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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 1999
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________ to _____________
Commission file number: 0-11355
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BINDLEY WESTERN INDUSTRIES, INC.
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(Exact name of registrant as specified in its charter)
INDIANA 84-0601662
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
8909 Purdue Road, Indianapolis, Indiana 46268
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (317) 704-4000
Securities registered pursuant to Section 12(b) of the Act:
Common Stock ($.01 par value) New York Stock Exchange
(Title of class) (Name of exchange on which registered)
Securities registered pursuant to section 12(g) of the Act:
NONE
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes x No ____
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [_]
$425,537,218
Aggregate market value of the voting stock held by nonaffiliates of the
registrant based on the last sale price for such stock on March xx, 2000
(assuming solely for the purposes of this calculation that all Directors and
Officers of the Registrant are "affiliates")
34,157,479
Number of shares of Common Stock outstanding as of March 17, 2000
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the following document have been incorporated by reference into this
annual report on Form 10-K:
IDENTITY OF DOCUMENT PARTS OF FORM 10-K INTO WHICH
DOCUMENT IS INCORPORATED
PART III
Proxy Statement to be filed for the
2000 Annual Meeting of Common
Shareholders of Registrant
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BINDLEY WESTERN INDUSTRIES, INC.
Indianapolis, Indiana
Annual Report to Securities and Exchange Commission
December 31, 1999
Part I
Item 1. Business.
General
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Bindley Western Industries, Inc., an Indiana corporation, is the fifth
largest distributor of pharmaceuticals and related products in the United
States. We sell ethical (prescription) pharmaceuticals, health and beauty care
products, and homecare merchandise to chain drug companies that operate their
own warehouses as well as independent drug stores, hospitals, clinics, HMOs and
other managed care providers. We operate from 18 distribution centers in 14
states, serving customers located throughout the United States and in U.S.
military facilities in Europe. By using us as a primary source of
pharmaceuticals, our customers can centralize purchasing functions, exercise
better inventory control, maintain better security and reduce handling costs.
We sell to chain warehouses and direct store delivery customers.
During 1999, we serviced three of the 10 largest chain warehouse customers in
the United States. We believe that technological innovation and emphasis on
customer service is critical to our ability to serve chain warehouse customers.
Since 1987, we have focused significant resources on increasing sales to direct
store delivery customers. Direct store delivery sales increased from $171
million in 1987 to $4.9 billion in 1999. To complement our internal growth and
strengthen our position in the northeastern and southeastern United States, we
purchased J.E. Goold in 1992, Kendall Drug in 1994, Tennessee Wholesale Drug in
1997 and Central Pharmacy Services in 1999.
Bindley Western's sales of $8.5 billion for 1999 represented the
31st consecutive year of record sales, equating to a compound growth rate of
approximately 20% since our inception in 1968. Our growth has resulted from
acquisitions, expansion into new geographic areas and increased market share.
Spin-off of Priority Healthcare Corporation
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On December 31, 1998, we distributed to our shareholders the remaining
82% interest that we then owned in our subsidiary, Priority Healthcare
Corporation ("Priority"). We formed Priority in 1994 to focus on distributing
products and providing services to the growing alternate site component of the
healthcare industry. The net cost of the acquisitions which created Priority
was approximately $7 million. The total market capitalization of the Priority
shares distributed to our shareholders exceeded $500 million.
The spin-off resulted in the removal of $107.5 million of assets and
$37.2 million of liabilities from our consolidated balance sheet as of December
31, 1998. The results of
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operations for Priority, net of minority interest, for 1998 and earlier periods
are included in our consolidated statement of earnings because Priority was a
subsidiary through December 31, 1998.
Acquisition of Central Pharmacy
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On August 31, 1999, we acquired Central Pharmacy Services, Inc., a
Georgia corporation, through the merger of one of our wholly owned subsidiaries
with and into Central Pharmacy, resulting in Central Pharmacy becoming a wholly
owned subsidiary of ours. Headquartered in Atlanta, Georgia, Central Pharmacy
operates centralized nuclear pharmacies that prepare and deliver
radiopharmaceuticals for use in nuclear imaging procedures in hospitals and
clinics. Central Pharmacy operates 29 specialized pharmacies located in 13
states. Central Pharmacy's revenues increased from $4.4 million in 1993 to $43.9
million in 1999, an average annual compound growth rate of 47%.
Central Pharmacy operates centralized nuclear pharmacies that prepare
and deliver unit dose radiopharmaceuticals for use in nuclear imaging procedures
in hospitals and clinics. Nuclear medicine uses small amounts of radioactive
material for the safe diagnosis, treatment and monitoring of disease. In
nuclear imaging procedures, a special camera scans a patient who has swallowed,
inhaled or been injected with a diluted radiopharmaceutical compound that emits
radiotracers. The special camera is able to detect the radiotracer emissions
from the compound. The compounds are usually specific to a particular organ in
which they concentrate and help the reader of the scan detect irregularities in
organ tissue for the identification of cancer or other diseases. Common types
of scans include heart, bone, liver, renal, lung and brain scans. Nuclear
imaging is a way to gather medical information that may otherwise be
unavailable, that may otherwise require invasive surgery or that otherwise would
have necessitated more expensive diagnostic tests.
Hospitals and clinics that perform diagnostic imaging procedures have
two means of acquiring the radiopharmaceuticals: they can buy directly from
manufacturers in bulk and perform the compounding and unit dosing themselves, or
they can purchase from centralized nuclear pharmacies principally in unit dose
form.
In addition to its core radiopharmaceutical compounding, dispensing
and distribution services, Central Pharmacy has recently expanded its service
offerings with its NuScan Services division. NuScan provides nuclear medicine
imaging department outsourcing services to hospital clients. The hospital
provides the space for the imaging department, while the radiopharmaceuticals,
equipment, personnel, scheduling and management are all controlled by NuScan.
NuScan charges the hospital on a fee-per-scan basis, which effectively switches
the department from a fixed to a variable cost.
The descriptions of the businesses of Bindley Western and Central
Pharmacy are discussed separately in this report because of the recent nature of
this acquisition.
Segments
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The core operations of Bindley Western are included in the BWI segment
while the operations of Central Pharmacy comprise the Nuclear Pharmacy segment.
Prior to the spin-off, the operations of Priority comprised the Priority
segment.
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These segments have different management teams and infrastructures to
facilitate their specific customer needs and marketing strategies. These
segments are discussed separately in this report. See also Note 3 to the
Consolidated Financial Statements.
Suppliers
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BWI
In every year for the last five years, sales of ethical (prescription)
pharmaceutical products accounted for approximately 85% of our total sales
volume. Our 800 plus suppliers are comprised of branded pharmaceutical
manufacturers, generic pharmaceutical manufacturers, private label manufacturers
of pharmaceutical and over-the-counter products, various health and beauty care
and home health care vendors, and other wholesale distributors which purchase
products directly from the manufacturer or sources other than the manufacturer.
Of the approximately 54,000 products in our inventory, a comparatively small
number account for a disproportionately large share of the total dollar volume
of products sold. Our five largest suppliers in 1999 were Pfizer, Bristol-Myers
Squibb Company, Astra Pharmaceutical, Eli Lilly and Company and SmithKline
Beecham. While none of these vendors account for over 10% of net sales, as a
group, they are significant. We maintain many competing products in inventory
and are not dependent upon any single supplier. Nevertheless, the loss of a
major supplier could adversely affect our business if we could not locate
alternate sources of supply. Our arrangements with suppliers typically may be
canceled by either party, without cause, on one month's notice. Many of these
arrangements are not governed by formal agreements. We believe our relationships
with our suppliers are generally good.
Nuclear Pharmacy
Although supplier contracts are negotiated centrally, each of our
pharmacy managers has the discretion to order from suppliers based on local
market demand for products and delivery availability from suppliers. However, in
the aggregate, the largest suppliers to Nuclear Pharmacy are Nycomed Amersham,
Mallinckrodt Medical, Inc. and DuPont Pharmaceuticals Company. These top three
suppliers accounted for 86% of total purchases in 1999, 79% of total purchases
in 1998 and 74% of total purchases in 1997.
Customers and Markets
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BWI
We categorize our sales as either "brokerage sales" or "from stock
sales". Brokerage sales are made to the chain warehouse market and from stock
sales are made directly from our inventory to both the chain warehouse and
direct store delivery markets. See Item 6 -- Selected Financial Data for
revenues from brokerage sales and from stock sales.
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Direct Store Delivery Market. We provide direct store delivery service
to chain drug stores (both warehousing and non-warehousing), independent drug
stores, hospitals, clinics, HMOs, state and federal agencies and other health
care providers. These customers generally purchase less than full-case lots on a
daily basis when they need a particular item. While smaller in quantity, these
sales typically generate higher margins than sales to warehouse customers.
Shipments to direct store customers are delivered on a daily basis by our
vehicles or by carriers.
Our direct store delivery business has experienced significant growth.
Since 1987, direct store delivery sales increased from $171 million to $4.9
billion in 1999, a compound annual growth rate of 32%. Direct store delivery
sales as a percentage of net sales increased from approximately 16% to
approximately 58% during that period. During 1999, no single direct store
delivery customer accounted for 10% or more of our total net sales.
We compete with other drug wholesalers for direct store delivery sales
by offering value added services that our customers would not be likely to
develop on their own. These value added services are designed to enhance the
competitiveness of independent, small chain and managed care pharmacies. Two
examples are our "Profit Partners" and "1st Choice for Value" programs. These
are both PC-based, marketing support and merchandising programs which include a
generic pharmaceutical source program, a home health care program, a private
label over the counter program and the Rx Vector and Global Vector purchasing
and inventory management systems.
We believe that there are opportunities for growth in direct store
delivery sales by expanding into new geographical areas and increasing our
market share in existing markets. We are focused on the development of new
services and programs through interaction and cooperation with both customers
and suppliers, all of which are designed to enhance profitability, provide added
value to the customer and strengthen our role in the distribution channel. These
programs include computerized ordering systems, inventory management programs,
generic pharmaceutical source programs, repack programs, innovative advertising
and marketing campaigns and merchandising programs, including private label
product lines and e-commerce business solutions.
Chain Warehouse Market. Chain warehouse customers purchase in full-
case lots for redistribution to individual retail outlets. Approximately 42% of
our net sales in 1999 were to chain drug warehouse customers. At December 31,
1999, our largest chain drug customers and the approximate period of time they
had done business with us were: Eckerd Corporation (27 years) and CVS (30
years). The following chain drug warehouse customers each accounted for over 10%
of net sales during the years shown: Eckerd Corporation (16%) and CVS (21%) in
1999; Eckerd Corporation (18%) and CVS (17%) in 1998; and CVS (22%), Rite Aid
Corporation (18%) and Eckerd Corporation (16%) in 1997. Net sales to these
customers aggregated 37% of net sales for 1999, 35% of net sales for 1998 and
56% of net sales for 1997.
By using us as a primary source of pharmaceuticals, a chain drug
customer can centralize its purchasing functions, exercise better inventory
control, maintain better security and reduce handling costs. Inventory control
and security are particularly important to these customers because of the
relatively high dollar value of pharmaceuticals in relation to their physical
size. In addition, we offer chain drug customers systems and procedures that we
have
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developed to facilitate their compliance with the recordkeeping and physical
security requirements of the Controlled Substances Act of 1970 and the
Prescription Drug Marketing Act of 1987. Additionally, we offer software to
these customers which permits direct communication between our computers and
theirs.
We have, from time to time, entered into written understandings with
some chain warehouse customers setting forth various terms and conditions of
sale. Generally, we have few long-term contracts with our major customers and
the relationship is terminable at will by either party. The loss of any one of
our major chain warehouse customers could have a material adverse effect on our
operations. During the second quarter of 1998, Rite Aid informed us that it had
signed a supply agreement with another wholesaler that became effective in May
1998. In 1997, Rite Aid accounted for 18% of our net sales. Sales to Rite Aid
were predominantly to their warehouses. The loss of this customer has not had a
material adverse impact on our operations. See also, Note 14 -- Major Customers
in our financial statements.
Nuclear Pharmacy
We actively serve two types of customers: hospitals and outpatient
clinics. Each type of customer receives product deliveries through the same
network, but there are differences in the frequency and types of doses, the
number and timing of deliveries and the method of purchasing. Approximately 475
hospital customers generate nearly two-thirds of our revenue. Over the past
several years, the hospital industry has undergone significant consolidation.
The hospitals that have not participated in this trend have aggregated
purchasing clout through group purchasing associations. We have been able to
participate in bidding on these accounts in partnership with other nuclear
pharmacy providers, due to the mismatch between the broad national coverage of
the group purchasing organizations and hospital consolidators and the focused,
regional coverage of our Nuclear Pharmacy segment. The Nuclear Pharmacy segment
also services approximately 115 clinic customers. Clinic customers differ from
hospitals in their price sensitivity, product focus and timing of deliveries.
While clinic customers are very price sensitive due to reimbursement concerns,
they tend to order exclusively the higher margin cardiology products on a
regular basis, which produces attractive margins. However, due to their
outpatient population, clinics do not require emergency deliveries, which
produce lower margins due to the small quantity of orders.
Central Pharmacy has partnered with two radiopharmaceutical
manufacturers to advance its position with group purchasing organizations.
Mallinckrodt Medical, Inc. has a contract that lasts through June 2004 with
Premier Purchasing Partners, L.P., the largest hospital group purchasing
organization in the United States representing approximately 30% of hospitals,
in which Mallinckrodt is the exclusive distributor of nuclear medicine products
to Premier members. Mallinckrodt established a similar relationship with
Consorta Catholic Resource Partners ("Consorta") in December 1999. We have a
parallel agreement with Mallinckrodt in which we are the exclusive service
representative for these Premier and Consorta accounts in specific geographic
areas. Our ability to sign new contracts with Premier and Consorta customers
under this arrangement is strong, but not automatic. Each contract must be
enrolled individually at the time the contract is up for renewal and
renegotiation, and therefore requires significant joint sales efforts by our
local pharmacy managers and the local Mallinckrodt and Premier representatives.
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Similarly, Nycomed Amersham has a contract that lasts through 2001
with Novation LLC, a group purchasing organization that represents approximately
30% of all United States hospitals, in which Nycomed/Amersham is the exclusive
distributor of nuclear medicine products to Novation members. We have a parallel
agreement with Nycomed/Amersham to be the exclusive service representative for
these Novation accounts in specific geographic areas. The Novation contract is
very similar to the Premier contract in the manner of obtaining customers.
Internal Systems Development
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BWI
We have developed and continue to improve our specialized internal
operating and management systems. We control inventories and accounts receivable
through the use of data processing and management information systems which we
developed. These assets are monitored by distribution center management using
real time connections to the Company's centralized data center. At present, many
operational functions, including accounting, cash management, accounts
receivable and inventory control are conducted through data processing
operations at our Indianapolis, Indiana facility. Data is transmitted to and
from on-site data processing equipment at the distribution centers.
Nuclear Pharmacy
We have developed programs to enhance internal operating and
management systems. We control accounts receivable, accounts payable and group
purchasing organization billing through the use of internally developed software
programs. The majority of operational functions, including accounting, cash
management, and accounts receivable are conducted through data processing
operations in the Atlanta, Georgia facility. Accounts receivable and accounts
payable data are transmitted electronically to and from on-site data processing
equipment at each of the pharmacies.
Expansion/Acquisitions
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We have made several acquisitions since 1992. We continue to seek
opportunities to expand operations through our acquisition of wholesale drug
distributors and other businesses in the healthcare industry.
Within the past two years, we have established six distribution
centers in new operational areas and replaced three older distribution centers
with new centers.
Presented below is a brief discussion of acquisitions by Bindley
Western since 1992. All of the acquisitions, other than the acquisition of
Central Pharmacy, have been accounted for under the purchase method and,
accordingly, the results of operations of the acquired companies have been
included in our financial statements from the effective date of acquisition. The
purchase price has been allocated based on a determination of the fair value of
the assets acquired and liabilities assumed. The goodwill associated with these
acquisitions is being amortized on a straight line basis over periods not
exceeding 40 years. See, also, Note 15 - Statement of Cash Flows in our
financial statements.
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J.E. Goold. On March 25, 1992, we effected a merger with J.E. Goold, a
full-line, full-service distributor of pharmaceutical, health and beauty care
and home health care products based in Portland, Maine.
Kendall Drug Company. Effective July 1, 1994, we acquired the net
assets of Kendall Drug Company, a wholesale distributor of pharmaceutical
products and health and beauty care products based in Shelby, North Carolina.
Priority Healthcare Services Corporation. On February 7, 1996, we
acquired all of the assets of the infusion services division of Infectious
Disease of Indiana, P.S.C. Through February 7, 1997, this business was operated
as National Infusion Services, Inc., a physician managed provider of infusion
services programs to patients in a variety of settings, including the home,
extended care facilities and its outpatient center in Indianapolis, Indiana. On
that date, the corporate name was changed to Priority Healthcare Services
Corporation. We expended approximately $9.0 million and incurred a long-term
obligation of approximately $1.5 million, resulting in approximately $9.8
million in intangible assets. See Note 6 - Intangibles and Note 9 - Long Term
Debt in our consolidated financial statements.
Tennessee Wholesale Drug Company. Effective July 31, 1997, we
purchased substantially all of the operating assets and assumed most of the
liabilities and contractual obligations of Tennessee Wholesale Drug Company,
Inc. ("TWD"), a full-line, full-service wholesale drug company with a
distribution facility in Nashville, Tennessee. We expended approximately $27
million which approximated the net book value of the assets and liabilities
acquired. While the acquisition was not material to us as a whole, it provided
further opportunities for us to expand our presence in the direct store delivery
and managed care markets.
Priority Healthcare Corporation. In August 1994, we formed Priority
Healthcare as our subsidiary by combining the businesses of two acquisitions
that we had made in 1993. From 1994 to 1997, Priority acquired three other
businesses in California and Florida. In October 1997, Priority Healthcare
completed an initial public offering in which 18% of its stock was issued to the
public. On December 31, 1998, we distributed to our shareholders the remaining
82% interest that we then owned in Priority Healthcare.
Central Pharmacy. On August 31, 1999, we acquired Central Pharmacy
Services, Inc. through a merger in which Central Pharmacy became a wholly owned
subsidiary of ours. We issued approximately 2.9 million shares of our common
stock in connection with the acquisition, along with options to purchase
approximately 300,000 shares of our common stock in exchange for previously
outstanding Central Pharmacy options. We are accounting for the acquisition of
Central Pharmacy as a pooling of interests and the financial statements are
based on the assumption that the companies were combined for all periods
presented. Headquartered in Atlanta, Georgia, Central Pharmacy operates
centralized nuclear pharmacies that prepare and deliver radiopharmaceuticals for
use in nuclear imaging procedures in hospitals and clinics. Central Pharmacy
operates 29 specialized pharmacies located in 13 states.
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Employees
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BWI
At February 29, 2000, we had approximately 1435 employees, of whom
approximately 4% were covered by a single collective bargaining agreement. We
believe that our relationship with our employees is good.
Nuclear Pharmacy
At February 29, 2000, we had a total of approximately 360 employees,
none of whom were covered by a collective bargaining agreement.
Competition
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BWI
We compete with national full-line, full-service wholesale drug
distributors, some of which are larger and have substantially greater financial
resources than we do. We also compete with local and regional drug distributors,
direct selling manufacturers and specialty distributors. While competition is
primarily price oriented, it can also be affected by delivery requirements,
credit terms, technology services, depth of product line and other customer
service requirements. We cannot assure you that we will not encounter increased
competition in the future that could adversely affect our business. In recent
years there has been a trend toward consolidation in the wholesale drug
industry, as shown by the purchase of a number of distributors by national
wholesalers. We estimate that there are currently approximately 35 full-line,
full-service wholesale drug distributors in the United States.
Nuclear Pharmacy
We have only one significant competitor, Syncor International, a
publicly-traded national chain. Syncor is primarily a nuclear pharmacy services
company engaged in compounding, dispensing and distributing radiopharmaceutical
products and services to hospitals and clinics in the United States and
overseas. We also compete with the distribution arms of some major
manufacturers, such as Mallinckrodt and Nycomed/Amersham, but to a lesser extent
since they operate mostly in the largest metropolitan markets.
Government Regulation
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BWI
We are subject to regulation by federal, state and local government
agencies and must obtain licenses or permits from, and comply with operating and
security standards of, the United States Drug Enforcement Administration, the
Food and Drug Administration ("FDA") and numerous state agencies. Each of our
distribution centers is licensed to distribute ethical pharmaceutical products
and certain controlled substances in accordance with the requirements of the
Prescription Drug Marketing Act of 1987 and the Controlled Substances Act of
1970.
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If we fail to comply with these laws and regulations, we could be
subject to both criminal and civil sanctions. We have full-time regulatory
compliance managers and outside advisors conduct compliance reviews at our
locations. We have also implemented a company-wide ethics and corporate
compliance program. We believe that our operations comply in all material
respects with applicable laws and regulations. However, because the health care
industry will continue to be subject to substantial regulations, we cannot
assure you that our activities will not be reviewed or challenged by the
government in the future.
Since Congress enacted the Prescription Drug Marketing Act ("PDMA") in
1987, we have conducted our alternate source purchasing and state licensing
activities in accordance with this legislation. On December 3, 1999, the FDA
published final regulations, to become effective December 4, 2000, that will,
among other things, require (a) alternate source vendors to provide purchasers
of pharmaceutical drugs with either (i) written proof that they are authorized
to distribute a manufacturer's pharmaceutical drugs or (ii) a statement
identifying each prior sale, purchase, or trade of that particular
pharmaceutical drug starting in the chain of distribution with the manufacturer
and (b) at least 44 states to change the record retention requirements for
wholesale distributors of prescription drugs from the current two years to three
years. Although the final regulations will require us to make some modifications
with respect to our current business practices related to alternate source
purchases and record retention, we do not anticipate that the final regulations
will have a material adverse effect on our business or results of operations.
Nuclear Pharmacy
We operate in a highly regulated industry which requires licenses or
permits from the Federal Nuclear Regulatory Commission, the Radiologic Health
Agency of each state in which we operate, the applicable State Board of Pharmacy
and the Department of Transportation which regulates the transport of
potentially hazardous material. We devote substantial human and financial
resources to complying with these applicable regulations.
Industry Overview
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The wholesale drug industry in the United States continues to
experience significant growth. As reported by the National Wholesale Druggists'
Association, industry sales grew from $30 billion in 1990 to approximately $83
billion in 1998, a compound annual growth rate of 14%. Today, industry analysts
estimate over 80% of pharmaceutical sales are distributed through wholesalers
compared to less than 47% in 1970. Order processing, inventory management and
product delivery by wholesale distributors allow manufacturers to better
allocate their resources to research and development, manufacturing and
marketing their products. Wholesale distribution provides customers access to a
single supply source for a full line of pharmaceutical and health care products
that are manufactured by hundreds of other companies. Wholesale distribution can
lower customers' inventory, reduce costs and delivery time and improve
purchasing and inventory information. Wholesale distribution also offers value
added programs that can reduce customers' costs and increase their operating
efficiencies.
We believe the pharmaceutical industry, including drug wholesalers and
related health care distributors and providers, will continue to grow as a
result of the following trends:
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Aging Population. The number of individuals over 65 in the United
States is expected to grow 25% from approximately 28 million in 1985 to
approximately 35 million by the year 2000. This age group suffers from a greater
incidence of chronic illnesses and disabilities than the rest of the population
and is estimated to account for approximately two-thirds of total health care
expenditures by the end of the decade.
Introduction of New Pharmaceuticals. Traditional research and
development as well as the advent of new research and production methods, such
as biotechnology, continue to generate new compounds that are more effective in
treating diseases. We believe that ongoing research and development expenditures
by the leading pharmaceutical manufacturers will contribute to the continued
growth of the industry. Drug therapy has had a beneficial impact on the overall
increase in aggregate health care costs, by reducing expensive surgeries and
prolonged hospital stays. The Health Care Financing Administration estimates
that expenditures in the United States for pharmaceuticals will more than triple
by 2008 from current levels.
Managed Care. To remain competitive, pharmaceutical manufacturers are
required to sell their products to the managed care market, wherein employers
negotiate discounts from health care providers by committing to long-term
contracts involving thousands of patients. Health care costs are linked more
tightly to the provision of managed health care services, especially with
hospitals and doctors, than under traditional medical insurance plans. Managed
care organizations generally provide full coverage for prescription drugs to
lower health care costs by improving access to medical treatment rather than
delaying treatment until more expensive services are required. The costs
associated with the prescription drug benefit are monitored by the managed care
organization primarily through the establishment of tightly controlled
formularies of approved prescription drugs, including generic substitutes, and
by drug utilization review procedures wherein physicians' prescribing practices
and patients' usage are closely scrutinized. Even though there has been a recent
trend to increase co-payments, implement tighter drug formularies and cap annual
pharmaceutical costs per patient, analysts have determined that these efforts
have done little thus far to decrease demand for pharmaceutical drugs as part of
a general healthcare delivery strategy.
Increased Use of Generic Drugs. The growth of managed care's influence
on pharmacy along with the introduction of generic equivalent products for many
top selling brand name drugs has caused the generic market to grow
substantially. Branded drugs with annual sales of approximately $24 billion are
expected to come off patent in the next three years, thus expanding the generic
marketing opportunity. Analysts estimate that the size of the generic market is
expected to nearly double from $8.8 billion in 1998 to $16.6 billion in 2003.
Pharmaceutical Price Increases. As a result of competitive market-
driven cost containment measures implemented by both the private and public
sectors since 1993, pharmaceutical price increases are less than in prior years.
Nevertheless, we believe that price increases by pharmaceutical manufacturers
will continue to equal or exceed the overall Consumer Price Index, which is due
in large part to relatively inelastic demand in the face of higher prices
charged for patented drugs as manufacturers have attempted to recoup costs
associated with the research and development, clinical testing and FDA approval
of new products.
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Continued Industry Consolidation. Largely in response to cost
containment pressure from private and governmental payers and the focus on
health care reform in the United States during the 1990's, the health care
industry is experiencing significant consolidation at the manufacturer,
wholesaler and customer levels. Pharmaceutical manufacturers consolidate to
reduce operating expenses, gain access to new drugs in the pipeline and enhance
marketing efforts in a managed care environment. Chain drug stores consolidate
through combining with other drug chains, as well as acquiring independent drug
stores. Independent drug stores are also consolidating through regional and
national affiliations. The number of pharmaceutical wholesalers in the United
States has decreased from 139 in 1980 to approximately 35 full-line, full-
service wholesalers at the end of 1999.
Medicare Prescription Drug Benefit. An emerging debate centers around
proposed legislation to offer an outpatient drug benefit for Medicare
beneficiaries. Although this proposed federal legislation could slow down the
recent growth of the pharmaceutical industry because of politically imposed
price controls, some analysts believe that drug wholesalers will benefit because
of increased volume and generic drug participation.
e-Commerce. Because wholesale drug distributors perform the
fulfillment function for on-line pharmacies, the recent advent of e-commerce
companies that distribute pharmaceuticals via the Internet should not threaten
- -- and may even benefit -- drug distributors. Most industry observers have
determined that successful e-commerce companies will need to partner with retail
drug chains or pharmacy benefits management companies to provide for the orderly
administration of related claims.
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Item 2. Properties.
BWI
We currently have 18 distribution centers located in 14 states.
Each of our distribution centers has been constructed or adapted to
our specifications for climate control, alarm systems and segregated security
areas for controlled substances. We use modern warehousing techniques and
equipment designed to accommodate both chain drug warehouses and direct store
delivery customers. At each location, a manager supervises warehouse, delivery
and local sales functions. We use our own vans and trucks, as well as contract
carriers, common carriers and couriers to deliver products. We believe that our
facilities are adequate to serve our current and anticipated needs without
making any capital expenditures at levels which are materially higher than the
amounts we have spent in the past.
Our distribution centers are listed below:
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Square Owned or
Location Footage Leased
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Austell, Georgia 56,160 Leased
Dallas, Texas 44,000 Owned
Denver, Colorado 42,725 Leased
Grapevine, Texas 70,000 Leased
Houston, Texas 39,000 Owned
Indianapolis, Indiana 57,200 Owned
Kansas City, Missouri 45,696 Leased
Middletown, Pennsylvania 112,000 Owned
Milwaukee, Wisconsin 40,040 Leased
Nashville, Tennessee 93,000 Owned
Orange, Connecticut 185,000 Owned
Orlando, Florida 94,600 Owned
Portland, Maine 60,000 Owned
Portland, Oregon 46,000 Leased
San Dimas, California 53,500 Leased
Shelby, North Carolina 96,500 Owned
Westbrook, Maine 132,000 Owned
Woodland, California 47,000 Leased
</TABLE>
We lease approximately 76,000 square feet for our corporate
headquarters in Indianapolis, Indiana for our accounting, human resources,
information systems, purchasing and sales and marketing departments, along with
our executive offices and related staff. This is a 15 year lease which began
April 30, 1999.
13
<PAGE>
Nuclear Pharmacy
We operate 29 centralized nuclear pharmacies. All of the pharmacies
are leased. The following table shows the locations of the pharmacies and sites:
<TABLE>
<CAPTION>
State City State City
- ----- ---- ----- ----
<S> <C> <C> <C>
Alabama Birmingham Nebraska Omaha
Gadsden
Arkansas Fort Smith Oklahoma Tulsa
Little Rock
Ozark
Florida Gainesville Oregon Eugene
Jacksonville Medford
Port Charlotte
Palm City
Winter Haven
Kentucky Lexington Tennessee Chattanooga
Louisville Nashville
Louisiana Baton Rouge Texas Lake Area
Houma
Lafayette
Monroe
Mississippi Jackson Virginia Richmond
Meridian Charlottesville
Washington Spokane
Tacoma
</TABLE>
14
<PAGE>
Item 3. Legal Proceedings.
Bindley Western was named a defendant, along with six other pharmaceutical
wholesalers and 24 pharmaceutical manufacturers, in a consolidated class action
filed in the United States District Court for the Northern District of Illinois
in 1993. (In re Brand Name Prescription Drugs Litigation, MDL 997.) The
----------------------------------------------
complaint alleges that the defendants conspired to fix prices of brand-name
prescription drugs sold to retail pharmacies at artificially high levels in
violation of the federal antitrust laws. The complaint seeks injunctive relief,
unspecified treble damages, costs, interest and attorneys' fees. Additional
complaints were filed in the federal class action by two chain drug companies
naming certain pharmaceutical manufacturers and wholesalers, including us, as
defendants. These complaints contain allegations and claims for relief that are
substantially similar to those in the earlier class action complaint. In
addition, we are a defendant in additional actions brought by plaintiffs who
"opted out" of the federal class action. The vast majority of the complaints in
these actions contain allegations and claims for relief that are substantially
similar to those in the federal class action. The remaining complaints add
allegations that the defendants' conduct violated state law. We have denied the
allegations in each of the amended complaints filed in these opt out lawsuits.
Discovery in the opt out cases is currently ongoing and no trial dates have yet
been scheduled.
On July 1, 1996, we and several other wholesalers were joined as defendants
in a proceeding filed in the Circuit Court of Greene County, Alabama. (Durrett
-------
v. The Upjohn Company, Civil Action No. 94-029.) An order dismissing the action
- ---------------------
and taxing costs against the plaintiffs was entered by the Circuit Court on
November 29, 1999.
On June 16, 1998, we were named a defendant in an action filed in the
Circuit Court for Cocke County, Tennessee purportedly on behalf of consumers of
prescription drugs in the following states: Tennessee, Alabama, Arizona,
Florida, Kansas, Maine, Michigan, Minnesota, New Mexico, North Carolina, North
Dakota, South Dakota, West Virginia and Wisconsin. (Graves et al. v. Abbott
-----------------------
Laboratories et al., Civil Action No. 25,109-II.) The complaint charges that
- -------------------
pharmaceutical manufacturers and wholesalers, including us, engaged in a price-
fixing conspiracy in violation of Tennessee's Trade Practices Act and Consumer
Protection Act, and the unfair or deceptive trade practices statutes of the
other jurisdictions named therein. We have denied the allegations of the
complaint and all proceedings in this suit have been stayed until further order
of the Circuit Court.
We have denied any liability to the plaintiffs in the prescription drug
price litigation described above and have been defending ourselves vigorously.
On October 21, 1994, we entered into an agreement with the other defendants,
wholesalers and pharmaceutical manufacturers covering all of the prescription
drug price actions. Under this agreement: (1) the manufacturer defendants
agreed to reimburse us and the other wholesaler defendants for litigation costs
incurred, up to an aggregate amount of $9 million; and (2) if a judgment is
entered against both manufacturers and wholesalers, our total exposure for joint
and several liability would be limited to the lesser of 1% of such judgment or
$1 million. In addition, we have released any claims which we might have had
against the manufacturers for the claims presented by the plaintiffs in these
actions. As a result of the settlements discussed in the next paragraph, we
have periodically received reimbursement of our legal fees and expenses in
excess of our proportionate share of the $9 million, and we expect to receive
reimbursement of substantially all of such fees and expenses in the future.
15
<PAGE>
Several of the manufacturer defendants and the class plaintiffs have
reached settlement agreements with regard to the In re Brand Name Prescription
-----------------------------
Drugs class action. Under these agreements, the settling manufacturer
- -----
defendants retain certain contingent liabilities under the October 21, 1994
agreement discussed in the preceding paragraph. The trial against the remaining
defendants, including us, began on September 14, 1998. On November 30, 1998,
the court granted all remaining defendants' motions for judgments as a matter of
law and dismissed all class claims against us and other defendants. The class
plaintiffs appealed the Court's ruling, and, on July 13, 1999, the appeals court
dismissed the wholesalers, including us, from the case. On February 22, 2000,
the United States Supreme Court denied the plaintiffs' petition for certiorari,
thus concluding the In re Brand Name Prescription Drugs class action litigation.
-----------------------------------
After discussions with counsel, we believe that any allegations of
liability against us in the remaining prescription drug pricing cases described
above are without merit and that any liability that we may have is not likely to
have a material adverse effect on our financial condition, results of
operations, or cash flows.
The Company has been advised that it is a potential defendant in an ongoing
grand jury investigation being conducted by the U.S. Attorney's Office in Las
Vegas, NV. The investigation concerns transactions between wholesale
pharmaceutical distributors and licensed institutional pharmacies known as
closed-door pharmacies. Closed-door or institutional pharmacies are entitled to
purchase pharmaceuticals at a discount from wholesale prices, but typically have
an agreement with the manufacturers to service only their own long-term care
patients. Wholesalers seek chargeback credits from the manufacturers for sales
to closed-door pharmacies.
The Company understands that the government's inquiry focuses principally
on whether pharmaceutical manufacturers have been defrauded by institutional or
closed-door pharmacies, which allegedly resold discount-priced pharmaceutical
drugs at a profit in violation of agreements with pharmaceutical manufacturers
to purchase the product solely for their own use. The government is examining
whether the Company, through any of its employees, participated in these
transactions by selling discount-priced pharmaceutical drugs with knowledge of
the pharmacies' plans to resell the product at a profit. These sales of excess
pharmaceutical drugs were allegedly made to alternate source vendors that, in
turn, sold the product in the secondary market to numerous wholesale
distributors and other customers.
To date, the government's investigation has been substantially focused on
sales that the Company made at the San Dimas, California division of Bindley
Western Drug Company to certain institutional pharmacies located in California
and Nevada, principally between 1995 and 1997. The Company no longer employs
the two managers who were primarily involved in the questioned sales. One was
terminated by the Company approximately two years ago for violation of the
Company's ethics code, and the other abruptly resigned in October 1999 during
the investigation of this matter. The Company has determined that sales to
institutional pharmacies served by the San Dimas division of Bindley Western
Drug Company represented less than 1% of total Company sales during the period
in question. The Company has further determined that no related business has
been conducted with these accounts for an extended period.
16
<PAGE>
The Company believes that its two former managers have admitted to certain
wrongdoing in connection with their activities while employed by the Company.
The Company is cooperating with the government and has undertaken its own
investigation. At this stage of the government's investigation, the Company
does not believe it is possible to predict or determine the outcome, resolution
or timing of the final resolution of this matter. The Company is currently
unable to estimate the range of any potential loss, the amount of which could
have a material adverse effect on the Company's financial condition, results of
operations and/or cash flows.
We are also subject to ordinary and routine lawsuits and governmental
inspections, investigations and proceedings incidental to our business, the
outcome of which should not have a material adverse effect on our financial
condition, results of operations, or cash flows.
17
<PAGE>
Item 4. Submission of Matters to a Vote of Security Holders.
No matters were submitted during the fourth quarter of 1999 to a vote of
our security holders, through the solicitation of proxies or otherwise.
Executive Officers of the Company
The following is a list of our executive officers, their ages and the
positions held by each of them. These positions may exclude other positions held
with our subsidiaries. These executive officers serve at the discretion of our
Board. There is no family relationship between any of our executive officers.
Name Age Position
----------------------------------------------------------------------
William E. Bindley 59 Chairman of the Board, Chief
Executive Officer and President
Keith W. Burks 42 Executive Vice President
Michael D. McCormick 52 Executive Vice President,
General Counsel and Secretary
Thomas J. Salentine 60 Executive Vice President and
Chief Financial Officer
Gregory S. Beyerl 42 Vice President and Controller
Michael L. Shinn 45 Treasurer
Gregory S. Beyerl, who is a certified public accountant, joined the Bindley
Western Drug Company Division in 1986 as Assistant Controller and was promoted
to division Controller in 1987, division Vice President in 1990 and corporate
Vice President and Controller in 1992. He was previously with the accounting
firm of Price Waterhouse. Mr. Beyerl also holds an MBA degree.
Michael L. Shinn joined Bindley Western as Treasurer in May 1992. Mr. Shinn is
a certified public accountant and was previously the Director of Corporate
Taxation for the Indianapolis office of the accounting firm of Price Waterhouse.
His duties include responsibility for our entire tax function, including our
subsidiaries and divisions.
(Pursuant to General Instruction (G)(3) of Form 10-K, the foregoing information
pertaining to executive officers who are not standing for election as members of
the Board of Directors is included as an unnumbered Item in Part I of this
Annual Report instead of being included in our Proxy Statement for our 2000
Annual Meeting of Shareholders.)
18
<PAGE>
PART II
Item 5. Market for the Registrant's Common Equity and Related Stockholder
Matters.
Our common stock, $.01 par value, is traded on the New York Stock Exchange
under the symbol "BDY." On June 3, 1998, a 4-for-3 stock split of our common
stock was paid in the form of a stock dividend to shareholders of record at the
close of business on May 21, 1998. On June 25, 1999, another 4-for-3 stock split
of our common stock was paid in the form of a stock dividend to shareholders of
record at the close of business on June 11, 1999. The following table is
adjusted to reflect retroactively the June 3, 1998 stock split and the June 25,
1999 stock split as well as the December 31, 1998 spin-off of Priority
Healthcare Corporation's common stock. The table shows the range of the reported
high and low prices for our common stock as reported on the New York Stock
Exchange for the years ended December 31, 1999 and December 31, 1998.
1999 High Low
January 1 - March 31 25.83 16.22
April 1 - June 30 24.89 20.63
July 1 - September 30 24.06 13.50
October 1 - December 31 15.56 11.75
1998 High Low
January 1 - March 31 11.27 8.02
April 1 - June 30 13.07 10.10
July 1 - September 30 13.76 10.27
October 1 - December 31 19.51 9.93
At March 17, 2000, 34,157,479 shares of our common stock were outstanding,
which were held by approximately 1,224 holders of record.
We paid cash dividends on our common stock of 2 cents per share on 9
different quarterly dates for the period beginning March 25, 1997 and ending
March 23, 1999. The 2 cents per share dividend remained unchanged after the June
3, 1998 stock split. We paid cash dividends on our common stock of 1.5 cents per
share on 4 different quarterly dates for the period beginning July 16, 1999 and
ending March 24, 2000. In addition, on December 31, 1998, we completed the spin-
off of our subsidiary Priority Healthcare by distributing to the holders of our
common stock all of the shares of Priority Class A common stock that we owned.
We distributed 10,214,286 shares of Priority Class A common stock on the basis
of .448 shares of Priority Class A common stock for each share of our common
stock outstanding on the record date, December 15, 1998. As a result of the
distribution, Priority ceased to be a subsidiary of ours. Future dividends will
be paid in accordance with declarations by our Board of Directors in its sole
discretion. Our primary bank line of credit agreement requires us to maintain
specified levels of working capital and net worth, which may limit our ability
to pay dividends in the future.
During the third quarter of 1994, we established an Automatic Dividend
Reinvestment Plan for our shareholders. This voluntary plan provides for
periodic investment of shareholder dividends in shares of our common stock plus
the opportunity to make voluntary cash payments up to $5,000 per month to
purchase additional shares without incurring any service charges or brokerage
fees.
19
<PAGE>
Sales of Unregistered Securities
On May 20, 1999, we issued a total of 1,435 shares, adjusted to reflect the
June 25, 1999 stock split, of our common stock to our seven non-employee
directors as the stock portion of their annual retainer. This issuance was
exempt from the registration requirements of the Securities Act of 1933, as
amended, under Section 4(2) of the Securities Act.
On June 25, 1999, all of our 22,921,685 shares of common stock outstanding
on the record date of June 11, 1999, were split on a four-for-three basis, paid
as a stock dividend. This transaction was exempt from the registration
requirements of the Securities Act because it did not involve a "sale" of a
security within the meaning of Section 2(3) of the Securities Act.
On August 31, 1999, we issued a total of 2,922,055 shares of our common
stock in connection with our acquisition of Central Pharmacy Services. This
issuance was exempt from the registration requirements of the Securities Act
under Section 4(2) of the Securities Act.
On December 27, 1999, we sold $25 million of our 7.93% Senior Notes due
December 27, 2004 to Nationwide Life Insurance Company. This sale was exempt
from the registration requirements of the Securities Act under Section 4(2) of
the Securities Act.
20
<PAGE>
Item 6. Selected Financial Data
The selected financial data set forth below should be read in conjuction with
the Company's financial statements and related notes included elsewhere in this
report. All of our financial information includes the results of Bindley Western
Industries, Inc. ("BWI") and Central Pharmacy Services, Inc. ("Central
Pharmacy") for all periods presented giving retroactive effect to the merger on
August 31, 1999 which has been accounted for as a pooling of interests.
Five Year Financial Review and Selected Financial Data
Bindley Western Industries, Inc.
<TABLE>
<CAPTION>
(in thousands, except share data)
- -------------------------------------------------------------------------------------------------------------------------------
1999 1998 (1) 1997 1996 1995
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net sales from stock $ 5,039,180 $ 4,156,799 $ 2,784,450 $ 2,145,262 $ 1,941,212
Net brokerage sales 3,468,425 3,497,422 4,549,687 3,190,219 2,741,415
Other income 1,939 1,915 1,908 1,410 2,559
Cost of products sold 8,287,842 7,448,331 7,181,415 5,207,565 4,573,233
Selling, general and administrative 121,542 118,340 89,402 77,396 67,705
Other expenses 36,082 46,375 24,704 21,447 17,239
Earnings before income taxes 64,078 43,090 40,524 30,483 27,009
Provision for income taxes 25,782 18,989 15,806 12,865 11,383
Minority interest in net income
of consolidated subsidiary - 1,865 212 - -
Net earnings 38,296 22,236 24,506 17,618 15,626
Earnings per share: (2)(3)
Basic $ 1.14 $ 0.70 $ 0.95 $ 0.76 $ 0.70
Diluted $ 1.05 $ 0.66 $ 0.83 $ 0.67 $ 0.62
Cash dividends declared per Common Share $ 0.065 $ 0.08 $ 0.08 $ 0.08 $ 0.08
Other financial data:
Current assets $ 1,582,855 $ 1,180,276 $ 1,188,403 $ 854,890 $ 780,041
Total assets 1,702,822 1,293,957 1,292,944 946,285 852,776
Current liabilities 1,284,706 954,510 903,945 621,037 575,690
Long-term debt 38,698 733 32,282 101,861 72,562
Total liabilities 1,328,107 958,330 940,389 725,928 653,358
Minority interest - - 11,010 - -
Shareholders equity 374,715 335,627 341,545 220,357 199,418
Book value per share (2)(3) 11.02 13.08 18.32 15.56 14.40
</TABLE>
(1) On December 31, 1998, BWI distributed to the holders of BWI Common Stock
all of the 10,214,286 shares of Priority Class A Common Stock owned by BWI in
the form of a dividend. As a result of the distribution, Priority ceased to be a
subsidiary of BWI as of December 31, 1998 and as such, its assets, liabilities
and equity are not included in the December 31, 1998 Consolidated Balance Sheet.
However, Priority's results of operations, net of minority interest, for the
year ended December 31, 1998 are included in the BWI Consolidated Statement of
Earnings as Priority was a subsidiary of the Company for the full year of 1998.
(2) On June 3, 1998, a 4-for-3 split of the Company's Common Stock was effected
in the form of a dividend to all shareholders of record at the close of business
on May 21, 1998. Accordingly, all historical weighted average and per share
amounts have been restated to reflect the stock split. Share amounts in the
consolidated Balance Sheets reflect the actual share amounts outstanding for
each period presented.
(3) On June 25, 1999, a 4-for-3 split of the Company's Common Stock was
effected in the form of a dividend to all shareholders of record at the close of
business on June 11, 1999. Accordingly, all historical weighted average and per
share amounts have been restated to reflect the stock split. Share amounts in
the consolidated Balance Sheets reflect the actual share amounts outstanding for
each period presented.
21
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
The discussion and analysis that follows should be read in conjunction with the
Consolidated Financial Statements and related notes included elsewhere in this
report.
We have made the following acquisitions which affect the comparison of the
results of operations on a year to year basis. All acquisitions, except Central
Pharmacy Services, Inc., have been accounted for under the purchase method and,
accordingly, the results of operations of the acquired entities are included in
the Company's financial statements from the respective dates of acquisition.
Tennessee Wholesale Drug Company - Effective July 31, 1997, we acquired
substantially all of the operating assets and assumed most of the liabilities of
Tennessee Wholesale Drug Company ("TWD"). TWD is a full-line, full-service
wholesale drug company with a distribution facility in Nashville, Tennessee.
Grove Way Pharmacy - Effective August 6, 1997, we, through our Priority
Healthcare Corporation ("Priority") subsidiary, acquired substantially all of
the assets of Grove Way Pharmacy, Inc. ("Grove Way"), a specialty distributor of
vaccines located in Castro Valley, California.
Central Pharmacy Services, Inc. - On August 31, 1999, we completed the merger
with Central Pharmacy Services, Inc. ("Central Pharmacy") of Atlanta, Georgia
for approximately $55 million of our common stock. Central Pharmacy operates
specialized pharmacies in 29 cities located in 13 states. These pharmacies
prepare and deliver unit dose radiopharmaceuticals for use in nuclear imaging
procedures in hospitals and clinics. The transaction was accounted for as a
pooling of interests and the financial statements for the periods ended December
31, 1999, 1998 and 1997 are based on the assumption that the companies were
combined for the full period.
On December 31, 1998, we distributed to the holders of our common
stock all of the 10,214,286 shares of Priority Class A common stock owned by us
on the basis of .448 shares of Priority Class A common stock for each share of
our common stock outstanding on the record date, December 15, 1998. The two
classes of Priority common stock entitle holders to the same rights and
privileges, except that holders of shares of Priority Class A common stock are
entitled to three votes per share on all matters submitted to a vote of holders
of Priority common stock and holders of shares of Priority Class B common stock
are entitled to one vote per share on such matters. As a result of the
distribution, Priority ceased to be our subsidiary as of December 31, 1998 and,
therefore, its assets, liabilities and equity are not included in our December
31, 1998 Consolidated Balance Sheet. However, Priority's results of operations,
net of minority interest, for the year ended December 31, 1998 are included in
our Consolidated Statement of Earnings as Priority was our subsidiary for the
full year of 1998.
Results of Operations.
Net sales for 1999, 1998 and 1997 were $8,508 million, $7,654 million, and
$7,334 million, respectively. This represents an 11% increase for 1999 over 1998
(15% when Priority's sales are excluded from 1998 results) and a 4% increase in
1998 over 1997. In all years, Central Pharmacy sales accounted for less than 1%
of total sales. The 1999 brokerage type sales
22
<PAGE>
("brokerage sales") remained relatively constant when compared to 1998. We
experienced increased sales to existing customers that offset the impact of the
loss of a single chain warehouse customer during the second quarter of 1998. The
loss of this customer resulted in a 23% decrease in 1998 brokerage sales when
compared to 1997. Brokerage sales generate very little gross margin, however,
they provide for increased working capital and support our programs to attract
more direct store delivery business from chain customers. Sales from our
inventory ("from stock sales") increased 21% in 1999 (30% when Priority's sales
are excluded from 1998 results). From stock sales include sales from our
inventory to chain customers and direct store delivery business. We continued to
expand our presence in the direct store delivery portion of the business through
increased sales to existing customers and the addition of new customers. Direct
store delivery sales increased by 25% from 1998 to 1999 (35% when Priority's
sales are excluded from 1998 results) and 50% from 1997 to 1998. As a percentage
of total sales, direct store delivery sales represented 58% in 1999, 51% in 1998
and 35% in 1997. In both periods, the increase related to pricing was
approximately equal to the increase in the Consumer Price Index. Net sales for
Priority were $276 million in 1998 and $231 million in 1997. This growth was
generated internally and reflected primarily the addition of new customers, new
product introductions (including the new Rebetron treatment for Hepatitis-C),
additional sales to existing customers and, to a lesser extent, the acquisition
of Grove Way Pharmacy and inflationary price increases.
Gross margins for 1999, 1998 and 1997 were $220 million, $206 million and $153
million, respectively. These increases in gross margin resulted primarily from
internal growth. Gross margins as a percent of net sales increased from 2.08% in
1997 to 2.69% in 1998 and then decreased to 2.58% in 1999. However, after the
exclusion of Priority, gross margins as a percent of sales were 1.82% for 1997
and 2.37% in 1998. These increases in gross margins resulted from the change in
mix away from the lower margin brokerage sales to the higher margin from stock
sales in the BWI segment and also the increased sales of the higher margin
Nuclear Pharmacy segment. The change in mix resulted from both the increased
direct store delivery business and the loss of the chain warehouse customer. In
all years, the pressure on sell side margins continued and the purchasing gains
associated with pharmaceutical price inflation remained relatively constant.
Gross margins for Priority were $31.1 million for 1998 and $23.2 million for
1997. Gross margins as a percent of sales for Priority for 1998 and 1997 were
11.30% and 10.01%, respectively. The increase in 1998 margins over 1997 margins
was primarily attributed to the change in sales mix resulting from significantly
higher sales by Priority Healthcare Pharmacy which generated higher gross
margins than those of Priority Healthcare Distribution.
Other income in 1999, 1998 and 1997 represented finance charges on certain
customers' receivables and gains on the sale of assets. The 1999 and 1998
balances also include approximately $200,000 of interest related to the note
from the CEO of the Company.
Selling, general and administrative ("SGA") expenses were $121.5 million, $118.3
million and $89.4 million in 1999, 1998 and 1997, respectively. When Priority is
excluded, SGA was $104.3 million for 1998 and $78.8 million for 1997. The
increase in SGA in the BWI segment resulted from costs associated with our
continued expansion, normal inflationary increases and increased variable costs
to support the growing direct store delivery business. In 1999, we incurred
startup costs associated with the opening of new distribution centers in
Milwaukee, Wisconsin, Kansas City, Missouri and Denver, Colorado. In 1998, we
incurred startup costs associated with the opening of new distribution centers
in Woodland, California and Portland,
23
<PAGE>
Oregon. The variable costs related to the direct store delivery business
include, among others, delivery expense, warehouse expense, and labor costs. The
remainder of the increase is associated with the continued expansion, and the
opening of new specialized pharmacies, in our Nuclear Pharmacy segment. Our
commitment to growth in both our direct store delivery sales and our Nuclear
Pharmacy segment will result in increased SGA in the future. However, management
remains focused on controlling SGA through improved technology, better asset
management and opportunities to consolidate distribution centers. This focus has
resulted in a decrease in SGA expense as a percent of from stock sales to 2.41%
in 1999 from 2.85% in 1998 (2.69%, excluding Priority) and 3.21% in 1997 (3.09%,
excluding Priority). SGA for Priority was $14.0 million in 1998 and $10.6
million in 1997. As a percent of sales, SGA for Priority for 1998 was 5.1% as
compared to 4.6% in 1997. This increase was the result of expenses associated
with the opening of the Grove City, Ohio facility, which opened in November
1997, training and payroll costs from hiring additional sales personnel at
Priority Healthcare Pharmacy and increased overall costs of being a publicly
traded company.
Depreciation and amortization was $10.5 million, $8.9 million and $8.2 million
in 1999, 1998 and 1997, respectively. When Priority is excluded, depreciation
and amortization was $7.7 million in 1998 and $7.0 million in 1997. These
increases were the result of the building of new facilities, expansion and
automation of existing facilities and investments in management information
systems. Depreciation and amortization for Priority was $1.2 million for both
1998 and 1997.
Interest expense for 1999, 1998 and 1997 was $23.4 million, $18.6 million and
$16.2 million, respectively. The inclusion of interest expense for Priority in
1998 and 1997 was not material. The average short-term borrowings outstanding
were $338 million, $249 million, and $152 million at an average short-term
interest rate of 5.5%, 6.3% and 6.4% for 1999, 1998 and 1997, respectively. We
also had in place a private placement of $30 million Senior Notes due December
27, 1999 at an interest rate of 7.25%. Interest expense associated with these
Notes was approximately $2.2 million in 1999, 1998 and 1997. On December 27,
1999, we repaid this private placement and negotiated a new private placement of
$25 million Senior Notes due December 27, 2004 at an interest rate of 7.93%.
In 1999, we recorded as an unusual item the one-time, pre-tax charge of
approximately $2.1 million, which approximated $1.6 million on an after-tax
basis, related to the acquisition of Central Pharmacy. In the fourth quarter of
1998, we recorded as an unusual item the one-time, pre-tax charge of
approximately $19.0 million, which approximated $14.0 million on an after-tax
basis. Of the $19.0 million charge, $11.0 million represented a non-cash charge
for the acceleration of the amortization of compensation related to restricted
stock grants in connection with the Priority spin-off, $7.0 million represented
the non-cash write-off of goodwill that had been carried on the books from an
acquisition dating back to early 1996 and $1.0 million represented the
settlement of litigation associated with that acquisition. See also, Note 1 -
Significant Accounting Policies, Note 6 - Intangibles, Note 9 - Long-term Debt,
Note 12 - Capital Stock and Note 16 - Legal Proceedings, of the Company's
financial statements for further discussion.
The provision for income taxes represented 40.2%, 44.1% and 39.0% of earnings
before taxes in 1999, 1998 and 1997, respectively. The increase in the 1998
effective rate was attributable to the nondeductible element of restricted stock
grants expensed in 1998.
On October 7, 1996 we and our subsidiary, National Infusion Services (now known
as Priority
24
<PAGE>
Healthcare Services Corporation) ("PHSC"), were named as defendants in an action
filed by Thomas G. Slama, M.D. in the Superior Court of Hamilton County,
Indiana. Dr. Slama is a former director of the company and formerly was Chief
Executive Officer and President of PHSC. The complaint alleged breach of
contract and defamation arising from the termination of Dr. Slama's employment
with PHSC in October 1996. On October 26, 1998, Dr. Slama filed a Second Amended
Complaint which added Priority and William E. Bindley as defendants and stated
additional claims for breach of contract, breach of oral contract, breach of
fiduciary duty, securities fraud and conversion. Pursuant to an Indemnification
and Hold Harmless Agreement we indemnified and held harmless Priority and its
subsidiaries from and against any and all costs, damages, charges and expenses
(including without limitation legal and other professional fees) which Priority
might incur or which may be charged against Priority in any way based upon,
connected with or arising out of the lawsuit filed by Dr. Slama. All defendants
answered the complaint, denied the merits of Dr. Slama's claims, and also filed
a counterclaim against Dr. Slama which sought, among other things, declaratory
relief, compensatory and (in some instances) treble damages, punitive damages,
attorneys' fees, interest and costs. On December 31, 1998, a Settlement
Agreement was executed by and among the parties named above pursuant to which
mutual releases were obtained and, on January 4, 1999, a one-time payment of
$875,000 was made by the Company to Dr. Slama. The corresponding Joint
Stipulation of Dismissal was approved by the Court on January 11, 1999.
Liquidity-Capital Resources.
On October 29, 1997, Priority consummated an initial public offering
("IPO"). Priority registered 2,300,000 shares of Class B common stock, all of
which were sold in a firm commitment underwriting at an aggregate offering price
of $33.35 million. After underwriters' discount of $2.32 million and expenses
incurred by Priority in conjunction with the IPO of $1.05 million, the net
offering proceeds to Priority were approximately $29.98 million.
On December 31, 1998, we distributed to the holders of our common
stock all of the 10,214,286 shares of Priority Class A common stock owned by us
on the basis of .448 shares of Priority Class A common stock for each share of
our common stock outstanding on the record date, December 15, 1998. The two
classes of Priority common stock entitle holders to the same rights and
privileges, except that holders of shares of Priority Class A common stock are
entitled to three votes per share on all matters submitted to a vote of holders
of Priority common stock and holders of shares of Priority Class B common stock
are entitled to one vote per share on such matters. As a result of the
distribution, Priority ceased to be our subsidiary. From the date of the IPO
until the December 31, 1998 distribution to the holders of our common stock, we
owned 81.6% of the outstanding common stock of Priority. In 1998, the amount of
net earnings associated with the minority interest was $1.9 million as compared
to $212,000 in 1997.
Our operations consumed $134.9 million in cash for the year ended December 31,
1999. The use of funds resulted from an increase in accounts receivables and
inventories. These uses were offset by an increase in accounts payable. The
increase in accounts receivables is a direct result of the overall increase in
direct store sales. The increase in inventories resulted from increased
purchases associated with the start up of our new distribution centers in
Milwaukee, Wisconsin and Kansas City, Missouri, additional volume associated
with the inventory and purchasing management systems with certain customers and
buildup related to Year 2000. The increase in accounts payable is attributed to
the timing of payments of invoices related to
25
<PAGE>
inventory purchases. We continue to closely monitor working capital in relation
to economic and competitive conditions. However, our emphasis on direct store
delivery business will continue to require both net working capital and cash.
Capital expenditures for 1999 were $23.9 million. These were predominantly for
distribution centers, the expansion and automation of existing distribution
centers and the investment in additional management information systems.
On April 30, 1999, we sold our corporate office building to an unrelated party
and signed a 15 year lease for the top two floors of the building. This lease
meets the criteria of a capital lease and resulted in the recording of an asset
and liability in the amount of the present value of minimum lease payments of
$13.4 million. The asset is being amortized over the term of the lease.
Effective July 31, 1997, we purchased substantially all of the operating assets
and assumed most of the liabilities and contractual obligations of TWD. We
expended approximately $27 million for the acquisition of TWD, which
approximated the fair value of the net assets acquired.
Effective August 6, 1997, Priority acquired substantially all of the operating
assets and assumed most of the liabilities of Grove Way Pharmacy, Inc., a
specialty distributor of vaccines and injectables located in Castro Valley,
California. The amount expended approximated the fair value of the net assets
acquired.
On August 27, 1997, we called for redemption on September 12, 1997 all of our
outstanding 6 1/2% Convertible Subordinated Debentures Due 2002 at a redemption
price of $1,039 per $1,000 principal amount of Debentures plus accrued interest
through the redemption date. Debenture holders could elect to convert their
debentures into shares of our common stock through September 12, 1997, which was
the redemption date. Holders of all but $119,000 principal amount of the
$67,350,000 outstanding Debentures elected to convert their Debentures into
common stock at the rate of 50.4 shares of common stock for each $1,000
principal amount of Debentures. The redemption reduced our long-term debt by
$67,350,000 and increased by 3.4 million the number of issued shares of our
common stock.
We hold a note receivable with a principal balance of $3.2 million from the CEO
of the Company. The proceeds of this note, which bears interest at 6.5% per
annum and matures on December 16, 2000, were used by the CEO to exercise stock
options. The note provides for annual interest only payments with outstanding
interest and principal to be repaid at maturity.
In December 1998, we established a receivables securitization facility (the
"Receivables Facility") pursuant to which we sell substantially all of our
receivables arising in connection with the sale of goods or the rendering of
services ("Receivables") to Bindley Western Funding Corporation ("Funding
Corp."), a wholly owned special purpose corporation subsidiary. The Receivables
are sold to Funding Corp. on a continuous basis, and the cash generated by sales
of interests in the Receivables or by collections on the Receivables retained is
used by Funding Corp. to, among other things, purchase additional Receivables
originated by the Company. The assets of Funding Corp. will be available first
and foremost to satisfy claims of Funding Corp. creditors.
In connection with the Receivables Facility, Funding Corp. entered into a
Receivables Purchase
26
<PAGE>
Agreement, dated as of December 28, 1998, with Falcon Asset Securitization
Corporation ("Falcon"), an affiliate of Bank One, NA ("Bank One"), certain other
financial institutions (collectively with Falcon, the "Purchasers"), and Bank
One, as Agent. Pursuant to the Receivables Purchase Agreement, Funding Corp.
may, from time to time, sell interests in the Receivables ("Receivables
Interests") to the Agent for the benefit of the Purchasers. Each Receivables
Interest has an associated Discount Rate and Tranche Period applicable to it, as
selected by Funding Corp. The Discount Rate may, at Funding Corp.'s election, be
the Base Rate (the corporate prime or base rate announced from time to time by
Bank One) or, with respect to the Receivables Interests purchased by Falcon, the
CP Rate (generally, a commercial paper related rate based on Falcon's funding
charges) or, with respect to the Receivables Interests purchased by other
Purchasers, the LIBO Rate (generally, LIBOR for the applicable Tranche Period,
plus 1.25% per annum). The Receivables Facility terminates on December 13, 2000,
and is subject to final termination on December 28, 2003, subject to earlier
termination in certain events. At December 31, 1999, there were $350 million of
Receivables Interests outstanding, which is the maximum amount that could be
drawn on this facility, bearing a Discount Rate of 6.1% per annum. We account
for the Receivables Facility as a financing transaction in our consolidated
financial statements.
In connection with the implementation of the Receivables Facility, we
renegotiated our bank line of credit on December 28, 1999 and now have $150
million of available credit. For 1999, the net increase in borrowings under the
bank credit agreement was $25.5 million. At December 31, 1999, we had borrowed
$45 million under the bank credit agreement and had a remaining availability of
$105 million.
On December 27, 1999, we repaid our $30 million Senior Notes. In addition on
December 27, 1999 we completed a new private placement of $25 million Senior
Notes due December 27, 2004 at an interest rate of 7.93%.
We believe that our cash on hand, bank line of credit, Receivables Facility and
working capital management efforts are sufficient to meet future working capital
requirements. However, see Note 16 to our Consolidated Financial Statements for
a description of certain contingencies.
Our primary exposure to market risk consists of changes in interest rates on
borrowings. An increase in interest rates would adversely affect our operating
results and the cash flow available to fund operations and expansion. Based on
the average variable borrowings for 1999, an increase of 10% in our average
variable borrowing rate would result in a $2.2 million annual increase in
interest expense. Conversely, a 10% decrease in the average variable borrowing
rate would result in a $2.2 million annual decrease in interest expense. We
continually monitor this risk and review the potential benefits of entering into
hedging transactions, such as interest rate swaps, to mitigate the exposure to
interest rate fluctuations. At December 31, 1999, we were not a party to any
hedging transactions.
Our principal working capital needs are for inventory and accounts receivable.
We sell inventory to our chain drug warehouse and other customers on various
payment terms. This requires significant working capital to finance inventory
purchases and entails accounts receivable exposure in the event any of our chain
warehouse or other major customers encounter financial difficulties. Although we
monitor closely the creditworthiness of our major customers and, when feasible,
obtain security interests in the inventory sold, there can be no assurance that
we will not incur some collection loss on chain drug or other major customer
accounts receivable in the future.
27
<PAGE>
Year 2000.
Currently, we have not experienced any significant Year 2000 related problems,
nor do we anticipate any Year 2000 related problems in the future. There have
been no instances where mission-critical and/or non-mission-critical systems
have failed to perform correctly. In addition, we have not experienced any
repercussions of Year 2000 related issues with either our suppliers or
customers. The total cumulative costs to make our systems compliant for the Year
2000 were approximately $1 million.
Inflation.
Our financial statements are prepared on the basis of historical costs and are
not intended to reflect changes in the relative purchasing power of the dollar.
Because of our ability to take advantage of forward purchasing opportunities,
the Company believes that our gross profits generally increase as a result of
manufacturers' price increases in the products we distribute. Gross profits may
decline if the rate of price increases by manufacturers declines.
Generally, price increases are passed through to customers as they are received
by the Company and therefore reduce the negative effect of inflation. Other
non-inventory cost increases, such as payroll, supplies and services, have been
partially offset during the past three years by increased volume and
productivity.
Forward Looking Statements.
Certain statements included in this annual report which are not historical facts
are forward looking statements. Such forward looking statements are made
pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. These forward looking statements involve certain risks and
uncertainties including, but not limited to, changes in interest rates,
competitive pressures, changes in customer mix, financial stability of major
customers, investment procurement opportunities, asserted and unasserted claims
and changes in government regulations or the interpretation thereof, which could
cause actual results to differ from those in the forward looking statements.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
See discussion in Item 7.
Item 8. Financial Statements and Supplementary Data.
The financial data required to be included under this item is submitted in a
separate section of this report and incorporated herein by reference.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
Not Applicable.
28
<PAGE>
PART III
Item 10. Directors and Executive Officers of the Registrant.
The information required by this Item concerning the Directors and nominees for
Directors of the Company and concerning disclosure of delinquent filers is
incorporated herein by reference from the Company's definitive Proxy Statement
for its 2000 annual meeting of common shareholders, to be filed with the
Commission pursuant to Regulation 14A within 120 days after the end of the
Company's last fiscal year. Information concerning the executive officers of the
Company is also included under "Executive Officers of the Company" at the end of
Part I of this Annual Report. Such information is incorporated herein by
reference, in accordance with General Instruction G(3) to Form 10-K and
Instruction 3 to Item 401(b) of Regulation S-K.
Item 11. Executive Compensation.
The information required by this Item concerning remuneration of the Company's
officers and Directors and information concerning material transactions
involving such officers and Directors is incorporated herein by reference from
the Company's definitive Proxy Statement for its 2000 annual meeting of common
shareholders to be filed with the Commission pursuant to Regulation 14A within
120 days after the end of the Company's last fiscal year.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
The information required by this Item concerning the stock ownership of
management and five percent beneficial owners is incorporated herein by
reference from the Company's definitive Proxy Statement for its 2000 annual
meeting of common shareholders to be filed with the Commission pursuant to
Regulation 14A within 120 days after the end of the Company's last fiscal year.
Item 13. Certain Relationships and Related Transactions.
The information required by this Item concerning certain relationships and
related transactions is incorporated herein by reference from the Company's
definitive Proxy Statement for its 2000 annual meeting of common shareholders to
be filed with the Commission pursuant to Regulation 14A within 120 days after
the end of the Company's last fiscal year.
29
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
The documents listed below are filed as a part of this report except as
otherwise indicated:
(a) 1. Financial Statements. The following described financial
statements, required to be filed by Item 8 and incorporated therein by reference
are set forth on pages F-1 through F-31.
<TABLE>
<S> <C>
Report of Independent Accountants F-1
Consolidated Statements of Earnings for each of the three
years in the period ended December 31, 1999 F-2
Consolidated Balance Sheets as of December 31, 1999
and 1998 F-3
Consolidated Statements of Cash Flows for each of the
three years in the period ended December 31, 1999 F-4
Consolidated Statements of Shareholders' Equity for
each of the three years in the period ended December 31,
1999 F-5
Notes to Consolidated Financial Statements F-6 TO F-31
</TABLE>
2. Financial Statement Schedules. No financial statement
schedules are included as the information required by Rule 5-04 is not
applicable, or is not material.
3. Exhibits. The list of exhibits filed as part of this report
is incorporated herein by reference to the Index to Exhibits
beginning at Page E-1.
(b) Reports on Form 8-K. On November 17, 1999, we filed a current
report on Form 8-K, which described our merger with Central Pharmacy Services,
Inc., and which included the following historical financial statements, restated
to reflect the pooling of interest from Central Pharmacy: Consolidated
Statements of Earnings for each of the three years in the period ended December
31, 1998, Consolidated Balance Sheets as of December 31, 1998 and 1997,
Consolidated Statements of Cash Flows for each of the three years in the period
ended December 31, 1998, and Consolidated Statements of Shareholders' Equity for
each of the three years in the period ended December 31, 1998.
30
<PAGE>
Report of Independent Accountants
To the Board of Directors and Shareholders
of Bindley Western Industries, Inc.:
In our opinion, the consolidated financial statements listed in the index
appearing under Item 14(a)1 on page 30 present fairly, in all material
respects, the financial position of Bindley Western Industries, Inc. and its
subsidiaries at December 31, 1999 and 1998, and the results of their operations
and their cash flows for each of the three years in the period ended December
31, 1999 in conformity with accounting principles generally accepted in the
United States. These financial statements are the responsibility of the
Company's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with auditing standards generally accepted in the
United States, which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Indianapolis, Indiana
March 21, 2000
F-1
<PAGE>
Consolidated Statements of Earnings
Bindley Western Industries, Inc. and Subsidiaries
<TABLE>
<CAPTION>
For the years ended December 31, 1999 1998 1997
(In thousands, except share data)
<S> <C> <C> <C>
Revenues:
Net sales from stock $ 5,039,180 $ 4,156,799 $ 2,784,450
Net brokerage sales 3,468,425 3,497,422 4,549,687
------------ ----------- -----------
Total net sales 8,507,605 7,654,221 7,334,137
Other income 1,939 1,915 1,908
------------ ----------- -----------
8,509,544 7,656,136 7,336,045
Cost and expenses:
Cost of products sold 8,287,842 7,448,331 7,181,415
Selling, general and administrative 121,542 118,340 89,402
Depreciation and amortization 10,548 8,894 8,162
Interest 23,438 18,648 16,192
Unusual items 2,096 18,833 350
------------ ----------- -----------
8,445,466 7,613,046 7,295,521
Earnings before income taxes
and minority interest 64,078 43,090 40,524
------------ ----------- -----------
Provision for income taxes:
Current 25,782 22,636 19,640
Deferred (3,647) (3,834)
------------ ----------- -----------
25,782 18,989 15,806
Minority interest in net income of
consolidated subsidiary 1,865 212
------------ ----------- -----------
Net earnings $ 38,296 $ 22,236 $ 24,506
============ =========== ===========
Earnings per share:
Basic $ 1.14 $ 0.70 $ 0.95
Diluted $ 1.05 $ 0.66 $ 0.83
Average shares outstanding:
Basic 33,478,470 31,651,034 25,834,292
Diluted 36,467,639 33,508,668 31,890,035
</TABLE>
(See accompanying notes to consolidated financial statements)
F-2
<PAGE>
Consolidated Balance Sheets
Bindley Western Industries, Inc. and Subsidiaries
<TABLE>
<CAPTION>
December 31, 1999 1998
(In thousands, except share data)
<S> <C> <C>
Assets
Current assets:
Cash $ 34,910 $ 42,982
Accounts receivable, less allowance for doubtful
accounts of $9,547 for 1999 and $7,550 for 1998 721,830 456,994
Finished goods inventory 803,021 660,089
Deferred income taxes 13,168 11,552
Other current assets 9,926 8,659
----------- -----------
1,582,855 1,180,276
----------- -----------
Other assets 18 90
----------- -----------
Fixed assets, at cost 129,140 121,850
Less: accumulated depreciation (27,773) (27,660)
----------- -----------
101,367 94,190
----------- -----------
Intangibles, net 18,582 19,401
----------- -----------
Total assets $ 1,702,822 $ 1,293,957
=========== ===========
Liabilities and Shareholders' Equity
Current liabilities:
Short-term borrowings $ 45,000 $ 19,500
Securitized borrowings 349,963 224,163
Private placement debt 30,000
Accounts payable 864,271 644,461
Note payable to Priority Healthcare Corporation 16,517
Other current liabilities 25,472 19,869
----------- -----------
1,284,706 954,510
----------- -----------
Long-term debt 38,698 733
----------- -----------
Deferred income taxes 4,703 3,087
----------- -----------
Shareholders' equity:
Common stock. $.01 par value-authorized 53,333,333 shares;
issued 35,213,201 and 26,345,421 shares, respectively 3,415 3,406
Special shares, $.01 par value-authorized 1,000,000 shares
Additional paid in capital 225,459 215,177
Note receivable from officer (3,228) (3,228)
Retained earnings 166,550 130,953
----------- -----------
392,196 346,308
----------- -----------
Less: shares in treasury-at cost 1,212,232 and 689,161, respectively (17,481) (10,681)
----------- -----------
Total shareholders' equity 374,715 335,627
----------- -----------
Commitments and contingencies
----------- -----------
Total liabilities and shareholders' equity $ 1,702,822 $ 1,293,957
=========== ===========
</TABLE>
(See accompanying notes to consolidated financial statements)
F-3
<PAGE>
Consolidated Statements of Cash Flows
Bindley Western Industries, Inc. and Subsidiaries
<TABLE>
<CAPTION>
For the years ended December 31, 1999 1998 1997
<S> <C> <C> <C>
(In thousands)
Cash flow from operating activities:
Net income $ 38,296 $ 22,236 $ 24,506
Adjustments to reconcile net income to
net cash provided (used) by operating activities:
Depreciation and amortization 10,548 8,894 8,162
Deferred income taxes (3,647) (3,834)
Minority interest 1,865 212
Compensation expense on stock option grant 350
Compensation expense on restricted stock 1,589
Interest capitalized on conversion of debt 1,970
Gain on sale of fixed assets (183) (310) (77)
Unusual items 18,833
Change in assets and liabilities,
net of acquisitions:
Accounts receivable (264,836) 94,814 (229,880)
Finished goods inventory (142,933) (163,310) (63,276)
Accounts payable 219,810 (60,700) 151,919
Other current assets and liabilities 4,371 816 4,317
------------ ------------ ------------
Net cash provided (used) by operating activities (134,927) (78,920) (105,631)
------------ ------------ ------------
Cash flow from investing activities:
Purchase of fixed assets and other assets (23,897) (34,254) (23,164)
Proceeds from sale of fixed assets 20,600 540 2,127
Acquisition of businesses (774) (27,711)
Distribution of Priority Healthcare Corporation (2)
------------ ------------ ------------
Net cash used by investing activities (3,297) (34,490) (48,748)
------------ ------------ ------------
Cash flow from financing activities:
Proceeds from sale of stock 10,291 26,795 14,741
Proceeds from IPO of subsidiary 29,982
Related party note receivable (3,228)
Addition (reduction) of other debt, net (21,940) (1,574) (1,823)
Proceeds under line of credit agreement 1,540,500 1,600,000 1,496,000
Payments under line of credit agreement (1,515,000) (1,727,500) (1,401,000)
Proceeds from securitized borrowings 125,800 224,163
Payments to acquire treasury shares (6,800) (6,754) (777)
Dividends (2,699) (1,633) (1,083)
------------ ------------ ------------
Net cash provided by financing activities 130,152 113,497 132,812
------------ ------------ ------------
Net increase (decrease) in cash (8,072) 87 (21,567)
Cash at beginning of year 42,982 42,895 64,462
------------ ------------ ------------
Cash at end of year $ 34,910 $ 42,982 $ 42,895
============ ============ ============
</TABLE>
(See accompanying notes to consolidated financial statements)
F-4
<PAGE>
Consolidated Statements of Shareholders' Equity
Bindley Western Industries, Inc. and Subsidiaries
<TABLE>
<CAPTION>
Common Stock Treasury Stock
-------------------- ----------------------
Additional Note
Shares Shares Paid in Receivable Retained Shareholders'
Outstanding Amount Outstanding Amount Capital From Officer Earnings Equity
- --------------------------------------------------------------------------------------------------------------------------------
(In thousands, except share data)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balances at December 31, 1996 14,508,459 $3,342 348,291 $ (3,150) $ 93,523 $126,642 $220,357
Net earnings 24,506 24,506
Dividends at $.08 per share (1,083) (1,083)
Shares issued upon exercise of
stock options 1,123,109 12 14,730 14,742
Shares issued upon conversion of
debt 3,394,147 34 67,460 67,494
IPO of subsidiary 24,405 (5,221) 19,184
IPO option grant 350 350
Note receivable from officer (3,228) (3,228)
Purchase of treasury shares 32,651 (777) (777)
----------- ------- --------- -------- -------- -------- -------- --------
Balances at December 31, 1997 19,025,715 3,388 380,942 (3,927) 200,468 (3,228) 144,844 341,545
Net earnings 22,236 22,236
Dividends at $.08 per share (1,633) (1,633)
Shares issued upon exercise of
stock options 1,346,049 14 26,781 26,795
Shares issued upon issuance of
restricted stock 350,000 4 12,334 12,338
Shares issued upon stock split 5,623,657 131,351
Distribution of Priority Healthcare (24,406) (34,494) (58,900)
Purchase of treasury shares 176,868 (6,754) (6,754)
----------- ------- --------- -------- -------- -------- -------- --------
Balances at December 31, 1998 26,345,421 $3,406 689,161 (10,681) 215,177 (3,228) 130,953 335,627
Net earnings 38,296 38,296
Dividends at $.065 per share (2,699) (2,699)
Shares issued upon exercise of
stock options 927,148 9 10,282 10,291
Shares issued upon stock split 7,940,632 301,466
Purchase of treasury shares 221,605 (6,800) (6,800)
----------- ------ --------- -------- -------- -------- -------- --------
Balances at December 31, 1999 35,213,201 $3,415 1,212,232 $(17,481) $225,459 $(3,228) $166,550 $374,715
=========== ====== ========= ======== ======== ======== ======== ========
</TABLE>
(See accompanying notes to consolidated financial statements)
F-5
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
Principles of consolidation. The consolidated financial statements include
the accounts of Bindley Western Industries, Inc. and its subsidiaries ("BWI" or
the "Company"). All significant intercompany accounts and transactions have
been eliminated.
Merger with Central Pharmacy Services, Inc. Effective August 31, 1999, BWI
completed the merger with Central Pharmacy Services, Inc ("Central Pharmacy") by
exchanging 2.9 million shares of BWI common stock for all of the common stock of
Central Pharmacy. Each share of Central Pharmacy was exchanged for 26.38 shares
of BWI common stock. In addition, outstanding Central Pharmacy employee stock
options were converted at the same exchange factor into options to purchase
approximately 300,000 shares of BWI common stock. The consolidated financial
statements include Central Pharmacy for all periods presented. In 1999, we
recorded as an unusual item the one-time, pre-tax charge of approximately $2.1
million, which approximated $1.6 million on an after-tax basis, related to the
acquisition of Central Pharmacy.
Revenue recognition. The Company differentiates sales as either brokerage
type sales ("brokerage sales") or sales from the Company's inventory ("from
stock sales"). Brokerage sales are made to the chain warehouse market, whereas
from stock sales are made to both the chain warehouse and direct store delivery
markets. Revenues are recorded at the time of shipment.
Inventories. Inventories are stated on the basis of lower of cost or
market using the first-in, first-out (FIFO) method.
Fixed assets. Depreciation is computed on the straight-line method for
financial reporting purposes. Accelerated methods are primarily used for income
tax purposes. Assets, valued at cost, are generally being depreciated over their
estimated useful lives as follows:
Estimated useful life (years)
Buildings and furnishings 5-35
Leasehold improvements 3-20
Transportation and other equipment 3-20
Data equipment and software 3-5
In 1999, the Company implemented the Statement of Position 98-1 "Accounting
for the Costs of Computer Software Developed or Obtained for Internal Use". As
a result, costs incurred for the coding, installation and testing of internal
use software were capitalized beginning in 1999. These costs are recorded as
capitalized software and generally amortized over three years.
F-6
<PAGE>
In the event facts and circumstances indicate an asset could be impaired,
an evaluation of the undiscounted estimated future cash flows is compared to the
asset's carrying amount to determine if a write-down is required.
Debt issue costs. Debt issue costs are amortized on a straight-line basis
over the life of the Convertible Subordinated Debentures ("Debentures"), which
were redeemed on September 12, 1997, and the private placement debt.
Intangibles. The Company continually monitors its cost in excess of net
assets acquired ("goodwill") and its other intangibles (customer lists and
covenants not to compete) to determine whether any impairment of these assets
has occurred. In making such determination, the Company evaluates the
performance, on an undiscounted basis, of the underlying businesses which gave
rise to such amounts. Goodwill is being amortized on the straight-line method
over periods not exceeding 40 years. Other intangibles are being amortized on
the straight-line method over five to 15 years.
Earnings per share. Basic earnings per share is based on the weighted
average number of common shares outstanding during each period. The diluted
earnings per share is based on the weighted average number of common shares and
dilutive potential common shares outstanding during each period. See Note 17
for a reconciliation of earnings per share.
Income taxes. In accordance with the provisions of Statement of Financial
Accounting Standards No. 109 "Accounting for Income Taxes," the Company accounts
for income taxes using the asset and liability method. The asset and liability
method requires the recognition of deferred tax assets and liabilities for
expected future tax consequences of temporary differences that currently exist
between the tax bases and financial reporting bases of the Company's assets and
liabilities.
Use of estimates. The preparation of financial statements in accordance
with generally accepted accounting principles requires the use of estimates made
by management. Actual results could differ from those estimates.
Fair value of financial instruments. The carrying values of cash, accounts
receivable, other current assets, short-term borrowings, accounts payable and
other current liabilities approximate their fair market values due to the short-
term maturity of these instruments. The fair market value of long term debt was
determined based on market quoted rates or was estimated using rates currently
available to the Company for debt with similar terms and maturities.
Other income. Other income for 1999, 1998 and 1997 was substantially all
interest income and gains on the sale of assets.
Prior year reclassifications. Certain amounts in the prior year financial
statements have been reclassified to conform to the current year presentation.
F-7
<PAGE>
NOTE 2 - DISTRIBUTION OF PRIORITY HEALTHCARE CORPORATION
On December 31, 1998, the Company distributed to the holders of the
Company's common stock all of the 10,214,286 shares of Priority Healthcare
Corporation ("Priority") Class A common stock owned by the Company on the basis
of .448 shares Priority Class A common stock for each share of BWI common stock
outstanding on the record date, December 15, 1998. As a result of the
distribution, Priority ceased to be a subsidiary of the Company as of December
31, 1998. The dividend distribution of $58.9 million represents the Company's
ownership interest in the net assets of Priority. The spin-off resulted in the
removal of $107.5 million of assets and $37.2 million of liabilities from the
Company's Consolidated Balance Sheet as of December 31, 1998.
The results of operations for Priority, net of minority interest, for the
year ended December 31, 1998 are included in the Company's Consolidated
Statement of Earnings as Priority was a subsidiary for the full year of 1998.
Summary Statement of Earnings data for Priority is presented in Note 3 below.
NOTE 3 - OPERATING SEGMENTS
In June 1997, SFAS No. 131, "Disclosure about Segments of an Enterprise and
Related Information", was issued effective for fiscal years ended after December
15, 1998. The Statement designates the internal management accountability
structure as the source of the Company's reportable segments. The statement also
requires disclosures about products and services, geographic areas and major
customers. The adoption of this standard did not affect results of operations or
financial position but did affect the disclosure of segment information.
Prior to 1998, the Company operated as one industry segment. The 1997
information presented below has been restated in order to conform to the current
year presentation.
Giving effect to the Central Pharmacy merger, the Company has three
reportable segments, BWI, Priority and Nuclear Pharmacy, which conduct
substantially all of their business within the United States. The BWI segment
specializes in the distribution of pharmaceuticals and related health care
products to chain drug companies which operate their own warehouses, individual
drug stores, supermarkets and mass retailers with their own pharmacies,
hospitals, clinics, HMOs, state and federal government agencies and other health
care providers. The Priority segment distributed specialty pharmaceuticals and
related medical supplies to the alternate site healthcare market and was a
provider of patient-specific, self-injectable biopharmaceuticals and disease
treatment programs to individuals with chronic diseases. The Nuclear Pharmacy
segment prepares and delivers unit dose radiopharmaceuticals for use in nuclear
imaging procedures in hospitals and clinics. During 1999 approximately 86% of
this segment's purchases of pharmaceuticals were from three vendors accounting
for 44%, 26% and 16% of this segment's cost of sales for the year ended 1999.
The significant customers reported in Note 14 are all sold through the BWI
segment.
F-8
<PAGE>
These segments have separate management teams and infrastructures to
facilitate their specific customer needs and marketing strategies. The
accounting policies of the reportable segments are the same as those described
in the summary of significant accounting policies. The intersegment sales and
transfers are not significant. As discussed in Note 2, Priority ceased to be a
subsidiary of the Company as of December 31, 1998 and, therefore, its assets,
liabilities and equity are not included in the Company's Consolidated Balance
Sheets at December 31, 1999 and 1998.
Segment information for the years ended 1999, 1998 and 1997 was as follows:
<TABLE>
<CAPTION>
Nuclear
(in thousands) BWI Priority Pharmacy Total
<S> <C> <C> <C> <C>
1999
Revenues $8,463,700 $43,905 $8,507,605
Interest expense 23,390 48 23,438
Depreciation and amortization 9,945 603 10,548
Unusual items 1,054 1,042 2,096
Segment net earnings 35,599 2,697 38,296
Total assets 1,692,646 10,176 1,702,822
Capital expenditures 22,931 966 23,897
1998
Revenues $7,345,726 $275,626 $32,869 $7,654,221
Interest expense 18,310 155 183 18,648
Depreciation and amortization 7,179 1,234 481 8,894
Unusual items 18,833 18,833
Segment net earnings 8,996 10,143 3,097 22,236
Total assets 1,286,575 7,382 1,293,957
Capital expenditures 32,636 905 713 34,254
1997
Revenues $7,078,940 $230,982 $24,215 $7,334,137
Interest expense 15,907 285 16,192
Depreciation and amortization 6,270 1,161 731 8,162
Segment net earnings 17,595 6,151 760 24,506
Total assets 1,196,051 91,728 5,165 1,292,944
Capital expenditures 21,916 727 521 23,164
</TABLE>
NOTE 4 - SHORT-TERM BORROWINGS
The Company's unsecured short-term bank line of credit was $150,000,000 as
of December 31, 1999. The line was available, as necessary, for general
corporate purposes at rates based upon prevailing money market rates. At
December 31, 1999, 1998 and 1997, the
F-9
<PAGE>
Company had borrowed on its short-term line of credit $45,000,000 at a rate of
5.7%, $19,500,000 at a rate of 5.4% and $147,000,000 at a rate of 6.6%,
respectively.
No compensating balance is required on the line. Certain conditions
relating to the maintenance of net worth, total debt and interest coverage
ratios have been imposed by the lenders.
A summary of 1999, 1998 and 1997 borrowings under the line of credit is as
follows:
<TABLE>
<CAPTION>
Maximum short-term Average Average
Year borrowings borrowings interest rate
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
(in thousands)
1999 $174,000 $ 96,000 6.2%
1998 $338,000 $249,000 6.3%
1997 $270,000 $152,000 6.4%
</TABLE>
On December 27, 1996, the Company completed a private placement of $30
million Senior Notes due December 27, 1999 at an interest rate of 7.25%. On
December 27, 1999, the Company repaid these Senior Notes with the proceeds from
the newly issued private placement Senior Notes discussed in Note 9.
In December 1998, the Company established a receivables securitization
facility (the "Receivables Facility") pursuant to which the Company sells
substantially all of its receivables arising in connection with the sale of
goods or the rendering of services ("Receivables") to Bindley Western Funding
Corporation ("Funding Corp."), a wholly owned special purpose corporation
subsidiary. The Receivables are sold to Funding Corp. on a continuous basis, and
the cash generated by sales of interests in the Receivables or by collections on
the Receivables retained is used by Funding Corp. to, among other things,
purchase additional Receivables originated by the Company. The assets of Funding
Corp. will be available first and foremost to satisfy claims of Funding Corp.
creditors.
In connection with the Receivables Facility, Funding Corp. entered into a
Receivables Purchase Agreement, dated as of December 28, 1998, with Falcon Asset
Securitization Corporation ("Falcon"), an affiliate of The Bank One, NA ("Bank
One"), certain other financial institutions (collectively with Falcon, the
"Purchasers"), and Bank One, as Agent. Pursuant to the Receivables Purchase
Agreement, Funding Corp. may, from time to time, sell interests in the
Receivables ("Receivables Interests") to the Agent for the benefit of the
Purchasers. Each Receivables Interest has an associated Discount Rate and
Tranche Period applicable to it, as selected by Funding Corp. The Discount Rate
may, at Funding Corp.'s election, be the Base Rate (the corporate prime or base
rate announced from time to time by Bank One) or, with respect to the
Receivables Interests purchased by Falcon, the CP Rate (generally, a commercial
paper related rate based on Falcon's funding charges) or, with respect to the
Receivables Interests purchased by other Purchasers, the LIBO Rate (generally,
LIBOR for the
F-10
<PAGE>
applicable Tranche Period, plus 1.25% per annum). For 1999, the average
Receivables interests outstanding was $242 million at an average interest rate
of 5.4%. At December 31, 1999, there were $350 million of Receivables Interests
outstanding, which is the maximum amount that could be drawn on this facility,
bearing a Discount Rate of 6.1% per annum and at December 31, 1998, there were
$224 million of Receivables Interests outstanding, bearing a Discount Rate of
5.5% per annum. The Receivables Facility terminates on December 13, 2000, and is
subject to final termination on December 28, 2003, subject to earlier
termination in certain events. The Company accounts for the Receivables Facility
as a financing transaction in its consolidated financial statements. This
facility and the private placement of $25 million Senior Notes discussed in
Note 9, contain certain conditions related to the maintenance of net worth,
total debt and interest coverage ratios.
Central Pharmacy's working capital line of credit agreement with a bank, as
amended on April 8, 1999, allows Central Pharmacy to borrow up to $3,500,000.
Amounts borrowed under this agreement bear interest at the bank's prime rate
(8.5% at December 31, 1999) and are due on April 7, 2000. The line of credit
agreement contains various covenants which place restrictions on Central
Pharmacy's current ratio, indebtedness and operating cash flows. Amounts
borrowed under this agreement are secured by Central Pharmacy's assets. As of
December 31, 1999 and 1998, there was no outstanding balance on this line of
credit.
NOTE 5 - FIXED ASSETS
<TABLE>
<CAPTION>
December 31, 1999 1998
- -------------------------------------------------------------------------------------
(in thousands)
<S> <C> <C>
Land $ 4,449 $ 6,749
Buildings and furnishings 37,441 53,163
Leasehold improvements 3,551 2,907
Transportation and other equipment 47,522 37,378
Data equipment and software 22,708 21,653
Capitalized leases 13,468
-----------------------------
129,139 121,850
Less: Accumulated Depreciation (27,772) (27,660
-----------------------------
$101,367 $ 94,190
=============================
</TABLE>
F-11
<PAGE>
NOTE 6- INTANGIBLES
<TABLE>
<CAPTION>
December 31, 1999 1998
- ---------------------------------------------------------------------------------
<S> <C> <C>
(in thousands)
Goodwill $ 23,543 $ 23,537
Accumulated amortization (6,071) (5,424)
---------------------------------------------
Goodwill, net 17,472 18,113
Other 3,179 3,179
Accumulated amortization (2,069) (1,891)
---------------------------------------------
Other, net 1,110 1,288
---------------------------------------------
Intangibles, net $ 18,582 $ 19,401
=============================================
</TABLE>
In performing the review for impairment on the intangible assets related to
Priority Healthcare Services, the Company determined that the loss of key
personnel as part of the distribution of Priority and the recent and projected
operating results and cash flows were not adequate to support the recorded
amount. In the fourth quarter of 1998, the Company wrote off approximately $6
million in goodwill and $2 million in other intangibles, which is presented in
the Consolidated Statement of Earnings as part of the unusual items caption.
Priority Healthcare Services is a component of the BWI segment.
NOTE 7 - RELATED PARTY TRANSACTIONS
At December 31, 1999 and 1998, the Company held a note receivable with a
principal balance of $3.2 million from the Chief Executive Officer of the
Company in connection with his exercise of stock options granted to him under
the 1993 Stock Option and Incentive Plan. This note, which bears interest at
6.5% per annum, matures on December 16, 2000 and provides for annual interest
only payments, beginning in 1998, with outstanding interest and principal to be
repaid at maturity. In both 1999 and 1998, other income includes $200,000 of
interest income related to this note.
At December 31, 1998, the Company owed Priority $16.5 million. This amount
was due on demand and represented loans of excess cash balances of Priority to
the Company on a short-term basis, bearing interest at the Company's average
incremental borrowing rate. At December 31, 1998, the incremental borrowing rate
was 6.3%. This balance was repaid in 1999.
NOTE 8 - INCOME TAXES
The provision for income taxes includes state income taxes of $4,326,000,
$3,320,000 and $2,706,000 in 1999, 1998 and 1997, respectively.
F-12
<PAGE>
The following table indicates the significant elements contributing to the
difference between the U.S. federal statutory tax rate and the effective tax
rate:
<TABLE>
<CAPTION>
Year ended December 31, 1999 1998 1997
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Percentage of earnings before taxes:
U.S. federal statutory rate 35.0% 35.0% 35.0%
State and local taxes on income, net of
Federal income tax benefit 4.4% 5.0% 4.4%
Nondeductible element of restricted
stock grants 5.7%
Central Pharmacy utilization of NOL (2.3%) (.8%)
carryforwards
Other .8% .7% .4%
------------------------------------------------------------------
Effective rate 40.2% 44.1% 39.0%
==================================================================
</TABLE>
Presented below are the significant elements of the net deferred tax
balance sheet accounts at December 31, 1999 and 1998:
<TABLE>
<CAPTION>
(in thousands) 1999 1998
---- ----
<S> <C> <C>
Deferred tax assets:
Current:
Accounts receivable $ 8,051 $ 6,635
Inventories 1,049 1,371
Deferred compensation 3,458 2,382
Other, net 610 1,164
-------------------------
Subtotal 13,168 11,552
Long-term:
Acquired net operating loss benefits 311 368
Intangibles 2,411 2,474
-------------------------
Subtotal 2,722 2,842
-------------------------
Total deferred tax assets $15,890 $14,394
=========================
Deferred tax liabilities:
Current $ $
Long-term:
Fixed assets 7,425 5,897
Other, net 32
-------------------------
Subtotal 7,425 5,929
-------------------------
Total deferred tax liabilities $ 7,425 $ 5,929
=========================
</TABLE>
F-13
<PAGE>
In connection with a prior year acquisition, the Company acquired federal
net operating loss carryforwards of $2.3 million. Due to certain tax law
limitations, annual utilization of the carryforward is limited to $163,000. The
remaining tax loss carryforward at December 31, 1999 is $1.1 million. The
carryover period expires in 2006.
Prior to the merger between BWI and Central Pharmacy, the respective
companies' income tax returns were filed separately from each other. In its 1998
and 1997 returns, Central Pharmacy utilized $1,385,000 and $935,000,
respectively, of net operating loss carryforwards. At December 31, 1998, Central
Pharmacy had utilized all of its NOL carryforwards.
NOTE 9 - LONG-TERM DEBT
On December 27, 1999, the Company completed a private placement of $25
million Senior Notes due December 27, 2004 at an interest rate of 7.93%. The
Company estimates the fair market value at December 27, 1999 approximates the
principal amount based on the proximity of the issuance date to the fiscal year
end.
On April 30, 1999, the Company sold its corporate office building to an
unrelated party for approximately net book value and signed a 15 year lease for
the top two floors of the building. The lease meets the criteria of a
capitalized lease and resulted in the recording of an asset and liability in the
amount of the present value of minimum lease payments of $13.4 million. The
asset is being amortized over the term of the lease.
The remaining 1999 balance, and substantially all of the 1998 balance, was
comprised of a mortgage obligation.
In 1998, a $1.2 million obligation, which related to the purchase of
Priority Healthcare Services, was included as a reduction of the fourth quarter
unusual items charge resulting from the litigation settlement agreement on
December 31, 1998.
NOTE 10 - PROFIT SHARING PLAN
The Company and its subsidiaries maintain a qualified Profit Sharing Plan
("Profit Sharing Plan") for eligible employees. All employees are generally
eligible to participate in the Profit Sharing Plan as of the first January 1,
April 1, July 1 or October 1 after having completed at least one year of service
(as defined in the Profit Sharing Plan) and having reached age 21.
The annual contribution of the Company and its subsidiaries to the Profit
Sharing Plan is at the discretion of the Board and is generally 8% of the
Participant's compensation for the year. The employer contribution for a year is
allocated among the Participants employed on the last day of the year in
proportion to their relative compensation for the year. The Company's
F-14
<PAGE>
Contributions to the plan for the years ended December 31, 1999, 1998 and 1997
were $2,077,000, $1,785,000 and $1,576,000, respectively.
The Profit Sharing Plan has been amended to adopt, effective as of January
1, 2000, one of the permissible safe harbor methods of satisfying the
nondiscrimination test for elective deferrals under the 401(k) feature of the
Profit Sharing Plan. Under this safe harbor method, the Company and its
subsidiaries will make a contribution each year, on behalf of their eligible
employees, equal to 3% of the employee's eligible compensation for the year.
These contributions, and attributable earnings, will be 100% vested at all
times, rather than subject to the graded vesting schedule that applies to the
discretionary contributions by the Company and its subsidiaries. The annual
contribution of the Company and its subsidiaries to the Profit Sharing Plan
beyond the 3% safe harbor contribution is at the discretion of the Board, and
the Company expects that the combination of the safe harbor contributions and
discretionary contributions by the Company and its subsidiaries will generally
total 8% of a participant's compensation for the year. The employer contribution
for a year is allocated among participants employed on the last day of the year
in proportion to their relative compensation for the year.
Subject to limitations imposed by the Code, a participant may, in addition
to receiving a share of the employer contribution, have a percentage of his or
her compensation withheld from pay and contributed to the Profit Sharing Plan.
Subject to applicable Code requirements, employees may make "rollover"
contributions to the Profit Sharing Plan of qualifying distributions from other
employers' qualified plans.
A Participant's interest in amounts withheld from his or her pay and
contributed to the Profit Sharing Plan or in rollover contributions and in the
earnings on those amounts are fully vested at all times. A Participant's
interest in discretionary employer contributions made on his or her behalf and
the earnings on those contributions become 20% vested after three years of
service and an additional 20% vested during each of the next four years. A
Participant's interest in discretionary employer contributions made on his or
her behalf and the earnings on those contributions will also become fully vested
when the employee retires at age 65 or older, dies or becomes totally disabled.
All contributions to the Profit Sharing Plan are paid in cash to a trustee
bank, as trustee, and are invested by the trustee until distributed to
Participants or their beneficiaries. Participants are permitted to direct the
trustee as to the investment of their accounts by choosing among several
investment funds that are offered under the Profit Sharing Plan, including one
fund consisting of common stock of the Company. Participants may elect to invest
in one fund or a combination of the available funds according to their
investment goals. If a Participant does not make an investment election, his or
her Profit Sharing Plan accounts will be invested in a fund designated by the
Company.
F-15
<PAGE>
Effective July 1, 1993, Central Pharmacy adopted the Central Pharmacy
Services, Inc. 401(k) Plan (the "Plan"), a defined contribution plan which
intended to qualify under Section 401(k) of the Internal Revenue Code. The Plan
also includes a cash or defined arrangement to qualify under Section 401(k) of
the code. All employees of Central Pharmacy are eligible to participate in the
Plan after one year of service. Participants may contribute up to 20% of their
base salaries to the Plan, and Central Pharmacy will match 100% of the
participants' contributions up to 2% of their base salaries. Contributions to
the Plan were approximately $118,000, $90,000 and $71,000 for the years ended
December 31, 1999, 1998, and 1997, respectively. The plan was frozen effective
as of the close of business on December 31, 1999, and the Plan will be merged
into the Profit Sharing Plan in the second quarter of 2000.
NOTE 11 - MINORITY INTEREST
On October 29, 1997, the Company consummated an initial public offering
("IPO") of its Priority Healthcare Corporation ("Priority") subsidiary. Priority
registered 2,300,000 shares of Class B common stock, all of which were sold in a
firm commitment underwriting at an aggregate offering price of $33.35 million.
After underwriters' discount of $2.32 million and expenses incurred in
conjunction with the IPO of $1.05 million, the net offering proceeds to Priority
were approximately $29.98 million.
The Priority IPO resulted in the establishment of minority interest of $11
million, which represented the minority shareholders' interest in shareholders'
equity of Priority, and an increase of $19.2 million in the Company's additional
paid in capital, which represented the Company's incremental share of Priority's
shareholders' equity, both at October 29, 1997.
See Note 2 for discussion of the Company's distribution of Priority.
NOTE 12 - CAPITAL STOCK
The Company's capitalization consists of 53,333,333 authorized shares of
common stock and 1,000,000 authorized shares of Special Stock. Both the common
stock and Special Stock have a $.01 par value per share. On June 25, 1999, a 4-
for-3 stock split was effected in the form of a stock dividend to shareholders
of record at the close of business on June 11, 1999. On June 3, 1998, a 4-for-3
stock split was effected in the form of a stock dividend to shareholders of
record at the close of business on May 21, 1998.
Prior to May 20, 1993, the Company had a 1983 Incentive Stock Option Plan,
a 1983 Nonqualified Option Plan, and a 1987 Stock Option and Incentive Plan. The
number of shares available for issuance pursuant to such plans aggregated
2,500,000 shares. Incentive stock options, granted at a minimum of 100% of fair
market value, and nonqualified stock options, granted at a minimum of 85% of
fair market value, both exercisable for up to 10 years from the date of grant,
were authorized under such plans.
F-16
<PAGE>
On May 20, 1993, the Company's shareholders approved the 1993 Stock Option
and Incentive Plan (the "1993 Plan") authorizing 1,000,000 shares of the
Company's common stock for sale or award to officers and key employees
(including any such officer or employee who holds at least 10% of the Company's
common stock) as stock options or restricted stock. Options generally become
exercisable over a one to four year period following date of grant and expire 10
years following date of grant. No further awards will be made from the shares of
common stock that remained available for grants under the prior stock option
plans.
On May 19, 1994, the Company's shareholders approved amendments to the
Company's 1983 Incentive Stock Option Plan, the 1983 Nonqualified Stock Option
Plan, the 1987 Stock Option and Incentive Plan and the 1993 Plan to permit the
Company's Compensation and Stock Option Committee of the Board of Directors
("Committee") to allow participants under these plans, including the holders of
outstanding options, to exercise an option during its term following cessation
of employment by reason of death, disability or retirement. Such amendments also
permitted the Committee, in its sole discretion, to change the exercise and
termination terms of options granted if such changes are otherwise consistent
with applicable federal and state laws. In addition, the 1993 Plan was amended
to (i) increase from 1,000,000 to 1,500,000 the number of shares authorized for
issuance pursuant to awards made under the 1993 Plan; (ii) limit to 100,000
shares the number of shares that any one participant may receive under the 1993
Plan during any calendar year; and (iii) provide that the Board of Directors may
amend the 1993 Plan in any respect without shareholder approval, unless such
approval is required to comply with Rule 16b-3 under the Securities Exchange Act
of 1934 or Section 422 of the Internal Revenue Code of 1986. On May 16, 1996,
the Company's shareholders approved an amendment to the 1993 Plan to increase to
3,000,000 the number of shares authorized for issuance pursuant to awards made
under the 1993 Plan. At the May 21, 1998 annual shareholders meeting, the
Company's shareholders approved an amendment to the 1993 Plan to (i) increase to
4,000,000 (restated to 5,333,332 as a result of the June 3, 1998 stock split, to
7,821,973 as a result of the spin-off of Priority, and to 10,271,118 as a result
of the June 25, 1999 stock split, each restatement made pursuant to an anti-
dilution provision contained in the 1993 Plan) the number of shares authorized
for issuance pursuant to awards made under the 1993 Plan and (ii) increase to
300,000 the number of shares that any one participant may receive under the 1993
Plan during any calendar year.
On May 14, 1991, the Company's shareholders approved the Outside Directors
Stock Option Plan (the "Directors Plan"). Each eligible director is
automatically granted an option to purchase 1,000 shares of the Company's common
stock on June 1 of each year beginning in 1991. The option exercise price per
share is 85% of the fair market value of one share of common stock on the date
of grant. Each option becomes exercisable six months following the date of grant
and expires 10 years following the date of grant.
On December 11, 1998, the Company's Board of Directors adopted the 1998
Non-Qualified Stock Option Plan (the "1998 Non-Qualified Plan"), which reserves
for issuance 600,000 shares of the Company's common stock held by the Company as
treasury shares. On
F-17
<PAGE>
July 22, 1999, the Company's Board of Directors approved an amendment to the
1998 Non-Qualified Plan to increase the reserves for issuance to 1,200,000
shares of the Company's common stock held by the Company as treasury shares. The
1998 Non-Qualified Plan provides for the grant of non-qualified stock options to
employees who are not officers or directors of the Company or its affiliates.
Under the 1998 Non-Qualified Plan, no individual participant may receive awards
for more than 50,000 shares in any calendar year. Options generally become
exercisable over a one to four year period following date of grant and expire 10
years following date of grant.
The Central Pharmacy 1993 Stock Option Plan (the "Central Pharmacy Option
Plan") provided for the issuance of options to employees of Central Pharmacy for
the purchase of shares of Central Pharmacy's common stock. Options were issued
with exercise prices equal to or in excess of the fair market value of Central
Pharmacy's common stock, as determined by Central Pharmacy's Board of Directors,
on the date of grant. Vesting and terms of all options are determined by Central
Pharmacy's Board of Directors and may vary by optionee; however, the term may be
no longer than 10 years from the date of grant.
In accordance with the terms of the Central Pharmacy Option Plan and merger
between BWI and Central Pharmacy, all options outstanding under the Central
Pharmacy option plan vested at the date of the merger. Furthermore, all such
outstanding Central Pharmacy options were converted to BWI options pursuant to
the terms of the merger which, in essence, provided that such options would be
converted based on the calculated "in-the-money" amounts and exercise price to
fair market value ratios at the time of the merger. Additionally, in accordance
with the terms of the merger, no further options can be issued from the Central
Pharmacy Option Plan subsequent to the merger.
In accordance with the provisions of Financial Accounting Standards No.
123, "Accounting for Stock-Based Compensation" ("SFAS 123"), the Company has
elected to continue following Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees" ("APB 25") and related
interpretations in accounting for its stock option plans, and accordingly,
generally does not recognize compensation expense related to these options. If
the Company had elected to recognize compensation expense based on the fair
value of the options at the grant date as prescribed by SFAS 123, pro forma net
income and earnings would have been:
F-18
<PAGE>
<TABLE>
<CAPTION>
For the years ended December 31, 1999 1998 1997
- ---------------------------------------------------------------------------
(in thousands, except share data)
<S> <C> <C> <C>
Net earnings - as reported $38,296 $22,236 $24,506
Net earnings - pro forma $35,219 $18,946 $21,971
Earnings per share
Basic - as reported 1.14 .70 .95
Basic - pro forma 1.05 .60 .85
Diluted - as reported 1.05 .66 .83
Diluted - pro forma .97 .57 .75
</TABLE>
The fair value of each option grant is estimated on the date of grant using
the Black-Scholes option pricing model with the following weighted-average
assumptions for the following years ended December 31:
<TABLE>
<CAPTION>
1999 1998 1997
----------------------------------
<S> <C> <C> <C>
Company Options
Risk free interest rates 4.96% 5.31% 5.71%
Expected dividend yields .53% .16% .26%
Expected life of options 4.98 4.34 4.66
Volatility of stock price 32.94% 28.85% 27.23%
Weighted average fair
value of options $ 6.91 $ 9.34 $10.16
Priority Options
Risk free interest rates 5.02% 5.90%
Expected dividend yields .00% .00%
Expected life of options 4.71 4.60
Volatility of stock price 55.94% 54.79%
Weighted average fair
value of options $ 9.65 $ 7.52
</TABLE>
Compensation expense based on the fair value of options granted prior to
January 1, 1995 was not included in the preceding pro forma calculations.
Therefore, the resulting pro forma compensation cost may not be representative
of that to be expected in future years.
F-19
<PAGE>
Changes in stock options under the Company's plans are shown below, (all
historical shares and per share amounts have been restated to reflect the two
aforementioned 4-for-3 stock splits):
<TABLE>
<CAPTION>
Weighted
Number average
of Shares option price
- -----------------------------------------------------------------------
<S> <C> <C>
Options outstanding
at December 31, 1996 6,286,824 $ 7.75
Forfeited during 1997 (77,538) $ 8.94
Granted during 1997 1,537,463 $16.32
Exercised during 1997 (1,799,888) $ 6.32
-----------
Options outstanding
at December 31, 1997 5,946,861 $10.38
Forfeited during 1998 (206,049) $10.81
Granted during 1998 41,651 $16.76
Exercised during 1998 (1,948,979) $ 8.71
-----------
Options outstanding
at December 31, 1998 3,833,484 $11.28
Effect of Spin-off of
Priority Healthcare (1) 3,193,251
-----------
Converted options outstanding
at December 31, 1998 7,026,735 $ 6.15
===========
Forfeited during 1999 (75,493) $13.54
Granted during 1999 1,362,361 $18.57
Exercised during 1999 (1,055,623) $ 5.48
=============================
Options outstanding
at December 31, 1999 7,257,980 $ 8.51
=============================
Exercisable
at December 31, 1999 4,868,072 $ 5.82
=============================
Available for grant
at December 31, 1999 961,058
===========
</TABLE>
F-20
<PAGE>
(1) As a result of the spin-off of Priority, in order to preserve the economic
value of the outstanding stock options, effective after the close of business on
December 31, 1998, all such outstanding options were converted pursuant to anti-
dilution provisions contained in the various stock option plans. As these
options were converted in accordance with accounting principles issued by the
Financial Accounting Standards Board, no compensation expense was recorded as a
result of such conversion.
In certain cases, the exercise of stock options results in state and
federal income tax deductions to the Company on the difference between the
market price at the date of exercise and the option price. The tax benefits
obtained from these deductions of $4,476,000, $9,593,000 and $3,305,000 are
included in additional paid in capital in 1999, 1998 and 1997, respectively.
Additional information regarding the Company's options outstanding at
December 31, 1999 is shown below:
<TABLE>
<CAPTION>
Exercise Price Range
- ------------------------------------------------------------------------------------------------------
$.59 $2.93 - $5.68 $7.48 - $12.88 $16.75 - $23.95 Total
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Number of options
outstanding 192,329 3,666,198 2,157,335 1,242,118 7,257,980
Weighted average
exercise price $ .59 $ 4.80 $ 9.31 $ 19.26 $ 8.51
Weighted average
remaining
contractual life 6.03 5.63 8.01 9.10 6.94
Number of shares
exercisable 192,329 3,369,938 1,296,474 9,331 4,868,072
Weighted average
exercisable price $ .59 $ 4.75 $ 9.29 $ 20.36 $ 5.82
</TABLE>
During 1998, the Company issued 350,000 (restated to 466,667 to reflect the
1998 stock split) restricted stock grants to certain key executives with a grant
date fair value of $35.25 per share. Pending the lapse of the forfeiture and
transfer restrictions established by the Compensation and Stock Option
Committee, the grantee generally had all the rights of a shareholder, including
the right to vote the shares and the right to receive all dividends thereon.
Upon issuance of the restricted stock grants, unearned compensation equivalent
to the market value at the date of grant was recorded as unamortized value of
restricted stock and was charged to earnings over the period during which the
restrictions lapsed. Compensation expense related to these restricted stock
grants of $1.6 million was recorded in the first nine
F-21
<PAGE>
months of 1998. The remaining $11.1 million was recorded in the fourth quarter
of 1998 as part of the unusual items when the lapse of the forfeiture and
transfer restrictions on the restricted stock was accelerated by the
Compensation and Stock Option Committee.
Priority's stock option plans. Presented below is information concerning
Priority's stock option plans for the years ended December 31, 1998 and 1997.
The information has not been updated to reflect events subsequent to December
31, 1998.
On August 25, 1997, Priority's Board of Directors and the then sole
shareholder (the Company) adopted Priority's 1997 Stock Option and Incentive
Plan (the "1997 Stock Option Plan"). The 1997 Stock Option Plan reserved for
issuance 1,250,000 shares of Priority Class B common stock, subject to
adjustment in certain events. The 1997 Stock Option Plan provided for the grant
of options to purchase shares of Class B common stock and restricted shares of
Class B common stock to officers, key employees and consultants of Priority.
Stock options granted under the 1997 Stock Option Plan were either options
intended to qualify for federal income tax purposes as "incentive stock options"
or options not qualifying for favorable tax treatment ("nonqualified stock
options"). No individual participant could receive awards for more than 300,000
shares in any calendar year.
Also on August 25, 1997, Priority's Board of Directors and the then sole
shareholder (the Company) adopted Priority's Outside Directors Stock Option Plan
("the Priority Directors Plan"). The number of shares of Priority's Class B
common stock authorized for issuance pursuant to the Priority Directors Plan was
25,000. Each eligible director was granted an option to purchase 1,000 shares of
Priority's Class B common stock on June 1 of 1998. The option exercise price per
share was equal to the fair market value of one share of Class B common stock on
the date of grant. Each option became exercisable six months following the date
of grant and will expire 10 years following the date of grant.
On September 15, 1998, Priority's Board of Directors adopted the Broad
Based Stock Option Plan, which reserved for issuance 400,000 shares of Priority
Class B common stock. The Broad Based Stock Option Plan provided for the grant
of nonqualified stock options to key employees who were not officers or
directors of Priority or its affiliates. The number of shares which could be
granted under the Broad Based Plan during any calendar year could not exceed
40,000 shares to any one person.
F-22
<PAGE>
Changes in stock options under all of Priority's plans through December 31,
1998 are shown below:
<TABLE>
<CAPTION>
Number Option price
of shares per share
- ------------------------------------------------------------------------
<S> <C> <C>
Options outstanding
at December 31, 1996
Forfeited during 1997 (13,800) $ 14.50 to $14.50
Granted during 1997 473,050 $ 14.50 to $15.00
Exercised during 1997
-------------
Options outstanding
at December 31, 1997 459,250 $ 14.50 to $15.00
=============
Forfeited during 1998 (29,120) $ 14.50 to $20.00
Granted during 1998 601,953 $ 12.24 to $20.00
Exercised during 1998
-------------
Options outstanding
at December 31, 1998 1,032,083 $ 12.24 to $20.00
=============
</TABLE>
NOTE 13 - COMMITMENTS
The Company leases warehouse and office space under noncancelable operating
leases expiring at various dates through 2005, with options to renew for various
periods.
On April 30, 1999, the Company sold its corporate office building to an
unrelated party for approximately net book value and signed a 15 year lease for
the top two floors of the building. The lease meets the criteria of a
capitalized lease and resulted in the recording of an asset and liability in the
amount of the present value of minimum lease payments of $13.4 million. The
asset is being amortized over the term of the lease.
F-23
<PAGE>
The following is a summary of the future minimum lease commitments under
capitalized leases and under operating leases as of December 31, 1999:
Year ended December 31, Capitalized Operating
Leases Leases
- -------------------------------------------------------------------
(in thousands)
2000 $ 1,221 $ 2,956
2001 1,221 2,625
2002 1,221 1,963
2003 1,221 1,568
2004 1,322 982
Later years 13,916 264
-------- -------
Total minimum lease payments 20,122 $10,358
-------- =======
Imputed interest 6,998
--------
Present value of minimum capitalized
lease obligations $13,124
========
The consolidated rent expense for the years ended December 31, 1999, 1998
and 1997 was $2,414,000, $2,961,000 and $2,615,000, respectively.
Prior to the sale of the corporate office building on April 30, 1999, the
Company received rental income of $313,000 from operating lease agreements for
the bottom three floors of the building.
NOTE 14 - MAJOR CUSTOMERS
The BWI segment services customers in 48 states and Puerto Rico from its 18
distribution centers located in 14 states. The Nuclear Pharmacy segment operates
specialized pharmacies in 13 states. The principal customers of the BWI segment
are chain drug companies that operate their own warehouses. Other customers
include independent drug stores, chain drug stores, supermarkets and mass
merchandisers with their own pharmacies, hospitals, clinics, HMOs, state and
federal government agencies and other health care providers. The following chain
drug warehouse customers each accounted for over 10% of the Company's net sales
during the years shown: Eckerd Corporation (16%) and CVS (21%) in 1999; Eckerd
Corporation (18%) and CVS (17%) in 1998; and CVS (22%), Rite Aid Corporation
(18%) and Eckerd Corporation (16%) in 1997. Sales to these customers aggregated
37%, 35% and 56% of net sales in 1999, 1998 and 1997, respectively. The Company
sells inventory to its chain drug warehouse and other customers on various
payment terms. This entails accounts receivable exposure, especially if any of
its chain warehouse customers encounter financial difficulties. Although the
Company monitors closely the creditworthiness of its major customers and, when
feasible, obtains security interests in the inventory sold, there can be no
assurance
F-24
<PAGE>
that the Company will not incur the write-off or writedown of chain drug
accounts receivable in the future.
During the second quarter of 1998, Rite Aid informed the Company that Rite
Aid signed a supply agreement with another wholesaler that began in May 1998. In
1997, Rite Aid comprised 18% of the Company's sales. Sales to Rite Aid were
predominantly to their warehouses. The loss of this customer did not have a
material adverse impact on the Company's results of operations.
NOTE 15 - STATEMENT OF CASH FLOWS
Cash paid for interest expense and income taxes was as follows:
December 31, 1999 1998 1997
(in thousands)
Interest $20,730 $20,330 $14,697
Income taxes $19,871 $15,017 $16,935
Presented below is a brief discussion of recent acquisitions by the
Company. The purchase price has been allocated based on a determination of the
fair value of the assets acquired and liabilities assumed. The goodwill
associated with these acquisitions is being amortized on a straight line basis
not exceeding 40 years. All acquisitions were treated as purchases and the
financial statements include the results of operations from the respective
effective date of acquisition. Results of operations of the acquired companies
from January 1 of the year of acquisition to the effective dates of the
transactions are not material to the consolidated results of operations of the
Company for the respective years.
In January 1996, the Company formed a new subsidiary, National Infusion
Services, Inc. ("NIS"). Effective February 8, 1996, the Company through its NIS
subsidiary purchased the assets of the infusion services division of Infectious
Disease of Indiana P.S.C. NIS provided quality care to patients in a variety of
settings. In February 1997, the corporate name was changed from NIS to Priority
Healthcare Services Corporation. The Company acquired the assets of NIS for
approximately $9 million in cash and incurred a long-term obligation of
approximately $1.5 million, resulting in approximately $9.8 million in
intangible assets. As discussed in Note 6 and Note 9 above, the remaining
balance of the intangible assets and the long-term obligation were written off
as part of the unusual items caption in the fourth quarter of 1998.
Effective July 31, 1997, the Company purchased substantially all of the
operating assets and assumed most of the liabilities and contractual obligations
of Tennessee Wholesale Drug Company ("TWD"). The Company expended approximately
$27 million for the acquisition of TWD, which approximated the fair value of the
net assets acquired. During 1998, the Company closed the TWD divisions located
in Baltimore, Maryland and Tampa, Florida. The customers of
F-25
<PAGE>
these divisions are serviced from existing facilities. The Company recognized a
liability related to the closure of the facilities of $413,000 as of December
31, 1997. The Company offered all employees an opportunity to interview for
openings elsewhere in the Company and agreed to pay a lump sum relocation cost
to those that relocated. Employees who did not relocate and worked up to the
designated date of his/her separation of employment received a benefits and
compensation package based on his or her tenure with the Company. The plan also
included operational and data processing costs associated with the closure. Both
facilities were closed in 1998 and the costs associated with those closures were
paid and approximated the liability established.
Effective August 6, 1997, Priority acquired substantially all of the
operating assets and assumed most of the liabilities of Grove Way Pharmacy,
Inc., a specialty distributor of vaccines and injectables located in Castro
Valley, California. The amount expended approximated the fair value of the net
assets acquired.
In 1997, Central Pharmacy acquired certain assets and assumed certain
liabilities of Nu-Scan, Inc., Sholars Drugs, Inc. and Alpha Nuclear Pharmacy,
Inc. Aggregate consideration for these transactions was approximately $666,000,
consisting of approximately $441,000 in cash (including $25,000 paid in 1998)
and a note payable for $225,000. Central Pharmacy recorded $60,000 as noncompete
agreements in accordance with the terms of the asset purchase and other related
agreements. The remainder of the excess of the cost over the fair value of net
assets acquired of approximately $612,000 has been recorded as goodwill and is
being amortized on a straight-line basis over 20 years.
In December 1998, Central Pharmacy acquired the remaining interest in its
50% owned affiliate, Central Source Pharmacy Services, LLC for cash
consideration of approximately $877,000. The excess of cost over the fair value
of net assets acquired of approximately $780,000 has been recorded as goodwill
and is being amortized on a straight-line basis over 20 years.
NOTE 16 - LEGAL PROCEEDINGS
In a consolidated class action filed in the United States District Court
for the Northern District of Illinois in 1993, the Company, other pharmaceutical
wholesalers and pharmaceutical manufacturers were named as defendants, In re
-----
Brand Name Prescription Drugs Litigation, MDL 997. Plaintiffs alleged that
- ----------------------------------------
pharmaceutical manufacturers and wholesalers conspired to fix prices of brand-
name prescription drugs sold to retail pharmacies at artificially high levels
in violation of the federal antitrust laws. The plaintiffs sought injunctive
relief, unspecified treble damages, costs, interest and attorneys' fees. The
Company denied the complaint allegations.
Several of the manufacturer defendants and the class plaintiffs have
reached settlement agreements. Under these agreements, the settling
manufacturer defendants retain certain contingent liabilities under the October
21, 1994 agreement discussed below. The trial against
F-26
<PAGE>
the remaining defendants, including the Company, began on September 14, 1998. On
November 30, 1998, the Court granted all remaining defendants' motions for
judgments as a matter of law, dismissing all In re Brand Name Prescription Drugs
----------------------------
class claims against the Company and other defendants. The class plaintiffs
appealed the Court's ruling and, on July 13, 1999, the appeals court dismissed
the wholesalers, including the Company, from the case. On February 22, 2000, the
United States Supreme Court denied the plaintiffs' petition for certiorari, thus
concluding the In re Brand Name Prescription Drugs class action litigation.
-----------------------------------
At this time, the Company is a defendant in 115 additional cases brought by
plaintiffs who "opted out" of the federal class action described above. One
hundred eleven of these complaints contain allegations and claims for relief
that are substantially similar to those in the federal class action. The four
remaining complaints add allegations that the defendants' conduct violated state
law. The damages period in these cases begins in October 1993. The Company has
denied the allegations in all of these complaints. Discovery in the opt out
cases is currently ongoing and no trial dates have yet been scheduled.
On November 20, 1997, two additional complaints were filed in the MDL 997
proceeding by Eckerd Corporation and American Drug Stores naming certain
pharmaceutical manufacturers and wholesalers, including the Company, as
defendants. These complaints contain allegations and claims for relief that are
substantially similar to those in the federal class action. The Company has
denied the allegations in these complaints. No trial date has been set in these
cases.
On July 1, 1996, the Company and several other wholesalers were joined as
the defendants in a seventh amended and restated complaint filed in the Circuit
Court of Greene County, Alabama, Durrett v. The Upjohn Company, Civil Action No.
-----------------------------
94-029. An order dismissing the action and taxing costs against the plaintiffs
was entered by the Circuit Court on November 29, 1999.
On June 16, 1998, a suit was filed in the Circuit Court for Cocke County,
Tennessee purportedly on behalf of consumers of prescription drugs in the
following states: Tennessee, Alabama, Arizona, Florida, Kansas, Maine, Michigan,
Minnesota, New Mexico, North Carolina, North Dakota, South Dakota, West Virginia
and Wisconsin. Graves et al. v. Abbott Laboratories et al., Civil Action No.
-------------------------------------------
25,109-II. The complaint charges that pharmaceutical manufacturers and
wholesalers, including the Company, engaged in a price-fixing conspiracy in
violation of Tennessee's Trade Practices Act and Consumer Protection Act, and
the unfair or deceptive trade practices statutes of the other jurisdictions
named therein. The Company has denied the allegations of the complaint and all
proceedings in this suit have been stayed until further order of the Circuit
Court.
On October 21, 1994, the Company entered into an agreement with the other
wholesalers and pharmaceutical manufacturers covering all of the cases listed
above. Among other things, the agreement provides that for all judgments that
might be entered against both the
F-27
<PAGE>
manufacturer and wholesaler defendants, the Company's total exposure for joint
and several liability is limited to $1 million and the wholesaler defendants are
indemnified for $9 million in related legal fees and expenses. As a result of
the previously noted settlements, we have periodically received reimbursement of
our legal fees and expenses in excess of our proportionate share of the $9
million, and we expect to receive reimbursement of substantially all of such
fees and expenses in the future.
The Company is unable to form a reasonably reliable conclusion regarding
the likelihood of a favorable or unfavorable outcome of these cases, each of
which is being defended vigorously. The Company believes the allegations of
liability are without merit with regard to the wholesaler defendants and that
the attendant liability of the Company, if any, would not have a material
adverse effect on the Company's financial condition or liquidity. Adverse
decisions, although not anticipated, could have a material adverse effect on the
Company's results of operations.
On October 7, 1996, the Company and its subsidiary, National Infusion
Services (now known as Priority Healthcare Services Corporation) ("PHSC"), were
named as defendants in an action filed by Thomas G. Slama, M.D. in the Superior
Court of Hamilton County, Indiana. Dr. Slama is a former director of the Company
and formerly was Chief Executive Officer and President of PHSC. The complaint
alleged breach of contract and defamation arising from the termination of Dr.
Slama's employment with PHSC in October 1996. On October 26, 1998, Dr. Slama
filed a Second Amended Complaint which added Priority and William E. Bindley as
defendants and stated additional claims for breach of contract, breach of oral
contract, breach of fiduciary duty, securities fraud and conversion. Pursuant to
an Indemnification and Hold Harmless Agreement the Company indemnified and held
harmless Priority and its subsidiaries from and against any and all costs,
damages, charges and expenses (including without limitation legal and other
professional fees) which Priority might incur or which may be charged against
Priority in any way based upon, connected with or arising out of the lawsuit
filed by Dr. Slama. The Company, PHSC, Priority and Mr. Bindley answered the
complaint, denied the merits of Dr. Slama's claims, and also filed a
counterclaim against Dr. Slama which sought, among other things, declaratory
relief, compensatory and (in some instances) treble damages, punitive damages,
attorneys' fees, interest and costs. On December 31, 1998, a Settlement
Agreement was executed by and among the parties named above pursuant to which
mutual releases were obtained, and on January 4, 1999, a one-time payment of
$875,000 was made by the Company to Dr. Slama. The corresponding Joint
Stipulation of Dismissal was approved by the Court on January 11, 1999. This one
time payment, and approximately $150,000 of legal costs, were included in the
unusual item charge recorded in the fourth quarter of 1998.
The Company has been advised that it is a potential defendant in an ongoing
grand jury investigation being conducted by the U.S. Attorney's Office in Las
Vegas, NV. The investigation concerns transactions between wholesale
pharmaceutical distributors and licensed institutional pharmacies known as
closed-door pharmacies. Closed-door or institutional pharmacies are entitled to
purchase pharmaceuticals at a discount from wholesale prices, but typically have
an
F-28
<PAGE>
agreement with the manufacturers to service only their own long-term care
patients. Wholesalers seek chargeback credits from the manufacturers for sales
to closed-door pharmacies.
The Company understands that the government's inquiry focuses principally
on whether pharmaceutical manufacturers have been defrauded by institutional or
closed-door pharmacies, which allegedly resold discount-priced pharmaceutical
drugs at a profit in violation of agreements with pharmaceutical manufacturers
to purchase the product solely for their own use. The government is examining
whether the Company, through any of its employees, participated in these
transactions by selling discount-priced pharmaceutical drugs with knowledge of
the pharmacies' plans to resell the product at a profit. These sales of excess
pharmaceutical drugs were allegedly made to alternate source vendors that, in
turn, sold the product in the secondary market to numerous wholesale
distributors and other customers.
To date, the government's investigation has been substantially focused on
sales that the Company made at the San Dimas, California division of Bindley
Western Drug Company to certain institutional pharmacies located in California
and Nevada, principally between 1995 and 1997. The Company no longer employs the
two managers who were primarily involved in the questioned sales. One was
terminated by the Company approximately two years ago for violation of the
Company's ethics code, and the other abruptly resigned in October 1999 during
the investigation of this matter. The Company has determined that sales to
institutional pharmacies served by the San Dimas division of Bindley Western
Drug Company represented less than 1% of total Company sales during the period
in question. The Company has further determined that no related business has
been conducted with these accounts for an extended period.
The Company believes that its two former managers have admitted to certain
wrongdoing in connection with their activities while employed by the Company.
The Company is cooperating with the government and has undertaken its own
investigation. At this stage of the government's investigation, the Company does
not believe it is possible to predict or determine the outcome, resolution or
timing of the final resolution of this matter. The Company is currently unable
to estimate the range of any potential loss, the amount of which could have a
material adverse effect on the Company's financial condition, results of
operations and/or cash flows.
We are also subject to ordinary and routine lawsuits and governmental
inspections, investigations and proceedings incidental to our business, the
outcome of which should not have a material adverse effect on our financial
condition, results of operations, or cash flows.
F-29
<PAGE>
NOTE 17 - EARNINGS PER SHARE
The following is a reconciliation of the numerators and denominators of the
basic and diluted earnings per share computations for 1999, 1998 and 1997.
<TABLE>
<CAPTION>
1999 1998 1997
- ----------------------------------------------------------------------------------------------
(in thousands, except per share data)
<S> <C> <C> <C>
Basic:
Net earnings $ 38,296 $ 22,236 $ 24,506
Weighted shares outstanding 30,556,415 28,728,979 22,912,237
Shares issued in
Central Pharmacy merger 2,922,055 2,922,055 2,922,055
Basic shares Outstanding 33,478,470 31,651,034 25,834,292
Per share amount $ 1.14 $ .70 $ .95
Diluted:
Net earnings $ 38,296 $ 22,236 $ 24,506
6 1/2% convertible
debentures 1,889
Diluted earnings $ 38,296 $ 22,236 $ 26,395
Weighted shares outstanding 30,556,415 28,728,979 22,912,237
Debentures 4,193,297
Shares issued in
Central Pharmacy merger 2,922,055 2,922,055 2,922,055
Stock Options 2,989,169 1,708,990 1,862,446
Restricted Stock 148,644
Diluted Shares 36,467,639 33,508,668 31,890,035
Per share amount $ 1.05 $ .66 $ .83
</TABLE>
The earnings per share for 1998 and 1997 have been restated to give effect for
the 4-for-3 stock split on June 25, 1999 and the earnings per share for 1997 has
been restated to give effect for the 4-for-3 stock split on June 3, 1998.
See Note 12 regarding changes to outstanding options at the close of business on
December 31, 1998.
F-30
<PAGE>
NOTE 18 - SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
The following table presents the quarterly financial data for 1999 and 1998.
<TABLE>
<CAPTION>
First Second Third Fourth
Quarter Quarter Quarter Quarter
- ----------------------------------------------------------------------------------------------------
(in thousands, except per share data)
<S> <C> <C> <C> <C>
1999
Net sales $1,985,165 $2,055,841 $2,145,845 $2,320,754
Gross margin 51,740 53,724 55,481 58,816
Net earnings 9,704 9,810 8,528 10,251
Earnings per share:
Basic (1) $ 0.29 $ 0.29 $ 0.25 $ 0.30
Diluted (1) 0.27 0.27 0.23 0.29
1998
Net sales $1,969,157 $1,856,142 $1,821,594 $2,007,328
Gross margin 46,217 50,842 51,896 56,933
Net earnings 8,007 9,069 8,763 (3,603)
Earnings per share:
Basic (1) $ 0.26 $ 0.29 $ 0.28 $ (0.11)
Diluted (1) 0.24 0.27 0.26 (0.11)
</TABLE>
(1) The earnings per share for first quarter of 1998 have been restated to give
effect for the 4-for-3 stock split effected in the form of a dividend on June 3,
1998 to shareholders of record on May 21, 1998. The earnings per share for 1998
and the first quarter of 1999 have been restated to give effect for the 4-for-3
stock split effected in the form of a dividend on June 25, 1999 to shareholders
of record on June 11, 1999.
F-31
<PAGE>
Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
March 24, 2000 BINDLEY WESTERN INDUSTRIES, INC.
By /s/ William E. Bindley
-----------------------------
William E. Bindley
Chairman, President
and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
<TABLE>
<S> <C> <C>
Signature Title Date
/s/ William E. Bindley
- ----------------------
William E. Bindley Chairman of the Board and President (Principal
Executive Officer); Director March 24, 2000
/s/ William F. Bindley, II
- --------------------------
William F. Bindley, II Director March 24, 2000
/s/ Keith W. Burks
- ------------------
Keith W. Burks Executive Vice President; Director March 24, 2000
/s/ Seth B. Harris
- ------------------
Seth B. Harris Director March 24, 2000
/s/ Robert L. Koch, II
- ----------------------
Robert L. Koch, II Director March 24, 2000
/s/ Michael D. McCormick
- ------------------------
Michael D. McCormick Executive Vice President, General Counsel and
Secretary; Director March 24, 2000
/s/ J. Timothy McGinley
- -----------------------
J. Timothy McGinley Director March 24, 2000
/s/ James K. Risk, III
- ----------------------
James K. Risk, III Director March 24, 2000
/s/ Thomas J. Salentine
- -----------------------
Thomas J. Salentine Executive Vice President and Chief Financial
Officer (Principal Accounting and Financial March 24, 2000
Officer); Director
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
/s/ K. Clay Smith
- -----------------
K. Clay Smith Director March 24, 2000
/s/ Carolyn Woo
- -----------------
Carolyn Woo Director March 24, 2000
</TABLE>
<PAGE>
INDEX TO EXHIBITS (12/31/99 10-K)
<TABLE>
<CAPTION>
Page No.
Exhibit This
No. Description Filing
- ---------- --------------------------------------------------------------- ---------
<S> <C> <C>
3-A 1 (i)Amended and Restated Articles of Incorporation of
Registrant....................................................
2 (ii)Amendment to Restated Articles of Incorporation
increasing number of authorized shares........................
3 (iii)Amendment to Restated Articles of Incorporation
establishing terms of Class A Preferred Stock.................
17 (iv)Amendment to Restated Articles of Incorporation
increasing number of authorized shares........................
15 (v)Amendment to Restated Articles of Incorporation increasing
number of authorized shares...................................
3-B 18 Restated By-Laws of Registrant, as amended to date............
4-A 16 (i)Third Amended and Restated Credit Agreement, dated as of
December 28, 1998, by and among Registrant, NationsBank,
N.A., The Bank of Tokyo-Mitsubishi, Ltd., KeyBank National
Association, Suntrust Bank, Central Florida, N.A., National
City Bank of Indiana, Fifth Third Bank, Indiana, (f/k/a The
Fifth Third Bank of Central Indiana), The Northern Trust
Company, NBD Bank, N.A., and Bank One, Indiana, NA, as Agent..
(ii)First Amendment to Third Amended and Restated Credit
Agreement, dated as of December 16, 1999, by and among
Registrant, Bank One, Indiana, NA, KeyBank National
Association, Suntrust Bank, Central Florida, N.A., National
City Bank of Indiana, Fifth Third Bank, Indiana, The Northern
Trust Company, The Huntington National Bank and Comerica
Bank..........................................................
4-B 16 (i)Receivables Purchase Agreement, dated as of December 28,
1998, among Bindley Western Funding Corporation, Falcon Asset
Securitization Corporation, NBD Bank, N.A., KeyBank National
Association, Comerica Bank, NationsBank, N.A., Fifth Third
Bank, Indiana, National City Bank of Indiana, and The First
National Bank of Chicago, as Agent............................
</TABLE>
E-1
<PAGE>
<TABLE>
<CAPTION>
Page No.
Exhibit This
No. Description Filing
- ---------- --------------------------------------------------------------- ---------
<S> <C> <C>
(ii)Amendment No. 1 to Receivables Purchase Agreement, dated
as of December 15, 1999, among Bindley Western Funding
Corporation, Falcon Asset Securitization Corporation, and Bank
One, NA..................................................................
4-C Note Purchase Agreement, dated as of December 15, 1999,
between Registrant and Nationwide Life Insurance Company,
relating to 7.93% Senior Notes due December 27, 2004 of
Registrant...............................................................
Registrant agrees to furnish to the Securities and Exchange
Commission, upon request, a copy of each instrument with
respect to other issues of Registrant's long-term debt, the
authorized principal amount of which exceeds 10% of Registrant's
total assets on a consolidated basis.....................................
10-A* 6 (iii)Employee Benefit Trust Agreement of Registrant dated
November 30, 1990........................................................
5 (v)Split Dollar Insurance Agreement dated December 11, 1992
between Registrant and William F. Bindley, II and K. Clay
Smith as trustees of the William E. Bindley Irrevocable Trust............
5 (vi)The William E. Bindley Trust Agreement dated December 11,
1992 between William E. Bindley, grantor, and William F. Bindley,
II and K. Clay Smith, trustees...........................................
10-B* 7 (i)Nonqualified Stock Option Plan of Registrant..........................
10 (ii)Amendment to the Nonqualified Stock Option Plan of Registrant........
10-C* 7 (i)Incentive Stock Option Plan of Registrant.............................
10 (ii)Amendment to the Incentive Stock Option Plan of Registrant...........
10-D* 8 (i)1987 Stock Option and Incentive Plan of Registrant....................
9 (ii)Amendment to 1987 Stock Option and Incentive Plan......................
</TABLE>
E-2
<PAGE>
<TABLE>
<CAPTION>
Page No.
Exhibit This
No. Description Filing
- ---------- --------------------------------------------------------------- ---------
<S> <C> <C>
9 (iii)Outside Directors Stock Option Plan of Registrant............
10 (iv)Amendment to the 1987 Stock Option and Incentive Plan of
Registrant........................................................
24 (v)First Amendment to Outside Directors Stock Option Plan of
Registrant........................................................
10-E* 5 (i)1993 Stock Option and Incentive Plan of Registrant.............
10 (ii) First Amendment to the 1993 Stock Option and Incentive Plan
of Registrant.....................................................
14 (iii) Second Amendment to the 1993 Stock Option and Incentive
Plan of Registrant................................................
20 (iv)Third Amendment to the 1993 Stock Option and Incentive Plan
of Registrant.....................................................
21 (v)Fourth Amendment to the 1993 Stock Option and Incentive Plan
of Registrant.....................................................
10-H 4 Distribution Agreement, dated as of October 23, 1998, between
Registrant and Priority Healthcare Corporation.
10-I 23 Revolving Credit Promissory Note between Registrant (Maker) and
Priority Healthcare Corporation (Holder)..........................
10-J* 13 Form of Termination Benefits Agreement, dated April 1, 1996,
between Registrant and each of William E. Bindley, Keith W.
Burks, Michael D. McCormick, and Thomas J. Salentine..............
10-K Agreement of Purchase and Sale and Joint Escrow Instructions
("Purchase Agreement"), dated March 30, 1999, between College
Park Plaza Associates, Inc. and College Park Plaza, Inc.,
relating to the sale of Registrant's headquarters building
located at 8909 Purdue Road, Indianapolis, Indiana; First
Amendment to Purchase Agreement, dated April 12, 1999, Second
Amendment to Purchase Agreement, dated April 22, 1999, and Third
Amendment to Purchase Agreement, dated April 30, 1999.............
</TABLE>
E-3
<PAGE>
<TABLE>
<CAPTION>
Page No.
Exhibit This
No. Description Filing
- ---------- --------------------------------------------------------------- ---------
<S> <C> <C>
10-L Lease Agreement, dated April 30, 1999, between Registrant and
College Park Plaza, LLC, relating to the lease of Registrant's
headquarters located at 8909 Purdue Road, Indianapolis,
Indiana...........................................................
10-Y 12 Collective Bargaining Agreement dated October 21, 1994 between
J.E. Goold & Co. and Truck Drivers, Warehousemen and Helpers
Union Local No. 340...............................................
10-Z* 10 (i)401(k) Profit Sharing Plan (Nonstandardized) Adoption
Agreement of Registrant, effective January 1, 1994................
11 (ii)Amendment to page 4 of the 401(k) Profit Sharing Plan
(Nonstandardized) Adoption Agreement of Registrant, effective
January 1, 1994...................................................
12 (iii)401(k) Profit Sharing Plan (Nonstandardized) Adoption
Agreement of Registrant, effective January 1, 1996................
12 (iv)Amendment to page 6 of the 401(k) Profit Sharing Plan
(Nonstandardized) Adoption Agreement of Registrant, effective
January 1, 1996...................................................
19 (v)Amendment to Item B.3 of the 401(k) Profit Sharing Plan
(Nonstandardized) Adoption Agreement of Registrant, effective
October 1, 1997...................................................
19 (vi)401(k) Profit Sharing Plan (Nonstandardized) Participation
Agreement of Registrant, effective July 31,1997...................
19 (vii)401(k) Profit Sharing Plan (Nonstandardized) Participation
Agreement of Registrant, effective August 8, 1997.................
22 (viii)Profit Sharing Plan of Bindley Western Industries, Inc. &
Subsidiaries (PRISM(R) Prototype Retirement Plan and Trust).......
25 (ix)Spin-off Amendment to the Profit Sharing Plan of Registrant
effective December 11, 1998.......................................
</TABLE>
E-4
<PAGE>
<TABLE>
<CAPTION>
Page No.
Exhibit This
No. Description Filing
- ---------- -------------------------------------------------------------------- ----------
<S> <C> <C>
/25/ (x)Second Amendment to the Profit Sharing Plan of Registrant
effective December 31, 1999.........................................
/25/ (xi)Third Amendment to the Profit Sharing Plan of Registrant
effective January 1, 2000...........................................
10-AA* /11/ (i)Form of Profit Sharing Excess Plan and related Trust between
Registrant and each of William E. Bindley, Keith W. Burks,
Michael D. McCormick, and Thomas J. Salentine.......................
/11/ (ii)Form of 401(k) Excess Plan and Related Trust between Registrant
and each of William E. Bindley, Keith W. Burks, Michael D.
McCormick, and Thomas J. Salentine..................................
/12/ (iii)First Amendment to 401(k) Excess Plan..........................
/19/ (iv)Form of Profit Sharing Excess Plan, restated as of January
1,1996, between Registrant and each of William E. Bindley, Keith W.
Burks, Michael D. McCormick, Robert L. Myers, and Thomas J.
Salentine...........................................................
/19/ (v)Form of 401(k) Excess Plan, restated as of January 1, 1996,
between Registrant and each of William E. Bindley, Keith W. Burks,
Michael D. McCormick, Robert L. Myers, and Thomas J. Salentine......
10-BB* /16/ (i) 1998 Non-Qualified Stock Option Plan of Registrant, as
amended.............................................................
/26/ (ii) Amendment to 1998 Non-Qualified Stock Option Plan of
Registrant..........................................................
10-CC* /25/ Central Pharmacy Services, Inc. 1993 Stock Option Plan, as
amended.............................................................
21 List of subsidiaries of Registrant..................................
23 Written Consent of PricewaterhouseCoopers LLP.......................
27 Financial Data Schedule.............................................
</TABLE>
- -----------------------
*The indicated exhibit is a management contract, compensatory plan, or
arrangement required to be filed by Item 601 of Regulation S-K.
E-5
<PAGE>
/1/ The copy of this exhibit filed as the same exhibit number to the
Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30,
1987 is incorporated herein by reference.
/2/ The copy of this exhibit filed as Exhibit 4(a)(ii) to the Registrant's
Registration Statement on Form S-3 (Registration No. 33-45965) is
incorporated herein by reference.
/3/ The copy of this exhibit filed as Exhibit 1 to the Registrant's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1992 is incorporated
herein by reference.
/4/ The copy of this exhibit filed as Exhibit 10 to the Registrant's Current
Report on Form 8-K, as filed with the Commission on January 4, 1999, is
incorporated herein by reference.
/5/ The copy of this exhibit filed as the same exhibit number to the
Registrant's Annual Report on Form 10-K for the year ended December 31,
1992 is incorporated herein by reference.
/6/ The copy of this exhibit filed as the same exhibit number to the
Registrant's Annual Report on Form 10-K for the year ended December 31,
1990 is incorporated herein by reference.
/7/ The copy of this exhibit filed as the same exhibit number to the
Registrant's Registration Statement on Form S-1 (Registration No. 2-84862)
is incorporated herein by reference.
/8/ The copy of this exhibit filed as the same exhibit number to the
Registrant's Annual Report on Form 10-K for the year ended December 31,
1986 is incorporated herein by reference.
/9/ The copy of this exhibit filed as the same exhibit number to the
Registrant's Annual Report on Form 10-K for the year ended December 31,
1991 is incorporated herein by reference.
/10/ The copy of this exhibit filed as the same exhibit number to the
Registrant's Annual Report on Form 10-K for the year ended December 31,
1993 is incorporated herein by reference.
/11/ The copy of this exhibit filed as the same exhibit number to the
Registrant's Annual Report on Form 10-K for the year ended December 31,
1994 is incorporated herein by reference.
/12/ The copy of this exhibit filed as the same exhibit number to the
Registrant's Annual Report on Form 10-K for the year ended December 31,
1995 is incorporated herein by reference.
/13/ The copy of this exhibit filed as Exhibit 10-CC to the Registrant's
Quarterly Report on Form 10-Q for the quarter ended March 31, 1996 is
incorporated herein by reference.
E-6
<PAGE>
/14/ The copy of this exhibit filed as the same exhibit number to the
Registrant's Annual Report on Form 10-K for the year ended December 31,
1996 is incorporated herein by reference.
/15/ The copy of this exhibit filed as Exhibit 4 to the Registrant's Current
Report on Form 8-K, as filed with the Commission on August 23, 1999, is
incorporated herein by reference.
/16/ The copy of this exhibit filed as the same exhibit number to the
Registrant's Annual Report on Form 10-K for the year ended December 31,
1998 is incorporated herein by reference.
/17/ The copy of this exhibit filed as Exhibit 4.1 (iv) to the Registrant's
Registration Statement on Form S-8 (Registration No. 333-57975) is
incorporated herein by reference.
/18/ The copy of this exhibit filed as Exhibit 4.2 to the Registrant's
Registration Statement on Form S-8 (Registration No. 333-57975) is
incorporated herein by reference.
/19/ The copy of this exhibit filed as the same exhibit number to the
Registrant's Annual Report on Form 10-K for the year ended December 31,
1997 is incorporated herein by reference.
/20/ The copy of this exhibit filed as Exhibit 4.3 (iv) to the Registrant's
Registration Statement on Form S-8 (Registration No. 333-60279) is
incorporated herein by reference.
/21/ The copy of this exhibit filed as Exhibit 4.3 (v) to the Registrant's
Registration Statement on Form S-8 (Registration No. 333-60279) is
incorporated herein by reference.
/22/ The copy of this exhibit filed as Exhibit 4.3 to the Registrant's
Registration Statement on Form S-8 (Registration No. 333-57975) is
incorporated herein by reference.
/23/ The copy of this exhibit filed as Exhibit 10-G (ii) to the Registrant's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1998 is
incorporated herein by reference.
/24/ The copy of this exhibit filed as the same exhibit number to the
Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30,
1999 is incorporated herein by reference.
/25/ The copy of this exhibit filed as the same exhibit number to the
Registrant's Quarterly Report on Form 10-Q for the quarter ended September
30, 1999 is incorporated herein by reference.
/26/ The copy of this exhibit filed as Exhibit 4.3(ii) to the Registrant's
Registration Statement on Form S-8 (Registration No. 333-85379) is
incorporated herein by reference.
E-7
<PAGE>
Exhibit 4-A
FIRST AMENDMENT TO THIRD
------------------------
AMENDED AND RESTATED
--------------------
CREDIT AGREEMENT
----------------
THIS FIRST AMENDMENT TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT
("Amendment") is entered into as of December 16, 1999, by and among BINDLEY
WESTERN INDUSTRIES, INC., an Indiana corporation (the "Borrower"), BANK ONE,
INDIANA, NA, as successor by merger with NBD Bank, N.A. in its individual
capacity ("Bank One"), KEYBANK NATIONAL ASSOCIATION ("KeyBank"), SUNTRUST BANK,
CENTRAL FLORIDA, N.A. ("Suntrust"), NATIONAL CITY BANK OF INDIANA ("NCB"), FIFTH
THIRD BANK, INDIANA ("Fifth Third"), and THE NORTHERN TRUST COMPANY ("Northern
Trust") (Bank One, KeyBank, Suntrust, NCB, Fifth Third and Northern Trust
hereinafter collectively referred to as the "Banks" and each individually as a
"Bank"), THE HUNTINGTON NATIONAL BANK ("Huntington"), COMERICA BANK ("Comerica")
and BANK ONE, INDIANA, NA, as Agent for the Banks (in such capacity, the
"Agent") in order to provide as follows:
WHEREAS, the Borrower, the Banks, NATIONSBANK, N.A. ("Nationsbank") and the
Agent have entered into that certain Third Amended and Restated Credit Agreement
dated as of December 28, 1998 (the "Agreement"); and
WHEREAS, the Borrower, the Banks, Huntington, Comerica and the Agent now
desire to amend the Agreement to (i) exclude Nationsbank as a member of the
syndicate bank group providing the credit facilities to the Borrower, (ii)
include Huntington and Comerica as members of the syndicate bank group providing
the credit facilities to the Borrower; and (iii) amend certain provisions of the
Agreement.
NOW, THEREFORE, the Borrower, the Banks, Huntington, Comerica and the Agent
agree as follows:
1. Definitions. Unless otherwise specifically defined herein, all defined
-----------
terms used in this Amendment shall have the respective meanings as set forth in
the Agreement.
2. Amended Definitions. (a) The following definitions appearing in
-------------------
Section 1.01 of the Agreement are hereby amended and restated in its entirety as
follows:
"Applicable Spread" means that number of Basis Points to be taken into
-----------------
account in determining the per annum rate at which interest will accrue on the
Revolving Credit or the Swing Line, as the case may be, determined by reference
to the implied senior debt rating of the Borrower as reported quarterly by
Standard & Poors, Inc. in accordance with the following table:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
Senior Debt
Tier Rating Base Rate LIBOR* Federal Funds**
---- ------ --------- ----- -------------
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 BBB- and above: 0.0 65 b.p 65 b.p.
- ----------------------------------------------------------------------------------------
2 BB+ and below or
unrated: 0.0 90 b.p 90 b.p.
- ----------------------------------------------------------------------------------------
</TABLE>
* applicable to LIBOR Advances only.
<PAGE>
** applicable to Swing Line Advances only.
Initially, the Applicable Spread shall be as shown on Tier 2 indicated on the
above table. Thereafter, (a) with respect to a LIBOR Advance, the Applicable
Spread shall be determined on the basis of the report of Standard & Poors, Inc.
most recently delivered to the Agent prior to the first day of the LIBOR
Interest Period for which the interest rate is calculated with effect for the
entire LIBOR Interest Period, and, (b) with respect to a Base Rate Advance or a
Swing Line Advance, the Applicable Spread shall be determined on the basis of
the report of Standard & Poors, Inc. most recently delivered to the Agent prior
to the making of the Advance or Swing Line Advance with the Applicable Spread to
be adjusted thereafter, up or down as applicable, on the third Banking Day
following receipt by the Agent of a report which contains a change in the
Borrower's implied senior debt rating. In the event that the senior debt rating
of the Borrower as reported by Standard & Poors, Inc. is not available, the
Applicable Spread shall be the Applicable Spread as shown on Tier 2 indicated on
the above table and shall remain effective until such time as the implied senior
unsecured debt rating of the Borrower as reported by Standard & Poors, Inc.
becomes available.
"Banks" means Bank One, Indiana, NA, KeyBank National Association,
-----
Suntrust, Central Florida, N.A., National City Bank of Indiana, Fifth Third
Bank, Indiana, The Northern Trust Company, The Huntington National Bank and
Comerica Bank.
"Competitive Loan Note" means the promissory notes of the Borrower in favor
---------------------
of each Bank in the form of Exhibits "D-1" through "D-8" attached to this
----------------------------
Agreement, as amended, replaced, supplemented, or modified from time to
time, and "Competitive Loan Note" means any one of such Notes.
---------------------
"Revolving Note" means each promissory note to be executed by the Borrower
--------------
in favor of each Bank in the form of Exhibits "E-1" through "E-8" attached
----------------------------
hereto, as amended, replaced, supplemented or modified from time to time,
and Revolving Note means any one of such Notes.
--------------
"Swing Line Note" means a promissory note, in substantially the form of
---------------
Exhibit F attached hereto, duly executed by the Borrower and payable to the
---------
order of the Swing Line Bank in the amount of its Swing Line Commitment, as
amended, replaced, supplemented or modified from time to time.
"Termination Date" means the earlier to occur of (a) December 14, 2000, as
----------------
such date may hereafter be extended upon the mutual agreement of the
Borrower and all of the Banks in their sole discretion, and (b) the date on
which the Loans are terminated, accelerated or both pursuant to Article
VIII hereof.
(b) Section 1.01 of the Agreement is hereby supplemented by inclusion of
the following definition:
"First Amendment" means that certain First Amendment to Third Amended and
---------------
Restated Credit Agreement executed by and among the Borrower, the Banks,
Huntington and Comerica and the Agent as of December 16, 1999.
(3) All references in the Agreement to "NBD Bank" or "NBD Bank, N.A."
shall be amended to refer to "Bank One" or "Bank One, Indiana, NA".
<PAGE>
3. Amendment of Agreement. (a) Exhibits A, B and C attached to the
---------------------- -------------------
Agreement and as referenced in the definitions of "Competitive Bid",
"Competitive Bid Request" and "Competitive Bid Request by Agent", respectively,
appearing in Section 1.01 of the Agreement are hereby replaced with Exhibits A,
-----------
B and C attached to this Amendment.
- -------
(b) Section 2.1 of the Agreement is hereby amended and restated in
its entirety as follows:
2.01 Revolving Credit. Subject to the terms and conditions hereof,
----------------
including but not limited to the limitation stated in this Section 2.01 below
and Section 2.05(9) hereof, each Bank severally agrees to make Advances
(collectively, the "Revolving Credit") to the Borrower at any time and from time
to time on and after the date hereof to and including the Termination Date in an
aggregate principal amount at any one time outstanding not to exceed the Bank's
Commitment set forth opposite such Bank's name below:
<TABLE>
<CAPTION>
Amount of Percentage of
Bank Commitment Aggregate Commitment
---- ---------- --------------------
<S> <C> <C>
Bank One, Indiana, NA $ 30,000,000.00 20.0%
KeyBank National Association $ 31,000,000.00 20.6667%
Suntrust Bank, Central Florida, $ 35,000,000.00 23.3333%
N.A.
National City Bank of Indiana $ 10,000,000.00 6.6667%
Fifth Third Bank, Indiana $ 9,000,000.00 6.0%
The Northern Trust Company $ 15,000,000.00 10.0%
The Huntington National Bank $ 10,000,000.00 6.6667%
Comerica Bank $ 10,000,000,00 6.6667%
Total $150,000,000.00 100.0%
</TABLE>
The Revolving Credit is a revolving credit facility and subject to
Section 2.12 and within the limits of the Aggregate Commitment of the Banks, the
Borrower may repay and reborrow as Borrower may elect, provided that (y) all
Advances must mature no later than the Termination Date, and (z) the aggregate
outstanding principal balance of the Revolving Credit, the Competitive Bid
Facility and the Swing Line may not exceed $150,000,000.00.
(c) The first paragraph of Section 2.04 of the Agreement is hereby amended
and restated in its entirety as follows:
2.04 Competitive Bid Facility. In addition to the Revolving Credit
------------------------
and the Swing Line, the Borrower may, as set forth in this Section, request
the Banks at any time prior to the Termination Date to make offers to make
Competitive Bid Advances to the Borrower. The aggregate principal amount at
any one time outstanding under the Competitive Bid Facility shall not
exceed $60,000,000.00, and in no event may the aggregate outstanding
principal balances of
<PAGE>
the Competitive Bid Facility, the Revolving Credit and the Swing Line
exceed $150,000,000.00. The Banks may, but shall have no obligation to,
make such offers and the Borrower may, but shall have no obligation to,
accept any such offers in the manner set forth in this Section. Each
utilization of the Competitive Bid Facility by the Borrower shall serve to
reduce the available and unused Aggregate Commitment under the Revolving
Credit; provided, that neither the Pro Rata share of each Bank of the
Aggregate Commitment nor the amount of each Bank's Commitment shall be
altered by virtue of any Bank financing a Competitive Bid Advance.
(d) Section 2.04(g) of the Agreement is hereby amended and restated in its
entirety as follows:
(g) All Competitive Bid Advances shall reduce the Aggregate
Commitment, and at no time shall the sum of the aggregate
outstanding principal balances of the Revolving Credit, the Swing
Line and the Competitive Bid Facility exceed One Hundred Fifty
Million and No/100 Dollars ($150,000,000.00).
(e) Section 2.07 of the Agreement is hereby amended and restated in its
entirety as follows:
2.07 Fees.
----
(a) For the period from the date of the Amendment, to but excluding
the Termination Date, the Borrower shall pay to the Agent for the
account of each Bank a facility fee equal to 22.5 Basis Points
per annum calculated on the Aggregate Commitment. Such fees shall
be paid in advance with the first such payment due on the date of
hereof for the period from the date hereof through December 31,
1999, and thereafter calculated on a quarterly basis and paid in
advance on the last Banking Day of each December, March, June and
September.
(b) At any time and at all times that the outstanding principal
balance under the Revolving Credit exceeds Fifty Million and
No/100 Dollars ($50,000,000.00), the Borrower shall pay to the
Agent for the account of each Bank a utilization fee equal to
12.5 Basis Points per annum calculated on the entire principal
amount outstanding under the Revolving Credit. Such fees shall be
paid in arrears and calculated on a quarterly basis and paid on
the last Banking Day of each March, June, September and December,
beginning on December 31, 1999.
(c) The Agent may debit any demand deposit account of the Borrower on
the date such administrative, facility or usage fees are due in
payment of such fees, without further authority, and the Agent
shall promptly distribute (i) to each Bank its Pro Rata share of
each payment of the facility or utilization fee, and (ii) to the
Agent the amount of its administrative fee. Such fees shall be
calculated on the basis of a 360-day year and actual days
elapsed. All fees payable hereunder shall be non-refundable and
deemed to be earned in full upon payment except in the event of a
permanent reduction in the Aggregate Commitments as contemplated
in
-4-
<PAGE>
Section 2.15 hereof in which event Borrower shall be entitled to
a prorated refund of such fees.
-5-
<PAGE>
(d) The Borrower also agrees to pay to the Agent for the sole account
of the Agent and Banc One Capital Markets, Inc. (the "Arranger")
unless otherwise agreed between the Agent or the Arranger and any
Bank, the fees set forth in the Letter Agreement among the Agent,
the Arranger and the Borrower dated November 23, 1999, payable at
the times and in the amounts set forth therein.
(f) Schedule 1 referenced in Section 5.02 of the Agreement is
----------
replaced with Schedule 1 attached to this Amendment.
----------
(g) The Compliance Certificate referenced in Section 6.04(e) of the
Agreement, in the form attached to the Agreement as Exhibit G, is
---------
hereby replaced with Exhibit G attached to this Amendment.
---------
(h) Section 6.09 of the Agreement is hereby amended and restated in
its entirety as follows:
6.09 Consolidated Net Worth. Maintain at all times, a
----------------------
Consolidated Net Worth of not less than Two Hundred Ninety-
Five Million and 00/100 Dollars ($295,000,000.00); which
required minimum amount will increase as of the end of each
fiscal quarter of the Borrower, commencing with the quarter
ending December 31, 1999 by an amount equivalent to the sum
of (i) fifty percent (50.0%) of the Borrower's Consolidated
Net Income for such quarter (with no deduction on account of
negative Consolidated Net Income for a fiscal quarter), plus
(ii) one hundred percent (100.0%) of the net proceeds, cash
or otherwise, of all offerings and issuances of additional
equity by the Borrower and its Subsidiaries..
(i) Section 6.10 of the Agreement is hereby amended and restated in
its entirety as follows:
6.10 Consolidated Total Debt to Consolidated EBITDA. Maintain at
----------------------------------------------
all times a ratio of Consolidated Total Debt to Consolidated EBITDA
for the period of four (4) consecutive fiscal quarters most recently
ended on or prior to such determination date of not greater than 3.25
to 1.0.
(j) Subsection 7.01(f) of the Agreement is hereby amended and
replaced in its entirety as follows:
(f) Asset Backed Debt. Provided that the amount of financing
-----------------
under such transactions does not exceed at any one time
outstanding an amount equal to Five Hundred Million and
No/100 Dollars ($500,000,000.00) less the maximum principal
----
amount available under the Loans.
(k) Subsection 7.04(e) of the Agreement is hereby amended and
replaced in its entirety as follows:
(e) the transfer of an interest in accounts or notes receivable
by (i)(A) Special Services Company to the Borrower and (B)
the Borrower to Bindley Western Funding Corporation and (ii)
the transfer of such assets by Bindley Western Funding
Corporation to a conduit financier for fair market value and
with limited recourse, pursuant to the terms of the
<PAGE>
Transfer Agreements and Receivables Purchase Agreement,
provided that such transfer qualifies as a sale under GAAP
and that the amount of any related financing does not exceed
an amount equal to Five Hundred Million and 00/100 Dollars
($500,000,000.00) less the maximum principal amount
----
available under the Loans.
4. Representations and Warranties. By execution of this Amendment, the
------------------------------
Borrower represents and warrants that the representations and warranties stated
in Article V of the Agreement remain true and correct as of the date hereof and
that all references to the Agreement shall be deemed to refer to the Agreement
as amended by this Amendment. Further, the Borrower hereby makes the following
additional representations and warranties:
(a) Borrower has the requisite corporate power and authority to enter into
and execute and deliver, this Amendment and the new Revolving Notes to
Bank One, and the execution, delivery and performance of such
documents have been duly authorized by all requisite corporate action,
and are not in conflict with the terms of any charter, Articles of
Incorporation, By-Law or other organizational papers of the Borrower,
or any instrument or agreement to which the Borrower is a party or by
which the Borrower is bound or affected, and are valid and binding
obligations of the Borrower.
(b) The officers of the Borrower executing this Amendment and the
Revolving Notes as referenced in subsection (a) above, and any
certificate, instrument or agreement required to be delivered by the
Borrower hereunder or there under have been duly elected and appointed
and were fully authorized to execute the same as of the effective date
of each such agreement, certificate or instrument.
(c) No approval, consent, exemption or other action by, or notice to or
filing with, any governmental authority by the Borrower is necessary
in connection with the execution, delivery and performance of the
Borrower under this Amendment, the Revolving Notes as referenced in
subsection (a) above, or any other certificate, instrument or
agreement required to be delivered by the Borrower hereunder.
5. Conditions Precedent. As conditions precedent to the effectiveness of
--------------------
this Amendment, the Agents shall have received the following (in form and
substance satisfactory to the Agents and their counsel and the Banks and their
counsel and in sufficient numbers for each Bank to receive a copy with respect
to item (a) below);
(a) This Amendment duly executed by the Borrower and the Banks.
(b) The Revolving Notes substantially in the forms attached hereto as
Exhibits "E-1" - "E-8", each duly executed by the Borrower, payable to
----------------------
the order of each respective Bank in the amount of each respective
Bank's Commitment and dated the date of this Amendment.
(c) Such other documents, agreements and instruments as the Agents or any
Bank may reasonably request.
6. Reaffirmation of Agreement. Except as specifically modified hereby,
--------------------------
the Agreement shall remain in full force and effect, and the Borrower represents
and warrants that no Default or Event of Default
-7-
<PAGE>
exists or has occurred and is continuing as of the date of this Amendment.
Further, the Borrower acknowledges that as of the date of this Amendment there
are no existing claims, defenses, personal or otherwise, or rights of setoff
whatsoever with respect to the Loan Documents.
7. Counterparts. This Amendment may be executed in as many counterparts
------------
as may be deemed necessary or convenient and by the different parties hereto on
separate counterparts, each of which, when so executed, shall be deemed an
original, but all such counterparts shall constitute but one and the same
agreement.
IN WITNESS WHEREOF, the Borrower, the Banks and the Agent, by their
respective duly authorized officers, have executed this First Amendment to Third
Amended and Restated Credit Agreement effective as of the date and year first
written above.
BINDLEY WESTERN INDUSTRIES, INC.
By: /s/ Thomas J. Salentine
----------------------------------------------
Thomas J. Salentine, Executive Vice President
Address: 8909 Purdue Road
Indianapolis, Indiana 46268
Attn: Thomas J. Salentine
Telephone: (317) 704-4000
Fax: (317) 704-4603
-8-
<PAGE>
KEYBANK NATIONAL ASSOCIATION
By: /s/ Frank J. Jancar
-----------------------------------
Title: Vice President
-------------------------------
Address: 127 Public Square
Cleveland, Ohio 44114
Attn: Frank J. Jancar
Telephone: (216) 689-4442
Fax: (216) 689-4981
SUNTRUST BANK, CENTRAL FLORIDA, N.A.
By: /s/ Christopher A. Black
-----------------------------------
Title: Vice President and Director
--------------------------------
Address: 10 West Market Street
Suite 500
Indianapolis, Indiana 46204-2957
Attn: Christopher A. Black
Telephone: (317) 464-5248
Fax: (317) 464-5249
NATIONAL CITY BANK OF INDIANA
By: /s/ William E. Kennedy
-----------------------------------
Title: Vice President
--------------------------------
Address: One National City Center, Suite 200E
Indianapolis, Indiana 46255
Attn: William E. Kennedy
Telephone: (317) 267-7066
Fax: (317) 267-6249
<PAGE>
FIFTH THIRD BANK, INDIANA
By: /s/ Jonathan O. Speers
----------------------------------
Title: Vice President
-------------------------------
Address: 251 North Illinois Street
Suite 1000
Indianapolis, Indiana 46204
Attn: Jonathan O. Speers
Telephone: (317) 383-2424
Fax: (317) 383-2427
THE NORTHERN TRUST COMPANY
By: /s/ Candalario Martinez
----------------------------------
Title: Vice President
-------------------------------
Address: 50 South LaSalle Street
Floor B-2
Chicago, Illinois 60675
Attn: Candalario Martinez
Telephone: (312) 557-2816
Fax: (312) 444-7028
THE HUNTINGTON NATIONAL BANK
By: /s/ Lori L. Abbott
----------------------------------
Title: Vice President
-------------------------------
Address: 201 North Illinois Street, Suite 1800
Indianapolis, Indiana 46204
Attn: Lori Abbott
Telephone: (317) 237-2500
Fax: (317) 237-2505
COMERICA BANK
<PAGE>
By: /s/ Kathleen M. Kasperek
---------------------------------------
Title: Account Officer
------------------------------------
Address: 500 Woodward Avenue
Mail Code 3269
Detroit, Michigan 48226
Attn: Kathleen M. Kasperek
Telephone: (313) 222-3808
Fax: (313) 222-9516
BANK ONE, INDIANA, NA, Individually and as Agent
By: /s/ Scott A. Dvornik
---------------------------------------
Title: Vice President
------------------------------------
Address: One Indiana Square
P.O. Box 7700, 13/th/ Floor
Indianapolis, Indiana 46266
Attn: Scott A. Dvornik
Telephone: (317) 266-4070
Fax: (317) 266-6042
Exhibits:
A - Competitive Bid
B - Competitive Bid Request from Borrower
C - Competitive Bid Request from Agent
D-1 - D-8 - Competitive Loan Notes
E-1 - E-8 - Revolving Notes
F - Swing Line Note
G - Compliance Certificate
Schedule 1 - List of Borrower's Subsidiaries
-11-
<PAGE>
EXHIBIT 4-A
EXHIBIT A
---------
FORM OF COMPETITIVE BID
Bank One, Indiana, NA, as Agent
One Indiana Square
13/th/ Floor
Indianapolis, Indiana 46266
Attention: Scott A. Dvornik
Dear Sirs:
The undersigned, __________________________, refers to the Third Amended
and Restated Credit Agreement dated effective as of December 28, 1998, as
amended by that certain First Amendment to Third Amended and Restated Credit
Agreement dated effective as of December 16, 1999, as the same may be further
amended (the "Credit Agreement"), among Bindley Western Industries, Inc. (the
"Borrower"), the Banks named therein, and Bank One, Indiana, NA, as Agent.
Capitalized terms used herein and not otherwise defined herein shall have the
meanings assigned to such terms in the Credit Agreement. The undersigned hereby
makes a Competitive Bid pursuant to Section 2.04(b) of the Credit Agreement, in
response to the Competitive Bid Request made by the Borrower on
____________________, ____, and in that connection sets forth below the terms on
which such Competitive Bid is made:
(A) Principal Amount /1/ _____________________
(B) Competitive Bid Rate _____________________
(C) Competitive Bid Interest Period
and Last Day Thereof _____________________
(D) Date of Competitive Borrowing _____________________
The undersigned hereby confirms that it is prepared to extend credit to the
Borrower upon acceptance by the Borrower of this bid in accordance with Section
2.04(d) of the Credit Agreement.
Very truly yours,
[NAME OF BANK]
By: _____________________________
_____________________________
(printed name and title)
__________________________
/1/ Not less than $10,000,000.00 or greater than the available Commitment for
the Bank and in integral multiples of $1,000,000.00. Multiple bids will be
accepted by the Agent. Specify aggregate limitation if the sum of the
individual offers exceeds the amount the Bank is willing to lend.
<PAGE>
EXHIBIT B
---------
FORM OF COMPETITIVE BID REQUEST
Bank One, Indiana, NA, as Agent
One Indiana Square
13/th/ Floor
Indianapolis, Indiana 46266
Attention: Scott A. Dvornik
Dear Sirs:
The undersigned, Bindley Western Industries, Inc. (the "Borrower")
refers to the Third Amended and Restated Credit Agreement dated effective
as of December 28, 1998, as amended by that certain First Amendment to
Third Amended and Restated Credit Agreement dated effective as of December
16, 1999, as the same may be further amended (the "Credit Agreement") among
the Borrower, the Banks named therein, and Bank One, Indiana, NA, as Agent.
Capitalized terms used herein and not otherwise defined herein shall have
the meanings assigned to such terms in the Credit Agreement. The Borrower
hereby gives you notice pursuant to Section 2.04(a) of the Credit Agreement
that it requests a Competitive Bid Advance under the Credit Agreement, and,
in that connection, sets forth below the terms on which such Competitive
Borrowing is requested to be made:
(A) Date of Competitive Borrowing ______________________________
(which is a Banking Day)
(B) Principal Amount of Competitive ______________________________
Bid Advance/1//
(C) Competitive Bid Interest Period
and the last day thereof/2// ______________________________
Upon acceptance of any or all of the Competitive Bids offered by the Banks
in response to this request, the Borrower shall be deemed to have represented
and warranted that the conditions to lending specified in Sections 4.01 and 2.04
of the Credit Agreement have been satisfied.
Very truly yours,
BINDLEY WESTERN INDUSTRIES, INC.
By:_________________________________
____________________________________
(printed name and title)
______________________________
/1// Not less than $10,000,000.00 or greater than the Aggregate Commitment
and in integral multiples of $1,000,000.00.
/2// Which shall end not later than the Termination Date.
<PAGE>
EXHIBIT C
---------
FORM OF NOTICE OF COMPETITIVE BID REQUEST
___________________________
___________________________
___________________________
(Name of Bank)
Attention: ____________________
Dear Sirs:
Reference is made to the Third Amended and Restated Credit Agreement dated
effective as of December 28, 1998, as amended by that certain First Amendment to
Third Amended and Restated Credit Agreement dated effective as of December 16,
1999 (the "Credit Agreement") among Bindley Western Industries, Inc. (the
"Borrower"), the Banks named therein, and Bank One, Indiana, NA, as Agent.
Capitalized terms used herein and not otherwise defined herein shall have the
meanings ascribed to such terms in the Credit Agreement. The Borrower made a
Competitive Bid Request on ___________________________, ____ pursuant to Section
2.04(a) of the Credit Agreement, and in that connection you are invited to
submit a Competitive Bid by _________________________. Your Competitive Bid
must comply with Section 2.04(b) of the Credit Agreement and the terms set forth
below on which the Competitive Bid Request was made:
(A) Date of Competitive Borrowing __________________________
(B) Principal amount of Competitive
Bid Advance __________________________
(C) Competitive Bid Interest Rate __________________________
(D) Competitive Bid Interest Period
and the last day thereof __________________________
Very truly yours,
BANK ONE, INDIANA, NA, as Agent
By:________________________________
________________________________
(printed name and title)
<PAGE>
EXHIBIT D -1
PROMISSORY NOTE
(Competitive Bid Facility)
$_______________ Indianapolis, Indiana
Dated: ________________
Maturity: December 14, 2000
On or before December 14, 2000, BINDLEY WESTERN INDUSTRIES, INC., an
Indiana corporation (the "Maker"), promises to pay to the order of BANK ONE,
INDIANA, N.A. (the "Bank") the principal sum of $______________ or so much of
such Competitive Bid Advance as may be disbursed by the Bank under the terms of
the Credit Agreement described below and remaining outstanding and unpaid, and
to pay interest on the unpaid principal balance of such Competitive Bid Advance
outstanding from time to time as provided in this Note.
This Note evidences indebtedness (the "Competitive Bid Facility") incurred
or to be incurred by the Maker under a credit facility extended to the Maker by
the Bank under that certain First Amendment to Third Amended and Restated Credit
Agreement dated as of December 16, 1999, among the Maker, the Bank, the other
banks party thereto, and Bank One, Indiana, NA, as Agent (as from time to time
amended, supplemented, replaced or otherwise modified, the "Credit Agreement").
The principal amount of the Competitive Bid Facility outstanding from time to
time shall be determined by reference to the books and records of the Bank on
which all Advances under the Competitive Bid Facility and all payments by the
Maker on account of the Competitive Bid Facility shall be recorded. Such books
and records shall be deemed prima facie to be correct as to such matters.
----- -----
The terms "Competitive Bid Advance," "Maturity Date," and "Banking Day" are
used in this Note as defined in the Credit Agreement.
Interest on the unpaid principal balance of this Note outstanding from time
to time prior to and after the Maturity Date for such Competitive Bid Advance
will accrue at the rate or rates provided in the Credit Agreement. Prior to the
Maturity Date for such Competitive Bid Advance, accrued interest on the
outstanding principal balance of this Note shall be due and payable on such
dates as set forth in the Credit Agreement and on the Maturity Date for such
Competitive Bid Advance. After the Maturity Date for such Competitive Bid
Advance, interest shall be due and payable as accrued and without demand.
Interest will be calculated on the basis that an entire year's interest is
earned in 360 days.
Notwithstanding any other provisions of this Note, in no event shall the
interest payable hereon, whether before or after maturity, exceed the maximum
amount of interest which, under applicable law, may be charged hereon to the
Maker, and this Note is expressly made subject to the provisions of the Credit
Agreement which more fully sets out the limitations on how interest accrues
hereon. In the event applicable law provides for a rate ceiling, that ceiling
shall be the indicated rate ceiling and shall be used in this Note for
calculating the maximum interest rate at which interest may be charged hereon
and for all other purposes. The term "applicable law" as used in this Note
shall mean the laws of the state in which
<PAGE>
the principal office of the Bank or any holder is located, or the laws of the
United States, whichever laws allow the greater interest, as such laws now exist
or may be changed or amended or come into effect in the future.
The entire outstanding principal balance of this Note shall be due and
payable, together with accrued interest, on the Maturity Date for such
Competitive Bid Advance as evidenced by this Note. Reference is made to the
Credit Agreement which provides for acceleration of the maturity of the
Competitive Bid Advance evidenced by this Note upon the happening of Events of
Default as defined therein. All payments made by the Maker hereunder shall be
made for the account of the Bank at the office of Bank One, Indiana, NA located
at 111 Monument Circle, P. O. Box 7700, Indianapolis, Indiana 46277-0119.
All payments on account of this Note shall be applied first to expenses of
collection, next to interest which is due and payable, and only after
satisfaction of all such expenses and interest, to principal.
The Maker and any endorsers severally waive demand, presentment for payment
and notice of nonpayment of this Note, and each of them consents to any renewals
or extensions of the time of payment of this Note without notice.
All amounts payable under the terms of this Note shall be payable with
expenses of collection, including attorneys' fees, and without relief from
valuation and appraisement laws.
This Note may be prepaid only upon the conditions and at such times as
provided in the Credit Agreement.
This Note is made under and will be governed by the laws of the State of
Indiana without reference to conflicts of law and principles thereunder.
BINDLEY WESTERN INDUSTRIES, INC.
By:______________________________________
Vice President
<PAGE>
EXHIBIT D -2
PROMISSORY NOTE
(Competitive Bid Facility)
$_______________ Indianapolis, Indiana
Dated: __________________
Maturity: December 14, 2000
On or before December 14, 2000, BINDLEY WESTERN INDUSTRIES, INC., an
Indiana corporation (the "Maker"), promises to pay to the order of COMERICA BANK
(the "Bank") the principal sum of $______________ or so much of such Competitive
Bid Advance as may be disbursed by the Bank under the terms of the Credit
Agreement described below and remaining outstanding and unpaid, and to pay
interest on the unpaid principal balance of such Competitive Bid Advance
outstanding from time to time as provided in this Note.
This Note evidences indebtedness (the "Competitive Bid Facility") incurred
or to be incurred by the Maker under a credit facility extended to the Maker by
the Bank under that certain First Amendment to Third Amended and Restated Credit
Agreement dated as of December 16, 1999, among the Maker, the Bank, the other
banks party thereto, and Bank One, Indiana, NA, as Agent (as from time to time
amended, supplemented, replaced or otherwise modified, the "Credit Agreement").
The principal amount of the Competitive Bid Facility outstanding from time to
time shall be determined by reference to the books and records of the Bank on
which all Advances under the Competitive Bid Facility and all payments by the
Maker on account of the Competitive Bid Facility shall be recorded. Such books
and records shall be deemed prima facie to be correct as to such matters.
----- -----
The terms "Competitive Bid Advance," "Maturity Date," and "Banking Day" are
used in this Note as defined in the Credit Agreement.
Interest on the unpaid principal balance of this Note outstanding from time
to time prior to and after the Maturity Date for such Competitive Bid Advance
will accrue at the rate or rates provided in the Credit Agreement. Prior to the
Maturity Date for such Competitive Bid Advance, accrued interest on the
outstanding principal balance of this Note shall be due and payable on such
dates as set forth in the Credit Agreement and on the Maturity Date for such
Competitive Bid Advance. After the Maturity Date for such Competitive Bid
Advance, interest shall be due and payable as accrued and without demand.
Interest will be calculated on the basis that an entire year's interest is
earned in 360 days.
Notwithstanding any other provisions of this Note, in no event shall the
interest payable hereon, whether before or after maturity, exceed the maximum
amount of interest which, under applicable law, may be charged hereon to the
Maker, and this Note is expressly made subject to the provisions of the Credit
Agreement which more fully sets out the limitations on how interest accrues
hereon. In the event applicable law provides for a rate ceiling, that ceiling
shall be the indicated rate ceiling and shall be used in this Note for
calculating the maximum interest rate at which interest may be charged hereon
and for all other purposes. The term "applicable law" as used in this Note
shall mean the laws of the state in which the principal office of the Bank or
any holder is located, or the laws of the United States, whichever laws
<PAGE>
allow the greater interest, as such laws now exist or may be changed or amended
or come into effect in the future.
The entire outstanding principal balance of this Note shall be due and
payable, together with accrued interest, on the Maturity Date for such
Competitive Bid Advance as evidenced by this Note. Reference is made to the
Credit Agreement which provides for acceleration of the maturity of the
Competitive Bid Advance evidenced by this Note upon the happening of Events of
Default as defined therein. All payments made by the Maker hereunder shall be
made for the account of the Bank at the office of Bank One, Indiana, NA located
at 111 Monument Circle, P. O. Box 7700, Indianapolis, Indiana 46277-0119.
All payments on account of this Note shall be applied first to expenses of
collection, next to interest which is due and payable, and only after
satisfaction of all such expenses and interest, to principal.
The Maker and any endorsers severally waive demand, presentment for payment
and notice of nonpayment of this Note, and each of them consents to any renewals
or extensions of the time of payment of this Note without notice.
All amounts payable under the terms of this Note shall be payable with
expenses of collection, including attorneys' fees, and without relief from
valuation and appraisement laws.
This Note may be prepaid only upon the conditions and at such times as
provided in the Credit Agreement.
This Note is made under and will be governed by the laws of the State of
Indiana without reference to conflicts of law and principles thereunder.
BINDLEY WESTERN INDUSTRIES, INC.
By: ___________________________________
Vice President
<PAGE>
EXHIBIT D -3
PROMISSORY NOTE
(Competitive Bid Facility)
$_______________ Indianapolis, Indiana
Dated:__________________
Maturity: December 14, 2000
On or before December 14, 2000, BINDLEY WESTERN INDUSTRIES, INC., an Indiana
corporation (the "Maker"), promises to pay to the order of KEYBANK NATIONAL
ASSOCIATION, N.A. (the "Bank") the principal sum of $______________ or so much
of such Competitive Bid Advance as may be disbursed by the Bank under the terms
of the Credit Agreement described below and remaining outstanding and unpaid,
and to pay interest on the unpaid principal balance of such Competitive Bid
Advance outstanding from time to time as provided in this Note.
This Note evidences indebtedness (the "Competitive Bid Facility") incurred
or to be incurred by the Maker under a credit facility extended to the Maker by
the Bank under that certain First Amendment to Third Amended and Restated Credit
Agreement dated December 16, 1999, among the Maker, the Bank, the other banks
party thereto, and Bank One, Indiana, NA, as Agent (as from time to time
amended, supplemented, replaced or otherwise modified, the "Credit Agreement").
The principal amount of the Competitive Bid Facility outstanding from time to
time shall be determined by reference to the books and records of the Bank on
which all Advances under the Competitive Bid Facility and all payments by the
Maker on account of the Competitive Bid Facility shall be recorded. Such books
and records shall be deemed prima facie to be correct as to such matters.
----- -----
The terms "Competitive Bid Advance," "Maturity Date," and "Banking Day" are
used in this Note as defined in the Credit Agreement.
Interest on the unpaid principal balance of this Note outstanding from time
to time prior to and after the Maturity Date for such Competitive Bid Advance
will accrue at the rate or rates provided in the Credit Agreement. Prior to the
Maturity Date for such Competitive Bid Advance, accrued interest on the
outstanding principal balance of this Note shall be due and payable on such
dates as set forth in the Credit Agreement and on the Maturity Date for such
Competitive Bid Advance. After the Maturity Date for such Competitive Bid
Advance, interest shall be due and payable as accrued and without demand.
Interest will be calculated on the basis that an entire year's interest is
earned in 360 days.
Notwithstanding any other provisions of this Note, in no event shall the
interest payable hereon, whether before or after maturity, exceed the maximum
amount of interest which, under applicable law, may be charged hereon to the
Maker, and this Note is expressly made subject to the provisions of the Credit
Agreement which more fully sets out the limitations on how interest accrues
hereon. In the event applicable law provides for a rate ceiling, that ceiling
shall be the indicated rate ceiling and shall be used in this Note for
calculating the maximum interest rate at which interest may be charged hereon
and for all other purposes. The term "applicable law" as used in this Note
shall mean the laws of the state in which the principal office of the Bank or
any holder is located, or the laws of the United States, whichever laws
<PAGE>
allow the greater interest, as such laws now exist or may be changed or amended
or come into effect in the future.
The entire outstanding principal balance of this Note shall be due and
payable, together with accrued interest, on the Maturity Date for such
Competitive Bid Advance as evidenced by this Note. Reference is made to the
Credit Agreement which provides for acceleration of the maturity of the
Competitive Bid Advance evidenced by this Note upon the happening of Events of
Default as defined therein. All payments made by the Maker hereunder shall be
made for the account of the Bank at the office of Bank One, Indiana, NA located
at 111 Monument Circle, P. O. Box 7700, Indianapolis, Indiana 46277-0119.
All payments on account of this Note shall be applied first to expenses of
collection, next to interest which is due and payable, and only after
satisfaction of all such expenses and interest, to principal.
The Maker and any endorsers severally waive demand, presentment for payment
and notice of nonpayment of this Note, and each of them consents to any renewals
or extensions of the time of payment of this Note without notice.
All amounts payable under the terms of this Note shall be payable with
expenses of collection, including attorneys' fees, and without relief from
valuation and appraisement laws.
This Note may be prepaid only upon the conditions and at such times as
provided in the Credit Agreement.
This Note is made under and will be governed by the laws of the State of
Indiana without reference to conflicts of law and principles thereunder.
BINDLEY WESTERN INDUSTRIES, INC.
By:___________________________________
Vice President
<PAGE>
Exhibit 4-A
EXHIBIT D - 4
PROMISSORY NOTE
(Competitive Bid Facility)
$_______________ Indianapolis, Indiana
Dated: ________________
Maturity: December 14, 2000
On or before December 14, 2000, BINDLEY WESTERN INDUSTRIES, INC., an
Indiana corporation (the "Maker"), promises to pay to the order of SUNTRUST
BANK, CENTRAL FLORIDA, N.A. (the "Bank") the principal sum of $______________ or
so much of such Competitive Bid Advance as may be disbursed by the Bank under
the terms of the Credit Agreement described below and remaining outstanding and
unpaid, and to pay interest on the unpaid principal balance of such Competitive
Bid Advance outstanding from time to time as provided in this Note.
This Note evidences indebtedness (the "Competitive Bid Facility") incurred
or to be incurred by the Maker under a credit facility extended to the Maker by
the Bank under that certain First Amendment to Third Amended and Restated Credit
Agreement dated December 16, 1999, among the Maker, the Bank, the other banks
party thereto, and Bank One, Indiana, NA, as Agent (as from time to time
amended, supplemented, replaced or otherwise modified, the "Credit Agreement").
The principal amount of the Competitive Bid Facility outstanding from time to
time shall be determined by reference to the books and records of the Bank on
which all Advances under the Competitive Bid Facility and all payments by the
Maker on account of the Competitive Bid Facility shall be recorded. Such books
and records shall be deemed prima facie to be correct as to such matters.
----- -----
The terms "Competitive Bid Advance," "Maturity Date," and "Banking Day" are
used in this Note as defined in the Credit Agreement.
Interest on the unpaid principal balance of this Note outstanding from time
to time prior to and after the Maturity Date for such Competitive Bid Advance
will accrue at the rate or rates provided in the Credit Agreement. Prior to the
Maturity Date for such Competitive Bid Advance, accrued interest on the
outstanding principal balance of this Note shall be due and payable on such
dates as set forth in the Credit Agreement and on the Maturity Date for such
Competitive Bid Advance. After the Maturity Date for such Competitive Bid
Advance, interest shall be due and payable as accrued and without demand.
Interest will be calculated on the basis that an entire year's interest is
earned in 360 days.
Notwithstanding any other provisions of this Note, in no event shall the
interest payable hereon, whether before or after maturity, exceed the maximum
amount of interest which, under applicable law, may be charged hereon to the
Maker, and this Note is expressly made subject to the provisions of the Credit
Agreement which more fully sets out the limitations on how interest accrues
hereon. In the event applicable law provides for a rate ceiling, that ceiling
shall be the indicated rate ceiling and shall be used in this Note for
calculating the maximum interest rate at which interest may be charged hereon
and for all other purposes. The term "applicable law" as used in this Note
shall mean the laws of the state in which the principal office of the Bank or
any holder is located, or the laws of the United States, whichever laws
<PAGE>
allow the greater interest, as such laws now exist or may be changed or amended
or come into effect in the future.
The entire outstanding principal balance of this Note shall be due and
payable, together with accrued interest, on the Maturity Date for such
Competitive Bid Advance as evidenced by this Note. Reference is made to the
Credit Agreement which provides for acceleration of the maturity of the
Competitive Bid Advance evidenced by this Note upon the happening of Events of
Default as defined therein. All payments made by the Maker hereunder shall be
made for the account of the Bank at the office of Bank One, Indiana, NA located
at 111 Monument Circle, P. O. Box 7700, Indianapolis, Indiana 46277-0119.
All payments on account of this Note shall be applied first to expenses of
collection, next to interest which is due and payable, and only after
satisfaction of all such expenses and interest, to principal.
The Maker and any endorsers severally waive demand, presentment for payment
and notice of nonpayment of this Note, and each of them consents to any renewals
or extensions of the time of payment of this Note without notice.
All amounts payable under the terms of this Note shall be payable with
expenses of collection, including attorneys' fees, and without relief from
valuation and appraisement laws.
This Note may be prepaid only upon the conditions and at such times as
provided in the Credit Agreement.
This Note is made under and will be governed by the laws of the State of
Indiana without reference to conflicts of law and principles thereunder.
BINDLEY WESTERN INDUSTRIES, INC.
By:________________________________
Vice President
<PAGE>
Exhibit 4-A
EXHIBIT D - 5
PROMISSORY NOTE
(Competitive Bid Facility)
$_______________ Indianapolis, Indiana
Dated:______________
Maturity: December 14, 2000
On or before December 14, 2000, BINDLEY WESTERN INDUSTRIES, INC., an
Indiana corporation (the "Maker"), promises to pay to the order of NATIONAL CITY
BANK OF INDIANA (the "Bank") the principal sum of $______________ or so much of
such Competitive Bid Advance as may be disbursed by the Bank under the terms of
the Credit Agreement described below and remaining outstanding and unpaid, and
to pay interest on the unpaid principal balance of such Competitive Bid Advance
outstanding from time to time as provided in this Note.
This Note evidences indebtedness (the "Competitive Bid Facility") incurred
or to be incurred by the Maker under a credit facility extended to the Maker by
the Bank under that certain First Amendment to Third Amended and Restated Credit
Agreement dated December 16, 1999, among the Maker, the Bank, the other banks
party thereto, and Bank One, Indiana, NA, as Agent (as from time to time
amended, supplemented, replaced or otherwise modified, the "Credit Agreement").
The principal amount of the Competitive Bid Facility outstanding from time to
time shall be determined by reference to the books and records of the Bank on
which all Advances under the Competitive Bid Facility and all payments by the
Maker on account of the Competitive Bid Facility shall be recorded. Such books
and records shall be deemed prima facie to be correct as to such matters.
----- -----
The terms "Competitive Bid Advance," "Maturity Date," and "Banking Day" are
used in this Note as defined in the Credit Agreement.
Interest on the unpaid principal balance of this Note outstanding from time
to time prior to and after the Maturity Date for such Competitive Bid Advance
will accrue at the rate or rates provided in the Credit Agreement. Prior to the
Maturity Date for such Competitive Bid Advance, accrued interest on the
outstanding principal balance of this Note shall be due and payable on such
dates as set forth in the Credit Agreement and on the Maturity Date for such
Competitive Bid Advance. After the Maturity Date for such Competitive Bid
Advance, interest shall be due and payable as accrued and without demand.
Interest will be calculated on the basis that an entire year's interest is
earned in 360 days.
Notwithstanding any other provisions of this Note, in no event shall the
interest payable hereon, whether before or after maturity, exceed the maximum
amount of interest which, under applicable law, may be charged hereon to the
Maker, and this Note is expressly made subject to the provisions of the Credit
Agreement which more fully sets out the limitations on how interest accrues
hereon. In the event applicable law provides for a rate ceiling, that ceiling
shall be the indicated rate ceiling and shall be used in this Note for
calculating the maximum interest rate at which interest may be charged hereon
and for all other purposes. The term "applicable law" as used in this Note
shall mean the laws of the state in which the principal office of the Bank or
any holder is located, or the laws of the United States, whichever laws
<PAGE>
allow the greater interest, as such laws now exist or may be changed or amended
or come into effect in the future.
The entire outstanding principal balance of this Note shall be due and
payable, together with accrued interest, on the Maturity Date for such
Competitive Bid Advance as evidenced by this Note. Reference is made to the
Credit Agreement which provides for acceleration of the maturity of the
Competitive Bid Advance evidenced by this Note upon the happening of Events of
Default as defined therein. All payments made by the Maker hereunder shall be
made for the account of the Bank at the office of Bank One, Indiana, NA located
at 111 Monument Circle, P. O. Box 7700, Indianapolis, Indiana 46277-0119.
All payments on account of this Note shall be applied first to expenses of
collection, next to interest which is due and payable, and only after
satisfaction of all such expenses and interest, to principal.
The Maker and any endorsers severally waive demand, presentment for payment
and notice of nonpayment of this Note, and each of them consents to any renewals
or extensions of the time of payment of this Note without notice.
All amounts payable under the terms of this Note shall be payable with
expenses of collection, including attorneys' fees, and without relief from
valuation and appraisement laws.
This Note may be prepaid only upon the conditions and at such times as
provided in the Credit Agreement.
This Note is made under and will be governed by the laws of the State of
Indiana without reference to conflicts of law and principles thereunder.
BINDLEY WESTERN INDUSTRIES, INC.
By:________________________________
Vice President
<PAGE>
Exhibit 4-A
EXHIBIT D - 6
PROMISSORY NOTE
(Competitive Bid Facility)
$_______________ Indianapolis, Indiana
Dated: __________________
Maturity: December 14, 2000
On or before December 14, 2000, BINDLEY WESTERN INDUSTRIES, INC., an
Indiana corporation (the "Maker"), promises to pay to the order of FIFTH THIRD
BANK, INDIANA (the "Bank") the principal sum of $______________ or so much of
such Competitive Bid Advance as may be disbursed by the Bank under the terms of
the Credit Agreement described below and remaining outstanding and unpaid, and
to pay interest on the unpaid principal balance of such Competitive Bid Advance
outstanding from time to time as provided in this Note.
This Note evidences indebtedness (the "Competitive Bid Facility") incurred
or to be incurred by the Maker under a credit facility extended to the Maker by
the Bank under that certain First Amendment to Third Amended and Restated Credit
Agreement dated December 16, 1999, among the Maker, the Bank, the other banks
party thereto, and Bank One, Indiana, NA, as Agent (as from time to time
amended, supplemented, replaced or otherwise modified, the "Credit Agreement").
The principal amount of the Competitive Bid Facility outstanding from time to
time shall be determined by reference to the books and records of the Bank on
which all Advances under the Competitive Bid Facility and all payments by the
Maker on account of the Competitive Bid Facility shall be recorded. Such books
and records shall be deemed prima facie to be correct as to such matters.
----- -----
The terms "Competitive Bid Advance," "Maturity Date," and "Banking Day" are
used in this Note as defined in the Credit Agreement.
Interest on the unpaid principal balance of this Note outstanding from time
to time prior to and after the Maturity Date for such Competitive Bid Advance
will accrue at the rate or rates provided in the Credit Agreement. Prior to the
Maturity Date for such Competitive Bid Advance, accrued interest on the
outstanding principal balance of this Note shall be due and payable on such
dates as set forth in the Credit Agreement and on the Maturity Date for such
Competitive Bid Advance. After the Maturity Date for such Competitive Bid
Advance, interest shall be due and payable as accrued and without demand.
Interest will be calculated on the basis that an entire year's interest is
earned in 360 days.
Notwithstanding any other provisions of this Note, in no event shall the
interest payable hereon, whether before or after maturity, exceed the maximum
amount of interest which, under applicable law, may be charged hereon to the
Maker, and this Note is expressly made subject to the provisions of the Credit
Agreement which more fully sets out the limitations on how interest accrues
hereon. In the event applicable law provides for a rate ceiling, that ceiling
shall be the indicated rate ceiling and shall be used in this Note for
calculating the maximum interest rate at which interest may be charged hereon
and for all other purposes. The term "applicable law" as used in this Note
shall mean the laws of the state in which the principal office of the Bank or
any holder is located, or the laws of the United States, whichever laws allow
the greater interest, as such laws now exist or may be changed or amended or
come into effect in the future.
<PAGE>
The entire outstanding principal balance of this Note shall be due and
payable, together with accrued interest, on the Maturity Date for such
Competitive Bid Advance as evidenced by this Note. Reference is made to the
Credit Agreement which provides for acceleration of the maturity of the
Competitive Bid Advance evidenced by this Note upon the happening of Events of
Default as defined therein. All payments made by the Maker hereunder shall be
made for the account of the Bank at the office of Bank One, Indiana, NA located
at 111 Monument Circle, P. O. Box 7700, Indianapolis, Indiana 46277-0119.
All payments on account of this Note shall be applied first to expenses of
collection, next to interest which is due and payable, and only after
satisfaction of all such expenses and interest, to principal.
The Maker and any endorsers severally waive demand, presentment for payment
and notice of nonpayment of this Note, and each of them consents to any renewals
or extensions of the time of payment of this Note without notice.
All amounts payable under the terms of this Note shall be payable with
expenses of collection, including attorneys' fees, and without relief from
valuation and appraisement laws.
This Note may be prepaid only upon the conditions and at such times as
provided in the Credit Agreement.
This Note is made under and will be governed by the laws of the State of
Indiana without reference to conflicts of law and principles thereunder.
BINDLEY WESTERN INDUSTRIES, INC.
By:__________________________________
Vice President
<PAGE>
Exhibit 4-A
EXHIBIT D - 7
PROMISSORY NOTE
(Competitive Bid Facility)
$_______________ Indianapolis, Indiana
Dated: _________________
Maturity: December 14, 2000
On or before December 14, 2000, BINDLEY WESTERN INDUSTRIES, INC., an
Indiana corporation (the "Maker"), promises to pay to the order of THE NORTHERN
TRUST COMPANY (the "Bank") the principal sum of $______________ or so much of
such Competitive Bid Advance as may be disbursed by the Bank under the terms of
the Credit Agreement described below and remaining outstanding and unpaid, and
to pay interest on the unpaid principal balance of such Competitive Bid Advance
outstanding from time to time as provided in this Note.
This Note evidences indebtedness (the "Competitive Bid Facility") incurred
or to be incurred by the Maker under a credit facility extended to the Maker by
the Bank under that certain First Amendment to Third Amended and Restated Credit
Agreement dated December 16, 1999, among the Maker, the Bank, the other banks
party thereto, and Bank One, Indiana, NA, as Agent (as from time to time
amended, supplemented, replaced or otherwise modified, the "Credit Agreement").
The principal amount of the Competitive Bid Facility outstanding from time to
time shall be determined by reference to the books and records of the Bank on
which all Advances under the Competitive Bid Facility and all payments by the
Maker on account of the Competitive Bid Facility shall be recorded. Such books
and records shall be deemed prima facie to be correct as to such matters.
----- -----
The terms "Competitive Bid Advance," "Maturity Date," and "Banking Day" are
used in this Note as defined in the Credit Agreement.
Interest on the unpaid principal balance of this Note outstanding from time
to time prior to and after the Maturity Date for such Competitive Bid Advance
will accrue at the rate or rates provided in the Credit Agreement. Prior to the
Maturity Date for such Competitive Bid Advance, accrued interest on the
outstanding principal balance of this Note shall be due and payable on such
dates as set forth in the Credit Agreement and on the Maturity Date for such
Competitive Bid Advance. After the Maturity Date for such Competitive Bid
Advance, interest shall be due and payable as accrued and without demand.
Interest will be calculated on the basis that an entire year's interest is
earned in 360 days.
Notwithstanding any other provisions of this Note, in no event shall the
interest payable hereon, whether before or after maturity, exceed the maximum
amount of interest which, under applicable law, may be charged hereon to the
Maker, and this Note is expressly made subject to the provisions of the Credit
Agreement which more fully sets out the limitations on how interest accrues
hereon. In the event applicable law provides for a rate ceiling, that ceiling
shall be the indicated rate ceiling and shall be used in this Note for
calculating the maximum interest rate at which interest may be charged hereon
and for all other purposes. The term "applicable law" as used in this Note
shall mean the laws of the state in which the principal office of the Bank or
any holder is located, or the laws of the United States, whichever laws allow
the greater interest, as such laws now exist or may be changed or amended or
come into effect in the future.
<PAGE>
The entire outstanding principal balance of this Note shall be due and
payable, together with accrued interest, on the Maturity Date for such
Competitive Bid Advance as evidenced by this Note. Reference is made to the
Credit Agreement which provides for acceleration of the maturity of the
Competitive Bid Advance evidenced by this Note upon the happening of Events of
Default as defined therein. All payments made by the Maker hereunder shall be
made for the account of the Bank at the office of Bank One, Indiana, NA located
at 111 Monument Circle, P. O. Box 7700, Indianapolis, Indiana 46277-0119.
All payments on account of this Note shall be applied first to expenses of
collection, next to interest which is due and payable, and only after
satisfaction of all such expenses and interest, to principal.
The Maker and any endorsers severally waive demand, presentment for payment
and notice of nonpayment of this Note, and each of them consents to any renewals
or extensions of the time of payment of this Note without notice.
All amounts payable under the terms of this Note shall be payable with
expenses of collection, including attorneys' fees, and without relief from
valuation and appraisement laws.
This Note may be prepaid only upon the conditions and at such times as
provided in the Credit Agreement.
This Note is made under and will be governed by the laws of the State of
Indiana without reference to conflicts of law and principles thereunder.
BINDLEY WESTERN INDUSTRIES, INC.
By:_________________________________
Vice President
<PAGE>
Exhibit 4-A
EXHIBIT D - 8
PROMISSORY NOTE
(Competitive Bid Facility)
$_______________ Indianapolis, Indiana
Dated: _________________
Maturity: December 14, 2000
On or before December 14, 2000, BINDLEY WESTERN INDUSTRIES, INC., an
Indiana corporation (the "Maker"), promises to pay to the order of THE
HUNTINGTON NATIONAL BANK (the "Bank") the principal sum of $______________ or so
much of such Competitive Bid Advance as may be disbursed by the Bank under the
terms of the Credit Agreement described below and remaining outstanding and
unpaid, and to pay interest on the unpaid principal balance of such Competitive
Bid Advance outstanding from time to time as provided in this Note.
This Note evidences indebtedness (the "Competitive Bid Facility") incurred
or to be incurred by the Maker under a credit facility extended to the Maker by
the Bank under that certain First Amendment to Third Amended and Restated Credit
Agreement dated December 16, 1999, among the Maker, the Bank, the other banks
party thereto, and Bank One, Indiana, NA, as Agent (as from time to time
amended, supplemented, replaced or otherwise modified, the "Credit Agreement").
The principal amount of the Competitive Bid Facility outstanding from time to
time shall be determined by reference to the books and records of the Bank on
which all Advances under the Competitive Bid Facility and all payments by the
Maker on account of the Competitive Bid Facility shall be recorded. Such books
and records shall be deemed prima facie to be correct as to such matters.
----- -----
The terms "Competitive Bid Advance," "Maturity Date," and "Banking Day" are
used in this Note as defined in the Credit Agreement.
Interest on the unpaid principal balance of this Note outstanding from time
to time prior to and after the Maturity Date for such Competitive Bid Advance
will accrue at the rate or rates provided in the Credit Agreement. Prior to the
Maturity Date for such Competitive Bid Advance, accrued interest on the
outstanding principal balance of this Note shall be due and payable on such
dates as set forth in the Credit Agreement and on the Maturity Date for such
Competitive Bid Advance. After the Maturity Date for such Competitive Bid
Advance, interest shall be due and payable as accrued and without demand.
Interest will be calculated on the basis that an entire year's interest is
earned in 360 days.
Notwithstanding any other provisions of this Note, in no event shall the
interest payable hereon, whether before or after maturity, exceed the maximum
amount of interest which, under applicable law, may be charged hereon to the
Maker, and this Note is expressly made subject to the provisions of the Credit
Agreement which more fully sets out the limitations on how interest accrues
hereon. In the event applicable law provides for a rate ceiling, that ceiling
shall be the indicated rate ceiling and shall be used in this Note for
calculating the maximum interest rate at which interest may be charged hereon
and for all other purposes. The term "applicable law" as used in this Note
shall mean the laws of the state in which the principal office of the Bank or
any holder is located, or the laws of the United States, whichever laws allow
the greater interest, as such laws now exist or may be changed or amended or
come into effect in the future.
<PAGE>
The entire outstanding principal balance of this Note shall be due and
payable, together with accrued interest, on the Maturity Date for such
Competitive Bid Advance as evidenced by this Note. Reference is made to the
Credit Agreement which provides for acceleration of the maturity of the
Competitive Bid Advance evidenced by this Note upon the happening of Events of
Default as defined therein. All payments made by the Maker hereunder shall be
made for the account of the Bank at the office of Bank One, Indiana, NA located
at 111 Monument Circle, P. O. Box 7700, Indianapolis, Indiana 46277-0119.
All payments on account of this Note shall be applied first to expenses of
collection, next to interest which is due and payable, and only after
satisfaction of all such expenses and interest, to principal.
The Maker and any endorsers severally waive demand, presentment for payment
and notice of nonpayment of this Note, and each of them consents to any renewals
or extensions of the time of payment of this Note without notice.
All amounts payable under the terms of this Note shall be payable with
expenses of collection, including attorneys' fees, and without relief from
valuation and appraisement laws.
This Note may be prepaid only upon the conditions and at such times as
provided in the Credit Agreement.
This Note is made under and will be governed by the laws of the State of
Indiana without reference to conflicts of law and principles thereunder.
BINDLEY WESTERN INDUSTRIES, INC.
By:________________________________
Vice President
<PAGE>
EXHIBIT E - 1
PROMISSORY NOTE
(Revolving Credit)
Indianapolis, Indiana
$30,000,000.00 Dated: December 16, 1999
Maturity: December 14, 2000
On or before December 14, 2000, BINDLEY WESTERN INDUSTRIES, INC., an
Indiana corporation (the "Maker"), promises to pay to the order of BANK ONE,
INDIANA, NA (the "Bank") the principal sum of Thirty Million and No/100 Dollars
($30,000,000.00) or so much of the unpaid principal amount of each Advance
represented by this Note as may be disbursed by the Bank under the terms of the
Credit Agreement described below and remaining outstanding and unpaid, and to
pay interest on the unpaid principal balance of each Advance outstanding from
time to time as provided in this Note.
This Note evidences indebtedness (the "Revolving Credit") incurred or to be
incurred by the Maker under a revolving line of credit extended to the Maker by
the Bank under that certain First Amendment to Third Amended and Restated Credit
Agreement dated as of the date of this Note, among the Maker, the Bank, the
other banks party thereto, and Bank One, Indiana, NA, as Agent (as from time to
time amended, supplemented, replaced or otherwise modified, the "Credit
Agreement"). The principal amount of the Revolving Credit outstanding from time
to time shall be determined by reference to the books and records of the Bank on
which all Advances under the Revolving Credit and all payments by the Maker on
account of the Revolving Credit shall be recorded. Such books and records shall
be deemed prima facie to be correct as to such matters.
----- -----
The terms "Advance," "Maturity Date," and "Banking Day" are used in this
Note as defined in the Credit Agreement.
Interest on the unpaid principal balance of each Advance outstanding from
time to time prior to and after the Maturity Date for such Advance will accrue
at the rate or rates provided in the Credit Agreement. Prior to the Maturity
Date for such Advance, accrued interest on each Advance shall be due and payable
on such dates as set forth in the Credit Agreement and on the Maturity Date for
such Advance. After the Maturity Date for such Advance, interest shall be due
and payable as accrued and without demand. Interest will be calculated on the
basis that an entire year's interest is earned in 360 days.
Notwithstanding any other provisions of this Note, in no event shall the
interest payable hereon, whether before or after maturity, exceed the maximum
amount of interest which, under applicable law, may be charged hereon to the
Maker, and this Note is expressly made subject to the provisions of the Credit
Agreement which more fully sets out the limitations on how interest accrues
hereon. In the event applicable law provides for a rate ceiling, that ceiling
shall be the indicated rate ceiling and shall be used in this Note for
calculating the maximum interest rate at which interest may be charged hereon
and for all other purposes. The term "applicable law" as used in this Note
shall mean the laws of the state in which the principal office of the Bank or
any holder is located, or the laws of the United States, whichever laws allow
the greater interest, as such laws now exist or may be changed or amended or
come into effect in the future.
<PAGE>
Exhibit 4-A
The entire outstanding principal balance of this Note shall be due and
payable, together with accrued interest, on the respective Maturity Date for
each such Advance. Reference is made to the Credit Agreement which provides for
acceleration of the maturity of all Advances evidenced by this Note upon the
happening of Events of Default as defined therein. All payments made by the
Maker hereunder shall be made for the account of the Bank at the office of Bank
One, Indiana, NA, 111 Monument Circle, P.O. Box 7700, Indianapolis, Indiana
46277-0119.
All payments on account of this Note shall be applied first to expenses of
collection, next to interest which is due and payable, and only after
satisfaction of all such expenses and interest, to principal.
The Maker and any endorsers severally waive demand, presentment for payment
and notice of nonpayment of this Note, and each of them consents to any renewals
or extensions of the time of payment of this Note without notice.
All amounts payable under the terms of this Note shall be payable with
expenses of collection, including attorneys' fees, and without relief from
valuation and appraisement laws.
This Note may be prepaid only upon the conditions and at such times as
provided in the Credit Agreement.
This Note is made under and will be governed by the laws of the State of
Indiana without reference to conflicts of law and principles thereunder.
BINDLEY WESTERN INDUSTRIES, INC.
By:__________________________________
Thomas J. Salentine, Executive
Vice President
<PAGE>
Exhibit 4-A
EXHIBIT E - 2
PROMISSORY NOTE
(Revolving Credit)
Indianapolis, Indiana
$10,000,000.00 Dated: December 16, 1999
Maturity: December 14, 2000
On or before December 14, 2000, BINDLEY WESTERN INDUSTRIES, INC., an
Indiana corporation (the "Maker"), promises to pay to the order of COMERICA BANK
(the "Bank") the principal sum of Ten Million and No/100 Dollars
($10,000,000.00) or so much of the unpaid principal amount of each Advance
represented by this Note as may be disbursed by the Bank under the terms of the
Credit Agreement described below and remaining outstanding and unpaid, and to
pay interest on the unpaid principal balance of each Advance outstanding from
time to time as provided in this Note.
This Note evidences indebtedness (the "Revolving Credit") incurred or to be
incurred by the Maker under a revolving line of credit extended to the Maker by
the Bank under that certain First Amendment to Third Amended and Restated Credit
Agreement dated as of the date of this Note, among the Maker, the Bank, the
other banks party thereto, and Bank One, Indiana, NA, as Agent (as from time to
time amended, supplemented, replaced or otherwise modified, the "Credit
Agreement"). The principal amount of the Revolving Credit outstanding from time
to time shall be determined by reference to the books and records of the Bank on
which all Advances under the Revolving Credit and all payments by the Maker on
account of the Revolving Credit shall be recorded. Such books and records shall
be deemed prima facie to be correct as to such matters.
----- -----
The terms "Advance," "Maturity Date," and "Banking Day" are used in this
Note as defined in the Credit Agreement.
Interest on the unpaid principal balance of each Advance outstanding from
time to time prior to and after the Maturity Date for such Advance will accrue
at the rate or rates provided in the Credit Agreement. Prior to the Maturity
Date for such Advance, accrued interest on each Advance shall be due and payable
on such dates as set forth in the Credit Agreement and on the Maturity Date for
such Advance. After the Maturity Date for such Advance, interest shall be due
and payable as accrued and without demand. Interest will be calculated on the
basis that an entire year's interest is earned in 360 days.
Notwithstanding any other provisions of this Note, in no event shall the
interest payable hereon, whether before or after maturity, exceed the maximum
amount of interest which, under applicable law, may be charged hereon to the
Maker, and this Note is expressly made subject to the provisions of the Credit
Agreement which more fully sets out the limitations on how interest accrues
hereon. In the event applicable law provides for a rate ceiling, that ceiling
shall be the indicated rate ceiling and shall be used in this Note for
calculating the maximum interest rate at which interest may be charged hereon
and for all other purposes. The term "applicable law" as used in this Note
shall mean the laws of the state in which the principal office of the Bank or
any holder is located, or the laws of the United States, whichever laws allow
the greater interest, as such laws now exist or may be changed or amended or
come into effect in the future.
<PAGE>
Exhibit 4-A
The entire outstanding principal balance of this Note shall be due and
payable, together with accrued interest, on the respective Maturity Date for
each such Advance. Reference is made to the Credit Agreement which provides for
acceleration of the maturity of all Advances evidenced by this Note upon the
happening of Events of Default as defined therein. All payments made by the
Maker hereunder shall be made for the account of the Bank at the office of Bank
One, Indiana, NA, 111 Monument Circle, P.O. Box 7700, Indianapolis, Indiana
46277-0119.
All payments on account of this Note shall be applied first to expenses of
collection, next to interest which is due and payable, and only after
satisfaction of all such expenses and interest, to principal.
The Maker and any endorsers severally waive demand, presentment for payment
and notice of nonpayment of this Note, and each of them consents to any renewals
or extensions of the time of payment of this Note without notice.
All amounts payable under the terms of this Note shall be payable with
expenses of collection, including attorneys' fees, and without relief from
valuation and appraisement laws.
This Note may be prepaid only upon the conditions and at such times as
provided in the Credit Agreement.
This Note is made under and will be governed by the laws of the State of
Indiana without reference to conflicts of law and principles thereunder.
BINDLEY WESTERN INDUSTRIES, INC.
By:__________________________________
Thomas J. Salentine, Executive
Vice President
<PAGE>
Exhibit 4-A
EXHIBIT E - 3
PROMISSORY NOTE
(Revolving Credit)
Indianapolis, Indiana
$31,000,000.00 Dated: December 16, 1999
Maturity: December 14, 2000
On or before December 14, 2000, BINDLEY WESTERN INDUSTRIES, INC., an
Indiana corporation (the "Maker"), promises to pay to the order of KEYBANK
NATIONAL ASSOCIATION (the "Bank") the principal sum of Thirty-One Million and
No/100 Dollars ($31,000,000.00) or so much of the unpaid principal amount of
each Advance represented by this Note as may be disbursed by the Bank under the
terms of the Credit Agreement described below and remaining outstanding and
unpaid, and to pay interest on the unpaid principal balance of each Advance
outstanding from time to time as provided in this Note.
This Note evidences indebtedness (the "Revolving Credit") incurred or to be
incurred by the Maker under a revolving line of credit extended to the Maker by
the Bank under that certain First Amendment to Third Amended and Restated Credit
Agreement dated as of the date of this Note, among the Maker, the Bank, the
other banks party thereto, and Bank One, Indiana, NA, as Agent (as from time to
time amended, supplemented, replaced or otherwise modified, the "Credit
Agreement"). The principal amount of the Revolving Credit outstanding from time
to time shall be determined by reference to the books and records of the Bank on
which all Advances under the Revolving Credit and all payments by the Maker on
account of the Revolving Credit shall be recorded. Such books and records shall
be deemed prima facie to be correct as to such matters.
----- -----
The terms "Advance," "Maturity Date," and "Banking Day" are used in this
Note as defined in the Credit Agreement.
Interest on the unpaid principal balance of each Advance outstanding from
time to time prior to and after the Maturity Date for such Advance will accrue
at the rate or rates provided in the Credit Agreement. Prior to the Maturity
Date for such Advance, accrued interest on each Advance shall be due and payable
on such dates as set forth in the Credit Agreement and on the Maturity Date for
such Advance. After the Maturity Date for such Advance, interest shall be due
and payable as accrued and without demand. Interest will be calculated on the
basis that an entire year's interest is earned in 360 days.
Notwithstanding any other provisions of this Note, in no event shall the
interest payable hereon, whether before or after maturity, exceed the maximum
amount of interest which, under applicable law, may be charged hereon to the
Maker, and this Note is expressly made subject to the provisions of the Credit
Agreement which more fully sets out the limitations on how interest accrues
hereon. In the event applicable law provides for a rate ceiling, that ceiling
shall be the indicated rate ceiling and shall be used in this Note for
calculating the maximum interest rate at which interest may be charged hereon
and for all other purposes. The term "applicable law" as used in this Note
shall mean the laws of the state in which the principal office of the Bank or
any holder is located, or the laws of the United States, whichever laws allow
the greater interest, as such laws now exist or may be changed or amended or
come into effect in the future.
<PAGE>
The entire outstanding principal balance of this Note shall be due and
payable, together with accrued interest, on the respective Maturity Date for
each such Advance. Reference is made to the Credit Agreement which provides for
acceleration of the maturity of all Advances evidenced by this Note upon the
happening of Events of Default as defined therein. All payments made by the
Maker hereunder shall be made for the account of the Bank at the office of Bank
One, Indiana, NA, 111 Monument Circle, P.O. Box 7700, Indianapolis, Indiana
46277-0119.
All payments on account of this Note shall be applied first to expenses of
collection, next to interest which is due and payable, and only after
satisfaction of all such expenses and interest, to principal.
The Maker and any endorsers severally waive demand, presentment for payment
and notice of nonpayment of this Note, and each of them consents to any renewals
or extensions of the time of payment of this Note without notice.
All amounts payable under the terms of this Note shall be payable with
expenses of collection, including attorneys' fees, and without relief from
valuation and appraisement laws.
This Note may be prepaid only upon the conditions and at such times as
provided in the Credit Agreement.
This Note is made under and will be governed by the laws of the State of
Indiana without reference to conflicts of law and principles thereunder.
BINDLEY WESTERN INDUSTRIES, INC.
By:_____________________________________
Thomas J. Salentine, Executive
Vice President
<PAGE>
Exhibit 4-A
EXHIBIT E - 4
PROMISSORY NOTE
(Revolving Credit)
Indianapolis, Indiana
$35,000,000.00 Dated: December 16, 1999
Maturity: December 14, 2000
On or before December 14, 2000, BINDLEY WESTERN INDUSTRIES, INC., an
Indiana corporation (the "Maker"), promises to pay to the order of SUNTRUST
BANK, CENTRAL FLORIDA, N.A. (the "Bank") the principal sum of Thirty-Five
Million and No/100 Dollars ($35,000,000.00) or so much of the unpaid principal
amount of each Advance represented by this Note as may be disbursed by the Bank
under the terms of the Credit Agreement described below and remaining
outstanding and unpaid, and to pay interest on the unpaid principal balance of
each Advance outstanding from time to time as provided in this Note.
This Note evidences indebtedness (the "Revolving Credit") incurred or to be
incurred by the Maker under a revolving line of credit extended to the Maker by
the Bank under that certain First Amendment to Third Amended and Restated Credit
Agreement dated as of the date of this Note, among the Maker, the Bank, the
other banks party thereto, and Bank One, Indiana, NA, as Agent (as from time to
time amended, supplemented, replaced or otherwise modified, the "Credit
Agreement"). The principal amount of the Revolving Credit outstanding from time
to time shall be determined by reference to the books and records of the Bank on
which all Advances under the Revolving Credit and all payments by the Maker on
account of the Revolving Credit shall be recorded. Such books and records shall
be deemed prima facie to be correct as to such matters.
----- -----
The terms "Advance," "Maturity Date," and "Banking Day" are used in this
Note as defined in the Credit Agreement.
Interest on the unpaid principal balance of each Advance outstanding from
time to time prior to and after the Maturity Date for such Advance will accrue
at the rate or rates provided in the Credit Agreement. Prior to the Maturity
Date for such Advance, accrued interest on each Advance shall be due and payable
on such dates as set forth in the Credit Agreement and on the Maturity Date for
such Advance. After the Maturity Date for such Advance, interest shall be due
and payable as accrued and without demand. Interest will be calculated on the
basis that an entire year's interest is earned in 360 days.
Notwithstanding any other provisions of this Note, in no event shall the
interest payable hereon, whether before or after maturity, exceed the maximum
amount of interest which, under applicable law, may be charged hereon to the
Maker, and this Note is expressly made subject to the provisions of the Credit
Agreement which more fully sets out the limitations on how interest accrues
hereon. In the event applicable law provides for a rate ceiling, that ceiling
shall be the indicated rate ceiling and shall be used in this Note for
calculating the maximum interest rate at which interest may be charged hereon
and for all other purposes. The term "applicable law" as used in this Note shall
mean the laws of the state in which the principal office of the Bank or any
holder is located, or the laws of the United States, whichever laws allow the
greater interest, as such laws now exist or may be changed or amended or come
into effect in the future.
<PAGE>
The entire outstanding principal balance of this Note shall be due and
payable, together with accrued interest, on the respective Maturity Date for
each such Advance. Reference is made to the Credit Agreement which provides for
acceleration of the maturity of all Advances evidenced by this Note upon the
happening of Events of Default as defined therein. All payments made by the
Maker hereunder shall be made for the account of the Bank at the office of Bank
One, Indiana, NA, 111 Monument Circle, P.O. Box 7700, Indianapolis, Indiana
46277-0119.
All payments on account of this Note shall be applied first to expenses of
collection, next to interest which is due and payable, and only after
satisfaction of all such expenses and interest, to principal.
The Maker and any endorsers severally waive demand, presentment for payment
and notice of nonpayment of this Note, and each of them consents to any renewals
or extensions of the time of payment of this Note without notice.
All amounts payable under the terms of this Note shall be payable with
expenses of collection, including attorneys' fees, and without relief from
valuation and appraisement laws.
This Note may be prepaid only upon the conditions and at such times as
provided in the Credit Agreement.
This Note is made under and will be governed by the laws of the State of
Indiana without reference to conflicts of law and principles thereunder.
BINDLEY WESTERN INDUSTRIES, INC.
By:__________________________________
Thomas J. Salentine, Executive
Vice President
<PAGE>
Exhibit 4-A
EXHIBIT E - 5
PROMISSORY NOTE
(Revolving Credit)
Indianapolis, Indiana
$10,000,000.00 Dated: December 16, 1999
Maturity: December 14, 2000
On or before December 14, 2000, BINDLEY WESTERN INDUSTRIES, INC., an
Indiana corporation (the "Maker"), promises to pay to the order of NATIONAL CITY
BANK OF INDIANA (the "Bank") the principal sum of Ten Million and No/100 Dollars
($10,000,000.00) or so much of the unpaid principal amount of each Advance
represented by this Note as may be disbursed by the Bank under the terms of the
Credit Agreement described below and remaining outstanding and unpaid, and to
pay interest on the unpaid principal balance of each Advance outstanding from
time to time as provided in this Note.
This Note evidences indebtedness (the "Revolving Credit") incurred or to be
incurred by the Maker under a revolving line of credit extended to the Maker by
the Bank under that certain First Amendment to Third Amended and Restated Credit
Agreement dated as of the date of this Note, among the Maker, the Bank, the
other banks party thereto, and Bank One, Indiana, NA, as Agent (as from time to
time amended, supplemented, replaced or otherwise modified, the "Credit
Agreement"). The principal amount of the Revolving Credit outstanding from time
to time shall be determined by reference to the books and records of the Bank on
which all Advances under the Revolving Credit and all payments by the Maker on
account of the Revolving Credit shall be recorded. Such books and records shall
be deemed prima facie to be correct as to such matters.
----- -----
The terms "Advance," "Maturity Date," and "Banking Day" are used in this
Note as defined in the Credit Agreement.
Interest on the unpaid principal balance of each Advance outstanding from
time to time prior to and after the Maturity Date for such Advance will accrue
at the rate or rates provided in the Credit Agreement. Prior to the Maturity
Date for such Advance, accrued interest on each Advance shall be due and payable
on such dates as set forth in the Credit Agreement and on the Maturity Date for
such Advance. After the Maturity Date for such Advance, interest shall be due
and payable as accrued and without demand. Interest will be calculated on the
basis that an entire year's interest is earned in 360 days.
Notwithstanding any other provisions of this Note, in no event shall the
interest payable hereon, whether before or after maturity, exceed the maximum
amount of interest which, under applicable law, may be charged hereon to the
Maker, and this Note is expressly made subject to the provisions of the Credit
Agreement which more fully sets out the limitations on how interest accrues
hereon. In the event applicable law provides for a rate ceiling, that ceiling
shall be the indicated rate ceiling and shall be used in this Note for
calculating the maximum interest rate at which interest may be charged hereon
and for all other purposes. The term "applicable law" as used in this Note shall
mean the laws of the state in which the principal office of the Bank or any
holder is located, or the laws of the United States, whichever laws allow the
greater interest, as such laws now exist or may be changed or amended or come
into effect in the future.
<PAGE>
Exhibit 4-A
The entire outstanding principal balance of this Note shall be due and
payable, together with accrued interest, on the respective Maturity Date for
each such Advance. Reference is made to the Credit Agreement which provides for
acceleration of the maturity of all Advances evidenced by this Note upon the
happening of Events of Default as defined therein. All payments made by the
Maker hereunder shall be made for the account of the Bank at the office of Bank
One, Indiana, NA, 111 Monument Circle, P.O. Box 7700, Indianapolis, Indiana
46277-0119.
All payments on account of this Note shall be applied first to expenses of
collection, next to interest which is due and payable, and only after
satisfaction of all such expenses and interest, to principal.
The Maker and any endorsers severally waive demand, presentment for payment
and notice of nonpayment of this Note, and each of them consents to any renewals
or extensions of the time of payment of this Note without notice.
All amounts payable under the terms of this Note shall be payable with
expenses of collection, including attorneys' fees, and without relief from
valuation and appraisement laws.
This Note may be prepaid only upon the conditions and at such times as
provided in the Credit Agreement.
This Note is made under and will be governed by the laws of the State of
Indiana without reference to conflicts of law and principles thereunder.
BINDLEY WESTERN INDUSTRIES, INC.
By:_________________________________
Thomas J. Salentine, Executive
Vice President
<PAGE>
Exhibit 4-A
EXHIBIT E - 6
PROMISSORY NOTE
(Revolving Credit)
Indianapolis, Indiana
$9,000,000.00 Dated: December 16, 1999
Maturity: December 14, 2000
On or before December 14, 2000, BINDLEY WESTERN INDUSTRIES, INC., an
Indiana corporation (the "Maker"), promises to pay to the order of FIFTH THIRD
BANK, INDIANA (the "Bank") the principal sum of Nine Million and No/100 Dollars
($9,000,000.00) or so much of the unpaid principal amount of each Advance
represented by this Note as may be disbursed by the Bank under the terms of the
Credit Agreement described below and remaining outstanding and unpaid, and to
pay interest on the unpaid principal balance of each Advance outstanding from
time to time as provided in this Note.
This Note evidences indebtedness (the "Revolving Credit") incurred or to be
incurred by the Maker under a revolving line of credit extended to the Maker by
the Bank under that certain First Amendment to Third Amended and Restated Credit
Agreement dated as of the date of this Note, among the Maker, the Bank, the
other banks party thereto, and Bank One, Indiana, NA, as Agent (as from time to
time amended, supplemented, replaced or otherwise modified, the "Credit
Agreement"). The principal amount of the Revolving Credit outstanding from time
to time shall be determined by reference to the books and records of the Bank on
which all Advances under the Revolving Credit and all payments by the Maker on
account of the Revolving Credit shall be recorded. Such books and records shall
be deemed prima facie to be correct as to such matters.
----- -----
The terms "Advance," "Maturity Date," and "Banking Day" are used in this
Note as defined in the Credit Agreement.
Interest on the unpaid principal balance of each Advance outstanding from
time to time prior to and after the Maturity Date for such Advance will accrue
at the rate or rates provided in the Credit Agreement. Prior to the Maturity
Date for such Advance, accrued interest on each Advance shall be due and payable
on such dates as set forth in the Credit Agreement and on the Maturity Date for
such Advance. After the Maturity Date for such Advance, interest shall be due
and payable as accrued and without demand. Interest will be calculated on the
basis that an entire year's interest is earned in 360 days.
Notwithstanding any other provisions of this Note, in no event shall the
interest payable hereon, whether before or after maturity, exceed the maximum
amount of interest which, under applicable law, may be charged hereon to the
Maker, and this Note is expressly made subject to the provisions of the Credit
Agreement which more fully sets out the limitations on how interest accrues
hereon. In the event applicable law provides for a rate ceiling, that ceiling
shall be the indicated rate ceiling and shall be used in this Note for
calculating the maximum interest rate at which interest may be charged hereon
and for all other purposes. The term "applicable law" as used in this Note shall
mean the laws of the state in which the principal office of the Bank or any
holder is located, or the laws of the United States, whichever laws allow the
greater interest, as such laws now exist or may be changed or amended or come
into effect in the future.
<PAGE>
Exhibit 4-A
The entire outstanding principal balance of this Note shall be due and
payable, together with accrued interest, on the respective Maturity Date for
each such Advance. Reference is made to the Credit Agreement which provides for
acceleration of the maturity of all Advances evidenced by this Note upon the
happening of Events of Default as defined therein. All payments made by the
Maker hereunder shall be made for the account of the Bank at the office of Bank
One, Indiana, NA, 111 Monument Circle, P.O. Box 7700, Indianapolis, Indiana
46277-0119.
All payments on account of this Note shall be applied first to expenses of
collection, next to interest which is due and payable, and only after
satisfaction of all such expenses and interest, to principal.
The Maker and any endorsers severally waive demand, presentment for payment
and notice of nonpayment of this Note, and each of them consents to any renewals
or extensions of the time of payment of this Note without notice.
All amounts payable under the terms of this Note shall be payable with
expenses of collection, including attorneys' fees, and without relief from
valuation and appraisement laws.
This Note may be prepaid only upon the conditions and at such times as
provided in the Credit Agreement.
This Note is made under and will be governed by the laws of the State of
Indiana without reference to conflicts of law and principles thereunder.
BINDLEY WESTERN INDUSTRIES, INC.
By:_____________________________________
Thomas J. Salentine, Executive
Vice President
<PAGE>
Exhibit 4-A
EXHIBIT E - 7
PROMISSORY NOTE
(Revolving Credit)
Indianapolis, Indiana
$15,000,000.00 Dated: December 16, 1999
Maturity: December 14, 2000
On or before December 14, 2000, BINDLEY WESTERN INDUSTRIES, INC., an
Indiana corporation (the "Maker"), promises to pay to the order of THE NORTHERN
TRUST COMPANY (the "Bank") the principal sum of Fifteen Million and No/100
Dollars ($15,000,000.00) or so much of the unpaid principal amount of each
Advance represented by this Note as may be disbursed by the Bank under the terms
of the Credit Agreement described below and remaining outstanding and unpaid,
and to pay interest on the unpaid principal balance of each Advance outstanding
from time to time as provided in this Note.
This Note evidences indebtedness (the "Revolving Credit") incurred or to be
incurred by the Maker under a revolving line of credit extended to the Maker by
the Bank under that certain First Amendment to Third Amended and Restated Credit
Agreement dated as of the date of this Note, among the Maker, the Bank, the
other banks party thereto, and Bank One, Indiana, NA, as Agent (as from time to
time amended, supplemented, replaced or otherwise modified, the "Credit
Agreement"). The principal amount of the Revolving Credit outstanding from time
to time shall be determined by reference to the books and records of the Bank on
which all Advances under the Revolving Credit and all payments by the Maker on
account of the Revolving Credit shall be recorded. Such books and records shall
be deemed prima facie to be correct as to such matters.
----- -----
The terms "Advance," "Maturity Date," and "Banking Day" are used in this
Note as defined in the Credit Agreement.
Interest on the unpaid principal balance of each Advance outstanding from
time to time prior to and after the Maturity Date for such Advance will accrue
at the rate or rates provided in the Credit Agreement. Prior to the Maturity
Date for such Advance, accrued interest on each Advance shall be due and payable
on such dates as set forth in the Credit Agreement and on the Maturity Date for
such Advance. After the Maturity Date for such Advance, interest shall be due
and payable as accrued and without demand. Interest will be calculated on the
basis that an entire year's interest is earned in 360 days.
Notwithstanding any other provisions of this Note, in no event shall the
interest payable hereon, whether before or after maturity, exceed the maximum
amount of interest which, under applicable law, may be charged hereon to the
Maker, and this Note is expressly made subject to the provisions of the Credit
Agreement which more fully sets out the limitations on how interest accrues
hereon. In the event applicable law provides for a rate ceiling, that ceiling
shall be the indicated rate ceiling and shall be used in this Note for
calculating the maximum interest rate at which interest may be charged hereon
and for all other purposes. The term "applicable law" as used in this Note shall
mean the laws of the state in which the principal office of the Bank or any
holder is located, or the laws of the United States, whichever laws allow the
greater interest, as such laws now exist or may be changed or amended or come
into effect in the future.
<PAGE>
The entire outstanding principal balance of this Note shall be due and
payable, together with accrued interest, on the respective Maturity Date for
each such Advance. Reference is made to the Credit Agreement which provides for
acceleration of the maturity of all Advances evidenced by this Note upon the
happening of Events of Default as defined therein. All payments made by the
Maker hereunder shall be made for the account of the Bank at the office of Bank
One, Indiana, NA, 111 Monument Circle, P.O. Box 7700, Indianapolis, Indiana
46277-0119.
All payments on account of this Note shall be applied first to expenses of
collection, next to interest which is due and payable, and only after
satisfaction of all such expenses and interest, to principal.
The Maker and any endorsers severally waive demand, presentment for payment
and notice of nonpayment of this Note, and each of them consents to any renewals
or extensions of the time of payment of this Note without notice.
All amounts payable under the terms of this Note shall be payable with
expenses of collection, including attorneys' fees, and without relief from
valuation and appraisement laws.
This Note may be prepaid only upon the conditions and at such times as
provided in the Credit Agreement.
This Note is made under and will be governed by the laws of the State of
Indiana without reference to conflicts of law and principles thereunder.
BINDLEY WESTERN INDUSTRIES, INC.
By:____________________________________
Thomas J. Salentine, Executive
Vice President
<PAGE>
Exhibit 4-A
EXHIBIT E - 8
PROMISSORY NOTE
(Revolving Credit)
Indianapolis, Indiana
$10,000,000.00 Dated: December 16, 1999
Maturity: December 14, 2000
On or before December 14, 2000, BINDLEY WESTERN INDUSTRIES, INC., an
Indiana corporation (the "Maker"), promises to pay to the order of THE
HUNTINGTON NATIONAL BANK (the "Bank") the principal sum of Ten Million and
No/100 Dollars ($15,000,000.00) or so much of the unpaid principal amount of
each Advance represented by this Note as may be disbursed by the Bank under the
terms of the Credit Agreement described below and remaining outstanding and
unpaid, and to pay interest on the unpaid principal balance of each Advance
outstanding from time to time as provided in this Note.
This Note evidences indebtedness (the "Revolving Credit") incurred or to be
incurred by the Maker under a revolving line of credit extended to the Maker by
the Bank under that certain First Amendment to Third Amended and Restated Credit
Agreement dated as of the date of this Note, among the Maker, the Bank, the
other banks party thereto, and Bank One, Indiana, NA, as Agent (as from time to
time amended, supplemented, replaced or otherwise modified, the "Credit
Agreement"). The principal amount of the Revolving Credit outstanding from time
to time shall be determined by reference to the books and records of the Bank on
which all Advances under the Revolving Credit and all payments by the Maker on
account of the Revolving Credit shall be recorded. Such books and records shall
be deemed prima facie to be correct as to such matters.
----- -----
The terms "Advance," "Maturity Date," and "Banking Day" are used in this
Note as defined in the Credit Agreement.
Interest on the unpaid principal balance of each Advance outstanding from
time to time prior to and after the Maturity Date for such Advance will accrue
at the rate or rates provided in the Credit Agreement. Prior to the Maturity
Date for such Advance, accrued interest on each Advance shall be due and payable
on such dates as set forth in the Credit Agreement and on the Maturity Date for
such Advance. After the Maturity Date for such Advance, interest shall be due
and payable as accrued and without demand. Interest will be calculated on the
basis that an entire year's interest is earned in 360 days.
Notwithstanding any other provisions of this Note, in no event shall the
interest payable hereon, whether before or after maturity, exceed the maximum
amount of interest which, under applicable law, may be charged hereon to the
Maker, and this Note is expressly made subject to the provisions of the Credit
Agreement which more fully sets out the limitations on how interest accrues
hereon. In the event applicable law provides for a rate ceiling, that ceiling
shall be the indicated rate ceiling and shall be used in this Note for
calculating the maximum interest rate at which interest may be charged hereon
and for all other purposes. The term "applicable law" as used in this Note shall
mean the laws of the state in which the principal office of the Bank or any
holder is located, or the laws of the United States, whichever laws allow the
greater interest, as such laws now exist or may be changed or amended or come
into effect in the future.
<PAGE>
Exhibit 4-A
The entire outstanding principal balance of this Note shall be due and
payable, together with accrued interest, on the respective Maturity Date for
each such Advance. Reference is made to the Credit Agreement which provides for
acceleration of the maturity of all Advances evidenced by this Note upon the
happening of Events of Default as defined therein. All payments made by the
Maker hereunder shall be made for the account of the Bank at the office of Bank
One, Indiana, NA, 111 Monument Circle, P.O. Box 7700, Indianapolis, Indiana
46277-0119.
All payments on account of this Note shall be applied first to expenses of
collection, next to interest which is due and payable, and only after
satisfaction of all such expenses and interest, to principal.
The Maker and any endorsers severally waive demand, presentment for payment
and notice of nonpayment of this Note, and each of them consents to any renewals
or extensions of the time of payment of this Note without notice.
All amounts payable under the terms of this Note shall be payable with
expenses of collection, including attorneys' fees, and without relief from
valuation and appraisement laws.
This Note may be prepaid only upon the conditions and at such times as
provided in the Credit Agreement.
This Note is made under and will be governed by the laws of the State of
Indiana without reference to conflicts of law and principles thereunder.
BINDLEY WESTERN INDUSTRIES, INC.
By:_________________________________
Thomas J. Salentine, Executive
Vice President
<PAGE>
Exhibit 4-A
PROMISSORY NOTE
(Swing Line)
Indianapolis, Indiana
$20,000,000.00 Dated: December 16, 1999
Maturity: December 14, 2000
On or before December 14, 2000, BINDLEY WESTERN INDUSTRIES, INC., an
Indiana corporation (the "Maker"), promises to pay to the order of BANK ONE,
INDIANA, NA (the "Bank") the principal sum of Twenty Million Dollars
($20,000,000.00) or so much of the unpaid principal amount of each Swing Line
Advance represented by this Note as may be disbursed by the Bank under the terms
of the Credit Agreement described below and remaining outstanding and unpaid,
and to pay interest on the unpaid principal balance of each Swing Line Advance
outstanding from time to time as provided in this Note.
This Note evidences indebtedness (the "Swing Line ") incurred or to be
incurred by the Maker under a revolving line of credit extended to the Maker by
the Bank under that certain First Amendment to Third Amended and Restated Credit
Agreement dated as of the date of this Note, among the Maker, the Bank, the
other banks party thereto, and Bank One, Indiana, NA, as Agent (as from time to
time amended, supplemented, replaced or otherwise modified, the "Credit
Agreement"). The principal amount of the Swing Line outstanding from time to
time shall be determined by reference to the books and records of the Bank on
which all Swing Line Advances under the Swing Line and all payments by the Maker
on account of the Swing Line shall be recorded. Such books and records shall be
deemed prima facie to be correct as to such matters.
----- -----
The terms "Swing Line Advance," "Maturity Date," and "Banking Day" are used
in this Note as defined in the Credit Agreement.
Interest on the unpaid principal balance of each Swing Line Advance
outstanding from time to time prior to and after the Maturity Date for such
Swing Line Advance will accrue at the rate or rates provided in the Credit
Agreement. Prior to the Maturity Date for such Swing Line Advance, accrued
interest on each Swing Line Advance shall be due and payable on such dates as
set forth in the Credit Agreement and on the Maturity Date for such Swing Line
Advance. After the Maturity Date for such Swing Line Advance, interest shall be
due and payable as accrued and without demand. Interest will be calculated on
the basis that an entire year's interest is earned in 360 days.
Notwithstanding any other provisions of this Note, in no event shall the
interest payable hereon, whether before or after maturity, exceed the maximum
amount of interest which, under applicable law, may be charged hereon to the
Maker, and this Note is expressly made subject to
<PAGE>
the provisions of the Credit Agreement which more fully sets out the limitations
on how interest accrues hereon. In the event applicable law provides for a rate
ceiling, that ceiling shall be the indicated rate ceiling and shall be used in
this Note for calculating the maximum interest rate at which interest may be
charged hereon and for all other purposes. The term "applicable law" as used in
this Note shall mean the laws of the state in which the principal office of the
Bank or any holder is located, or the laws of the United States, whichever laws
allow the greater interest, as such laws now exist or may be changed or amended
or come into effect in the future.
The entire outstanding principal balance of this Note shall be due and
payable, together with accrued interest, on the respective Maturity Date for
each such Swing Line Advance. Reference is made to the Credit Agreement which
provides for acceleration of the maturity of all Swing Line Advances evidenced
by this Note upon the happening of Events of Default as defined therein. All
payments made by the Maker hereunder shall be made for the account of the Bank
at the office of Bank One, Indiana, NA, 111 Monument Circle, Indianapolis,
Indiana 46277.
All payments on account of this Note shall be applied first to expenses of
collection, next to interest which is due and payable, and only after
satisfaction of all such expenses and interest, to principal.
The Maker and any endorsers severally waive demand, presentment for payment
and notice of nonpayment of this Note, and each of them consents to any renewals
or extensions of the time of payment of this Note without notice.
All amounts payable under the terms of this Note shall be payable with
expenses of collection, including attorneys' fees, and without relief from
valuation and appraisement laws.
This Note may be prepaid only upon the conditions and at such times as
provided in the Credit Agreement.
This Note is made under and will be governed by the laws of the State of
Indiana without reference to conflicts of law and principles thereunder.
BINDLEY WESTERN INDUSTRIES, INC.
By:___________________________________
Thomas J. Salentine, Executive
Vice President
<PAGE>
Exhibit 4-A
EXHIBIT G
---------
COMPLIANCE CERTIFICATE
I represent that I am the [chief executive officer or chief financial
officer] of BINDLEY WESTERN INDUSTRIES, INC. ("Borrower") and pursuant to the
terms of the First Amendment to Third Amended and Restated Credit Agreement
dated effective December 16, 1999 by and among the Borrower and the Banks which
are parties thereto, I certify that:
1. Each of the representations contained in Sections 5.01 through 5.12,
inclusive, and 5.15 of the Credit Agreement are true and correct as of
the date of this Officer's Certificate.
2. The financial statements of the Borrower as of ___________, _____, and
for the fiscal year then ended, and the financial statements as of
______________________, _____, and for the partial fiscal year then
ended, present fairly the financial condition of the Borrower and the
results of its operations as of the dates of such statements and for
the fiscal periods then ended, and since the date of the latest of
such statements there has been no material adverse change in its
financial position or its operations.
3. No Default, as such term is defined in the Credit Agreement, has
occurred and is continuing.
4. Computation of Borrower's compliance with each of the financial
covenants as contained in the Credit Agreement is set forth below:
Net Worth (Section 6.09) Current Requirement
--------- -------------------
1. Total Assets ________
2. Total Liabilities, Reserves and
Minority Interest ________
3. Line 1 minus Line 2 ________ $295,000,000
Total Debt to EBITDA (Section 6.10)
--------------------
1. Total Debt ________
2. EBITDA ________
3. Line 1 divided by Line 2 ________ 3.25 to 1.0
Interest Coverage Ratio (Section 6.11)
-----------------------
1. Net Income (excluding all extraordinary
<PAGE>
gains and losses) ________
2. Income Taxes ________
3. Interest Expense ________
4. Line 1 plus Lines 2 and 3 ________
5. Interest Expense (same as Line 3) ________
6. Line 4 divided by Line 5 ________ 2.50 to 1.0
BINDLEY WESTERN INDUSTRIES, INC.
By:________________________________
___________________________________
(Printed Name and Title)
Date:___________________________
<PAGE>
EXHIBIT 4-B
AMENDMENT NO. 1 TO RECEIVABLES PURCHASE AGREEMENT
This Amendment No. 1 (the "Amendment") is dated as of December 15, 1999
among Bindley Western Funding Corporation (the "Seller"), Falcon Asset
Securitization Corporation ("Falcon"), the financial institutions signatory
hereto (the "Investors") and Bank One, NA (formerly known as The First National
Bank of Chicago), as agent (the "Agent") for Falcon and the Investors
(collectively, the "Purchasers").
W I T N E S S E T H:
WHEREAS, the Seller, the Purchasers and the Agent are parties to that
certain Receivables Purchase Agreement dated as of December 28, 1998 (the
"Agreement"); and
WHEREAS, the Seller the undersigned Purchasers and the Agent desire to
amend the Agreement so as to (i) add Sun Trust Bank, Central Florida, NA, The
Northern Trust Company, The Huntington National Bank and Bank One, Indiana, NA
as Investors thereunder (the "New Investors"), (ii) remove NationsBank, N.A.
(now known as Bank of America National Trust and Savings Association) and NBD
Bank, N.A. (the "Exiting Investors") as Investors thereunder, (iii) increase the
aggregate Commitments of the Investors thereunder to $350,000,000, and (iv)
amend various other provisions of the Agreement as more fully described
hereinafter;
NOW, THEREFORE, in consideration of the premises herein contained, and for
other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto hereby agree as follows:
1. Defined Terms. Capitalized terms used herein and not otherwise
-------------
defined shall have their meanings as attributed to such terms in the Agreement.
2. Amendments to the Agreement.
---------------------------
2.1. Amendment to Section 7.1(e)(i). Section 7.1(e)(i) of the Agreement is
------------------------------
hereby amended by deleting the percentage "28.0%" where it appears therein and
inserting the percentage "23.0%" in lieu thereof.
2.2. Amendment to Section 1.11. Section 1.11 of the Agreement is hereby
-------------------------
deleted in its entirety.
2.3. Amendment to Section 1.12. Section 1.12 of the Agreement is hereby
-------------------------
deleted in its entirety.
2.4. Increase in the Total Commitment. The Total Commitment amount set
--------------------------------
forth on the first signature page to the Agreement is hereby amended by deleting
the amount "$250,000,000" where it appears thereon and inserting the amount
"$350,000,000" in lieu thereof.
<PAGE>
2.5. Adjustment of Commitments. The signature pages to the Agreement are
-------------------------
hereby amended by deleting the amount of the Commitment of each Investor set
forth on the signature pages of the Agreement and inserting in lieu therefor the
amount set forth opposite such Investor's respective signature hereto.
2.6. Amendment to the Definition of Commitment. The definition of
-----------------------------------------
"Commitment" appearing in Exhibit I to the Agreement is hereby amended in its
entirety to read as set forth below:
"`Commitment' means, for each Investor, the commitment of such
----------
Investor to purchase its Pro Rata Share of Receivable Interests from (i) the
Seller and (ii) Falcon, such Pro Rata Share not to exceed, in the aggregate, the
amount set forth opposite such Investor's name on the signature pages of
Amendment No. 1 to the Agreement dated as of December 15, 1999, as such amount
may be modified in accordance with the terms hereof."
2.7. Amendment to the Definition of Liquidity Termination Date. The
---------------------------------------------------------
definition of "Liquidity Termination Date" appearing in Exhibit I to the
Agreement is hereby amended in its entirety to read as set forth below:
"'Liquidity Termination Date' means December 13, 2000."
--------------------------
2.8. Amendment to the Definition of Total Government Obligor Limit. The
-------------------------------------------------------------
definition of "Total Government Obligor Limit" appearing in Exhibit I to the
Agreement is hereby amended by deleting the percentage "10%" where it appears
therein and inserting the percentage "17%" in lieu thereof.
3. Termination of the Commitments of the Exiting Investors. Upon the
-------------------------------------------------------
effectiveness of this Amendment pursuant to paragraph 6 hereof, the Commitments
of the Exiting Investors are hereby terminated and cancelled in full and the
Exiting Investors shall cease to be Investors under the Agreement.
4. Inclusion of the New Investors. Upon the effectiveness of this
------------------------------
Amendment pursuant to paragraph 6 hereof, each New Investor (a) shall for all
purposes be an Investor under and pursuant to the terms of the Agreement, as
amended hereby, (b) shall have all the rights and obligations of an Investor
ender the Agreement, as amended hereby, and (ii) shall have the respective
Commitment under the Agreement in the amount set forth opposite its signature
hereto.
5. Representations and Warranties. In order to induce the Agent and the
------------------------------
undersigned Purchasers to enter into this Amendment the Seller represents and
warrants that:
5.1. The representations and warranties set forth in Article III of the
Agreement, as hereby amended, are true, correct and complete on the date hereof
as if made on and as of the date hereof and that there exists no Termination
Event or Potential Termination Event on the date hereof.
<PAGE>
5.2. The execution and delivery by the Seller of this Amendment has been
duly authorized by proper corporate proceedings of the Seller and this
Amendment, and the Agreement, as amended by this Amendment, constitutes the
legal, valid and binding obligation of the Seller enforceable against the Seller
in accordance with its terms, except as such enforcement may be limited by
applicable bankruptcy, insolvency, reorganization or other similar laws relating
to or limiting creditors' rights generally.
5.3. Neither the execution and delivery by the Seller of this Amendment,
nor the consummation of the transactions herein contemplated, nor compliance
with the provisions hereof will violate any law, rule, regulation, order, writ,
judgment, injunction, decree or award binding on the Seller or any Subsidiary or
the Seller's or any Subsidiary's articles of incorporation or by-laws or the
provisions of any indenture, instrument or agreement to which the Seller or any
Subsidiary is a party or is subject, or by which it or its property, is bound,
or conflict with or constitute a default thereunder.
6. Effective Date. This Amendment shall become effective as of the date
--------------
above first written upon receipt by the Agent of (i) counterparts of this
Amendment duly executed by the Seller and each of the Investors and (ii)
payments for the accounts of the Exiting Investors of all Investor Fees payable
to the Exiting Investors under the Agreement, accrued for the period through and
including the date of this Amendment. The Agent agrees to promptly remit such
amount to the Exiting Investors upon its receipt thereof.
8. Ratification. The Agreement, as amended hereby, is hereby ratified,
------------
approved and confirmed in all respects.
9. Reference to Agreement. From and after the effective date hereof,
----------------------
each reference in the Agreement to "this Agreement", "hereof", or "hereunder" or
words of like import, and all references to the Agreement in any and all
agreements, instruments, documents, notes, certificates and other writings of
every kind and nature shall be deemed to mean the Agreement, as amended by this
Amendment.
10. Costs and Expenses. The Seller agrees to pay all costs, fees, and
------------------
out-of-pocket expenses (including attorneys' fees and time charges of attorneys
for the Agent, which attorneys may be employees of the Agent) incurred by the
Agent in connection with the preparation, execution and enforcement of this
Amendment.
11. CHOICE OF LAW. THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE WITH
-------------
THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF ILLINOIS.
12. Execution in Counterparts. This Amendment may be executed in any
-------------------------
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement.
<PAGE>
IN WITNESS WHEREOF, the Seller, the undersigned Investors and the Agent have
executed this Amendment as of the date first above written.
BINDLEY WESTERN FUNDING
CORPORATION, as Seller
By: /s/ Thomas J. Salentine
-----------------------
Title: Chairman
--------
FALCON ASSET SECURITIZATION CORPORATION
By: /s/ Ronald J. Adkins
--------------------
Authorized Signatory
BANK ONE, NA (formerly known as THE
FIRST NATIONAL BANK OF
CHICAGO), as Agent
By: /s/ Ronald J. Adkins
---------------------
Title: First Vice President
---------------------
<PAGE>
INVESTORS
---------
Total Commitment
- ----------------
$350,000,000
Commitment BANK ONE, INDIANA, NA
- ----------
$180,000,000
By: _______________ ______________________
Title: _________________________
Commitment COMERICA BANK __
- ----------
$35,000,0000
By: ____________________________
Title: _________________________
Commitment KEYBANK NATIONAL ASSOCIATION
- ----------
$33,000,000
By: ___________________ __________________
Title: _________________________
Commitment THE NORTHERN TRUST COMPANY
- ----------
$30,000,000
By: ____________________________
Title: _________________________
NATIONAL CITY BANK OF INDIANA
Commitment
- ----------
$25,000,000 By: ____________________________
Title: _________________________
<PAGE>
Commitment THE HUNTINGTON NATIONAL BANK
- ----------
$20,000,000
By: ____________________________
Title: _________________________
Commitment SUNTRUST BANK, CENTRAL
- ----------
$15,000,000 FLORIDA, N.A.
By: ____________________________
Title: _________________________
Commitment FIFTH THIRD BANK, INDIANA
- ----------
$12,000,000
By: ____________________________
Title: _________________________
Commitment BANK OF AMERICA NATIONAL
- ----------
$ -0- TRUST AND SAVING ASSOCIATION
(formerly known as NATIONSBANK,
N.A.)
By: __________________________________
Title: _______________________________
Commitment NBD BANK, N.A.
- ----------
$ -0-
By: __________________________________
Title: _______________________________
<PAGE>
Exhibit 4-B
AMENDMENT NO. 1 TO RECEIVABLES PURCHASE AGREEMENT
This Amendment No. 1 (the "Amendment") is dated as of December 15, 1999
among Bindley Western Funding Corporation (the "Seller"), Falcon Asset
Securitization Corporation ("Falcon"), the financial institutions signatory
hereto (the "Investors") and Bank One, NA (formerly known as The First National
Bank of Chicago), as agent (the "Agent") for Falcon and the Investors
(collectively, the "Purchasers").
W I T N E S S E T H:
WHEREAS, the Seller, the Purchasers and the Agent are parties to that
certain Receivables Purchase Agreement dated as of December 28, 1998 (the
"Agreement"); and
WHEREAS, the Seller the undersigned Purchasers and the Agent desire to
amend the Agreement so as to (i) add Sun Trust Bank, Central Florida, NA, The
Northern Trust Company, The Huntington National Bank and Bank One, Indiana, NA
as Investors thereunder (the "New Investors"), (ii) remove NationsBank, N.A.
(now known as Bank of America National Trust and Savings Association) and NBD
Bank, N.A. (the "Exiting Investors") as Investors thereunder, (iii) increase the
aggregate Commitments of the Investors thereunder to $350,000,000, and (iv)
amend various other provisions of the Agreement as more fully described
hereinafter;
NOW, THEREFORE, in consideration of the premises herein contained, and for
other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto hereby agree as follows:
1. Defined Terms. Capitalized terms used herein and not otherwise defined
-------------
shall have their meanings as attributed to such terms in the Agreement.
2. Amendments to the Agreement.
---------------------------
2.1. Amendment to Section 7.1(e)(i). Section 7.1(e)(i) of the Agreement is
------------------------------
hereby amended by deleting the percentage "28.0%" where it appears therein and
inserting the percentage "23.0%" in lieu thereof.
2.2. Amendment to Section 1.11. Section 1.11 of the Agreement is hereby
-------------------------
deleted in its entirety.
2.3. Amendment to Section 1.12. Section 1.12 of the Agreement is hereby
-------------------------
deleted in its entirety.
2.4. Increase in the Total Commitment. The Total Commitment amount set
--------------------------------
forth on the first signature page to the Agreement is hereby amended by deleting
the amount "$250,000,000" where it appears thereon and inserting the amount
"$350,000,000" in lieu thereof.
<PAGE>
2.5. Adjustment of Commitments. The signature pages to the Agreement are
-------------------------
hereby amended by deleting the amount of the Commitment of each Investor set
forth on the signature pages of the Agreement and inserting in lieu therefor the
amount set forth opposite such Investor's respective signature hereto.
2.6. Amendment to the Definition of Commitment. The definition of
-----------------------------------------
"Commitment" appearing in Exhibit I to the Agreement is hereby amended in its
entirety to read as set forth below:
"`Commitment' means, for each Investor, the commitment of such Investor
----------
to purchase its Pro Rata Share of Receivable Interests from (i) the Seller and
(ii) Falcon, such Pro Rata Share not to exceed, in the aggregate, the amount set
forth opposite such Investor's name on the signature pages of Amendment No. 1 to
the Agreement dated as of December 15, 1999, as such amount may be modified in
accordance with the terms hereof."
2.7. Amendment to the Definition of Liquidity Termination Date. The
---------------------------------------------------------
definition of "Liquidity Termination Date" appearing in Exhibit I to the
Agreement is hereby amended in its entirety to read as set forth below:
"`Liquidity Termination Date' means December 13, 2000."
--------------------------
2.8. Amendment to the Definition of Total Government Obligor Limit. The
-------------------------------------------------------------
definition of "Total Government Obligor Limit" appearing in Exhibit I to the
Agreement is hereby amended by deleting the percentage "10%" where it appears
therein and inserting the percentage "17%" in lieu thereof.
3. Termination of the Commitments of the Exiting Investors. Upon the
-----------------------------------------------------
effectiveness of this Amendment pursuant to paragraph 6 hereof, the Commitments
of the Exiting Investors are hereby terminated and cancelled in full and the
Exiting Investors shall cease to be Investors under the Agreement.
4. Inclusion of the New Investors. Upon the effectiveness of this Amendment
------------------------------
pursuant to paragraph 6 hereof, each New Investor (a) shall for all purposes be
an Investor under and pursuant to the terms of the Agreement, as amended hereby,
(b) shall have all the rights and obligations of an Investor ender the
Agreement, as amended hereby, and (ii) shall have the respective Commitment
under the Agreement in the amount set forth opposite its signature hereto.
5. Representations and Warranties. In order to induce the Agent and the
------------------------------
undersigned Purchasers to enter into this Amendment the Seller represents and
warrants that:
5.1. The representations and warranties set forth in Article III of the
Agreement, as hereby amended, are true, correct and complete on the date hereof
as if made on and as of the date hereof and that there exists no Termination
Event or Potential Termination Event on the date hereof.
<PAGE>
5.2. The execution and delivery by the Seller of this Amendment has been
duly authorized by proper corporate proceedings of the Seller and this
Amendment, and the Agreement, as amended by this Amendment, constitutes the
legal, valid and binding obligation of the Seller enforceable against the Seller
in accordance with its terms, except as such enforcement may be limited by
applicable bankruptcy, insolvency, reorganization or other similar laws relating
to or limiting creditors' rights generally.
5.3. Neither the execution and delivery by the Seller of this Amendment,
nor the consummation of the transactions herein contemplated, nor compliance
with the provisions hereof will violate any law, rule, regulation, order, writ,
judgment, injunction, decree or award binding on the Seller or any Subsidiary or
the Seller's or any Subsidiary's articles of incorporation or by-laws or the
provisions of any indenture, instrument or agreement to which the Seller or any
Subsidiary is a party or is subject, or by which it or its property, is bound,
or conflict with or constitute a default thereunder.
6. Effective Date. This Amendment shall become effective as of the date
--------------
above first written upon receipt by the Agent of (i) counterparts of this
Amendment duly executed by the Seller and each of the Investors and (ii)
payments for the accounts of the Exiting Investors of all Investor Fees payable
to the Exiting Investors under the Agreement, accrued for the period through and
including the date of this Amendment. The Agent agrees to promptly remit such
amount to the Exiting Investors upon its receipt thereof.
8. Ratification. The Agreement, as amended hereby, is hereby ratified,
------------
approved and confirmed in all respects.
9. Reference to Agreement. From and after the effective date hereof,
----------------------
each reference in the Agreement to "this Agreement", "hereof", or "hereunder" or
words of like import, and all references to the Agreement in any and all
agreements, instruments, documents, notes, certificates and other writings of
every kind and nature shall be deemed to mean the Agreement, as amended by this
Amendment.
10. Costs and Expenses. The Seller agrees to pay all costs, fees, and
------------------
out-of-pocket expenses (including attorneys' fees and time charges of attorneys
for the Agent, which attorneys may be employees of the Agent) incurred by the
Agent in connection with the preparation, execution and enforcement of this
Amendment.
11. CHOICE OF LAW. THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE WITH
-------------
THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF ILLINOIS.
12. Execution in Counterparts. This Amendment may be executed in any
-------------------------
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement.
<PAGE>
IN WITNESS WHEREOF, the Seller, the undersigned Investors and the Agent
have executed this Amendment as of the date first above written.
BINDLEY WESTERN FUNDING
CORPORATION, as Seller
By: /s/ Thomas J. Salentine
------------------------
Title: Chairman
---------
FALCON ASSET SECURITIZATION CORPORATION
By: /s/ Ronald J. Adkins
---------------------
Authorized Signatory
BANK ONE, NA (formerly known as THE
FIRST NATIONAL BANK OF
CHICAGO), as Agent
By: /s/ Ronald J. Adkins
---------------------
Title: First Vice President
---------------------
<PAGE>
INVESTORS
---------
Total Commitment
- ----------------
$350,000,000
Commitment BANK ONE, INDIANA, NA
- ----------
$180,000,000
By: ___________________________________
Title: ________________________
Commitment COMERICA BANK__________________
- ----------
$35,000,0000
By: ___________________________
Title: ________________________
Commitment KEYBANK NATIONAL ASSOCIATION
- ----------
$33,000,000
By: ___________________________________
Title: ________________________
Commitment THE NORTHERN TRUST COMPANY
- ----------
$30,000,000
By: ___________________________
Title: ________________________
NATIONAL CITY BANK OF INDIANA
Commitment
- ----------
$25,000,000 By: ___________________________
Title: ________________________
<PAGE>
Commitment THE HUNTINGTON NATIONAL BANK
- ----------
$20,000,000
By: _____________________________
Title: __________________________
Commitment SUNTRUST BANK, CENTRAL
- ----------
$15,000,000 FLORIDA, N.A.
By: _____________________________
Title: __________________________
Commitment FIFTH THIRD BANK, INDIANA
- ----------
$12,000,000
By: _____________________________
Title: __________________________
Commitment BANK OF AMERICA NATIONAL
- ----------
$ -0- TRUST AND SAVING ASSOCIATION
(formerly known as NATIONSBANK,
N.A.)
By: _____________________________
Title: __________________________
Commitment NBD BANK, N.A.
- ----------
$ -0-
By: _____________________________
Title: __________________________
<PAGE>
Exhibit 4-B
AMENDMENT NO. 1 TO RECEIVABLES PURCHASE AGREEMENT
This Amendment No. 1 (the "Amendment") is dated as of December 15, 1999
among Bindley Western Funding Corporation (the "Seller"), Falcon Asset
Securitization Corporation ("Falcon"), the financial institutions signatory
hereto (the "Investors") and Bank One, NA (formerly known as The First National
Bank of Chicago), as agent (the "Agent") for Falcon and the Investors
(collectively, the "Purchasers").
W I T N E S S E T H :
WHEREAS, the Seller, the Purchasers and the Agent are parties to that
certain Receivables Purchase Agreement dated as of December 28, 1998 (the
"Agreement"); and
WHEREAS, the Seller the undersigned Purchasers and the Agent desire to
amend the Agreement so as to (i) add Sun Trust Bank, Central Florida, NA, The
Northern Trust Company, The Huntington National Bank and Bank One, Indiana, NA
as Investors thereunder (the "New Investors"), (ii) remove NationsBank, N.A.
(now known as Bank of America National Trust and Savings Association) and NBD
Bank, N.A. (the "Exiting Investors") as Investors thereunder, (iii) increase the
aggregate Commitments of the Investors thereunder to $350,000,000, and (iv)
amend various other provisions of the Agreement as more fully described
hereinafter;
NOW, THEREFORE, in consideration of the premises herein contained, and for
other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto hereby agree as follows:
1. Defined Terms. Capitalized terms used herein and not otherwise
-------------
defined shall have their meanings as attributed to such terms in the Agreement.
2. Amendments to the Agreement.
---------------------------
2.1. Amendment to Section 7.1(e)(i). Section 7.1(e)(i) of the Agreement is
------------------------------
hereby amended by deleting the percentage "28.0%" where it appears therein and
inserting the percentage "23.0%" in lieu thereof.
2.2. Amendment to Section 1.11. Section 1.11 of the Agreement is hereby
-------------------------
deleted in its entirety.
2.3. Amendment to Section 1.12. Section 1.12 of the Agreement is hereby
-------------------------
deleted in its entirety.
2.4. Increase in the Total Commitment. The Total Commitment amount set
--------------------------------
forth on the first signature page to the Agreement is hereby amended by deleting
the amount "$250,000,000" where it appears thereon and inserting the amount
"$350,000,000" in lieu thereof.
<PAGE>
2.5. Adjustment of Commitments. The signature pages to the Agreement are
-------------------------
hereby amended by deleting the amount of the Commitment of each Investor set
forth on the signature pages of the Agreement and inserting in lieu therefor the
amount set forth opposite such Investor's respective signature hereto.
2.6. Amendment to the Definition of Commitment. The definition of
-----------------------------------------
"Commitment" appearing in Exhibit I to the Agreement is hereby amended in its
entirety to read as set forth below:
"'Commitment' means, for each Investor, the commitment of such
-----------------
Investor to purchase its Pro Rata Share of Receivable Interests from (i) the
Seller and (ii) Falcon, such Pro Rata Share not to exceed, in the aggregate, the
amount set forth opposite such Investor's name on the signature pages of
Amendment No. 1 to the Agreement dated as of December 15, 1999, as such amount
may be modified in accordance with the terms hereof."
2.7. Amendment to the Definition of Liquidity Termination Date. The
---------------------------------------------------------
definition of "Liquidity Termination Date" appearing in Exhibit I to the
Agreement is hereby amended in its entirety to read as set forth below:
"'Liquidity Termination Date' means December 13, 2000."
--------------------------
2.8. Amendment to the Definition of Total Government Obligor Limit. The
-------------------------------------------------------------
definition of "Total Government Obligor Limit" appearing in Exhibit I to the
Agreement is hereby amended by deleting the percentage "10%" where it appears
therein and inserting the percentage "17%" in lieu thereof.
3. Termination of the Commitments of the Exiting Investors. Upon the
-------------------------------------------------------
effectiveness of this Amendment pursuant to paragraph 6 hereof, the Commitments
of the Exiting Investors are hereby terminated and cancelled in full and the
Exiting Investors shall cease to be Investors under the Agreement.
4. Inclusion of the New Investors. Upon the effectiveness of this
------------------------------
Amendment pursuant to paragraph 6 hereof, each New Investor (a) shall for all
purposes be an Investor under and pursuant to the terms of the Agreement, as
amended hereby, (b) shall have all the rights and obligations of an Investor
ender the Agreement, as amended hereby, and (ii) shall have the respective
Commitment under the Agreement in the amount set forth opposite its signature
hereto.
5. Representations and Warranties. In order to induce the Agent and the
------------------------------
undersigned Purchasers to enter into this Amendment the Seller represents and
warrants that:
5.1. The representations and warranties set forth in Article III of the
Agreement, as hereby amended, are true, correct and complete on the date hereof
as if made on and as of the date hereof and that there exists no Termination
Event or Potential Termination Event on the date hereof.
<PAGE>
5.2. The execution and delivery by the Seller of this Amendment has been
duly authorized by proper corporate proceedings of the Seller and this
Amendment, and the Agreement, as amended by this Amendment, constitutes the
legal, valid and binding obligation of the Seller enforceable against the Seller
in accordance with its terms, except as such enforcement may be limited by
applicable bankruptcy, insolvency, reorganization or other similar laws relating
to or limiting creditors' rights generally.
5.3. Neither the execution and delivery by the Seller of this Amendment,
nor the consummation of the transactions herein contemplated, nor compliance
with the provisions hereof will violate any law, rule, regulation, order, writ,
judgment, injunction, decree or award binding on the Seller or any Subsidiary or
the Seller's or any Subsidiary's articles of incorporation or by-laws or the
provisions of any indenture, instrument or agreement to which the Seller or any
Subsidiary is a party or is subject, or by which it or its property, is bound,
or conflict with or constitute a default thereunder.
6. Effective Date. This Amendment shall become effective as of the date
--------------
above first written upon receipt by the Agent of (i) counterparts of this
Amendment duly executed by the Seller and each of the Investors and (ii)
payments for the accounts of the Exiting Investors of all Investor Fees payable
to the Exiting Investors under the Agreement, accrued for the period through and
including the date of this Amendment. The Agent agrees to promptly remit such
amount to the Exiting Investors upon its receipt thereof.
8. Ratification. The Agreement, as amended hereby, is hereby ratified,
------------
approved and confirmed in all respects.
9. Reference to Agreement. From and after the effective date hereof,
----------------------
each reference in the Agreement to "this Agreement", "hereof", or "hereunder" or
words of like import, and all references to the Agreement in any and all
agreements, instruments, documents, notes, certificates and other writings of
every kind and nature shall be deemed to mean the Agreement, as amended by this
Amendment.
10. Costs and Expenses. The Seller agrees to pay all costs, fees, and
------------------
out-of-pocket expenses (including attorneys' fees and time charges of attorneys
for the Agent, which attorneys may be employees of the Agent) incurred by the
Agent in connection with the preparation, execution and enforcement of this
Amendment.
11. CHOICE OF LAW. THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE WITH
-------------
THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF ILLINOIS.
12. Execution in Counterparts. This Amendment may be executed in any
-------------------------
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement.
<PAGE>
IN WITNESS WHEREOF, the Seller, the undersigned Investors and the Agent
have executed this Amendment as of the date first above written.
BINDLEY WESTERN FUNDING
CORPORATION, as Seller
By: /s/ Thomas J. Salentine
-----------------------
Title: Chairman
--------
FALCON ASSET SECURITIZATION
CORPORATION
By: /s/ Ronald J. Adkins
--------------------
Authorized Signatory
BANK ONE, NA (formerly known as
THE FIRST NATIONAL BANK OF
CHICAGO), as Agent
By: /s/ Ronald J. Adkins
--------------------
Title: First Vice President
--------------------
<PAGE>
INVESTORS
---------
Total Commitment
- ----------------
$350,000,000
Commitment BANK ONE, INDIANA, NA
- ----------
$180,000,000
By: _______________________
Title: ____________________
Commitment COMERICA BANK
- ----------
$35,000,0000
By: _______________________
Title: ____________________
Commitment KEYBANK NATIONAL ASSOCIATION
- ----------
$33,000,000
By: _______________________
Title: ____________________
Commitment THE NORTHERN TRUST COMPANY
- ----------
$30,000,000
By: _______________________
Title: ____________________
NATIONAL CITY BANK OF INDIANA
Commitment
- ----------
$25,000,000 By: _______________________
Title: ____________________
<PAGE>
Commitment THE HUNTINGTON NATIONAL BANK
- ----------
$20,000,000
By: _______________________
Title: ____________________
Commitment SUNTRUST BANK, CENTRAL
- ----------
$15,000,000 FLORIDA, N.A.
By: _______________________
Title: ____________________
Commitment FIFTH THIRD BANK, INDIANA
- ----------
$12,000,000
By: _______________________
Title: ____________________
Commitment BANK OF AMERICA NATIONAL
- ----------
$ -0- TRUST AND SAVING ASSOCIATION
(formerly known as NATIONSBANK,
N.A.)
By: _______________________________
Title: ____________________________
Commitment NBD BANK, N.A.
- ----------
$ -0-
By: _______________________________
Title: ____________________________
<PAGE>
Exhibit 4-C
================================================================================
BINDLEY WESTERN INDUSTRIES, INC.
$25,000,000
7.93% Senior Notes due December 27, 2004
______________
Note Purchase Agreement
______________
Dated as of December 15, 1999
================================================================================
<PAGE>
EXHIBIT 4-C
Table of Contents
(Not a part of the Agreement)
<TABLE>
<CAPTION>
Section Heading Page
<S> <C> <C>
Section 1. Authorization of Notes.......................................... 1
Section 2. Sale and Purchase of Notes...................................... 1
Section 3. Closing......................................................... 1
Section 4. Conditions to Closing........................................... 2
Section 4.1. Representations and Warranties.................................. 2
Section 4.2. Performance; No Default......................................... 2
Section 4.3. Compliance Certificates......................................... 2
Section 4.4. Opinions of Counsel............................................. 2
Section 4.5. Purchase Permitted By Applicable Law, etc....................... 3
Section 4.6. Payment of Special Counsel Fees................................. 3
Section 4.7. Private Placement Number........................................ 3
Section 4.8. Changes in Corporate Structure.................................. 3
Section 4.9. Proceedings and Documents....................................... 3
Section 5. Representations and Warranties of the Company................... 3
Section 5.1. Organization; Power and Authority............................... 3
Section 5.2. Authorization, etc.............................................. 4
Section 5.3. Disclosure...................................................... 4
Section 5.4. Organization and Ownership of Shares of Subsidiaries;
Affiliates................................................... 4
Section 5.5. Financial Statements............................................ 5
Section 5.6. Compliance with Laws, Other Instruments, etc.................... 5
Section 5.7. Governmental Authorizations, etc................................ 5
Section 5.8. Litigation; Observance of Agreements, Statutes and Orders....... 5
Section 5.9. Taxes........................................................... 6
Section 5.10. Title to Property; Leases....................................... 6
Section 5.11. Licenses, Permits, etc.......................................... 6
Section 5.12. Compliance with ERISA........................................... 7
Section 5.13. Private Offering by the Company................................. 7
Section 5.14. Use of Proceeds; Margin Regulations............................. 8
Section 5.15. Existing Debt; Future Liens..................................... 8
Section 5.16. Foreign Assets Control Regulations, etc......................... 8
Section 5.17. Status under Certain Statutes................................... 8
Section 5.18. Environmental Matters........................................... 8
Section 5.19. Notes Pari Passu................................................ 9
Section 5.20. Computer 2000 Compliant......................................... 9
</TABLE>
-i-
<PAGE>
<TABLE>
<CAPTION>
Section Heading Page
<S> <C> <C>
Section 6. Representations of the Purchaser................................ 9
Section 6.1. Purchase for Investment......................................... 9
Section 6.2. Source of Funds................................................. 10
Section 7. Information as to Company....................................... 11
Section 7.1. Financial and Business Information.............................. 11
Section 7.2. Officer's Certificate........................................... 13
Section 7.3. Inspection...................................................... 14
Section 8. Required Payment and Optional Prepayment of the Notes........... 14
Section 8.1. Required Payments............................................... 14
Section 8.2. Optional Prepayments with Make-Whole Amount..................... 14
Section 8.3. Allocation of Partial Prepayments............................... 15
Section 8.4. Maturity; Surrender, etc........................................ 15
Section 8.5. Purchase of Notes............................................... 15
Section 8.6. Make-Whole Amount............................................... 15
Section 8.7. Change in Control............................................... 17
Section 9. Affirmative Covenants........................................... 19
Section 9.1. Compliance with Law............................................. 19
Section 9.2. Insurance....................................................... 19
Section 9.3. Maintenance of Properties....................................... 19
Section 9.4. Payment of Taxes and Claims..................................... 19
Section 9.5. Corporate Existence, etc........................................ 20
Section 10. Negative Covenants.............................................. 20
Section 10.1. Consolidated Net Worth.......................................... 20
Section 10.2. Limitations on Debt............................................. 20
Section 10.3. Limitations on Priority Debt.................................... 20
Section 10.4. Interest Coverage Ratio......................................... 20
Section 10.5. Limitation on Liens............................................. 20
Section 10.6. Investments..................................................... 22
Section 10.7. Mergers, Consolidations and Sales of Assets..................... 23
Section 10.8. Sale-and-Leasebacks............................................. 24
Section 10.9. Change in Business.............................................. 24
Section 10.10. Guaranties...................................................... 24
Section 10.11. Hazardous Materials............................................. 24
Section 10.12. Transactions with Affiliates.................................... 24
Section 11. Events of Default............................................... 25
Section 12. Remedies on Default, etc........................................ 27
</TABLE>
-ii-
<PAGE>
<TABLE>
<CAPTION>
Section Heading Page
<S> <C> <C>
Section 12.1. Acceleration.................................................... 27
Section 12.2. Other Remedies.................................................. 27
Section 12.3. Rescission...................................................... 28
Section 12.4. No Waivers or Election of Remedies, Expenses, etc............... 28
Section 13. Registration; Exchange; Substitution of Notes................... 28
Section 13.1. Registration of Notes........................................... 28
Section 13.2. Transfer and Exchange of Notes.................................. 28
Section 13.3. Replacement of Notes............................................ 29
Section 14. Payments on Notes............................................... 29
Section 14.1. Place of Payment................................................ 29
Section 14.2. Home Office Payment............................................. 30
Section 15. Expenses, etc................................................... 30
Section 15.1. Transaction Expenses............................................ 30
Section 15.2. Survival........................................................ 30
Section 16. Survival of Representations and Warranties; Entire Agreement.... 30
Section 17. Amendment and Waiver............................................ 31
Section 17.1. Requirements.................................................... 31
Section 17.2. Solicitation of Holders of Notes................................ 31
Section 17.3. Binding Effect, etc............................................. 31
Section 17.4. Notes Held by Company, etc...................................... 32
Section 18. Notices......................................................... 32
Section 19. Reproduction of Documents....................................... 32
Section 20. Confidential Information........................................ 33
Section 21. Substitution of Purchaser....................................... 34
Section 22. Additional Debt................................................. 34
Section 23. Miscellaneous................................................... 34
Section 23.1. Successors and Assigns.......................................... 34
Section 23.2. Payments Due on Non-Business Days............................... 34
Section 23.3. Severability.................................................... 35
</TABLE>
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Section Heading Page
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Section 23.4. Construction.................................................... 35
Section 23.5. Counterparts.................................................... 35
Section 23.6. Governing Law................................................... 35
Signature............................................................................ 36
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Schedule A - Information Relating To Purchasers
Schedule B - Defined Terms
Schedule 5.4 - Subsidiaries of the Company and Ownership of Subsidiary StoCK
Schedule 5.5 - Financial Statements
Schedule 5.11 - Patents, etc.
Schedule 5.15 - Existing Debt
Schedule 10.5 - Existing Liens
Exhibit 1 - Form of 7.93% Senior Note due December 27, 2004
Exhibit 4.4(a) - Form of Opinion of Special Counsel for the Company
Exhibit 4.4(b) - Form of Opinion of General Counsel of the Company
Exhibit 4.4(c) - Form of Opinion of Special Counsel for the Purchasers
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BINDLEY WESTERN INDUSTRIES, INC.
10333 North Meridian Street, Suite 300
Indianapolis, Indiana 46290
7.93% Senior Notes due December 27, 2004
December 15, 1999
TO EACH OF THE PURCHASERS LISTED IN
THE ATTACHED SCHEDULE A:
Ladies and Gentlemen:
BINDLEY WESTERN INDUSTRIES, INC., an Indiana corporation (the "Company"),
agrees with you as follows:
Section 1. Authorization of Notes.
The Company will authorize the issue and sale of $25,000,000 aggregate
principal amount of its 7.93% Senior Notes due December 27, 2004 (the "Notes,"
such term to include any such notes issued in substitution therefor pursuant to
Section 13 of this Agreement). The Notes shall be substantially in the form set
out in Exhibit 1, with such changes therefrom, if any, as may be approved by you
and the Company. Certain capitalized terms used in this Agreement are defined
in Schedule B; references to a "Schedule" or an "Exhibit" are, unless otherwise
specified, to a Schedule or an Exhibit attached to this Agreement.
Section 2. Sale and Purchase of Notes.
Subject to the terms and conditions of this Agreement, the Company will
issue and sell to you and you will purchase from the Company, at the Closing
provided for in Section 3, Notes in the principal amount specified opposite your
name in Schedule A at the purchase price of 100% of the principal amount
thereof.
Section 3. Closing.
The sale and purchase of the Notes to be purchased by you shall occur at
the offices of Chapman and Cutler, 111 West Monroe Street, Chicago, Illinois
60603, at 11:00 a.m. Chicago time, at a closing (the "Closing") on December 27,
1999 or on such other Business Day as may be agreed upon by the Company and you.
On or prior to the date of the Closing, the Company shall pay by wire transfer
of immediately available funds $5,000,000 aggregate principal amount of 1996
Notes plus all accrued and unpaid interest on the 1996 Notes. At the Closing
you shall
<PAGE>
surrender the 1996 Notes in an outstanding principal amount of $30,000,000 to
the Company and in exchange therefore, the Company shall issue and deliver to
you the Notes to be purchased by you in the form of a single Note (or such
greater number of Notes in denominations of at least $100,000 as you may
request) dated the date of the Closing and registered in your name (or in the
name of your nominee) and pay $5,000,000 aggregate principal amount of the 1996
Notes plus all accrued and unpaid interest on the 1996 Notes. If at the Closing
the Company shall fail to tender such Notes or shall have failed to pay
$5,000,000 aggregate principal amount of the 1996 Notes plus all accrued and
unpaid interest on the 1996 Notes as aforesaid to you as provided above in this
Section 3, or any of the conditions specified in Section 4 shall not have been
fulfilled to your satisfaction, you shall, at your election, be relieved of all
further obligations under this Agreement, without thereby waiving any rights you
may have by reason of such failure or such nonfulfillment.
Section 4. Conditions to Closing.
Your obligation to purchase and pay for the Notes to be sold to you at the
Closing is subject to the fulfillment to your satisfaction, prior to or at the
Closing, of the following conditions:
Section 4.1. Representations and Warranties. The representations and
warranties of the Company in this Agreement shall be correct when made and at
the time of the Closing.
Section 4.2. Performance; No Default. The Company shall have performed
and complied with all agreements and conditions contained in this Agreement
required to be performed or complied with by it prior to or at the Closing, and
after giving effect to the issue and sale of the Notes (and the application of
the proceeds thereof as contemplated by Section 5.14), no Default or Event of
Default shall have occurred and be continuing. Neither the Company nor any
Subsidiary shall have entered into any transaction since the date of the most
recent financial statements listed in Schedule 5.5 that would have been
prohibited by the covenants contained in Section 10 hereof had such covenants
applied since such date.
Section 4.3. Compliance Certificates.
(a) Officer's Certificate. The Company shall have delivered to you an
Officer's Certificate, dated the date of the Closing, certifying that the
conditions specified in Sections 4.1, 4.2 and 4.8 have been fulfilled.
(b) Secretary's Certificate. The Company shall have delivered to you a
certificate certifying as to the resolutions attached thereto and other
corporate proceedings relating to the authorization, execution and delivery of
the Notes and the Agreements.
Section 4.4. Opinions of Counsel. You shall have received opinions in
form and substance satisfactory to you, dated the date of the Closing (a) from
Baker & Daniels, counsel for the Company, covering the matters set forth in
Exhibit 4.4(a) (and the Company hereby instructs its counsel to deliver such
opinion to you) (b) from Michael McCormick, General Counsel of the
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Company, covering the matters set forth in Exhibit 4.4(b), and (c) from Chapman
and Cutler, your special counsel in connection with such transactions,
substantially in the form set forth in Exhibit 4.4(c).
Section 4.5. Purchase Permitted By Applicable Law, etc. On the date of the
Closing your purchase of Notes shall (i) be permitted by the laws and
regulations of each jurisdiction to which you are subject, without recourse to
provisions (such as Section 1405(a)(8) of the New York Insurance Law) permitting
limited investments by insurance companies without restriction as to the
character of the particular investment, (ii) not violate any applicable law or
regulation (including, without limitation, Regulation T, U or X of the Board of
Governors of the Federal Reserve System) and (iii) not subject you to any tax,
penalty or liability under or pursuant to any applicable law or regulation,
which law or regulation was not in effect on the date hereof. If requested by
you, you shall have received an Officer's Certificate certifying as to such
matters of fact as you may reasonably specify to enable you to determine whether
such purchase is so permitted.
Section 4.6. Payment of Special Counsel Fees. Without limiting the
provisions of Section 15.1, the Company shall have paid on or before the Closing
the fees, charges and disbursements of your special counsel referred to in
Section 4.4 to the extent reflected in a statement of such counsel rendered to
the Company at least one Business Day prior to the Closing.
Section 4.7. Private Placement Number. A Private Placement number issued
by Standard & Poor's CUSIP Service Bureau (in cooperation with the Securities
Valuation Office of the National Association of Insurance Commissioners) shall
have been obtained for the Notes.
Section 4.8. Changes in Corporate Structure. The Company shall not have
changed its jurisdiction of incorporation or been a party to any merger or
consolidation prohibited by Section 10.7 and shall not have succeeded to all or
any substantial part of the liabilities of any other entity, at any time
following the date of the most recent financial statements referred to in
Schedule 5.5.
Section 4.9. Proceedings and Documents. All corporate and other proceedings
in connection with the transactions contemplated by this Agreement and all
documents and instruments incident to such transactions shall be satisfactory to
you and your special counsel, and you and your special counsel shall have
received all such counterpart originals or certified or other copies of such
documents as you or they may reasonably request.
Section 5. Representations and Warranties of the Company
The Company represents and warrants to you that:
Section 5.1. Organization; Power and Authority. The Company is a
corporation duly organized and validly existing under the laws of its
jurisdiction of incorporation, and is duly qualified as a foreign corporation
and is in good standing in each jurisdiction in which such
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qualification is required by law, other than those jurisdictions as to which the
failure to be so qualified or in good standing could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. The Company
has the corporate power and authority to own or hold under lease the properties
it purports to own or hold under lease, to transact the business it transacts
and proposes to transact, to execute and deliver this Agreement and the Notes
and to perform the provisions hereof and thereof.
Section 5.2. Authorization, etc. This Agreement and the Notes have been
duly authorized by all necessary corporate action on the part of the Company,
and this Agreement constitutes, and upon execution and delivery thereof each
Note will constitute, a legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except as such
enforceability may be limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and (ii) general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
Section 5.3. Disclosure. This Agreement, the documents, certificates or
other writings delivered to you by or on behalf of the Company in connection
with the transactions contemplated hereby and the financial statements listed in
Schedule 5.5, taken as a whole, do not contain any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein not misleading in light of the circumstances under which they
were made. Since December 31, 1998, there has been no change in the financial
condition, operations, business, properties or prospects of the Company or any
Subsidiary except changes that individually or in the aggregate could not
reasonably be expected to have a Material Adverse Effect. There is no fact known
to the Company that could reasonably be expected to have a Material Adverse
Effect that has not been set forth herein or in the other documents,
certificates and other writings delivered to you by or on behalf of the Company
specifically for use in connection with the transactions contemplated hereby.
Section 5.4. Organization and Ownership of Shares of Subsidiaries;
Affiliates. (a) Schedule 5.4 contains (except as noted therein) complete and
correct lists (i) of the Company's Subsidiaries, showing, as to each Subsidiary,
the correct name thereof, the jurisdiction of its organization, and the
percentage of shares of each class of its capital stock or similar equity
interests outstanding owned by the Company and each other Subsidiary, (ii) of
the Company's Affiliates, other than Subsidiaries, and (iii) of the Company's
directors and senior officers.
(b) All of the outstanding shares of capital stock or similar equity
interests of each Subsidiary shown in Schedule 5.4 as being owned by the Company
and its Subsidiaries have been validly issued, are fully paid and nonassessable
and are owned by the Company or another Subsidiary free and clear of any Lien
(except as otherwise disclosed in Schedule 5.4).
(c) Each Subsidiary identified in Schedule 5.4 is a corporation or other
legal entity duly organized, validly existing and in good standing under the
laws of its jurisdiction of organization, and is duly qualified as a foreign
corporation or other legal entity and is in good standing in each
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jurisdiction in which such qualification is required by law, other than those
jurisdictions as to which the failure to be so qualified or in good standing
could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect. Each such Subsidiary has the corporate or other power
and authority to own or hold under lease the properties it purports to own or
hold under lease and to transact the business it transacts and proposes to
transact.
(d) No Subsidiary is a party to, or otherwise subject to any legal
restriction or any agreement (other than this Agreement, the agreements listed
on Schedule 5.4 and customary limitations imposed by corporate law statutes)
restricting the ability of such Subsidiary to pay dividends out of profits or
make any other similar distributions of profits to the Company or any of its
Subsidiaries that owns outstanding shares of capital stock or similar equity
interests of such Subsidiary.
Section 5.5. Financial Statements. The Company has delivered to each
Purchaser copies of the financial statements of the Company and its Subsidiaries
listed on Schedule 5.5. All of said financial statements (including in each case
the related schedules and notes) fairly present in all material respects the
consolidated financial position of the Company and its Subsidiaries as of the
respective dates specified in such Schedule and the consolidated results of
their operations and cash flows for the respective periods so specified and have
been prepared in accordance with GAAP consistently applied throughout the
periods involved except as set forth in the notes thereto (subject, in the case
of any interim financial statements, to normal, recurring year-end adjustments).
Section 5.6. Compliance with Laws, Other Instruments, etc. The execution,
delivery and performance by the Company of this Agreement and the Notes will not
(i) contravene, result in any breach of, or constitute a default under, or
result in the creation of any Lien in respect of any property of the Company or
any Subsidiary under, any indenture, mortgage, deed of trust, loan, purchase or
credit agreement, lease, corporate charter or by-laws, or any other agreement or
instrument to which the Company or any Subsidiary is bound or by which the
Company or any Subsidiary or any of their respective properties may be bound or
affected, (ii) conflict with or result in a breach of any of the terms,
conditions or provisions of any order, judgment, decree, or ruling of any court,
arbitrator or Governmental Authority applicable to the Company or any Subsidiary
or (iii) violate any provision of any statute or other rule or regulation of any
Governmental Authority applicable to the Company or any Subsidiary.
Section 5.7. Governmental Authorizations, etc. No consent, approval or
authorization of, or registration, filing or declaration with, any Governmental
Authority is required in connection with the execution, delivery or performance
by the Company of this Agreement or the Notes.
Section 5.8. Litigation; Observance of Agreements, Statutes and Orders.
(a) There are no actions, suits or proceedings pending or, to the knowledge of
the Company, threatened against or affecting the Company or any Subsidiary or
any property of the Company or any Subsidiary in any court or before any
arbitrator of any kind or before or by any Governmental Authority that,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.
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(b) Neither the Company nor any Subsidiary is in default under any term of
any agreement or instrument to which it is a party or by which it is bound, or
any order, judgment, decree or ruling of any court, arbitrator or Governmental
Authority or is in violation of any applicable law, ordinance, rule or
regulation (including without limitation Environmental Laws) of any Governmental
Authority, which default or violation, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect.
Section 5.9. Taxes. The Company and its Subsidiaries have filed all tax
returns that are required to have been filed in any jurisdiction, and have paid
all taxes shown to be due and payable on such returns and all other taxes and
assessments levied upon them or their properties, assets, income or franchises,
to the extent such taxes and assessments have become due and payable and before
they have become delinquent, except for any taxes and assessments (i) the amount
of which is not individually or in the aggregate Material or (ii) the amount,
applicability or validity of which is currently being contested in good faith by
appropriate proceedings and with respect to which the Company or a Subsidiary,
as the case may be, has established adequate reserves in accordance with GAAP.
The Company knows of no basis for any other tax or assessment that could
reasonably be expected to have a Material Adverse Effect. The charges, accruals
and reserves on the books of the Company and its Subsidiaries in respect of
Federal, state or other taxes for all fiscal periods are adequate. For all
taxable years ending on or before December 31, 1994, the Federal income tax
liability of the Company and its Subsidiaries has been satisfied and either the
period of limitations on assessment of additional Federal income tax has expired
or the Company and its Subsidiaries have entered into an agreement with the
Internal Revenue Service closing conclusively the total Federal tax liability
for the taxable year.
Section 5.10. Title to Property; Leases. The Company and its Subsidiaries
have good and sufficient title to their respective properties that individually
or in the aggregate are Material, including all such properties reflected in the
most recent audited balance sheet referred to in Section 5.5 or purported to
have been acquired by the Company or any Subsidiary after said date (except as
sold or otherwise disposed of in the ordinary course of business), in each case
free and clear of Liens prohibited by this Agreement. All leases that
individually or in the aggregate are Material are valid and subsisting and are
in full force and effect in all material respects.
Section 5.11. Licenses, Permits, etc. Except as disclosed in Schedule
5.11,
(a) the Company and its Subsidiaries own or possess all licenses,
permits, franchises, authorizations, patents, copyrights, service marks,
trademarks and trade names, or rights thereto, that individually or in the
aggregate are Material, without known conflict with the rights of others;
(b) to the best knowledge of the Company, no product of the Company
infringes in any Material respect any license, permit, franchise,
authorization, patent, copyright, service mark, trademark, trade name or
other right owned by any other Person; and
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(c) to the best knowledge of the Company, there is no Material
violation by any Person of any right of the Company or any of its
Subsidiaries with respect to any patent, copyright, service mark,
trademark, trade name or other right owned or used by the Company or any of
its Subsidiaries.
Section 5.12. Compliance with ERISA. (a) The Company and each ERISA
Affiliate have operated and administered each Plan in compliance with all
applicable laws except for such instances of noncompliance as have not resulted
in and could not reasonably be expected to result in a Material Adverse Effect.
Neither the Company nor any ERISA Affiliate has incurred any liability pursuant
to Title I or IV of ERISA or the penalty or excise tax provisions of the Code
relating to employee benefit plans (as defined in Section 3 of ERISA), and no
event, transaction or condition has occurred or exists that could reasonably be
expected to result in the incurrence of any such liability by the Company or any
ERISA Affiliate, or in the imposition of any Lien on any of the rights,
properties or assets of the Company or any ERISA Affiliate, in either case
pursuant to Title I or IV of ERISA or to such penalty or excise tax provisions
or to Section 401(a)(29) or 412 of the Code, other than such liabilities or
Liens as would not be individually or in the aggregate Material.
(b) The present value of the aggregate benefit liabilities under each of
the Plans (other than Multiemployer Plans), determined as of the end of such
Plan's most recently ended plan year on the basis of the actuarial assumptions
specified for funding purposes in such Plan's most recent actuarial valuation
report, did not exceed the aggregate current value of the assets of such Plan
allocable to such benefit liabilities. The terms "benefit liabilities" has
the meaning specified in section 4001 of ERISA and the terms "current value" and
"present value" have the meaning specified in section 3 of ERISA.
(c) The Company and its ERISA Affiliates have not incurred withdrawal
liabilities (and are not subject to contingent withdrawal liabilities) under
section 4201 or 4204 of ERISA in respect of Multiemployer Plans that
individually or in the aggregate are Material.
(d) The expected post-retirement benefit obligation (determined as of the
last day of the Company's most recently ended fiscal year in accordance with
Financial Accounting Standards Board Statement No. 106, without regard to
liabilities attributable to continuation coverage mandated by section 4980B of
the Code) of the Company and its Subsidiaries is not Material.
(e) The execution and delivery of this Agreement and the issuance and sale
of the Notes hereunder will not involve any transaction that is subject to the
prohibitions of section 406 of ERISA or in connection with which a tax could be
imposed pursuant to section 4975(c)(1)(A)-(D) of the Code. The representation
by the Company in the first sentence of this Section 5.12(e) is made in reliance
upon and subject to the accuracy of your representation in Section 6.2 as to the
sources of the funds used to pay the purchase price of the Notes to be purchased
by you.
Section 5.13. Private Offering by the Company. Neither the Company nor
anyone acting on its behalf has offered the Notes or any similar securities for
sale to, or solicited any offer to
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buy any of the same from, or otherwise approached or negotiated in respect
thereof with, any person other than you. Neither the Company nor anyone acting
on its behalf has taken, or will take, any action that would subject the
issuance or sale of the Notes to the registration requirements of Section 5 of
the Securities Act.
Section 5.14. Use of Proceeds; Margin Regulations. The Company will apply
the proceeds of the sale of the Notes to refinance the $30,000,000 aggregate
principal amount of the 7.25% Senior Notes of the Company dated December 27,
1996. No part of the proceeds from the sale of the Notes hereunder will be used,
directly or indirectly, for the purpose of buying or carrying any margin stock
within the meaning of Regulation U of the Board of Governors of the Federal
Reserve System (12 CFR 222), or for the purpose of buying or carrying or trading
in any securities under such circumstances as to involve the Company in a
violation of Regulation X of said Board (12 CFR 224) or to involve any broker or
dealer in a violation of Regulation T of said Board (12 CFR 220). As used in
this Section, the terms "margin stock" and "purpose of buying or carrying" shall
have the meanings assigned to them in said Regulation U.
Section 5.15. Existing Debt; Future Liens. (a) Except as described
therein, Schedule 5.15 sets forth a complete and correct list of all outstanding
Debt of the Company and its Subsidiaries as of November 30, 1999, since which
date there has been no Material change in the amounts, interest rates, sinking
funds, installment payments or maturities of the Debt of the Company or its
Subsidiaries. Neither the Company nor any Subsidiary is in default and no waiver
of default is currently in effect, in the payment of any principal or interest
on any Debt of the Company or such Subsidiary and no event or condition exists
with respect to any Debt of the Company or any Subsidiary that would permit (or
that with notice or the lapse of time, or both, would permit) one or more
Persons to cause such Debt to become due and payable before its stated maturity
or before its regularly scheduled dates of payment.
(b) Except as disclosed in Schedule 5.15, neither the Company nor any
Subsidiary has agreed or consented to cause or permit in the future (upon the
happening of a contingency or otherwise) any of its property, whether now owned
or hereafter acquired, to be subject to a Lien not permitted by Section 10.5.
Section 5.16. Foreign Assets Control Regulations, etc. Neither the sale of
the Notes by the Company hereunder nor its use of the proceeds thereof will
violate the Trading with the Enemy Act, as amended, or any of the foreign assets
control regulations of the United States Treasury Department (31 CFR, Subtitle
B, Chapter V, as amended) or any enabling legislation or executive order
relating thereto.
Section 5.17. Status under Certain Statutes. Neither the Company nor any
Subsidiary is subject to regulation under the Investment Company Act of 1940, as
amended, the Public Utility Holding Company Act of 1935, as amended, the
Interstate Commerce Act, as amended, or the Federal Power Act, as amended.
Section 5.18. Environmental Matters. Neither the Company nor any
Subsidiary has knowledge of any claim or has received any notice of any claim,
and no proceeding has been
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instituted raising any claim against the Company or any of its Subsidiaries or
any of their respective real properties now or formerly owned, leased or
operated by any of them or other assets, alleging any damage to the environment
or violation of any Environmental Laws, except, in each case, such as could not
reasonably be expected to result in a Material Adverse Effect. Except as
otherwise disclosed to you in writing:
(a) neither the Company nor any Subsidiary has knowledge of any
facts which would give rise to any claim, public or private, of violation
of Environmental Laws or damage to the environment emanating from,
occurring on or in any way related to real properties now or formerly
owned, leased or operated by any of them or to other assets or their use,
except, in each case, such as could not reasonably be expected to result in
a Material Adverse Effect;
(b) neither the Company nor any of its Subsidiaries has stored any
Hazardous Materials on real properties now or formerly owned, leased or
operated by any of them and or has disposed of any Hazardous Materials in a
manner contrary to any Environmental Laws in each case in any manner that
could reasonably be expected to result in a Material Adverse Effect; and
(c) all buildings on all real properties now owned, leased or
operated by the Company or any of its Subsidiaries are in compliance with
applicable Environmental Laws, except where failure to comply could not
reasonably be expected to result in a Material Adverse Effect.
Section 5.19. Notes Rank Pari Passu. The obligations of the Company under
this Agreement and the Notes rank at least pari passu in right of payment with
all other senior unsecured Debt of the Company, including, without limitation,
all senior unsecured Debt of the Company described in Section 5.15 hereto.
Section 5.20. Computer 2000 Compliant. The Company's and its Subsidiaries'
internal business and computer systems will be year 2000 compliant in all
material respects in a timely manner and the advent of the year 2000 and its
impact on said internal business and computer systems are not expected to have a
Material Adverse Effect.
Section 6. Representations of the Purchaser.
Section 6.1. Purchase for Investment. You represent that you are purchasing
the Notes for your own account or for one or more separate accounts maintained
by you or for the account of one or more pension or trust funds and not with a
view to the distribution thereof, provided that the disposition of your or their
property shall at all times be within your or their control. You understand that
the Notes have not been registered under the Securities Act and may be resold
only if registered pursuant to the provisions of the Securities Act or if an
exemption from registration is available, except under circumstances where
neither such registration nor such an exemption is required by law, and that the
Company is not required to register the Notes.
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Section 6.2. Source of Funds. You represent that at least one of the
following statements is an accurate representation as to each source of funds (a
"Source") to be used by you to pay the purchase price of the Notes to be
purchased by you hereunder:
(a) if you are an insurance company, the Source is an "insurance
company general account" within the meaning of Department of Labor
Prohibited Transaction Exemption 95-60 ("PTE") (issued July 12, 1995) and
there is no "employee benefit plan" (within the meaning of Section 3(3) of
ERISA or Section 4975(e)(1) of the Code), treating as a single plan, all
plans maintained by the same employer or employee organization, with
respect to which the amount of the general account reserves and liabilities
for all contracts held by or on behalf of such plan, exceed ten percent
(10%) of the total reserves and liabilities of such general account
(exclusive of separate account liabilities) plus surplus, as set forth in
the NAIC Annual Statement filed with your state of domicile; or
(b) to the extent that any part of the Source constitutes assets
allocated to any separate account maintained by you in which any employee
benefit plan (or its related trust) has any interest, (i) such separate
account is a "pooled separate account" within the meaning of Prohibited
Transaction Class Exemption 90-1, as amended, in which case you have
disclosed to the Company the name of each employee benefit plan whose
assets in such separate account exceed 10% of the total assets or are
expected to exceed 10% of the total assets of such account as of the date
of such purchase (and for the purposes of this paragraph (b), all employee
benefit plans maintained by the same employer or employee organization are
deemed to be a single plan), or (ii) such separate account contains only
the assets of a specific employee benefit plan, complete and accurate
information as to the identity of which you have delivered to the Company;
or
(c) the Source is one or more employee benefit plans, or a separate
account or trust fund comprised of one or more employee benefit plans, each
of which has been identified to the Company in writing pursuant to this
paragraph (e); or
(d) the Source does not include assets of any employee benefit plan,
other than a plan exempt from the coverage of ERISA.
As used in this Section 6.2, the terms "employee benefit plan,"
"governmental plan," "party in interest" and "separate account" shall have the
respective meanings assigned to such terms in Section 3 of ERISA.
The Company shall deliver a certificate on the date of the Closing, with
respect to you and on or prior to the date of any transfer of the Notes, with
respect to any subsequent holder of the Notes, which certificate shall either
state that (i) it is neither a "party in interest" (as defined in Title I,
Section 3(14) of ERISA) nor a "disqualified person" (as defined in Section
4975(e)(2) of the Code), with respect to any plan identified pursuant to
paragraphs (b) or (e) above, or (ii) with respect to any plan, identified
pursuant to paragraph (c) above, neither it nor any "affiliate" (as defined in
Section V(c) of the QPAM Exemption) has at this time, and during the
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immediately preceding one year has exercised the authority to appoint or
terminate said QPAM as manager of the assets of any plan identified in writing
pursuant to paragraph (c) above or to negotiate the terms of said QPAM's
management agreement on behalf of any such identified plans.
Section 7. Information as to Company
Section 7.1. Financial and Business Information. From and after the date of
this Agreement, the Company shall deliver to you and each holder of Notes:
(a) Quarterly Statements -- within 60 days after the end of each
quarterly fiscal period in each fiscal year of the Company (other than the
last quarterly fiscal period of each such fiscal year), duplicate copies
of:
(i) a consolidated and consolidating balance sheets of the
Company and its Subsidiaries as at the end of such quarter, and
(ii) consolidated and consolidating statements of income,
changes in shareholders' equity and cash flows of the Company and its
Subsidiaries for such quarter and (in the case of the second and third
quarters) for the portion of the fiscal year ending with such quarter,
setting forth in each case in comparative form the figures for the
corresponding periods in the previous fiscal year, all in reasonable
detail, prepared in accordance with GAAP applicable to quarterly financial
statements generally, and certified by a Senior Financial Officer as fairly
presenting, in all material respects, the financial position of the
companies being reported on and their results of operations and cash flows,
subject to changes resulting from year-end adjustments, provided that
delivery within the time period specified above of copies of the Company's
Quarterly Report on Form 10-Q prepared in compliance with the requirements
therefor and filed with the Securities and Exchange Commission shall be
deemed to satisfy the requirements of this Section 7.1(a);
(b) Annual Statements -- within 120 days after the end of each
fiscal year of the Company, duplicate copies of,
(i) a consolidated and consolidating balance sheets of the
Company and its Subsidiaries, as at the end of such year, and
(ii) consolidated and consolidating statements of income,
changes in shareholders' equity and cash flows of the Company and its
Subsidiaries, for such year,
setting forth in each case in comparative form the figures for the previous
fiscal year, all in reasonable detail, prepared in accordance with GAAP,
and accompanied by an opinion thereon of independent certified public
accountants of recognized national standing,
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which opinion shall state that such financial statements present fairly, in
all material respects, the financial position of the companies being
reported upon and their results of operations and cash flows and have been
prepared in conformity with GAAP, and that the examination of such
accountants in connection with such financial statements has been made in
accordance with generally accepted auditing standards, and that such audit
provides a reasonable basis for such opinion in the circumstances, provided
that the delivery within the time period specified above of the Company's
Annual Report on Form 10-K for such fiscal year (together with the
Company's annual report to shareholders, if any, prepared pursuant to Rule
14a-3 under the Exchange Act) prepared in accordance with the requirements
therefor and filed with the Securities and Exchange Commission, shall be
deemed to satisfy the requirements of this Section 7.1(b);
(c) SEC and Other Reports -- promptly upon their becoming
available, one copy of (i) each financial statement, report, notice or
proxy statement sent by the Company or any Subsidiary to public securities
holders generally, and (ii) each regular or periodic report, each
registration statement (without exhibits except as expressly requested by
such holder), and each prospectus and all amendments thereto filed by the
Company or any Subsidiary with the Securities and Exchange Commission and
of all press releases and other statements made available generally by the
Company or any Subsidiary to the public concerning developments that are
Material;
(d) Notice of Default or Event of Default -- promptly, and in any
event within five days after a Responsible Officer becoming aware of the
existence of any Default or Event of Default or that any Person has given
any notice or taken any action with respect to a claimed default hereunder
or that any Person has given any notice or taken any action with respect to
a claimed default of the type referred to in Section 11(f), a written
notice specifying the nature and period of existence thereof and what
action the Company is taking or proposes to take with respect thereto;
(e) ERISA Matters -- promptly, and in any event within five days
after a Responsible Officer becoming aware of any of the following, a
written notice setting forth the nature thereof and the action, if any,
that the Company or an ERISA Affiliate proposes to take with respect
thereto:
(i) with respect to any Plan, any reportable event, as
defined in section 4043(b) of ERISA and the regulations thereunder,
for which notice thereof has not been waived pursuant to such
regulations as in effect on the date hereof; or
(ii) the taking by the PBGC of steps to institute, or the
threatening by the PBGC of the institution of, proceedings under
section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Plan, or the receipt by the Company or any
ERISA Affiliate of a notice from a Multiemployer Plan that such action
has been taken by the PBGC with respect to such Multiemployer Plan; or
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(iii) any event, transaction or condition that could result in
the incurrence of any liability by the Company or any ERISA Affiliate
pursuant to Title I or IV of ERISA or the penalty or excise tax
provisions of the Code relating to employee benefit plans, or in the
imposition of any Lien on any of the rights, properties or assets of
the Company or any ERISA Affiliate pursuant to Title I or IV of ERISA
or such penalty or excise tax provisions, if such liability or Lien,
taken together with any other such liabilities or Liens then existing,
could reasonably be expected to have a Material Adverse Effect;
(f) Notices from Governmental Authority -- promptly, and in any
event within 10 Business Days of receipt thereof, copies of any notice to
the Company or any Subsidiary from any Federal or state Governmental
Authority relating to any order, ruling, statute or other law or regulation
that could reasonably be expected to have a Material Adverse Effect;
(g) Projections -- if any other creditor of the Company is given any
of the following projections, then simultaneously therewith, projected
annual consolidated balance sheet and statement of income of the Company
and its Subsidiaries for any fiscal period of the Company; and
(h) Requested Information -- with reasonable promptness, such other
data and information relating to the business, operations, affairs,
financial condition, assets or properties of the Company or any of its
Subsidiaries or relating to the ability of the Company to perform its
obligations hereunder and under the Notes as from time to time may be
reasonably requested by any such holder of Notes; provided, however, that
the Company shall not be required to disclose trade secrets.
Section 7.2. Officer's Certificate. Each set of financial statements
delivered to a holder of Notes pursuant to Section 7.1(a) or Section 7.1(b)
hereof shall be accompanied by a certificate of a Senior Financial Officer
setting forth:
(a) Covenant Compliance -- the information (including detailed
calculations) required in order to establish whether the Company was in
compliance with the requirements of Section 10 during the quarterly or
annual period covered by the statements then being furnished (including
with respect to each such Section, where applicable, the calculations of
the maximum or minimum amount, ratio or percentage, as the case may be,
permissible under the terms of such Sections, and the calculation of the
amount, ratio or percentage then in existence); and
(b) Event of Default -- a statement that such officer has reviewed
the relevant terms hereof and has made, or caused to be made, under his or
her supervision, a review of the transactions and conditions of the Company
and its Subsidiaries from the beginning of the quarterly or annual period
covered by the statements then being furnished to the date of the
certificate and that such review shall not have disclosed the existence
during such period of any condition or event that constitutes a Default or
an
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Event of Default or, if any such condition or event existed or exists
(including, without limitation, any such event or condition resulting from
the failure of the Company or any Subsidiary to comply with any
Environmental Law), specifying the nature and period of existence thereof
and what action the Company shall have taken or proposes to take with
respect thereto.
Section 7.3. Inspection. The Company shall permit the representatives of
each holder of Notes that is an Institutional Investor:
(a) No Default -- if no Default or Event of Default then exists,
at the expense of such holder and upon reasonable prior notice to the
Company, to visit the principal executive office of the Company, to discuss
the affairs, finances and accounts of the Company and its Subsidiaries with
the Company's officers, and (with the consent of the Company, which consent
will not be unreasonably withheld) its independent public accountants, and
(with the consent of the Company, which consent will not be unreasonably
withheld) to visit the other offices and properties of the Company and each
Subsidiary, all at such reasonable times and as often as may be reasonably
requested in writing; and
(b) Default -- if a Default or Event of Default then exists, at
the expense of the Company to visit and inspect any of the offices or
properties of the Company or any Subsidiary, to examine all their
respective books of account, records, reports and other papers, to make
copies and extracts therefrom, and to discuss their respective affairs,
finances and accounts with their respective officers and independent public
accountants (and by this provision the Company authorizes said accountants
to discuss the affairs, finances and accounts of the Company and its
Subsidiaries), all at such times and as often as may be requested.
Section 8. Required Payment and Optional Prepayment of the Notes.
Section 8.1. Required Payments. The entire principal amount of the Notes
shall become due and payable on December 27, 2004.
Section 8.2. Optional Prepayments with Make-Whole Amount. The Company
may, at its option, upon notice as provided below, prepay at any time all, or
from time to time any part of, the Notes (but if in part then in a minimum
principal amount of $1,000,000) at 100% of the principal amount so prepaid, plus
the Make-Whole Amount determined for the prepayment date with respect to such
principal amount. The Company will give each holder of Notes written notice of
each optional prepayment under this Section 8.2 not less than 30 days and not
more than 60 days prior to the date fixed for such prepayment. Each such notice
shall specify such date, the aggregate principal amount of the Notes to be
prepaid on such date, the principal amount of each Note held by such holder to
be prepaid (determined in accordance with Section 8.3), and the interest to be
paid on the prepayment date with respect to such principal amount being prepaid,
and shall be accompanied by a certificate of a Senior Financial Officer as to
the estimated Make-Whole Amount due in connection with such prepayment
(calculated as if
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the date of such notice were the date of the prepayment), setting forth the
details of such computation. Two Business Days prior to such prepayment, the
Company shall deliver to each holder of Notes a certificate of a Senior
Financial Officer specifying the calculation of such Make-Whole Amount as of the
specified prepayment date.
Section 8.3. Allocation of Partial Prepayments. In the case of each
partial prepayment of the Notes, the principal amount of the Notes to be prepaid
shall be allocated among all of the Notes at the time outstanding in proportion,
as nearly as practicable, to the respective unpaid principal amounts thereof not
theretofore called for prepayment.
Section 8.4. Maturity; Surrender, etc. In the case of each prepayment
of Notes pursuant to this Section 8, the principal amount of each Note to be
prepaid shall mature and become due and payable on the date fixed for such
prepayment, together with interest on such principal amount accrued to such date
and the applicable Make-Whole Amount, if any. From and after such date, unless
the Company shall fail to pay such principal amount when so due and payable,
together with the interest and Make-Whole Amount, if any, as aforesaid, interest
on such principal amount shall cease to accrue. Any Note paid or prepaid in full
shall be surrendered to the Company and cancelled and shall not be reissued, and
no Note shall be issued in lieu of any prepaid principal amount of any Note.
Section 8.5. Purchase of Notes. The Company will not and will not permit
any Affiliate to purchase, redeem, prepay or otherwise acquire, directly or
indirectly, any of the outstanding Notes except upon the payment or prepayment
of the Notes in accordance with the terms of this Agreement and the Notes. The
Company will promptly cancel all Notes acquired by it or any Affiliate pursuant
to any payment, prepayment or purchase of Notes pursuant to any provision of
this Agreement and no Notes may be issued in substitution or exchange for any
such Notes.
Section 8.6. Make-Whole Amount. The term "Make-Whole Amount" means, with
respect to any Note, an amount equal to the excess, if any, of the Discounted
Value of the Remaining Scheduled Payments with respect to the Called Principal
of such Note over the amount of such Called Principal, provided that the Make-
Whole Amount may in no event be less than zero. For the purposes of determining
the Make-Whole Amount, the following terms have the following meanings:
"Called Principal" means, with respect to any Note, the principal of
such Note that is to be prepaid pursuant to Section 8.2 or 8.7 or has
become or is declared to be immediately due and payable pursuant to Section
12.1, as the context requires.
"Discounted Value" means, with respect to the Called Principal of any
Note, the amount obtained by discounting all Remaining Scheduled Payments
with respect to such Called Principal from their respective scheduled due
dates to the Settlement Date with respect to such Called Principal, in
accordance with accepted financial practice and at a discount factor
(applied on the same periodic basis as that on which interest on the Notes
is payable) equal to the Reinvestment Yield with respect to such Called
Principal.
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"Reinvestment Yield" means, with respect to the Called Principal of
any Note, 0.50% over the yield to maturity implied by (i) the yields
reported, as of 10:00 A.M. (New York City time) on the second Business Day
preceding the Settlement Date with respect to such Called Principal, on the
display designated as "PX-1" on the Bloomberg Financial Market Screen (or
such other display as may replace PX-1 on the Bloomberg Financial Market
Screen) for actively traded U.S. Treasury securities having a maturity
equal to the Remaining Average Life of such Called Principal as of such
Settlement Date, or (ii) if such yields are not reported as of such time or
the yields reported as of such time are not ascertainable, the Treasury
Constant Maturity Series Yields reported, for the latest day for which such
yields have been so reported as of the second Business Day preceding the
Settlement Date with respect to such Called Principal, in Federal Reserve
Statistical Release H. 15 (519) (or any comparable successor publication)
for actively traded U.S. Treasury securities having a constant maturity
equal to the Remaining Average Life of such Called Principal as of such
Settlement Date. Such implied yield will be determined, if necessary, by
(a) converting U.S. Treasury bill quotations to bond-equivalent yields in
accordance with accepted financial practice and (b) interpolating linearly
between (1) the actively traded U.S. Treasury security with the maturity
closest to and greater than the Remaining Average Life and (2) the actively
traded U.S. Treasury security with the maturity closest to and less than
the Remaining Average Life.
"Remaining Average Life" means, with respect to any Called Principal,
the number of years (calculated to the nearest one-twelfth year) obtained
by dividing (i) such Called Principal into (ii) the sum of the products
obtained by multiplying (a) the principal component of each Remaining
Scheduled Payment with respect to such Called Principal by (b) the number
of years (calculated to the nearest one-twelfth year) that will elapse
between the Settlement Date with respect to such Called Principal and the
scheduled due date of such Remaining Scheduled Payment.
"Remaining Scheduled Payments" means, with respect to the Called
Principal of any Note, all payments of such Called Principal and interest
thereon that would be due after the Settlement Date with respect to such
Called Principal if no payment of such Called Principal were made prior to
its scheduled due date, provided that if such Settlement Date is not a date
on which interest payments are due to be made under the terms of the Notes,
then the amount of the next succeeding scheduled interest payment will be
reduced by the amount of interest accrued to such Settlement Date and
required to be paid on such Settlement Date pursuant to Section 8.2, 8.7 or
12.1.
"Settlement Date" means, with respect to the Called Principal of any
Note, the date on which such Called Principal is to be prepaid pursuant to
Section 8.2 or 8.7 or has become or is declared to be immediately due and
payable pursuant to Section 12.1, as the context requires.
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Section 8.7. Change in Control.
(a) Notice of Change in Control or Control Event. The Company will, within
fifteen Business Days after any Responsible Officer has knowledge of the
occurrence of any Change in Control or Control Event, give written notice of
such Change in Control or Control Event to each holder of Notes unless notice in
respect of such Change in Control (or the Change in Control contemplated by such
Control Event) shall have been given pursuant to subparagraph (b) of this
Section 8.7. If a Change in Control has occurred, such notice shall contain and
constitute an offer to prepay Notes as described in subparagraph (c) of this
Section 8.7 and shall be accompanied by the certificate described in
subparagraph (g) of this Section 8.7.
(b) Condition to Company Action. The Company will not take any action that
consummates or finalizes a Change in Control unless (i) at least 30 days prior
to such action it shall have given to each holder of Notes written notice
containing and constituting an offer to prepay Notes as described in
subparagraph (c) of this Section 8.7, accompanied by the certificate described
in subparagraph (g) of this Section 8.7, and (ii) contemporaneously with such
action, it prepays all Notes required to be prepaid in accordance with this
Section 8.7.
(c) Offer to Prepay Notes. The offer to prepay Notes contemplated by
subparagraphs (a) and (b) of this Section 8.7 shall be an offer to prepay, in
accordance with and subject to this Section 8.7, all, but not less than all, the
Notes held by each holder (in this case only, "holder" in respect of any Note
registered in the name of a nominee for a disclosed beneficial owner shall mean
such beneficial owner) on a date specified in such offer (the "Proposed
Prepayment Date"). If such Proposed Prepayment Date is in connection with an
offer contemplated by subparagraph (a) of this Section 8.7, such date shall be
not less than 30 days and not more than 60 days after the date of such offer (if
the Proposed Prepayment Date shall not be specified in such offer, the Proposed
Prepayment Date shall be the 30th day after the date of such offer).
(d) Acceptance. A holder of Notes may accept the offer to prepay made
pursuant to this Section 8.7 by causing a notice of such acceptance to be
delivered to the Company at least 15 days prior to the Proposed Prepayment Date.
A failure by a holder of Notes to respond to an offer to prepay made pursuant to
this Section 8.7 shall be deemed to constitute an acceptance of such offer by
such holder.
(e) Prepayment. Prepayment of the Notes to be prepaid pursuant to this
Section 8.7 shall be at 100% of the principal amount of such Notes, plus the
Make-Whole Amount determined for the date of prepayment with respect to such
principal amount, together with interest on such Notes accrued to the date of
prepayment. The prepayment shall be made on the Proposed Prepayment Date except
as provided in subparagraph (f) of this Section 8.7.
(f) Deferral Pending Change in Control. The obligation of the Company to
prepay Notes pursuant to the offers required by subparagraph (b) and accepted in
accordance with subparagraph (d) of this Section 8.7 is subject to the
occurrence of the Change in Control in respect of which such offers and
acceptances shall have been made. In the event that such Change in Control does
not occur on the Proposed Prepayment Date in respect thereof, the
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prepayment shall be deferred until, and shall be made on the date on which, such
Change in Control occurs. The Company shall keep each holder of Notes reasonably
and timely informed of (i) any such deferral of the date of prepayment, (ii) the
date on which such Change in Control and the prepayment are expected to occur,
and (iii) any determination by the Company that efforts to effect such Change in
Control have ceased or been abandoned (in which case the offers and acceptances
made pursuant to this Section 8.7 in respect of such Change in Control shall be
deemed rescinded).
(g) Officer's Certificate. Each offer to prepay the Notes pursuant to
this Section 8.7 shall be accompanied by a certificate, executed by a Senior
Financial Officer of the Company and dated the date of such offer, specifying:
(i) the Proposed Prepayment Date; (ii) that such offer is made pursuant to this
Section 8.7; (iii) the principal amount of each Note offered to be prepaid; (iv)
the estimated Make-Whole Amount due in connection with such prepayment
(calculated as if the date of such notice were the date of the prepayment),
setting forth the details of such computation; (v) the interest that would be
due on each Note offered to be prepaid, accrued to the Proposed Prepayment Date;
(vi) that the conditions of this Section 8.7 have been fulfilled; and (vii) in
reasonable detail, the nature and date or proposed date of the Change in
Control. Two Business Days prior to such prepayment, the Company shall deliver
to each holder of Notes which has accepted or is deemed to have accepted the
Company's offer to prepay the Notes a certificate of a Senior Financial Officer
specifying the calculation of such Make-Whole Amount as of the specified
prepayment date.
(h) "Change in Control" Defined. "Change in Control" means each and every
issue, sale or other disposition of shares of stock of the Company which results
in any person (as such term is used in section 13(d) and section 14(d)(2) of the
Exchange Act) or related persons constituting a group (as such term is used in
Rule 13d-5 under the Exchange Act) (herein, an "Acquiring Person"), other than
any Approved Owner, becoming the "beneficial owners" (as such term is used in
Rule 13d-3 under the Exchange Act as in effect on the date of the Closing),
directly or indirectly, of more than 50% of the total voting power of all
classes then outstanding of the Company's voting stock.
(i) "Control Event" Defined. "Control Event" means:
(i) the execution by the Company or any of its Subsidiaries or
Affiliates of any agreement or letter of intent with respect to any
proposed transaction or event or series of transactions or events which,
individually or in the aggregate, may reasonably be expected to result in a
Change in Control,
(ii) the execution of any written agreement which, when fully
performed by the parties thereto, would result in a Change in Control, or
(iii) the making of any written offer by any Acquiring Person to
the holders of the common stock of the Company, which offer, if accepted by
the requisite number of holders, would result in a Change in Control.
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As used herein, the term "Approved Owner" shall mean (i) the Control Group,
or (ii) any individual which is employed by the Company as of the date of this
Agreement.
"Control Group" shall mean (i) William E. Bindley; (ii) the spouse, lineal
descendants and spouses of the lineal descendants of William E. Bindley; (iii)
the estates or legal representatives of the persons named in clauses (i) and
(ii); (iv) trusts established for the benefit of any person named in clauses (i)
and (ii); and (v) entities of which more than 50% (by number of votes) of the
voting stock is owned directly or indirectly by the Persons named in clauses (i)
through (iv), both inclusive.
Section 9. Affirmative Covenants.
The Company covenants that from and after the date of this Agreement:
Section 9.1. Compliance with Law. The Company will and will cause each
of its Subsidiaries to comply with all laws, ordinances or governmental rules or
regulations to which each of them is subject, including, without limitation,
Environmental Laws, and will obtain and maintain in effect all licenses,
certificates, permits, franchises and other governmental authorizations
necessary to the ownership of their respective properties or to the conduct of
their respective businesses, in each case to the extent necessary to ensure that
non-compliance with such laws, ordinances or governmental rules or regulations
or failures to obtain or maintain in effect such licenses, certificates,
permits, franchises and other governmental authorizations could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
Section 9.2. Insurance. The Company will and will cause each of its
Subsidiaries to maintain, with financially sound and reputable insurers,
insurance with respect to their respective properties and businesses against
such casualties and contingencies, of such types, on such terms and in such
amounts (including deductibles, co-insurance and self-insurance, if adequate
reserves are maintained with respect thereto) as is customary in the case of
entities of established reputations engaged in the same or a similar business
and similarly situated.
Section 9.3. Maintenance of Properties. The Company will and will cause
each of its Subsidiaries to maintain and keep, or cause to be maintained and
kept, their respective properties in good repair, working order and condition
(other than ordinary wear and tear), so that the business carried on in
connection therewith may be properly conducted at all times, provided that this
Section shall not prevent the Company or any Subsidiary from discontinuing the
operation and the maintenance of any of its properties if such discontinuance is
desirable in the conduct of its business and the Company has concluded that such
discontinuance could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
Section 9.4. Payment of Taxes and Claims. The Company will and
will cause each of its Subsidiaries to file all tax returns required to be filed
in any jurisdiction and to pay and discharge all taxes shown to be due and
payable on such returns and all other taxes, assessments, governmental charges,
or levies imposed on them or any of their properties, assets, income or
franchises, to the extent such taxes and assessments have become due and payable
and before
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they have become delinquent and all claims for which sums have become due and
payable that have or might become a Lien on properties or assets of the Company
or any Subsidiary, provided that neither the Company nor any Subsidiary need pay
any such tax or assessment or claims if (i) the amount, applicability or
validity thereof is contested by the Company or such Subsidiary on a timely
basis in good faith and in appropriate proceedings, and the Company or a
Subsidiary has established adequate reserves therefor in accordance with GAAP on
the books of the Company or such Subsidiary or (ii) the nonpayment of all such
taxes and assessments in the aggregate could not reasonably be expected to have
a Material Adverse Effect.
Section 9.5. Corporate Existence, etc. The Company will at all times
preserve and keep in full force and effect its corporate existence. Subject to
Section 10.7, the Company will at all times preserve and keep in full force and
effect the corporate existence of each of its Subsidiaries and all rights and
franchises of the Company and its Subsidiaries unless, in the good faith
judgment of the Company, the termination of or failure to preserve and keep in
full force and effect such corporate existence, right or franchise could not,
individually or in the aggregate, have a Material Adverse Effect.
Section 10. Negative Covenants.
The Company covenants that from and after the date of this Agreement:
Section 10.1. Consolidated Net Worth. The Company will at all times keep
and maintain Consolidated Net Worth at an amount not less than the sum of (i)
$295,000,000 plus (ii) 50% of Consolidated Net Income for each fiscal quarter
ending during the period from and after December 31, 1999 to and including the
date of any determination thereof, computed on a cumulative basis for such
entire period, plus (iii) an amount equal to 100% of the net cash proceeds
received by the Company after the date of this Agreement from the sale of any
shares of capital stock of the Company and its Subsidiaries or from any other
capital contribution. If Consolidated Net Income is a deficit for any fiscal
quarter, such deficit shall not reduce the amount of Consolidated Tangible Net
Worth required to be maintained pursuant to this Section 10.1.
Section 10.2. Limitations on Debt. The Company will not at any time
permit the ratio of Consolidated Debt to Consolidated EBITDA for the period of
four consecutive fiscal quarters most recently ended to be greater than 3.25 to
1.0.
Section 10.3. Limitations on Priority Debt. The Company will not at any
time permit the aggregate principal amount of Priority Debt to exceed 20% of
Consolidated Tangible Net Worth.
Section 10.4. Interest Coverage Ratio. The Company will not at any time
permit the Interest Coverage Ratio for each period of the immediately preceding
four consecutive fiscal quarters to be less than 2.50 to 1.0.
Section 10.5. Limitation on Liens. The Company will not, and will
not permit any of its Subsidiaries to, directly or indirectly create, incur,
assume or permit to exist (upon the happening
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of a contingency or otherwise) any Lien on or with respect to any property or
asset (including, without limitation, any document or instrument in respect of
goods or accounts receivable) of the Company or any such Subsidiary, whether now
owned or held or hereafter acquired, or any income or profits therefrom, or
assign or otherwise convey any right to receive income or profits, except:
(a) Liens for property taxes and assessments or governmental charges
or levies and Liens securing claims or demands of mechanics and
materialmen, provided payment thereof is not at the time required by
Section 9.4;
(b) Liens created by or resulting from any litigation or legal
proceeding which is currently being contested in good faith by appropriate
proceedings or which result from a final, nonappealable judgment which is
satisfied within 30 days after such judgment becomes final and
nonappealable;
(c) Liens incidental to the normal conduct of business of the
Company or any Subsidiary or to secure claims for labor, materials or
supplies in respect of obligations not overdue or in connection with the
ownership of its property (including Liens in connection with worker's
compensation, unemployment insurance and other like laws, warehousemen's
and attorney's liens and statutory landlords' liens) which are not incurred
in connection with the incurrence of Debt or the borrowing of money and
which do not in the aggregate Materially impair the use of such property in
the operation of the business of the Company and its Subsidiaries, taken as
a whole, or the value of such property for the purpose of such business;
(d) Liens securing Debt of a Subsidiary to the Company or to a
Wholly-Owned Subsidiary;
(e) Liens existing as of the date of this Agreement and reflected in
Schedule 10.5; and any extension, renewal or replacement of any such Lien,
provided that no additional property shall be encumbered by such Liens and
the unpaid principal amount of the Debt secured thereby shall not be
increased on or after the date of any such extension, renewal or
replacement;
(f) Liens arising in connection with Securitization Debt of a
Securitization Subsidiary, provided that such Lien shall only attach to the
accounts receivable securing such Securitization Debt;
(g) minor survey exceptions or minor encumbrances, easements or
reservations, or rights of others for rights-of-way, utilities and other
similar purposes, or zoning or other restrictions as to the use of real
properties, which are necessary for the conduct of the activities of the
Company and its Subsidiaries or which customarily exist on properties of
corporations engaged in similar activities and similarly situated and which
do not in any event materially impair their use in the operation of the
business of the Company and its Subsidiaries;
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(h) Liens incurred after the date of this Agreement given to secure
the payment of the purchase price incurred in connection with the
acquisition of fixed assets useful and intended to be used in carrying on
the business of the Company or a Subsidiary, including Liens existing on
such property at the time of acquisition thereof, or Liens incurred within
180 days of such acquisition thereof, or at the time of acquisition by the
Company or a Subsidiary of any business entity then owning such fixed
assets, so long as they were not incurred, extended or renewed in
contemplation of such acquisition, provided that (i) the Lien shall attach
solely to the fixed assets acquired or purchased, (ii) at the time of
acquisition of such fixed assets, the aggregate amount remaining unpaid on
all Debt secured by Liens on such fixed assets, whether or not assumed by
the Company or a Subsidiary, shall not exceed an amount equal to the lesser
of the total purchase price or fair market value at the time of acquisition
of such fixed assets (as determined in good faith by the Board of Directors
of the Company or any Subsidiary, as the case may be), and (iii) the
aggregate principal amount of all such Debt shall have been incurred within
the applicable limitations set forth in Sections 10.2 and 10.3; and
(i) in addition to the Liens permitted by the preceding clauses (a)
through (h), inclusive, of this Section 10.5, Liens securing Priority Debt
of the Company or any Subsidiary, provided that such Priority Debt shall be
permitted by the applicable limitations set forth in Sections 10.2 and
10.3.
Section 10.6. Investments. The Company will not, and will not permit any
Subsidiary to, make any Investments, other than:
(a) Investments by the Company and its Subsidiaries in and to
Subsidiaries, including any Investment in a corporation which, after giving
effect to such Investment, will become a Subsidiary;
(b) Investments in commercial paper maturing in 270 days or less
from the date of issuance which, at the time of acquisition by the Company
or any Subsidiary, is accorded the highest rating by Standard & Poor's
Ratings Group, Moody's Investors Service, Inc. or other nationally
recognized credit rating agency of similar standing;
(c) Investments in direct obligations of the United States of
America or any agency or instrumentality of the United States of America,
the payment or guarantee of which constitutes a full faith and credit
obligation of the United States of America, in either case, maturing in
twelve months or less from the date of acquisition thereof;
(d) Investments in certificates of deposit maturing within one year
from the date of issuance thereof, issued by a bank or trust company
organized under the laws of the United States of America or any state
thereof, having capital, surplus and undivided profits aggregating at least
$250,000,000 and whose long-term certificates of deposit are, at the time
of acquisition thereof by the Company or a Subsidiary, rated A or better by
Standard & Poor's Ratings Group or A or better by Moody's Investors
Service, Inc. or other nationally recognized credit rating agency of
similar standing;
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(e) loans or advances in the usual and ordinary course of business
to officers, directors and employees for expenses (including moving
expenses related to a transfer) incidental to carrying on the business of
the Company or any Subsidiary;
(f) Investments in certificates of deposit maturing within one year
from the date of issuance, issued by a commercial bank or trust company
organized under the laws of the United States of America or any State
thereof; provided that the aggregate amount of all Investments in such
certificates of deposit owned by the Company and its Subsidiaries shall not
at any time exceed $1,000,000;
(g) Investments in marketable debt Securities maturing within 270
days from the date of acquisition thereof, issued by any State, territory
or possession of the United States of America or any political subdivision
thereof (including the District of Columbia) which, at the time of
acquisition thereof by the Company or any Subsidiary, is accorded a rating
of A or better by Standard & Poor's Ratings Group, Moody's Investors
Service, Inc. or other nationally recognized credit rating agency of
similar standing;
(h) Investments in money market funds investing principally in the
types of Securities described in clauses (b), (c), (d) and (g) of this
Section 10.6 and having, at the time of acquisition thereof by the Company
or any Subsidiary, assets in excess of $100,000,000; and
(i) other Investments (in addition to those permitted by the
foregoing clauses (a) through (h), inclusive of this Section 10.6),
provided that the aggregate amount of all such other Investments at any
time owned by the Company and its Subsidiaries shall not exceed 10% of
Consolidated Tangible Net Worth.
In valuing any Investments for the purpose of applying the limitations set
forth in this Section 10.6, such Investments shall be taken at the original cost
thereof, without allowance for any subsequent write-offs or appreciation or
depreciation therein, but less any amount repaid or recovered on account of
capital or principal.
For purposes of this Section 10.6, at any time when a corporation becomes a
Subsidiary, all Investments of such corporation at such time shall be deemed to
have been made by such corporation, as a Subsidiary, at such time.
Section 10.7. Mergers, Consolidations and Sales of Assets. The Company will
not, and will not permit any Subsidiary to, (i) consolidate with or be a party
to a merger with any other corporation or (ii) sell, lease or otherwise dispose
of any of the assets of the Company and its Subsidiaries; provided, however,
that:
(a) the Company and any Subsidiary may sell inventory in the
ordinary course of business;
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(b) the Company and any Subsidiary may sell or otherwise dispose of
property no longer used or useful in the conduct of the business of the
Company or any Subsidiary;
(c) any Subsidiary may merge or consolidate with or into (1) the
Company or any Wholly-Owned Subsidiary, so long as in any merger or
consolidation involving the Company, the Company shall be the surviving or
continuing corporation, and (2) any other corporation, if (i) the surviving
or continuing corporation is a Wholly-Owned Subsidiary, and (ii) at the
time of such consolidation or merger and after giving effect thereto, no
Default or Event of Default shall have occurred and be continuing;
(d) the Company may consolidate or merge with any other corporation
if (i) the Company shall be the surviving or continuing corporation, and
(ii) at the time of such consolidation or merger and after giving effect
thereto, no Default or Event of Default shall have occurred and be
continuing; and
(e) the Company may make a Qualified Sale of Accounts Receivable if,
at such time and after giving effect thereto, no Default or Event of
Default shall have occurred and be continuing and the aggregate amount of
all accounts receivable originated by the Company and its Subsidiaries
which are securitized pursuant to any asset securitization transaction
shall not exceed at any one time $350,000,000.
Section 10.8. Sale-and-Leasebacks. The Company will not, and will not
permit any Subsidiary to, enter into any Sale-and-Leaseback Transaction.
Section 10.9. Change in Business. The Company will not, and will not
permit any Subsidiary to, engage in any business activity or operation
substantially different from, and unrelated to, the present business activities
and operations conducted by the Company and its Subsidiaries on the date of this
Agreement, except for business activities or operations in which the aggregate
Investment of the Company and its Subsidiaries does not exceed 10% of
Consolidated Tangible Net Worth.
Section 10.10. Guaranties. The Company will not, and will not permit any
Subsidiary to, become or be liable in respect of any Guaranty except Guaranties
by the Company which are limited in amount to a stated maximum dollar exposure
or which constitute Guaranties of obligations incurred by any Subsidiary in
compliance with the provisions of this Agreement.
Section 10.11. Hazardous Materials. The Company will not, and will not
permit any Subsidiary to, permit or allow to continue the release or threatened
release of any Hazardous Materials on any premises owned or occupied by or under
lease to the Company or any Subsidiary.
Section 10.12. Transactions with Affiliates. The Company will not and will
not permit any Subsidiary to enter into directly or indirectly any transaction
or group of related transactions (including without limitation the purchase,
lease, sale or exchange of properties of any kind or
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the rendering of any service) with any Affiliate (other than the Company or
another Subsidiary) that are Material, either individually or in the aggregate,
except in the ordinary course and pursuant to the reasonable requirements of the
Company's or such Subsidiary's business and upon fair and reasonable terms no
less favorable to the Company or such Subsidiary than would be obtainable in a
comparable arm's-length transaction with a Person not an Affiliate.
Section 11. Events of Default.
An "Event of Default" shall exist if any of the following conditions or
events shall occur and be continuing:
(a) the Company defaults in the payment of any principal or Make-
Whole Amount, if any, on any Note when the same becomes due and payable,
whether at maturity or at a date fixed for prepayment or by declaration or
otherwise; or
(b) the Company defaults in the payment of any interest on any Note
for more than five days after the same becomes due and payable; or
(c) the Company defaults in the performance of or compliance with
any term contained in Section 10; or
(d) the Company defaults in the performance of or compliance with
any term contained herein (other than those referred to in paragraphs (a),
(b) and (c) of this Section 11) and such default is not remedied within 30
days after the earlier of (i) a Responsible Officer obtaining actual
knowledge of such default and (ii) the Company receiving written notice of
such default from any holder of a Note (any such written notice to be
identified as a "notice of default" and to refer specifically to this
paragraph (d) of Section 11); or
(e) any representation or warranty made in writing by or on behalf
of the Company or by any officer of the Company in this Agreement or in any
writing furnished in connection with the transactions contemplated hereby
proves to have been false or incorrect in any material respect on the date
as of which made; or
(f) (i) the Company or any Subsidiary is in default (as principal or
as guarantor or other surety) in the payment of any principal of or premium
or make-whole amount or interest on any Debt that is outstanding in an
aggregate principal amount of at least $5,000,000 beyond any period of
grace provided with respect thereto, or (ii) the Company or any Subsidiary
is in default in the performance of or compliance with any term of any
evidence of any Debt in an aggregate outstanding principal amount of at
least $5,000,000 or of any mortgage, indenture or other agreement relating
thereto or any other condition exists, and as a consequence of such default
or condition such Debt has become, or has been declared (or one or more
Persons are entitled to declare such Debt to be), due and payable before
its stated maturity or before its regularly scheduled dates of payment, or
(iii) as a consequence of the occurrence or continuation of any event or
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condition (other than the passage of time or the right of the holder of
Debt to convert such Debt into equity interests), (x) the Company or any
Subsidiary has become obligated to purchase or repay Debt before its
regular maturity or before its regularly scheduled dates of payment in an
aggregate outstanding principal amount of at least $5,000,000, or (y) one
or more Persons have the right to require the Company or any Subsidiary so
to purchase or repay such Debt; or
(g) the Company or any Subsidiary (i) is generally not paying, or
admits in writing its inability to pay, its debts as they become due, (ii)
files, or consents by answer or otherwise to the filing against it of, a
petition for relief or reorganization or arrangement or any other petition
in bankruptcy, for liquidation or to take advantage of any bankruptcy,
insolvency, reorganization, moratorium or other similar law of any
jurisdiction, (iii) makes an assignment for the benefit of its creditors,
(iv) consents to the appointment of a custodian, receiver, trustee or other
officer with similar powers with respect to it or with respect to any
substantial part of its property, (v) is adjudicated as insolvent or to be
liquidated, or (vi) takes corporate action for the purpose of any of the
foregoing; or
(h) a court or governmental authority of competent jurisdiction
enters an order appointing, without consent by the Company or any of its
Subsidiaries, a custodian, receiver, trustee or other officer with similar
powers with respect to it or with respect to any substantial part of its
property, or constituting an order for relief or approving a petition for
relief or reorganization or any other petition in bankruptcy or for
liquidation or to take advantage of any bankruptcy or insolvency law of any
jurisdiction, or ordering the dissolution, winding-up or liquidation of the
Company or any of its Subsidiaries, or any such petition shall be filed
against the Company or any of its Subsidiaries and such petition shall not
be dismissed within 60 days; or
(i) a final judgment or judgments for the payment of money
aggregating in excess of $1,000,000 are rendered against one or more of the
Company and its Subsidiaries and which judgments are not, within 30 days
after entry thereof, bonded, discharged or stayed pending appeal, or are
not discharged within 30 days after the expiration of such stay; or
(j) if (i) any Plan shall fail to satisfy the minimum funding
standards of ERISA or the Code for any plan year or part thereof or a
waiver of such standards or extension of any amortization period is sought
or granted under section 412 of the Code, (ii) a notice of intent to
terminate any Plan shall have been or is reasonably expected to be filed
with the PBGC or the PBGC shall have instituted proceedings under ERISA
section 4042 to terminate or appoint a trustee to administer any Plan or
the PBGC shall have notified the Company or any ERISA Affiliate that a Plan
may become a subject of any such proceedings, (iii) the aggregate "amount
of unfunded benefit liabilities" (within the meaning of section 4001(a)(18)
of ERISA) under all Plans, determined in accordance with Title IV of ERISA,
shall exceed $100,000, (iv) the Company or any ERISA Affiliate shall have
incurred or is reasonably expected to incur any liability pursuant to Title
I or
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IV of ERISA or the penalty or excise tax provisions of the Code relating to
employee benefit plans, (v) the Company or any ERISA Affiliate withdraws
from any Multiemployer Plan, or (vi) the Company or any Subsidiary
establishes or amends any employee welfare benefit plan that provides post-
employment welfare benefits in a manner that would increase the liability
of the Company or any Subsidiary thereunder; and any such event or events
described in clauses (i) through (vi) above, either individually or
together with any other such event or events, could reasonably be expected
to have a Material Adverse Effect.
As used in Section 11(j), the terms "employee benefit plan" and "employee
welfare benefit plan" shall have the respective meanings assigned to such terms
in Section 3 of ERISA.
Section 12. Remedies on Default, etc.
Section 12.1. Acceleration. (a) If an Event of Default with respect to the
Company described in paragraph (g) or (h) of Section 11 (other than an Event of
Default described in clause (i) of paragraph (g) or described in clause (vi) of
paragraph (g) by virtue of the fact that such clause encompasses clause (i) of
paragraph (g)) has occurred, all the Notes then outstanding shall automatically
become immediately due and payable.
(b) If any other Event of Default has occurred and is continuing, any
holder or holders of more than 25% in principal amount of the Notes at the time
outstanding may at any time at its or their option, by notice or notices to the
Company, declare all the Notes then outstanding to be immediately due and
payable.
(c) If any Event of Default described in paragraph (a) or (b) of Section
11 has occurred and is continuing, any holder or holders of Notes at the time
outstanding affected by such Event of Default may at any time, at its or their
option, by notice or notices to the Company, declare all the Notes held by it or
them to be immediately due and payable.
Upon any Note's becoming due and payable under this Section 12.1, whether
automatically or by declaration, such Note will forthwith mature and the entire
unpaid principal amount of such Note, plus (x) all accrued and unpaid interest
thereon and (y) the Make-Whole Amount determined in respect of such principal
amount (to the full extent permitted by applicable law), shall all be
immediately due and payable, in each and every case without presentment, demand,
protest or further notice, all of which are hereby waived. The Company
acknowledges, and the parties hereto agree, that each holder of a Note has the
right to maintain its investment in the Notes free from repayment by the Company
(except as herein specifically provided for), and that the provision for payment
of a Make-Whole Amount by the Company in the event that the Notes are prepaid or
are accelerated as a result of an Event of Default, is intended to provide
compensation for the deprivation of such right under such circumstances.
Section 12.2. Other Remedies. If any Default or Event of Default has
occurred and is continuing, and irrespective of whether any Notes have become or
have been declared immediately due and payable under Section 12.1, the holder of
any Note at the time outstanding
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may proceed to protect and enforce the rights of such holder by an action at
law, suit in equity or other appropriate proceeding, whether for the specific
performance of any agreement contained herein or in any Note, or for an
injunction against a violation of any of the terms hereof or thereof, or in aid
of the exercise of any power granted hereby or thereby or by law or otherwise.
Section 12.3. Rescission. At any time after any Notes have been declared
due and payable pursuant to clause (b) or (c) of Section 12.1, the holders of
not less than 66-2/3% in principal amount of the Notes then outstanding, by
written notice to the Company, may rescind and annul any such declaration and
its consequences if (a) the Company has paid all overdue interest on the Notes,
all principal of and Make-Whole Amount, if any, on any Notes that are due and
payable and are unpaid other than by reason of such declaration, and all
interest on such overdue principal and Make-Whole Amount, if any, and (to the
extent permitted by applicable law) any overdue interest in respect of the
Notes, at the Default Rate, (b) all Events of Default and Defaults, other than
non-payment of amounts that have become due solely by reason of such
declaration, have been cured or have been waived pursuant to Section 17, and (c)
no judgment or decree has been entered for the payment of any monies due
pursuant hereto or to the Notes. No rescission and annulment under this Section
12.3 will extend to or affect any subsequent Event of Default or Default or
impair any right consequent thereon.
Section 12.4. No Waivers or Election of Remedies, Expenses, etc. No course
of dealing and no delay on the part of any holder of any Note in exercising any
right, power or remedy shall operate as a waiver thereof or otherwise prejudice
such holder's rights, powers or remedies. No right, power or remedy conferred by
this Agreement or by any Note upon any holder thereof shall be exclusive of any
other right, power or remedy referred to herein or therein or now or hereafter
available at law, in equity, by statute or otherwise. Without limiting the
obligations of the Company under Section 15, the Company will pay to the holder
of each Note on demand such further amount as shall be sufficient to cover all
costs and expenses of such holder incurred in any enforcement or collection
under this Section 12, including, without limitation, reasonable attorneys'
fees, expenses and disbursements.
Section 13. Registration; Exchange; Substitution of Notes.
Section 13.1. Registration of Notes. The Company shall keep at its
principal executive office a register for the registration and registration of
transfers of Notes. The name and address of each holder of one or more Notes,
each transfer thereof and the name and address of each transferee of one or more
Notes shall be registered in such register. Prior to due presentment for
registration of transfer, the Person in whose name any Note shall be registered
shall be deemed and treated as the owner and holder thereof for all purposes
hereof, and the Company shall not be affected by any notice or knowledge to the
contrary. The Company shall give to any holder of a Note that is an
Institutional Investor promptly upon request therefor, a complete and correct
copy of the names and addresses of all registered holders of Notes.
Section 13.2. Transfer and Exchange of Notes. Upon surrender of any Note
at the principal executive office of the Company for registration of transfer or
exchange (and in the case of a surrender for registration of transfer, duly
endorsed or accompanied by a written
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instrument of transfer duly executed by the registered holder of such Note or
its attorney duly authorized in writing and accompanied by the address for
notices of each transferee of such Note or part thereof), the Company shall
execute and deliver, at the Company's expense (except as provided below), one or
more new Notes (as requested by the holder thereof) in exchange therefor, in an
aggregate principal amount equal to the unpaid principal amount of the
surrendered Note. Each such new Note shall be payable to such Person as such
holder may request and shall be substantially in the form of Exhibit 1. Each
such new Note shall be dated and bear interest from the date to which interest
shall have been paid on the surrendered Note or dated the date of the
surrendered Note if no interest shall have been paid thereon. The Company may
require payment of a sum sufficient to cover any stamp tax or governmental
charge imposed in respect of any such transfer of Notes. Notes shall not be
transferred in denominations of less than $100,000, provided that if necessary
to enable the registration of transfer by a holder of its entire holding of
Notes, one Note may be in a denomination of less than $100,000. Any transferee,
by its acceptance of a Note registered in its name (or the name of its nominee),
shall be deemed to have made the representation set forth in Section 6.2,
provided that such holder may (in reliance upon information provided by the
Company, which shall not be unreasonably withheld) make a representation to the
effect that the purchase by such holder of any Note will not constitute a non-
exempt prohibited transaction under Section 406(a) of ERISA.
Section 13.3. Replacement of Notes. Upon receipt by the Company of
evidence reasonably satisfactory to it of the ownership of and the loss, theft,
destruction or mutilation of any Note (which evidence shall be, in the case of
an Institutional Investor, notice from such Institutional Investor of such
ownership and such loss, theft, destruction or mutilation), and
(a) in the case of loss, theft or destruction, of indemnity
reasonably satisfactory to it (provided that if the holder of such Note is,
or is a nominee for, an original Purchaser or an Institutional Investor,
such Person's own unsecured agreement of indemnity shall be deemed to be
satisfactory), or
(b) in the case of mutilation, upon surrender and cancellation
thereof,
the Company at its own expense shall execute and deliver, in lieu thereof, a new
Note, dated and bearing interest from the date to which interest shall have been
paid on such lost, stolen, destroyed or mutilated Note or dated the date of such
lost, stolen, destroyed or mutilated Note if no interest shall have been paid
thereon.
Section 14. Payments on Notes.
Section 14.1. Place of Payment. Subject to Section 14.2, payments of
principal, Make-Whole Amount, if any, and interest becoming due and payable on
the Notes shall be made in Chicago, Illinois at the principal office of Bank One
N.A. in such jurisdiction. The Company may at any time, by notice to each holder
of a Note, change the place of payment of the Notes so long as such place of
payment shall be either the principal office of the Company in such jurisdiction
or the principal office of a bank or trust company in such jurisdiction.
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Section 14.2. Home Office Payment. So long as you or your nominee shall be
the holder of any Note, and notwithstanding anything contained in Section 14.1
or in such Note to the contrary, the Company will pay all sums becoming due on
such Note for principal, Make-Whole Amount, if any, and interest by the method
and at the address specified for such purpose below your name in Schedule A, or
by such other method or at such other address as you shall have from time to
time specified to the Company in writing for such purpose, without the
presentation or surrender of such Note or the making of any notation thereon,
except that upon written request of the Company made concurrently with or
reasonably promptly after payment or prepayment in full of any Note, you shall
surrender such Note for cancellation, reasonably promptly after any such
request, to the Company at its principal executive office or at the place of
payment most recently designated by the Company pursuant to Section 14.1. Prior
to any sale or other disposition of any Note held by you or your nominee you
will, at your election, either endorse thereon the amount of principal paid
thereon and the last date to which interest has been paid thereon or surrender
such Note to the Company in exchange for a new Note or Notes pursuant to Section
13.2. The Company will afford the benefits of this Section 14.2 to any
Institutional Investor that is the direct or indirect transferee of any Note
purchased by you under this Agreement and that has made the same agreement
relating to such Note as you have made in this Section 14.2.
Section 15. Expenses, etc.
Section 15.1. Transaction Expenses. Whether or not the transactions
contemplated hereby are consummated, the Company will pay all costs and expenses
(including reasonable attorneys' fees of a special counsel and, if reasonably
required, local or other counsel) incurred by you or holder of a Note in
connection with such transactions and in connection with any amendments, waivers
or consents under or in respect of this Agreement or the Notes (whether or not
such amendment, waiver or consent becomes effective), including, without
limitation: (a) the costs and expenses incurred in enforcing or defending (or
determining whether or how to enforce or defend) any rights under this Agreement
or the Notes or in responding to any subpoena or other legal process or informal
investigative demand issued in connection with this Agreement or the Notes, or
by reason of being a holder of any Note, and (b) the costs and expenses,
including financial advisors' fees, incurred in connection with the insolvency
or bankruptcy of the Company or any Subsidiary or in connection with any work-
out or restructuring of the transactions contemplated hereby and by the Notes.
The Company will pay, and will save you and each other holder of a Note harmless
from, all claims in respect of any fees, costs or expenses, if any, of brokers
and finders (other than those retained by you).
Section 15.2. Survival. The obligations of the Company under this Section
15 will survive the payment or transfer of any Note, the enforcement, amendment
or waiver of any provision of this Agreement or the Notes, and the termination
of this Agreement.
Section 16. Survival of Representations and Warranties; Entire Agreement.
All representations and warranties contained herein shall survive the
execution and delivery of this Agreement and the Notes, the purchase or transfer
by you of any Note or portion
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thereof or interest therein and the payment of any Note, and may be relied upon
by any subsequent holder of a Note, regardless of any investigation made at any
time by or on behalf of you or any other holder of a Note. All statements
contained in any certificate or other instrument delivered by or on behalf of
the Company pursuant to this Agreement shall be deemed representations and
warranties of the Company under this Agreement. Subject to the preceding
sentence, this Agreement and the Notes embody the entire agreement and
understanding between you and the Company and supersede all prior agreements and
understandings relating to the subject matter hereof.
Section 17. Amendment and Waiver.
Section 17.1. Requirements. This Agreement and the Notes may be amended,
and the observance of any term hereof or of the Notes may be waived (either
retroactively or prospectively), with (and only with) the written consent of the
Company and the Required Holders, except that (a) no amendment or waiver of any
of the provisions of Section 1, 2, 3, 4, 5, 6, 20 or 21 hereof, or any defined
term (as it is used therein), will be effective as to you unless consented to by
you in writing, and (b) no such amendment or waiver may, without the written
consent of the holder of each Note at the time outstanding affected thereby, (i)
subject to the provisions of Section 12 relating to acceleration or rescission,
change the amount or time of any prepayment or payment of principal of, or
reduce the rate or change the time of payment or method of computation of
interest or of the Make-Whole Amount on, the Notes, (ii) change the percentage
of the principal amount of the Notes the holders of which are required to
consent to any such amendment or waiver, or (iii) amend any of Sections 8,
11(a), 11(b), 12, 17 or 20.
Section 17.2. Solicitation of Holders of Notes.
(a) Solicitation. The Company will provide each holder of the Notes
(irrespective of the amount of Notes then owned by it) with sufficient
information, sufficiently far in advance of the date a decision is required, to
enable such holder to make an informed and considered decision with respect to
any proposed amendment, waiver or consent in respect of any of the provisions
hereof or of the Notes. The Company will deliver executed or true and correct
copies of each amendment, waiver or consent effected pursuant to the provisions
of this Section 17 to each holder of outstanding Notes promptly following the
date on which it is executed and delivered by, or receives the consent or
approval of, the requisite holders of Notes.
(b) Payment. The Company will not directly or indirectly pay or cause
to be paid any remuneration, whether by way of supplemental or additional
interest, fee or otherwise, or grant any security, to any holder of Notes as
consideration for or as an inducement to the entering into by any holder of
Notes or any waiver or amendment of any of the terms and provisions hereof
unless such remuneration is concurrently paid, or security is concurrently
granted, on the same terms, ratably to each holder of Notes then outstanding
even if such holder did not consent to such waiver or amendment.
Section 17.3. Binding Effect, etc. Any amendment or waiver consented to
as provided in this Section 17 applies equally to all holders of Notes and is
binding upon them and upon each
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future holder of any Note and upon the Company without regard to whether such
Note has been marked to indicate such amendment or waiver. No such amendment or
waiver will extend to or affect any obligation, covenant, agreement, Default or
Event of Default not expressly amended or waived or impair any right consequent
thereon. No course of dealing between the Company and the holder of any Note nor
any delay in exercising any rights hereunder or under any Note shall operate as
a waiver of any rights of any holder of such Note. As used herein, the term
"this Agreement" and references thereto shall mean this Agreement as it may from
time to time be amended or supplemented.
Section 17.4. Notes Held by Company, etc. Solely for the purpose of
determining whether the holders of the requisite percentage of the aggregate
principal amount of Notes then outstanding approved or consented to any
amendment, waiver or consent to be given under this Agreement or the Notes, or
have directed the taking of any action provided herein or in the Notes to be
taken upon the direction of the holders of a specified percentage of the
aggregate principal amount of Notes then outstanding, Notes directly or
indirectly owned by the Company or any of its Affiliates shall be deemed not to
be outstanding.
Section 18. Notices.
All notices and communications provided for hereunder shall be in writing
and sent (a) by telefacsimile if the sender on the same day sends a confirming
copy of such notice by a recognized overnight delivery service (charges
prepaid), or (b) by registered or certified mail with return receipt requested
(postage prepaid), or (c) by a recognized overnight delivery service (with
charges prepaid). Any such notice must be sent:
(i) if to you or your nominee, to you or it at the address
specified for such communications in Schedule A, or at such other address
as you or it shall have specified to the Company in writing,
(ii) if to any other holder of any Note, to such holder at such
address as such other holder shall have specified to the Company in
writing, or
(iii) if to the Company, to the Company at its address set forth at
the beginning hereof to the attention of the Chief Financial Officer, or at
such other address as the Company shall have specified to the holder of
each Note in writing.
Notices under this Section 18 will be deemed given only when actually received.
Section 19. Reproduction of Documents.
This Agreement and all documents relating thereto, including, without
limitation, (a) consents, waivers and modifications that may hereafter be
executed, (b) documents received by you at the Closing (except the Notes
themselves), and (c) financial statements, certificates and other information
previously or hereafter furnished to you, may be reproduced by you by any
photographic, photostatic, microfilm, microcard, miniature photographic or other
similar process
-32-
<PAGE>
and you may destroy any original document so reproduced. The Company agrees and
stipulates that, to the extent permitted by applicable law, any such
reproduction shall be admissible in evidence as the original itself in any
judicial or administrative proceeding (whether or not the original is in
existence and whether or not such reproduction was made by you in the regular
course of business) and any enlargement, facsimile or further reproduction of
such reproduction shall likewise be admissible in evidence. This Section 19
shall not prohibit the Company or any other holder of Notes from contesting any
such reproduction to the same extent that it could contest the original, or from
introducing evidence to demonstrate the inaccuracy of any such reproduction.
Section 20. Confidential Information.
For the purposes of this Section 20, "Confidential Information" means
information delivered to you by or on behalf of the Company or any Subsidiary in
connection with the transactions contemplated by or otherwise pursuant to this
Agreement that is proprietary in nature and that was clearly marked or labeled
or otherwise adequately identified when received by you as being confidential
information of the Company or such Subsidiary, provided that such term does not
include information that (a) was publicly known or otherwise known to you prior
to the time of such disclosure, (b) subsequently becomes publicly known through
no act or omission by you or any person acting on your behalf, (c) otherwise
becomes known to you other than through disclosure by the Company or any
Subsidiary or (d) constitutes financial statements delivered to you under
Section 7.1 that are otherwise publicly available. You will maintain the
confidentiality of such Confidential Information in accordance with procedures
adopted by you in good faith to protect confidential information of third
parties delivered to you, provided that you may deliver or disclose Confidential
Information to (i) your directors, officers, employees, agents, attorneys and
affiliates (to the extent such disclosure reasonably relates to the
administration of the investment represented by your Notes), (ii) your financial
advisors and other professional advisors who agree to hold confidential the
Confidential Information substantially in accordance with the terms of this
Section 20, (iii) any other holder of any Note, (iv) any Institutional Investor
to which you sell or offer to sell such Note or any part thereof or any
participation therein (if such Person has agreed in writing prior to its receipt
of such Confidential Information to be bound by the provisions of this Section
20), (v) any Person from which you offer to purchase any security of the Company
(if such Person has agreed in writing prior to its receipt of such Confidential
Information to be bound by the provisions of this Section 20), (vi) any federal
or state regulatory authority having jurisdiction over you, (vii) the National
Association of Insurance Commissioners or any similar organization, or any
nationally recognized rating agency that requires access to information about
your investment portfolio or (viii) any other Person to which such delivery or
disclosure may be necessary or appropriate (w) to effect compliance with any
law, rule, regulation or order applicable to you, (x) in response to any
subpoena or other legal process, (y) in connection with any litigation to which
you are a party or (z) if an Event of Default has occurred and is continuing, to
the extent you may reasonably determine such delivery and disclosure to be
necessary or appropriate in the enforcement or for the protection of the rights
and remedies under your Notes and this Agreement. Each holder of a Note, by its
acceptance of a Note, will be deemed to have agreed to be bound by and to be
entitled to the benefits of this Section 20 as though it were a party to this
-33-
<PAGE>
Agreement. On reasonable request by the Company in connection with the delivery
to any holder of a Note of information required to be delivered to such holder
under this Agreement or requested by such holder (other than a holder that is a
party to this Agreement or its nominee), such holder will enter into an
agreement with the Company embodying the provisions of this Section 20.
Section 21. Substitution of Purchaser.
You shall have the right to substitute any one of your Affiliates as the
purchaser of the Notes that you have agreed to purchase hereunder, by written
notice to the Company, which notice shall be signed by both you and such
Affiliate, shall contain such Affiliate's agreement to be bound by this
Agreement and shall contain a confirmation by such Affiliate of the accuracy
with respect to it of the representations set forth in Section 6. Upon receipt
of such notice, wherever the word "you" is used in this Agreement (other than in
this Section 21), such word shall be deemed to refer to such Affiliate in lieu
of you. In the event that such Affiliate is so substituted as a purchaser
hereunder and such Affiliate thereafter transfers to you all of the Notes then
held by such Affiliate, upon receipt by the Company of notice of such transfer,
wherever the word "you" is used in this Agreement (other than in this Section
21), such word shall no longer be deemed to refer to such Affiliate, but shall
refer to you, and you shall have all the rights of an original holder of the
Notes under this Agreement.
Section 22. Additional Debt.
Subject to the terms and provisions hereof, the Company may, from time to
time, issue and sell additional senior promissory notes and may, in connection
with the documentation thereof, incorporate by reference various provisions of
this Agreement. Such incorporation by reference shall not modify, dilute or
otherwise affect the terms and provisions hereof including, without limitation,
the priority of the Notes and the percentage of the Notes required to approve an
amendment or effectuate a waiver under the provisions of Section 17.1 or the
percentages of the Notes required to accelerate the Notes or rescind such an
acceleration under the provisions of Section 12.
Section 23. Miscellaneous.
Section 23.1. Successors and Assigns. All covenants and other
agreements contained in this Agreement by or on behalf of any of the parties
hereto bind and inure to the benefit of their respective successors and assigns
(including, without limitation, any subsequent holder of a Note) whether so
expressed or not.
Section 23.2. Payments Due on Non-Business Days. Anything in this
Agreement or the Notes to the contrary notwithstanding, any payment of principal
of or Make-Whole Amount or interest on any Note that is due on a date other than
a Business Day shall be made on the next succeeding Business Day without
including the additional days elapsed in the computation of the interest payable
on such next succeeding Business Day.
-34-
<PAGE>
Section 23.3. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall (to the full extent permitted by law)
not invalidate or render unenforceable such provision in any other jurisdiction.
Section 23.4. Construction. Each covenant contained herein shall be
construed (absent express provision to the contrary) as being independent of
each other covenant contained herein, so that compliance with any one covenant
shall not (absent such an express contrary provision) be deemed to excuse
compliance with any other covenant. Where any provision herein refers to action
to be taken by any Person, or which such Person is prohibited from taking, such
provision shall be applicable whether such action is taken directly or
indirectly by such Person.
Where the character or amount of any asset or liability or item of income
or expense is required to be determined or any consolidation or other accounting
computation is required to be made for the purposes of this Agreement, the same
shall be done in accordance with GAAP, to the extent applicable, except where
such principles are inconsistent with the express requirements of this
Agreement.
Section 23.5. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be an original but all of which
together shall constitute one instrument. Each counterpart may consist of a
number of copies hereof, each signed by less than all, but together signed by
all, of the parties hereto.
Section 23.6. Governing Law. This Agreement shall be construed and
enforced in accordance with, and the rights of the parties shall be governed by,
the law of the State of Illinois excluding choice-of-law principles of the law
of such State that would require the application of the laws of a jurisdiction
other than such State.
* * * * *
-35-
<PAGE>
If you are in agreement with the foregoing, please sign the form of
agreement on the accompanying counterpart of this Agreement and return it to the
Company, whereupon the foregoing shall become a binding agreement between you
and the Company.
Very truly yours,
Bindley Western Industries, Inc.
By /s/ Thomas J. Salentine
------------------------------
EVP & Chief Financial Officer
------------------------------
-36-
<PAGE>
The foregoing is hereby agreed
to as of the date thereof.
Nationwide Life Insurance Company
By Mark W. Poeppelman
-----------------------------
Its Vice President
-------------------------
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<PAGE>
Information Relating to Purchasers
Name and Address of Purchaser
Nationwide Life Insurance Company $25,000,000
One Nationwide Plaza (1-33-07)
Columbus, Ohio 43215-2220
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as
"Bindley Western Industries, Inc., 7.93% Senior Notes Due December 27, 2004, PPN
090324 A@ 3, principal or interest") to:
The Bank of New York (ABA #021-000-018)
BNF: IOC566
F/A/O Nationwide Life Insurance Company
Attention: P&I Dept.
Notices
All notices of payment on or in respect of the Notes and written confirmation of
each such payment to:
Nationwide Life Insurance Company
c/o The Bank of New York
P.O. Box 19266
Attention: P & I Department
Newark, New Jersey 07195
with a copy to:
Nationwide Life Insurance Company
Attention: Investment Accounting
One Nationwide Plaza (1-32-05)
Columbus, Ohio 43215-2220
All notices and communications other than those in respect to payments to be
addressed:
Nationwide Life Insurance Company
One Nationwide Plaza (1-33-07)
Columbus, Ohio 43215-2220
Attention: Corporate Fixed-Income Securities
Schedule A
(to Note Purchase Agreement)
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<PAGE>
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 31-4156830
A-2
<PAGE>
Defined Terms
As used herein, the following terms have the respective meanings set forth
below or set forth in the Section hereof following such term:
"1996 Notes" means the $30,000,000 aggregate principal amount of the 7.25%
Senior Notes of the Company dated December 27, 1996.
"Affiliate" means, at any time, and with respect to any Person, (a) any
other Person that at such time directly or indirectly through one or more
intermediaries Controls, or is Controlled by, or is under common Control with,
such first Person, and (b) any Person beneficially owning or holding, directly
or indirectly, 10% or more of any class of voting or equity interests of the
Company or any Subsidiary or any corporation of which the Company and its
Subsidiaries beneficially own or hold, in the aggregate, directly or indirectly,
10% or more of any class of voting or equity interests. As used in this
definition, "Control" means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or otherwise.
Unless the context otherwise clearly requires, any reference to an "Affiliate"
is a reference to an Affiliate of the Company.
"Business Day" means (a) for the purposes of Section 8.6 only, any day
other than a Saturday, a Sunday or a day on which commercial banks in New York
City are required or authorized to be closed, and (b) for the purposes of any
other provision of this Agreement, any day other than a Saturday, a Sunday or a
day on which commercial banks in Chicago, Illinois or Indianapolis, Indiana are
required or authorized to be closed.
"Capital Lease" means, at any time, a lease with respect to which the
lessee is required concurrently to recognize the acquisition of an asset and the
incurrence of a liability in accordance with GAAP.
"Capital Lease Obligation" means, with respect to any Person and a Capital
Lease, the amount of the obligation of such Person as the lessee under such
Capital Lease which would, in accordance with GAAP, appear as a liability on a
balance sheet of such Person.
"Change in Control" has the meaning set forth in Section 8.7.
"Closing" is defined in Section 3.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and the rules and regulations promulgated thereunder from time to time.
"Company" means Bindley Western Industries, Inc., an Indiana corporation.
"Confidential Information" is defined in Section 20.
Schedule B
(to Note Purchase Agreement)
<PAGE>
"Consolidated Debt" means as of the date of any determination thereof all
Debt of the Company and its Subsidiaries, determined on a consolidated basis in
accordance with GAAP.
"Consolidated EBITDA" means, with respect to any period, Consolidated Net
Income for such period plus all amounts deducted in the computation thereof on
account of (a) Interest Charges, (b) taxes imposed on or measured by income or
excess profits, (c) depreciation and (d) amortization.
"Consolidated Net Income" for any period means the gross revenues of the
Company and its Subsidiaries for such period less all expenses and other proper
charges (including taxes on income), determined on a consolidated basis in
accordance with GAAP, but excluding in any event:
(a) any extraordinary gains or losses; and
(b) post-retirement benefit expenses accrued in accordance with
Statement of Financial Accounting Standards No. 106.
"Consolidated Net Worth" means as of the date of any determination thereof
the total amount of consolidated assets of the Company and its Subsidiaries and
all items which would be included on the liability and equity side of a
consolidated balance sheet of the Company and its Subsidiaries, except capital
stock of any class, surplus and retained earnings of the Company, determined in
accordance with GAAP.
"Consolidated Tangible Net Worth" means as of the date of any determination
thereof Consolidated Net Worth, less:
(a) good will (including the unallocated excess purchase cost of
assets acquired in a transaction accounted for as a purchase over the
aggregate fair market value thereof on the date of acquisition), patents,
trade names, trade marks, copyrights, franchises, deferred assets
(including unamortized debt discount and expense, deferred research and
development expenses and organizational expenses) and such other assets as
are properly classified as "intangible assets" in accordance with GAAP;
(b) Investments in Affiliates (other than Subsidiaries) or any
extension of credit to shareholders, officers directors or employees of the
Company and its Affiliates;
(c) any write-up of assets of the Company or its Subsidiaries after
the date of this Agreement (other than a write-up of assets of a Subsidiary
in connection with the acquisition of such Subsidiary in accordance with
GAAP); and
(d) the difference between the current market value and the cost
(but not below zero) of the Marketable Securities of the Company and its
Subsidiaries.
"Debt" of any Person means and includes all (i) obligations of such Person
for borrowed money or which has been incurred in connection with the acquisition
of property or assets
B-2
<PAGE>
(excluding accounts payable arising in the ordinary course of business), (ii)
obligations secured by any Lien upon property or assets owned by such Person,
even though such Person has not assumed or become liable for the payment of such
obligations, (iii) obligations created or arising under any conditional sale or
other title retention agreement with respect to property acquired by such
Person, notwithstanding the fact that the rights and remedies of the seller,
lender or lessor under such agreement in the event of default are limited to
repossession or sale of property, (iv) Capital Lease Obligations, (v) recourse
obligations of such Person related to asset securitization transactions, and
(vi) Guaranties of obligations of others of the character referred to in this
definition. For purposes of all computation made pursuant to this Agreement,
Debt shall not include Securitization Debt of any Securitization Subsidiary.
"Default" means an event or condition the occurrence or existence of which
would, with the lapse of time or the giving of notice or both, become an Event
of Default.
"Default Rate" means that rate of interest that is the greater of (i) 9.93%
per annum or (ii) 2% over the rate of interest publicly announced by Bank One
N.A. in Chicago, Illinois as its "base" or "prime" rate.
"Environmental Laws" means any and all Federal, state, local, and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders, decrees,
permits, concessions, grants, franchises, licenses, agreements or governmental
restrictions relating to pollution and the protection of the environment or the
release of any materials into the environment, including but not limited to
those related to hazardous substances or wastes, air emissions and discharges to
waste or public systems.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the rules and regulations promulgated thereunder
from time to time in effect.
"ERISA Affiliate" means any trade or business (whether or not incorporated)
that is treated as a single employer together with the Company under section 414
of the Code.
"Event of Default" is defined in Section 11.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"GAAP" means generally accepted accounting principles as in effect from
time to time in the United States of America.
"Governmental Authority" means
(a) the government of
(i) the United States of America or any State or other
political subdivision thereof, or
B-3
<PAGE>
(ii) any jurisdiction in which the Company or any Subsidiary
conducts all or any part of its business, or which asserts
jurisdiction over any properties of the Company or any Subsidiary, or
(b) any entity exercising executive, legislative, judicial,
regulatory or administrative functions of, or pertaining to, any such
government.
"Guaranty" means, with respect to any Person, any obligation (except the
endorsement in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing or in effect guaranteeing any
indebtedness, dividend or other obligation of any other Person in any manner,
whether directly or indirectly, including (without limitation) obligations
incurred through an agreement, contingent or otherwise, by such Person:
(a) to purchase such indebtedness or obligation or any property
constituting security therefor;
(b) to advance or supply funds (i) for the purchase or payment of
such indebtedness or obligation, or (ii) to maintain any working capital or
other balance sheet condition or any income statement condition of any
other Person or otherwise to advance or make available funds for the
purchase or payment of such indebtedness or obligation;
(c) to lease properties or to purchase properties or services
primarily for the purpose of assuring the owner of such indebtedness or
obligation of the ability of any other Person to make payment of the
indebtedness or obligation; or
(d) otherwise to assure the owner of such indebtedness or obligation
against loss in respect thereof.
In any computation of the indebtedness or other liabilities of the obligor under
any Guaranty, the indebtedness or other obligations that are the subject of such
Guaranty shall be assumed to be direct obligations of such obligor.
"Hazardous Material" means any and all pollutants, toxic or hazardous
wastes or any other substances that might pose a hazard to health or safety, the
removal of which may be required or the generation, manufacture, refining,
production, processing, treatment, storage, handling, transportation, transfer,
use, disposal, release, discharge, spillage, seepage, or filtration of which is
or shall be restricted, prohibited or penalized by any applicable law
(including, without limitation, asbestos, urea formaldehyde foam insulation and
polychlorinated biphenyls).
"holder" means, with respect to any Note, the Person in whose name such
Note is registered in the register maintained by the Company pursuant to Section
13.1.
"Institutional Investor" means (a) any original purchaser of a Note, and
(b) any bank, trust company, savings and loan association or other financial
institution, any pension plan, any investment company, any insurance company,
any broker or dealer, or any other similar financial institution or entity,
regardless of legal form.
B-4
<PAGE>
"Interest Charges" means for any period all interest and all amortization
of debt discount and expense on any particular Debt (including imputed interest
on Capital Lease Obligations) for which such calculations are being made,
determined in accordance with GAAP.
"Interest Coverage Ratio" means for any period the ratio of (a) Net Income
Available for Interest Charges, to (b) Interest Charges.
"Investments" means all investments, in cash or by delivery of property
made, directly or indirectly in any Person, whether by acquisition of shares of
capital stock, indebtedness or other obligations or Securities or by loan,
advance, capital contribution or otherwise; provided, however, that
"Investments" shall not mean or include routine investments in property to be
used or consumed in the ordinary course of business.
"Lien" means, with respect to any Person, any mortgage, lien, pledge,
charge, security interest or other encumbrance, or any interest or title of any
vendor, lessor, lender or other secured party to or of such Person under any
conditional sale or other title retention agreement or Capital Lease, upon or
with respect to any property or asset of such Person (including in the case of
stock, stockholder agreements, voting trust agreements and all similar
arrangements).
"Make-Whole Amount" is defined in Section 8.6.
"Marketable Securities" means:
(a) Securities issued or guaranteed by the United States government
or any agency thereof;
(b) certificates of deposit issued by, or time deposits in, domestic
U.S. commercial banks that have, or are members of a group of U.S. domestic
commercial banks that have, consolidated total assets in an amount not less
than $5,000,000,000;
(c) commercial paper rated A-1+ or P-1 by Standard & Poor's Rating
Group or Moody's Investors Service, Inc. or the highest rating then
available from such rating agencies;
(d) stock listed on the New York, American or National NASDAQ
Exchange (other than shares of capital stock of the Company);
(e) mutual funds quoted daily in The Wall Street Journal; or
(f) bonds rated Ba or better by Moody's Investors Service, Inc. or
BB or better by Standard & Poor's Rating Group.
"Material" means material in relation to the business, operations, affairs,
financial condition, assets, properties, or prospects of the Company and its
Subsidiaries taken as a whole.
B-5
<PAGE>
"Material Adverse Effect" means a material adverse effect on (a) the
business, operations, affairs, financial condition, assets or properties of the
Company and its Subsidiaries taken as a whole, or (b) the ability of the Company
to perform its obligations under this Agreement and the Notes, or (c) the
validity or enforceability of this Agreement or the Notes.
"Multiemployer Plan" means any Plan that is a "multiemployer plan" (as such
term is defined in section 4001(a)(3) of ERISA).
"Net Income Available for Interest Charges" means for any period the sum of
(i) Consolidated Net Income during such period plus (to the extent deducted in
determining Consolidated Net Income) (ii) all provisions for any Federal, state
or other income taxes made by the Company and its Subsidiaries during such
period, and (iii) all Interest Charges of the Company and its Subsidiaries
during such period.
"Notes" is defined in Section 1.
"Officer's Certificate" means a certificate of a Senior Financial Officer
or of any other officer of the Company whose responsibilities extend to the
subject matter of such certificate.
"PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA or any successor thereto.
"Person" means an individual, partnership, corporation, limited liability
company, association, trust, unincorporated organization, or a government or
agency or political subdivision thereof.
"Plan" means an "employee benefit plan" (as defined in section 3(3) of
ERISA) that is or, within the preceding five years, has been established or
maintained, or to which contributions are or, within the preceding five years,
have been made or required to be made, by the Company or any ERISA Affiliate or
with respect to which the Company or any ERISA Affiliate may have any liability.
"Priority Debt" means all Debt of any Subsidiary (other than Debt owing to
the Company or another Subsidiary) and all Debt of the Company which is secured
by a Lien described in Section 10.5(i).
"property" or "properties" means, unless otherwise specifically limited,
real or personal property of any kind, tangible or intangible, choate or
inchoate.
"Qualified Sale of Accounts Receivable" shall mean an absolute sale without
recourse of accounts receivable of the Company or any Subsidiary to a
Securitization Subsidiary or to any other Person for the purpose of issuing Debt
secured by such accounts receivable, provided (i) such sale is permitted by
Section 10.7(e), and (ii) the Company or such Subsidiary shall receive, in
exchange for such sale of accounts receivable, a cash consideration in an amount
not less than the fair market value of the accounts receivable sold.
B-6
<PAGE>
"Required Holders" means, at any time, the holders of at least 66-2/3% in
principal amount of the Notes at the time outstanding (exclusive of Notes then
owned by the Company or any of its Affiliates).
"Responsible Officer" means any Senior Financial Officer and any other
officer of the Company with responsibility for the administration of the
relevant portion of this agreement.
"Sale-and-Leaseback Transaction" means a transaction or series of
transactions pursuant to which the Company or any Subsidiary shall sell or
transfer to any Person (other than the Company or a Subsidiary) any property,
whether now owned or hereafter acquired, and, as part of the same transaction or
series of transactions, the Company or any Subsidiary shall rent or lease as
lessee, or similarly acquire the right to possession or use of, such property or
one or more properties which it intends to use for the same purpose or purposes
as such property.
"Securities Act" means the Securities Act of 1933, as amended from time to
time.
"Securitization Debt" means Debt of any Securitization Subsidiary which by
its terms has recourse, in the event of any default thereof, solely to the
accounts receivable which secure such Debt and is otherwise non-recourse to the
property and assets of such Securitization Subsidiary or of any other Person.
"Securitization Subsidiary" means any Subsidiary of the Company which
engages exclusively in financing accounts receivable originated by the Company
and its Subsidiaries and activities relating to such financing activities.
"Security" shall have the same meaning as in Section 2(1) of the Securities
Act.
"Senior Financial Officer" means the chief financial officer, principal
accounting officer, treasurer or comptroller of the Company.
"Subsidiary" means, as to any Person, any corporation, association or other
business entity in which such Person or one or more of its Subsidiaries or such
Person and one or more of its Subsidiaries owns sufficient equity or voting
interests to enable it or them (as a group) ordinarily, in the absence of
contingencies, to elect a majority of the directors (or Persons performing
similar functions) of such entity, and any partnership or joint venture if more
than a 50% interest in the profits or capital thereof is owned by such Person or
one or more of its Subsidiaries or such Person and one or more of its
Subsidiaries (unless such partnership can and does ordinarily take major
business actions without the prior approval of such Person or one or more of its
Subsidiaries). Unless the context otherwise clearly requires, any reference to
a "Subsidiary" is a reference to a Subsidiary of the Company.
"Voting Stock" means Securities of any class or classes, the holders of
which are ordinarily, in the absence of contingencies, entitled to elect a
majority of the corporate directors (or Persons performing similar functions).
B-7
<PAGE>
"Wholly-Owned Subsidiary" means, at any time, any Subsidiary one hundred
percent (100%) of all of the equity interests (except directors' qualifying
shares) and voting interests of which are owned by any one or more of the
Company and the Company's other Wholly-Owned Subsidiaries at such time.
B-8
<PAGE>
[Form of Note]
Bindley Western Industries, Inc.
7.93% Senior Note due December 27, 2004
No. [_________] [Date]
$[____________] PPN _______
For Value Received, the undersigned, Bindley Western Industries, Inc.
(herein called the "Company"), a corporation organized and existing under the
laws of the State of Indiana, hereby promises to pay to [________________], or
registered assigns, the principal sum of [________________] Dollars on December
27, 2004, with interest (computed on the basis of a 360-day year of twelve 30-
day months) (a) on the unpaid balance thereof at the rate of 7.93% per annum
from the date hereof, payable semiannually, on the twenty-seventh day of June
and December in each year, commencing on the first of such dates after the date
hereof, until the principal hereof shall have become due and payable, and (b) to
the extent permitted by law on any overdue payment (including any overdue
prepayment) of principal, any overdue payment of interest and any overdue
payment of any Make-Whole Amount (as defined in the Note Purchase Agreement
referred to below), payable semiannually as aforesaid (or, at the option of the
registered holder hereof, on demand), at a rate per annum from time to time
equal to the greater of (i) 9.93% or (ii) 2% over the rate of interest publicly
announced by Bank One N.A. from time to time in Chicago, Illinois as its "base"
or "prime" rate.
Payments of principal of, interest on and any Make-Whole Amount with
respect to this Note are to be made in lawful money of the United States of
America at Bank One N.A. in Chicago, Illinois or at such other place as the
Company shall have designated by written notice to the holder of this Note as
provided in the Note Purchase Agreement referred to below.
This Note is one of a series of Senior Notes (herein called the "Notes")
issued pursuant to the Note Purchase Agreement, dated as of December 15, 1999
(as from time to time amended, the "Note Purchase Agreement"), between the
Company and the Purchasers named therein and is entitled to the benefits
thereof. Each holder of this Note will be deemed, by its acceptance hereof, to
have made the representation set forth in Section 6.2 of the Note Purchase
Agreement, provided that such holder may (in reliance upon information provided
by the Company, which shall not be unreasonably withheld) make a representation
to the effect that the purchase by such holder of this Note will not constitute
a non-exempt prohibited transaction under Section 406(a) of ERISA.
This Note is a registered Note and, as provided in the Note Purchase
Agreement, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the
Exhibit 1
(to Note Purchase Agreement)
<PAGE>
Company may treat the person in whose name this Note is registered as the owner
hereof for the purpose of receiving payment and for all other purposes, and the
Company will not be affected by any notice to the contrary.
This Note is subject to optional prepayment, in whole or from time to time
in part, at the times and on the terms specified in the Note Purchase Agreement,
but not otherwise.
If an Event of Default, as defined in the Note Purchase Agreement, occurs
and is continuing, the principal of this Note may be declared or otherwise
become due and payable in the manner, at the price (including any applicable
Make-Whole Amount) and with the effect provided in the Note Purchase Agreement.
This Note shall be construed and enforced in accordance with, and the
rights of the parties shall be governed by, the law of the State of Illinois
excluding choice-of-law principles of the law of such State that would require
the application of the laws of a jurisdiction other than such State.
Bindley Western Industries, Inc.
By
[Title]
E-1-2
<PAGE>
Subsidiaries of the Company and
Ownership of Subsidiary Stock
% Ownership of
Subsidiary Stock
1. BW Food Distributors, Inc. - Salem, NH 100%
2. BW Transportation Services, Inc. - Indianapolis, IN 100%
3. Special Services Company - Orange, CT 100%
4. Central Pharmacy Services, Inc. - Atlanta, GA
(a Georgia corporation) 100%
5. Priority Healthcare Services Corporation, - Indianapolis, IN 100%
6. College Park Plaza Associates, Inc. - Indianapolis, IN 100%
7. Bindley Western Funding Corporation - Woodland, CA
(a Delaware corporation) 100%
Note: All are Indiana corporations except as otherwise noted
Schedule 5.4
(to Note Purchase Agreement)
<PAGE>
Financial Statements
Unaudited financial statements as of September 30, 1999 and audited
financial statements as of December 31, 1998, 1997 and 1996 have been provided
to the Purchasers.
Schedule 5.5
(to Note Purchase Agreement)
<PAGE>
Patents, Etc.
None.
Schedule 5.11
(to Note Purchase Agreement)
<PAGE>
Existing Debt at November 30, 1999
Mortgage Note in Company's Dallas Facility 8.25% due in
monthly installments through September, 2008 $ 588,673
7.25% Private placement debt due December 27, 1999 30,000,000
Receivable Securitization interests outstanding 237,962,700
Short-term bank line of credit borrowing outstanding 171,500,000
------------
$440,051,373
============
Schedule 5.15
(to Note Purchase Agreement)
<PAGE>
Existing Liens
None.
Schedule 10.5
(to Note Purchase Agreement)
<PAGE>
Form of Opinion of Counsel
to the Company
The closing opinion of Baker & Daniels, counsel to the Company, which is
called for by Section 4.4 of the Note Purchase Agreement, shall be dated the
date of Closing and addressed to the Purchasers, shall be satisfactory in scope
and form to each Purchaser and shall be to the effect that:
1. The Company is a corporation, duly incorporated and validly
existing under the laws of the Indiana, has the corporate power and
authority to execute and perform the Note Purchase Agreement and to issue
the Notes and has the corporate power and authority to conduct the
activities in which it is now engaged and is duly licensed or qualified and
is in good standing as a foreign corporation in each jurisdiction in which
the character of the properties owned or leased by it or the nature of the
business transacted by it makes such licensing or qualification necessary,
except in each case where the failure to be so licensed or qualified would
not have a Material Adverse Effect.
2. The Note Purchase Agreement has been duly authorized by all
necessary corporate action on the part of the Company, has been duly
executed and delivered by the Company and constitutes the legal, valid and
binding contract of the Company enforceable in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent conveyance and similar laws
affecting creditors' rights generally, and general principles of equity
(regardless of whether the application of such principles is considered in
a proceeding in equity or at law).
3. The Notes have been duly authorized by all necessary corporate
action on the part of the Company, have been duly executed and delivered by
the Company and constitute the legal, valid and binding obligations of the
Company enforceable in accordance with their terms, subject to bankruptcy,
insolvency, fraudulent conveyance and similar laws affecting creditors'
rights generally, and general principles of equity (regardless of whether
the application of such principles is considered in a proceeding in equity
or at law).
4. No approval, consent or withholding of objection on the part of,
or filing, registration or qualification with, any federal or Indiana
governmental body, is necessary in connection with the execution and
delivery of the Note Purchase Agreement or the Notes.
5. The issuance and sale of the Notes and the execution, delivery
and performance by the Company of the Note Purchase Agreement do not
conflict with or result in any breach of any of the provisions of or
constitute a default under or result in the creation or imposition of any
Lien upon any of the property of the Company pursuant to the provisions of
the Articles of Incorporation or By-laws of the Company.
Exhibit 4.4(a)
(to Note Purchase Agreement)
<PAGE>
6. The issuance, sale and delivery of the Notes under the
circumstances contemplated by the Note Purchase Agreement do not, under
existing law, require the registration of the Notes under the Securities
Act of 1933, as amended, or the qualification of an indenture under the
Trust Indenture Act of 1939, as amended.
7. Neither the issuance of the Notes nor the application of the
proceeds of the sale of the Notes will violate or result in a violation of
Section 7 of the Securities Exchange Act of 1934, as amended, or any
regulation issued pursuant thereto, including, without limitation,
Regulation T, U or X of the Board of Governors of the Federal Reserve
System.
8. The Company is not an "investment company" or a company
"controlled" by an "investment company," within the meaning of the
Investment Company Act of 1940, as amended.
With respect to matters of fact on which such opinion is based, such
counsel shall be entitled to rely on appropriate certificates of public
officials and other officers of the Company and upon the representations and
warranties of the Company and the Purchasers in the Note Purchase Agreement.
The opinion of Baker & Daniels may be limited to the laws of the State of
Indiana and the Federal laws of the United States. To the extent the Note
Purchase Agreement and the Notes are governed by Illinois law, the opinions set
forth in paragraphs 2 and 3 as to enforceability mean that such documents and
instruments would be so enforceable under Indiana law.
E-4.4(a)-2
<PAGE>
Form of Opinion of the General Counsel
of the Company
The closing opinion of the General Counsel of the Company, which is called
for by Section 4.4 of the Note Purchase Agreement, shall be dated the date of
Closing and addressed to the Purchasers, shall be satisfactory in scope and form
to each Purchaser and shall be to the effect that:
1. The Company is a corporation, duly incorporated and validly
existing under the laws of the Indiana, has the corporate power and
authority to execute and perform the Note Purchase Agreement and to issue
the Notes and has the corporate power and authority to conduct the
activities in which it is now engaged and is duly licensed or qualified and
is in good standing as a foreign corporation in each jurisdiction in which
the character of the properties owned or leased by it or the nature of the
business transacted by it makes such licensing or qualification necessary,
except in each case where the failure to be so licensed or qualified would
not have a Material Adverse Effect.
2. Each Subsidiary is a corporation duly organized, validly existing
and in good standing under the laws of its jurisdiction of incorporation
and is duly licensed or qualified and is in good standing in each
jurisdiction in which the character of the properties owned or leased by it
or the nature of the business transacted by it makes such licensing or
qualification necessary, except in each case where the failure to be so
licensed or qualified would not have a Material Adverse Effect. All of the
issued and outstanding shares of capital stock of each such Subsidiary have
been duly issued, are fully paid and non-assessable and are owned by the
Company, by one or more Subsidiaries, or by the Company and one or more
Subsidiaries.
3. The issuance and sale of the Notes and the execution, delivery
and performance by the Company of the Note Purchase Agreement do not
conflict with or result in any breach of any of the provisions of or
constitute a default under or result in the creation or imposition of any
Lien upon any of the property of the Company pursuant to the provisions of
the Articles of Incorporation or By-laws of the Company or any agreement or
other instrument known to such counsel to which the Company is a party or
by which the Company may be bound.
4. There are no actions, suits or proceedings pending or, to the
knowledge of such counsel after due inquiry, threatened against or
affecting the Company or any Subsidiary in any court or before any
governmental authority or arbitration board or tribunal which, if adversely
determined, would have a materially adverse effect on the properties,
business, prospects, profits or condition, (financial or otherwise) of the
Company and its Subsidiaries or the ability of the Company to perform its
obligations under the Note Purchase Agreement and the Notes or on the
legality, validity or enforceability of the Company's obligations under the
Note Purchase Agreement or the Notes. To the knowledge of such counsel,
neither the Company nor any Subsidiary is in
Exhibit 4.4(b)
(to Note Purchase Agreement)
<PAGE>
default with respect to any court or governmental authority, or arbitration
board or tribunal.
With respect to matters of fact on which such opinion is based, such
counsel shall be entitled to rely on appropriate certificates of public
officials and other officers of the Company and upon the representations and
warranties of the Company and the Purchasers in the Note Purchase Agreement.
The opinion of the General Counsel may be limited to the laws of the State of
Indiana and the Federal laws of the United States.
E-4.4(b)-2
<PAGE>
Form of Opinion of Special Counsel
to the Purchasers
The closing opinion of Chapman and Cutler, special counsel to the
Purchasers, called for by Section 4.4 of the Note Purchase Agreement, shall be
dated the date of Closing and addressed to each Purchaser, shall be satisfactory
in form and substance to each Purchaser and shall be to the effect that:
1. The Company is a corporation, validly existing under the laws of
the State of Indiana and has the corporate power and the corporate
authority to execute and deliver the Note Purchase Agreement and to issue
the Notes.
2. The Note Purchase Agreement has been duly authorized by all
necessary corporate action on the part of the Company, has been duly
executed and delivered by the Company and constitutes the legal, valid and
binding contract of the Company enforceable in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent conveyance and similar laws
affecting creditors' rights generally, and general principles of equity
(regardless of whether the application of such principles is considered in
a proceeding in equity or at law).
3. The Notes have been duly authorized by all necessary corporate
action on the part of the Company, and the Notes being delivered on the
date hereof have been duly executed and delivered by the Company and
constitute the legal, valid and binding obligations of the Company
enforceable in accordance with their terms, subject to bankruptcy,
insolvency, fraudulent conveyance and similar laws affecting creditors'
rights generally, and general principles of equity (regardless of whether
the application of such principles is considered in a proceeding in equity
or at law).
4. The issuance, sale and delivery of the Notes under the
circumstances contemplated by the Note Purchase Agreement do not, under
existing law, require the registration of the Notes under the Securities
Act of 1933, as amended, or the qualification of an indenture under the
Trust Indenture Act of 1939, as amended.
The opinion of Chapman and Cutler shall also state that the opinion of
Baker & Daniels, counsel to the Company, is satisfactory in scope and form to
Chapman and Cutler and that, in their opinion, the Purchasers are justified in
relying thereon.
With respect to matters of fact upon which such opinion is based, Chapman
and Cutler may rely on appropriate certificates of public officials and officers
of the Company and upon representations of the Company and the Purchasers
delivered in connection with the issuance and sale of the Notes.
In rendering the opinion set forth in paragraph 1 above, Chapman and Cutler
may rely solely upon an examination of the Articles of Incorporation certified
by, and a certificate of good
Exhibit 4.4(c)
(to Note Purchase Agreement)
<PAGE>
standing of the Company from, the Secretary of State of the State of Indiana,
the By-laws of the Company and the general business corporation law of the State
of Indiana. The opinion of Chapman and Cutler is limited to the laws of the
State of Illinois, the general business corporation law of the State of Indiana
and the Federal laws of the United States.
E-4.4(c)-2
<PAGE>
Exhibit 10-K
AGREEMENT OF PURCHASE AND SALE AND JOINT ESCROW INSTRUCTIONS
To: Escrow No.
Escrow Officer:
THIS AGREEMENT OF PURCHASE AND SALE AND JOINT ESCROW INSTRUCTIONS
("Agreement") is made and entered into as of the __ day of March, 1999
("Execution Date") by and between COLLEGE PARK PLAZA ASSOCIATES, INC., an
Indiana corporation ("Seller"), and COLLEGE PARK PLAZA, INC., a Delaware
corporation ("Buyer").
R E C I T A L S:
A. Seller is the owner of the Real Property located in the City of
Indianapolis ("City"), County of Marion ("County"), State of Indiana ("State"),
and more particularly described in Exhibit "A" attached hereto.
B. The Real Property is improved with the Improvements.
C. The Real Property and Improvements are herein collectively
referred to as the "Project" which is commonly known as "College Park Plaza".
D. Capitalized terms shall have the meanings set forth in connection
with the use of such terms. If no definition is so set forth such capitalized
terms shall have the meanings set forth in the Glossary of Terms attached
hereto.
E. Buyer desires to purchase from Seller, and Seller desires to sell
to Buyer, the Property.
AGREEMENT:
NOW THEREFORE, incorporating the foregoing recitals, and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows.
1. Purchase and Sale. Seller agrees to sell to Buyer, and Buyer
-----------------
agrees to purchase from Seller, the Property upon the terms and conditions set
forth in this Agreement.
2. Purchase Price. The Purchase Price ("Purchase Price") for the
--------------
Property shall be Twenty-One Million Six Hundred Thousand and 00/100 Dollars
($21,600,000.00), based upon the Improvements consisting of 180,460 rentable
square feet. Seller acknowledges and agrees that if the rentable square footage
of the Improvements consists of less than 180,460 rentable square feet (as
determined by a remeasurement to be performed by a party selected by Buyer and
approved by Seller), then the Purchase Price shall be reduced by the product of
(i)
<PAGE>
10, 1999 full installment. Upon receipt of the tax bill for the May 10, 2000
installment, Buyer shall provide Seller with a copy thereof. If the actual tax
bill exceeds the amount used for closing proration, Seller shall pay Buyer
65.75% of the difference on the later of May 1, 2000 or ten (10) days after its
receipt of the copy of the tax bill. If the actual tax bill is less than the
amount used for closing proration, Buyer shall pay 65.75% of the difference to
Seller within ten (10) days of its receipt of the actual tax bill.
3. Buyer and Seller agree that, to the extent Buyer receives
payments from the tenants of the Property for installments of real estate taxes
paid by Seller or credited to Buyer at closing, such payments shall be paid by
Buyer to Seller. As to Bindley Western Industries, Inc. ("Bindley") and J.F.
Molloy and Associates, Inc. ("Molloy"), such payment shall be tax payments made
by such tenants to Buyer. As to Interactive Intelligence, Inc. ("Interactive")
and Wang Laboratories, Inc. ("Wang"), such payments shall be that portion of
excess operating expenses paid by such tenants to Buyer equal to the percentage
of such portion of excess operating expenses that are attributable to increases
in real estate taxes over such amounts payable in 1999. Payments received from
Bindley and Molloy shall be paid to Seller within ten (10) days of receipt by
Buyer. Payments received from Interactive and Wang shall be made within ten (10)
days of the completion of the annual reconciliation of operating expenses for
calendar years 1999 or 2000 contemplated by their respective leases.
Notwithstanding the foregoing, Buyer shall have the right to pay itself current
before paying such amounts to Seller.
4. Attached as Exhibit A hereto is a copy of a letter to Seller's
---------
property manager from Molloy concerning its build out allowance. In its
estoppel, Molloy has also expressed concern about carpeting in its space. In
addition, Seller recognizes that certain punch list items may arise in
connection with the Interactive space. Seller recognizes that the resolution of
these items is Seller's responsibility, agrees to do so with reasonable
diligence and will indemnify, defend and protect Buyer from all claims, demands,
actions, losses or costs sustained or incurred by Buyer resulting from these
items.
5. Seller agrees to cause the transfer of the roof warranties
attached as Exhibits B and C to Buyer within thirty (30) days of the date hereof
----------------
without expense to Buyer.
6. Seller agrees to deliver to Buyer copies of the general contract
for the construction of the Building and the as built plans for the Building and
the tenant improvements within thirty (30) days of the date hereof. To the
extent such documents are in the possession of Eaton & Lauth Real Estate
Services, Inc. ("E&L"), Buyer agrees to direct E&L to provide such documents to
Seller within ten (10) days of the date hereof.
7. Except for those provisions which are inconsistent with this
Third Amendment and those terms, covenants and conditions for which performance
has heretofore been completed, all other terms, covenants and conditions of the
Agreement shall remain in full force and effect. The term "Agreement" where used
in the Agreement shall hereinafter refer to the Agreement, as amended by this
Third Amendment.
-2-
<PAGE>
8. All capitalized terms used but not specifically defined in this
Third Amendment shall have the meanings ascribed to such terms in the Agreement.
9. This Third Amendment shall be binding upon and inure to the
benefit of Buyer, Seller, and their respective successors and assigns.
10. Each party hereto, and their respective successors and assigns
shall be authorized to rely upon the signatures of all of the parties hereto on
this Third Amendment which are delivered by facsimile as constituting a duly
authorized, irrevocable, actual, current delivery of this Third Amendment with
original ink signatures of each person and entity; provided, however, that each
party hereto that delivers such facsimile signatures to another party hereto,
covenants and agrees that it shall deliver an executed original of the same to
the party(s) so receiving the previous facsimile signatures within ten (10) days
after the delivery of such facsimile signatures.
11. This Third Amendment may be executed in counterparts, each of
which shall be deemed an original part and all of which together shall
constitute a single agreement.
IN WITNESS WHEREOF, Buyer and Seller have executed this Third
Amendment as of the date first written above.
BUYER: SELLER:
COLLEGE PARK PLAZA, LLC, COLLEGE PARK PLAZA
a Delaware limited liability company ASSOCIATES, INC., an Indiana
corporation
By: /s/ Lawrence K. Sullivan By: /s/ Scott D. Teets,
-------------------------------- ------------------------------
Lawrence K. Sullivan, Scott D. Teets, Associate
Vice President General Counsel and
Assistant Secretary
ACKNOWLEDGMENT OF RECEIPT
By signing below, Chicago Title Insurance Company, as Escrow Holder,
acknowledges receipt of this Third Amendment.
ESCROW HOLDER:
Dated: April ____, 1999 CHICAGO TITLE INSURANCE COMPANY
By: _________________________________
Printed: ____________________________
Title: ______________________________
-3-
<PAGE>
commencement date, and expiration date (including option periods) of each Tenant
Lease, (4) the current monthly rental payable under each Tenant Lease (including
base rent and any percentage rent or expense reimbursement) and other charges
payable by such Tenant, (5) the base year and the amount of expenses incurred
during such base year used for calculating each Tenant's cost pass-throughs
under such Tenant's Tenant Lease, (6) the amount of all Tenant Deposits, letters
of credit, and prepaid rent paid by each Tenant under such Tenant's Tenant
Lease, less amounts previously applied or returned to such Tenant, (7) whether
such Tenant is entitled to any assigned storage or parking spaces, (8) whether
any rents or other charges are in arrears or prepaid and the period to which
such arrearages or prepayments relate, (9) any incentives, concessions,
abatements, allowances or inducements granted to such Tenant (including any not
completed tenant improvement work), and (10) any unpaid leasing commission with
respect to such Tenant Lease (including potential obligations in connection with
the exercise of any unexercised options to expand or extend, referred to herein
as "Option Commissions").
(c) Financial Data for Tenant Leases. Seller
--------------------------------
shall deliver to Buyer all financial data relating to the Tenants in Seller's
possession or reasonably available to Seller and true, correct and complete
copies of all existing Tenant Leases, which Tenant Leases shall be identified on
the Rent Roll, and copies of all documents, agreements and other writings
referenced in or affecting the Tenant Leases.
(d) Service Contracts. Seller shall deliver to
-----------------
Buyer a list and complete copies of all Service Contracts relating to all or any
of the Property.
(e) Operating Statements. Seller shall deliver
--------------------
to Buyer detailed and complete monthly income and expense statements, year-end
financial and monthly operating statements and proposed budgets (collectively,
"Operating Statements") for the period from the completion of the Improvements
through the Closing Date, all of which shall be certified by an officer of Eaton
& Lauth Real Estate Services, Inc. ("E&L"), Seller's property manager as having
been prepared in accordance with such manager's customary accounting practice in
the ordinary course of business. Seller shall deliver to Buyer all additional
Operating Statements prepared in the ordinary course of business, even if
prepared after the Closing Date. The Operating Statements shall be in form and
content sufficient to allow Buyer to calculate each Tenant's cost pass throughs
and to satisfy all requirements under the Tenant Leases with regard to
documentation of charges payable by Tenants.
(f) Records and Plans; Warranties. Seller shall
-----------------------------
deliver to Buyer a list and complete copies of all Records and Plans and
Warranties.
(g) Licenses and Permits. Seller shall deliver
--------------------
to Buyer a list and complete copies of all Licenses and Permits.
(h) Insurance Policies. Seller shall deliver to
------------------
Buyer a list and complete copies of all present hazard, rent loss, liability,
worker's compensation and other insurance policies, and copies of all claims and
settlements of Fifty Thousand Dollars ($50,000.00) or more since the date that
the Improvements have been completed.
-4-
<PAGE>
(i) Utility and Property Tax Bills. Seller shall
------------------------------
deliver to Buyer copies of (1) all bills issued for real property taxes and
personal property taxes with respect to the Property since Seller's ownership of
the same, (2) all notices or documents for any assessments or bonds relating to
the Property, and (3) the most recently available utility bills and similar
records relating to the Property.
(j) Seismic and Environmental Studies. Seller
---------------------------------
shall deliver to Buyer a list and complete copies of all seismic and/or
environmental/hazardous material tests, studies, reports or analyses relating to
the Property within Seller's possession or control.
(k) Claims. Seller shall deliver to Buyer a list
------
of all pending or threatened claims, proceedings or legal actions instituted
against Seller and/or the Property.
(l) Seller's Authority. Seller shall deliver to
------------------
Buyer copies of all documentation evidencing the formation of Seller and
evidence of Seller's authority to enter into the transactions contemplated
hereby.
(m) Material Adverse Facts. Seller shall deliver
----------------------
to Buyer a written statement from Seller disclosing any material adverse facts
known to Seller respecting the Property.
(n) Architectural and Engineering Certifications.
--------------------------------------------
Seller shall deliver to Buyer a list of all architects or engineers employed in
connection with any construction of the Improvements or who inspected the
Improvements and copies of all certificates from said architects and engineers
certifying that the Improvements were constructed in a good and workmanlike
manner and in accordance with the final plans and specifications therefore.
(o) Relevant Information. Upon Buyer's request,
--------------------
Seller shall also make available for Buyer's review any other materials and
documents pertaining to the Property that are within Seller's possession or
control.
6.1.3 Inspections and Studies. On or before the
-----------------------
Contingency Date, Buyer shall have approved the results of any and all
inspections, investigations, tests and studies (including, without limitation,
investigations with regard to zoning, building codes and other government
regulations, architectural inspections, engineering tests, economic feasibility
studies and soils, seismic, environmental contamination and geologic reports)
with respect to the Project (including all structural and mechanical systems and
leased areas) as Buyer may elect to make or obtain. The failure of Buyer to
disapprove said results on or prior to the Contingency Date shall be deemed to
constitute its approval of the results. The cost of any such inspections, tests
and studies shall be borne by Buyer.
-5-
<PAGE>
6.1.4 Tenant Estoppel Certificates. Buyer shall have
----------------------------
received and approved estoppel certificates ("Tenant Estoppel Certificates") to
be dated not more than thirty (30) days prior to the Closing Date, duly executed
by Tenants such that Buyer shall have received Tenant Estoppel Certificates from
Tenants under Tenant Leases covering One Hundred percent (100%) of the leased
space in the Project. The Tenant Estoppel Certificates shall be in the form of,
and upon the terms contained in Exhibit "B" attached hereto, with such
modifications or additions to any particular Tenant Estoppel Certificate as
shall be reasonably requested by Buyer so long as such modifications or
additions are for the purpose of confirming certain matters respecting the
applicable Tenant Lease; provided, however, if the form of estoppel certificate
attached hereto as Exhibit "B" requests information in addition to or materially
-----------
different than that required to be provided by the particular Tenant pursuant to
that particular Tenant's Lease, this condition will be satisfied for that
particular Tenant if such Tenant(s) executes an estoppel certificate in the form
required pursuant to its Tenant Lease provided it is otherwise consistent with
the applicable Tenant Lease and the Rent Roll and provided further that Seller
made a good faith effort to attempt to obtain the signature of the particular
Tenant on the approved form attached as Exhibit "B". At least three (3) business
days prior to Seller's delivery to Tenants of the unexecuted Tenant Estoppel
Certificates, Seller shall deliver such unexecuted Tenant Estoppel Certificates
to Buyer for Buyer's review and approval. In the event Buyer does not give
Seller telephonic or written notice of any modifications to such Tenant Estoppel
Certificates which Buyer desires to be made thereto within such three (3)
business day period, Buyer shall be deemed to have approved the forms of such
unexecuted Tenant Estoppel Certificates. Seller shall deliver the original
executed Tenant Estoppel Certificates to Buyer no later than two (2) business
days prior to the Closing Date. In the event Buyer disapproves any Tenant
Estoppel Certificate executed by a Tenant, Seller shall use best efforts to
cause such Tenant to execute a Tenant Estoppel Certificate which is reasonably
satisfactory to Buyer prior to the Closing Date.
6.1.5 Moratorium. At the Closing Date, there shall be no
----------
reclassification, rezoning or other statute, law, judicial or administrative
decision, proceeding, ordinance or regulation (including amendments and
modifications of any of the foregoing) pending or proposed to be imposed by the
Authorities or any public or private utility having jurisdiction over the
Project which could adversely affect the acquisition, development, sale or
occupancy of the Project.
6.1.6 Representations, Warranties and Covenants of
--------------------------------------------
Seller. Seller shall have duly performed each and every agreement to be
- ------
performed by Seller hereunder and Seller's representations, warranties and
covenants set forth in this Agreement shall be true and correct in all material
respects as of the date hereof and as of the Closing Date with the same force
and effect as if remade by Seller in a separate certificate at that time.
6.1.7 Seller's Deliveries. Seller shall have delivered
-------------------
the items described in Paragraph 6.1, Paragraph 7.1, Paragraph 8 and Paragraph
13.3.9.
-6-
<PAGE>
6.1.8 No Material Changes. At the Closing Date, there
-------------------
shall have been no material adverse changes in the physical or financial
condition of any portion of the Property.
6.1.9 Title Insurance. As of the Close of Escrow, the
---------------
Title Company shall have issued or shall have committed to issue the Title
Policy to Buyer.
6.1.10 Investment Committee. Buyer's investment committee
--------------------
("Committee") shall have approved this Agreement on or before the Contingency
Date; provided, however, that the failure of the Committee to consider this
Agreement by the Contingency Date shall only constitute the failure of a
condition precedent to the Closing for Buyer's benefit, and not a default by
Buyer.
The conditions set forth in this Paragraph 6.1 are solely for the
benefit of Buyer and may be waived only by Buyer in writing to Seller. Buyer
shall at all times have the right to waive any condition. The waiver by Buyer
of any condition shall not relieve Seller of any liability or obligation with
respect to any representation, warranty, covenant or agreement of Seller. All
approvals or disapprovals given by Buyer under this Paragraph 6.1 shall be in
Buyer's sole and absolute discretion and in writing and the failure of Buyer to
disapprove any matter requiring its approval or disapproval under this Paragraph
6.1 by the time therefor (which date shall be the Contingency Date with respect
to the items set forth in subparagraphs 6.1.1, 6.1.2, 6.1.3 and 6.1.10 above)
shall be deemed approval thereof by Buyer. Neither Seller nor Buyer shall act
or fail to act for the purpose of permitting or causing any condition to fail
(except to the extent Buyer, in its own discretion, exercises its right to
disapprove any such items or matters).
6.2 Conditions Precedent to Seller's Obligations. The Close of
--------------------------------------------
Escrow and Seller's obligations with respect to the transaction contemplated by
this Agreement are subject to Buyer's delivery to Escrow Holder on or before the
Closing Date, for disbursement as provided herein, of the Purchase Price, and
the documents and materials described in Paragraph 7.2.
6.3 Failure of Conditions to Close of Escrow. In the event any
----------------------------------------
of the conditions set forth in Paragraph 6.1 or Paragraph 6.2 are not timely
satisfied or waived, for a reason other than the default of Buyer or Seller
under this Agreement:
6.3.1 This Agreement, the Escrow and the rights and
obligations of Buyer and Seller shall terminate, except as otherwise provided
herein; and
6.3.2 Escrow Holder is hereby instructed to promptly
return to Seller and Buyer all funds and documents deposited by them,
respectively, into Escrow which are held by Escrow Holder on the date of said
termination (less, in the case of the party otherwise entitled to such funds,
however, the amount of any cancellation charges required to be paid by such
party under Paragraph 6.4).
-7-
<PAGE>
6.4 Cancellation Fees and Expenses. In the event the Escrow
------------------------------
terminates because of the nonsatisfaction of any condition precedent for a
reason other than the default of Buyer or Seller under this Agreement, the
cancellation charges required to be paid by and to Escrow Holder and the Title
Company shall be borne one-half (1/2) by Seller and one-half (1/2) to Buyer and
all other charges shall be borne by the party incurring same.
7. Deliveries to Escrow Holder.
---------------------------
7.1 By Seller. Seller hereby covenants and agrees to deliver
---------
or cause to be delivered to Escrow Holder on or prior to the Closing Date the
following instruments and documents, the delivery of each of which shall be a
condition precedent to the Close of Escrow for the benefit of Buyer.
7.1.1 Deed. Seller shall deliver to Escrow Holder a
----
Special Warranty Deed ("Deed"), duly executed and acknowledged in recordable
form by Seller, conveying the Project to Buyer subject only to the Approved
Title Conditions. The Deed shall be in the form of, and upon the terms contained
in, ""C" attached hereto.
7.1.2 Assignment of Leases. Seller shall deliver to
--------------------
Escrow Holder an Assignment of Leases ("Tenant Lease Assignment") duly executed
by Seller assigning to Buyer all of Seller's right, title and interest in and to
all of the Tenant's Leases and Tenant Deposits. The Tenant Lease Assignment
shall be in the form, and upon the terms contained in, Exhibit "D" attached
hereto.
7.1.3 General Assignment and Bill of Sale. Seller shall
-----------------------------------
deliver to Escrow Holder an assignment and bill of sale ("General Assignment"),
duly executed by Seller, assigning to Buyer all of Seller's right, title and
interest (to the extent assignable) in and to all Service Contracts which have
not been disapproved by Buyer, and all Licenses and Permits, Records and Plans,
all Personal Property and all Warranties. The General Assignment shall be in the
form of, and upon the terms contained in, Exhibit "E" attached hereto.
7.1.4 Non-Foreign Certification. Seller shall deliver to
-------------------------
Escrow Holder a certification duly executed by Seller under penalty of perjury
in the form of, and upon the terms set forth in, the Transferor's Certification
of Non-Foreign Status attached hereto as Exhibit "F" ("FIRPTA Certificate"),
setting forth Seller's address and federal tax identification number and
certifying that Seller is a "United States Person" and that Seller is not a
"foreign person" in accordance with and/or for the purpose of the provisions of
Sections 7701 and 1445 (as may be amended) of the Internal Revenue Code of 1986,
as amended, and any regulations promulgated thereunder.
7.1.5 Bindley Lease. Seller shall deliver to Escrow
-------------
Holder a lease in the form of Exhibit "H" attached hereto (the "Bindley Lease"),
duly executed by Bindley Western Industries, Inc., as tenant, together with the
duly executed commencement date memorandum and tenant estoppel certificate
described therein. Buyer and Seller acknowledge
-8-
<PAGE>
that the attached lease is based on the leased premises consisting of rentable
area of 75,948 square feet. In the event the determination of square footage
pursuant to Section 2 hereof establishes that the rentable area of the leased
premises is less than 75,948 square feet, then the rentable area and building
percentage contained in the attached lease will be modified accordingly and the
monthly rental installments will be reduced as follows:
(a) Commencing on the date hereof through April
30, 2004, the monthly rental installment
shall be reduced by the product of (i)
$15.80, multiplied by (ii) the amount of
rentable square feet by which the rentable
area of the Leased Premises is less than
75,948 rentable square feet divided by 12.
(b) Commencing May 1, 2004 through April 30,
2009, the monthly rental installment shall be
reduced by the product of (i) $18.17,
multiplied by (ii) the amount of rentable
square feet by which the rentable area of the
Leased Premises is less than 75,948 rentable
square feet divided by 12.
(c) Commencing May 1, 2009 through April 30,
2014, the monthly rental installment shall be
reduced by the product of (i) $20.90,
multiplied by (ii) the amount of rentable
square feet by which the rentable area of the
Leased Premises is less than 75,948 rentable
square feet divided by 12.
7.1.6 Tenant Notification Letter. Seller shall deliver
--------------------------
to Escrow Holder a letter to the Tenants ("Tenant Notification Letter"), duly
executed by Seller and dated as of the Close of Escrow, notifying each Tenant
that: (A) the Project has been sold to Buyer; (B) all of Seller's right, title
and interest in and to the Tenant Leases and Tenant Deposits have been assigned
to Buyer; and (C) commencing immediately, all rent and other payments and any
notices under the Tenant Leases are to be paid and sent to Buyer. The form and
content of the Tenant Notification Letter shall be satisfactory to Buyer.
7.1.7 Change of Address. Seller shall deliver to Escrow
-----------------
Holder written notices executed by Seller to third parties to any Service
Contracts not disapproved by Buyer, changing the address for service of notice
and delivery of statements and bills.
7.1.8 Proof of Authority. Seller shall deliver to Escrow
------------------
Holder such proof of Seller's authority and authorization to enter into this
Agreement and
-9-
<PAGE>
consummate the transaction contemplated hereby, and such proof of the power
and authority of the individual(s) executing and/or delivering any instruments,
documents or certificates on behalf of Seller to act for and bind Seller as may
be reasonably required by Title Company and/or Buyer.
7.1.9 Lien Affidavits. Seller shall deliver to Escrow Holder
---------------
any owner's statements, lien affidavits or mechanic's lien indemnifications as
may be reasonably requested by the Title Company to issue the Title Policy.
7.1.10 Bring-Down Certificate. Seller shall deliver to Escrow
----------------------
Holder a certificate reaffirming all of Seller's representations and warranties
as of the Closing Date (subject to any changes thereto necessitated by changed
circumstances of which Seller timely notifies Buyer; provided, however, such
representations and warranties shall not be deemed to be modified for purposes
of Paragraph 6.1.6 above).
---------------
7.2 By Buyer. Buyer hereby covenants and agrees to deliver or cause
--------
to be delivered to Escrow Holder on or prior to the Closing Date the following
instruments and documents, the delivery of each of which shall be a condition
precedent to the Close of Escrow for the benefit of Seller.
7.2.1 Purchase Price. Buyer shall deliver to Escrow Holder
--------------
the Purchase Price in accordance with Paragraph 3;
7.2.2 Tenant Lease Assignment. Buyer shall deliver to Escrow
-----------------------
Holder the Tenant Lease Assignment duly executed by Buyer;
7.2.3 General Assignment. Buyer shall deliver to Escrow
------------------
Holder the General Assignment duly executed by Buyer;
7.2.4 Prorations. Buyer shall deliver to Escrow Holder the
----------
amount due to Seller, if any, after the prorations are computed in accordance
with Paragraph 11; and
7.2.5 Bindley Lease. Buyer shall deliver to Escrow Holder the
-------------
Bindley Lease, duly executed by Buyer, as landlord.
8. Deliveries to Buyer Upon Close of Escrow. Seller shall deliver
----------------------------------------
possession of the Property to Buyer upon the Close of Escrow, subject to the
rights of the Tenants, as tenants only, under the Tenant Leases and Bindley
Western Industries, Inc., as tenant under the Bindley Lease. Further, Seller
hereby covenants and agrees to deliver to Buyer, on or prior to the Closing
Date, the following items, the delivery of each of which shall be a condition to
the performance by Buyer of its obligations under the terms of this Agreement:
-10-
<PAGE>
8.1 Tenant Leases. Seller shall deliver to Buyer originals of all
-------------
the Tenant Leases or, to the extent an original Tenant Lease is unavailable, a
duplicate original thereof with a certificate executed by Seller warranting the
completeness and authenticity of such duplicate original;
8.2 Rent Roll. Seller shall deliver to Buyer the Rent Roll, updated
---------
as of the Closing Date, certified as to its accuracy and executed by Seller,
together with a list of Tenants whose rent is past due under their Tenant Leases
as of the Close of Escrow and a list of any other monetary and, to the best of
Seller's knowledge, nonmonetary defaults of each Tenant which have occurred
subsequent to the date of execution of such Tenant's Tenant Estoppel
Certificate;
8.3 Service Contracts. Seller shall deliver to Buyer originals of
-----------------
all Service Contracts which have not been disapproved by Buyer, or, to the
extent an original Service Contract is unavailable, a duplicate original thereof
with a certificate executed by Seller warranting the authenticity of such
duplicate original;
8.4 Records, Plans and Warranties. Seller shall deliver to Buyer
-----------------------------
originals of the Records, Plans and Warranties. Seller shall, at its expense,
obtain the consents to the assignment to Buyer of all Warranties to the extent
that Buyer requires the same.
8.5 Keys. Seller shall deliver to Buyer keys to all entrance doors
----
to the Improvements, which keys shall be properly tagged for identification;
8.6 Licenses and Permits. Seller shall deliver to Buyer originals
--------------------
of all Licenses and Permits or, to the extent an original of a License or Permit
is unavailable, a duplicate original thereof with a certificate executed by
Seller warranting the authenticity of such duplicate original; and
8.7 Reimbursable Operating Expenses Statement. Seller shall deliver
-----------------------------------------
to Buyer a certified statement setting forth the operating expenses incurred by
Seller for the year in which this Agreement is executed, for which Tenants have
not yet been billed but for which Tenants are required to reimburse Seller,
pursuant to the Tenant Leases; provided, however, if such information is not
reasonably available on the Close of Escrow, Seller shall deliver same to Buyer
as soon as practicable after the Close of Escrow.
9. Title Insurance. At the Close of Escrow, Seller shall cause the Title
---------------
Company to issue to Buyer, upon payment of a normal premium, an ALTA Extended
Coverage 1970 Form B Owner's Policy of Title Insurance with such endorsements as
are reasonably requested by Buyer showing fee title to the Project vested in
Buyer subject only to the Approved Title Conditions ("Title Policy"). The Title
Policy shall be issued with liability in an amount equal to the Purchase Price.
-11-
<PAGE>
10. Costs and Expenses. If the transaction contemplated by this Agreement
------------------
is consummated, then upon the Closing Seller shall pay (A) the premium for the
standard coverage portion of the Title Policy, (B) all documentary transfer
taxes, (C) one-half (1/2) of all escrow fees and costs, (D) all sales and gross
receipts taxes, (E) all costs of obtaining the ALTA survey, (F) all costs
related to the release of disapproved title matters pursuant to Paragraph 6.1.1
above, and (G) Seller's share of prorations. If the transaction contemplated by
this Agreement is consummated, then upon the Closing Buyer shall pay (W) the
cost of that portion of the premium for the Title Policy in excess of the
premium for standard coverage for the Title Policy, (X) any document recording
charges, (Y) one-half (1/2) of all escrow fees and costs, and (Z) Buyer's share
of prorations. Buyer and Seller shall each pay all legal and professional fees
and fees of other consultants incurred by Buyer and Seller, respectively. All
other costs and expenses shall be allocated between Buyer and Seller in
accordance with the customary practice in the County.
11. Prorations.
----------
11.1 General. Rentals, revenues, and other income, if any, from the
-------
Property, and real property taxes and operating expenses, if any, affecting the
Property shall be prorated as of 11:59 p.m. on the day preceding the Close of
Escrow. For purposes of calculating prorations, Buyer shall be deemed to be in
title to the Property, and therefore entitled to the income and responsible for
the expenses, for the entire day of the Close of Escrow.
11.2 Rentals. Subject to the provisions of Paragraphs 11.1, 11.3 and
-------
11.4, rentals shall be prorated as of the Close of Escrow. "Rentals" as used
herein includes fixed monthly rentals, additional rentals, percentage rentals,
escalation rentals, retroactive rentals, operating cost pass-throughs and other
sums and charges payable by Tenants under the Tenant Leases.
11.3 Delinquent Rentals. Rentals are delinquent when payment
------------------
thereof is past due as of the Close of Escrow. Delinquent rentals shall be
prorated between Buyer and Seller as of the Close of Escrow but not until they
are actually collected by Buyer. Rentals for the month in which the Close of
Escrow occurs shall be deemed to have been received by Seller. Buyer shall have
the right to collect any delinquent rentals, but shall not have the obligation
to do so; provided, however, Buyer agrees to send invoices to Tenants for
delinquent rent disclosed to Buyer by Seller's statement required under
Paragraph 8.2 on a monthly basis for three (3) months following the Close of
Escrow. Upon reasonable prior written notice to Buyer, Seller shall have the
right to sue Tenants to collect delinquent amounts; provided, however, Seller
agrees that it shall have no right to evict any Tenants or otherwise disturb any
Tenant's possession or quiet enjoyment of its premises. Seller shall not be
entitled to any rentals received from Tenants after the Close of Escrow unless
such Tenants are current in their rental obligations for periods occurring from
and after the Close of Escrow. Delinquent rentals collected by Buyer, net of
the costs of collection (including reasonable attorneys' fees), shall be applied
first to amounts currently due and then to amounts most recently overdue.
-12-
<PAGE>
11.4 Operating Cost Pass-Throughs, Etc. Operating cost pass throughs,
----------------------------------
percentage rentals, additional rentals and other retroactive rental escalations,
sums or charges payable by Tenants which accrue prior to the Close of Escrow but
are not then due and payable, shall be prorated as of the Close of Escrow;
provided, however, no payment thereof shall be made to Seller unless and until
Buyer collects same from the Tenants. Buyer shall have the right to collect such
amounts, but shall not have the obligation to do so; provided, however, Buyer
agrees to send invoices to Tenants for payments owed to Seller on a monthly
basis for three (3) months following the Close of Escrow. Upon reasonable prior
written notice to Buyer, Seller shall have the right to sue Tenants to collect
such amounts; provided, however, Seller agrees that it shall have no right to
evict any Tenants or otherwise disturb any Tenant's possession or quiet
enjoyment of its premises. When and if Buyer collects such operating cost pass-
throughs, percentage rentals or other retroactive rental escalations, sums or
charges from a Tenant, such amounts, net of the costs of collection, shall be
applied first to payment(s) most recently due, and Seller shall be due an amount
equal to all such operating cost pass-throughs, percentage rentals or other
retroactive rental escalations, sums or charges accruing prior to the Close of
Escrow, computing same on a per diem basis after amortizing them over the
respective periods for which such items are payable. Payments of such prorated
amounts collected by Buyer shall be made to Seller upon receipt and shall be
accompanied by a report showing how same was calculated.
11.5 Prepaid Rentals. Rentals received by Seller prior to the Close
---------------
of Escrow attributable to periods after the Close of Escrow and the amount of
any other credits due Tenants shall be credited to Buyer and debited to Seller
at the Close of Escrow.
11.6 Taxes and Assessments. All nondelinquent general real property
---------------------
taxes on the Property shall be prorated based on the actual current tax bill.
In the event a current tax bill has not been received, taxes shall be prorated
on the basis of estimated taxes as are reasonably agreed to by Buyer and Seller,
subject to post-Closing reconciliation. All delinquent taxes and all
assessments, if any, on the Property shall be paid at the Close of Escrow from
funds accruing to Seller.
11.7 Operating Expenses. All utility service charges for electricity,
------------------
heat and air conditioning service, other utilities, elevator maintenance, common
area maintenance, taxes (other than real estate taxes) such as rental taxes,
other expenses incurred in operating the Property that Seller customarily pays,
and any other costs incurred in the ordinary course of business or the
management and operation of the Project disclosed in the Operating Statements
and not covered elsewhere in this Paragraph 11 shall be prorated on an accrual
basis. Seller shall pay all such expenses that accrue prior to the Close of
Escrow and Buyer shall pay all such expenses accruing on the Close of Escrow and
thereafter. To the extent possible, Seller and Buyer shall obtain billings and
meter readings as of the Close of Escrow to aid in such prorations.
11.8 Tenant Improvement Allowance and Costs; Monetary Lease
------------------------------------------------------
Concessions; Commissions.
- ------------------------
-13-
<PAGE>
11.8.1 Seller shall pay in full all tenant improvement allowances
and other tenant improvements costs payable by the landlord under the Tenant
Leases pertaining to J.F. Molloy & Associates, Inc. ("Molloy"), Interactive
Intelligence, Inc. ("Interactive") and under the Bindley Lease (other than the
refurbishment allowance set for in Section 16.01 of the Bindley Lease) and all
leasing commissions (including any and all Option Commissions which pertain to
Tenant options to extend or expand which are exercised prior to the Close of
Escrow) with respect to the Tenant Leases pertaining to Molloy, Interactive and
the Bindley Lease, without contribution or proration from Buyer; provided that
Buyer shall pay all Option Commissions disclosed in writing to Buyer prior to
the Contingency Date which pertain to options to expand or extend which are
exercised after the Close of Escrow, and provided further Buyer shall pay or
reimburse Seller for (i) all tenant improvement allowances and other tenant
improvement costs that are payable by the landlord pursuant to the Tenant Lease
dated February 16, 1999 pertaining to Wang Laboratories, Inc. ("Wang") not to
exceed the sum of $47,509.33, (ii) the cost of the build out of the Second
Floor-South common corridor not to exceed the sum of $22,757.00, and (iii) the
leasing commissions that are payable by the landlord to Olympia Partners and E&L
in the aggregate amount of $14,490.47 pursuant to the Wang Tenant Lease. The
terms of the tenant improvement and common corridor build out are contained in
agreements with E&L dated February 25, 1999 and March 1, 1999, copies of which
have been provided to Buyer. No amendments to such contracts will be made
without Buyer's prior approval. Without limiting the foregoing, Seller shall be
responsible for, and shall either pay at Closing or (if not immediately payable)
shall provide a credit against the Purchase Price to the account of Purchaser,
any and all monetary concessions that are payable under the Bindley Lease and/or
the Tenant Leases pertaining to Molloy and Interactive, including, without
limitation, free rent concessions (but not including the reduced rent concession
granted to Interactive) with respect to periods on or after the Closing, moving
allowances and refurbishment allowances. Notwithstanding the foregoing, with
respect to any tenant improvements and leasing commissions required to be paid
for by Seller pursuant to this Paragraph 11.8, Seller hereby instructs Escrow
Holder to hold back from the proceeds of the Purchase Price and retain in a
separate escrow account an amount equal to 110% of such amounts (the "Holdback
Amount"). The Holdback Amount shall be released to Seller upon Seller's delivery
to Buyer and Escrow Holder of unconditional final lien releases from all
contractors, subcontractors and brokers, as applicable, together with paid
invoices indicating that all such work and or commissions, as applicable, have
been paid in full; provided, however, if the Holdback Amount has not been
released to Seller in accordance with this Paragraph 11.8 within six (6) months
of the Closing Date, then, at Buyer's election, the Holdback Amount (or so much
thereof as has not been released to Seller in accordance with this Paragraph 11.
8) shall be released to Buyer in order to enable Buyer to pay such amounts to
the applicable payees. Seller acknowledges that the Holdback Amount is in no way
intended to act as a limitation on Seller's liability with respect to the
Unfinished Work and/or its obligation to pay leasing commissions as are required
to be paid by Seller pursuant to this Paragraph 11.8.
11.8.2 With respect to any tenant improvements required to be
constructed pursuant to the Tenant Leases pertaining to Interactive and Molloy
that have not been completed as of the Close of Escrow (collectively, the
"Unfinished Work"), Seller hereby covenants and agrees to complete the
Unfinished Work at Seller's sole cost and expense up to the
<PAGE>
amount that is payable by the landlord under such Tenant Leases and at
Interactive's and Molloy's expense, as applicable, for any additional
improvements. Buyer shall cooperate with Seller in collecting such additional
amounts, if any, from Interactive and Molloy. The Unfinished Work shall be
completed by Seller as soon as reasonably practicable and with all diligence and
in a manner that does not unreasonably disturb other Tenants. Such work shall be
performed by Seller in accordance with reasonable business practices and in such
a manner as to not give rise to any claim of breach by the landlord under any
Tenant Lease. Seller hereby indemnifies Buyer from any and all personal injury
or damage to the Property (or any portion thereof) and mechanics' liens to the
extent resulting from or arising out of the entry onto the Property by Seller or
its agents, designees or representatives on or after the Close of Escrow and/or
in connection with seller's performance of the Unfinished Work; provided,
however, the foregoing indemnity shall not apply with respect to any claims
arising out of any acts or omissions of Buyer, its officers, directors, members,
agents or employees.
11.9 Tenant Deposits. Buyer shall be credited and Seller shall be
---------------
debited with an amount equal to all Tenant Deposits (and any interest accrued
thereon for the benefit of a Tenant) paid by Tenants.
11.10 Capital Expenditures. All capital and other improvements
--------------------
(including labor and materials) which are performed or contracted for by Seller
at or prior to the Close of Escrow will be paid by the Seller, without
contribution or proration from Buyer.
11.11 Service Contracts. Amounts payable under Service Contracts
-----------------
not disapproved by Buyer shall be prorated on an accrual basis. Seller shall
pay all amounts due thereunder which accrue prior to the Close of Escrow and
Buyer shall pay all amounts accruing on the Close of Escrow and thereafter.
Seller shall pay in full and terminate all Service Contracts disapproved by
Buyer, except that Seller shall not be obligated to terminate or pay in full the
Property Management Agreement.
11.12 Method of Proration. All prorations shall be made in
-------------------
accordance with customary practice in the County, except as expressly provided
herein. Buyer and Seller agree to cause their accountants to prepare a schedule
of tentative prorations prior to the Closing Date. Such prorations, if and to
the extent known and agreed upon as of the Close of Escrow, shall be paid by
Buyer to Seller (if the prorations result in a net credit to the Seller) or by
Seller to Buyer (if the prorations result in a net credit to the Buyer) by
increasing or reducing the cash to be paid by Buyer at the Close of Escrow. Any
such prorations not determined or not agreed upon as of the Close of Escrow
shall be paid by Buyer to Seller, or by Seller to Buyer, as the case may be, in
cash as soon as practicable following the Close of Escrow. A copy of the
schedule of prorations as agreed upon by Buyer and Seller shall be delivered to
Escrow Holder at least three (3) business days prior to the Closing Date.
12.0 Disbursements and Other Actions by Escrow Holder. At the Close of
------------------------------------------------
Escrow, Escrow Holder shall promptly undertake all of the following in the
manner hereinbelow indicated.
-15-
<PAGE>
12.1 Funds. Escrow Holder shall disburse all funds deposited with
-----
Escrow Holder by Buyer in payment of the Purchase Price as follows:
12.1.1 deduct all items chargeable to the account of Seller
pursuant to Paragraph 10;
12.1.2 if, as the result of the prorations and credits pursuant
to Paragraph 11, amounts are to be charged to account of Seller, deduct the
total amount of such charges;
12.1.3 disburse the balance of the Purchase Price to Seller
promptly upon the Close of Escrow; and
12.1.4 disburse the remaining balance of the funds, if any, to
Buyer promptly upon the Close of Escrow.
12.2 Recording. Escrow Holder shall cause the Deed and any other
---------
documents which the parties hereto may mutually direct to be recorded in the
Official Records and obtain conformed copies thereof for distribution to Buyer
and Seller.
12.3 Title Policy. Escrow Holder shall direct the Title Company to
------------
issue the Title Policy to Buyer.
12.4 Disbursement of Documents to Buyer. Escrow Holder shall disburse
----------------------------------
to Buyer the Tenant Lease Assignment, the General Assignment, the FIRPTA
Certificate, the Bindley Lease, the Tenant Notification Letters, the Bring Down
Certificate and change of address notices duly executed by Seller and any other
documents (or copies thereof) deposited into Escrow by Seller pursuant hereto.
12.5 Disbursement of Documents to Seller. Escrow Holder shall
-----------------------------------
disburse to Seller the Tenant Lease Assignment, the General Assignment and a
counterpart of the Bindley Lease.
13.0 Seller's Representations and Warranties. In addition to any express
---------------------------------------
agreements of Seller contained herein, the following constitute representations
and warranties of Seller to Buyer:
13.1 Representations Regarding Seller's Authority.
--------------------------------------------
13.1.1 Power. Seller has the legal power, right and authority to
-----
enter into this Agreement and the instruments referenced herein, and to
consummate the transaction contemplated hereby.
-16-
<PAGE>
13.1.2 Requisite Action. All requisite action (corporate, trust,
----------------
partnership or otherwise) has been taken by Seller in connection with the
entering into this Agreement and, prior to the Close of Escrow, the instruments
referenced herein, and the consummation of the transaction contemplated hereby.
No consent of any partner, shareholder, creditor, investor, judicial or
administrative body, Authority or other party is required.
13.1.3 Individual Authority. The individuals executing this
--------------------
Agreement and, prior to the Close of Escrow, the instruments referenced herein
on behalf of Seller and the partners, officers or trustees of Seller, if any,
have the legal power, right, and actual authority to bind Seller to the terms
and conditions hereof and thereof.
13.1.4 Validity. This Agreement and all documents required
--------
hereby to be executed by Seller are and shall be valid, legally binding
obligations of and enforceable against Seller in accordance with their terms,
subject only to applicable bankruptcy, insolvency, reorganization, moratorium
laws or similar laws or equitable principals affecting or limiting the rights of
contracting parties generally.
13.1.5 ERISA. Seller represents and warrants to Buyer that: (i)
-----
neither Seller nor any of its affiliates (within the meaning of Part V(c) of
Prohibited Transaction Exemption 84-14 ("PTE 84-14")) has, or during the
immediately preceding year has exercised, the authority to: (a) appoint or
terminate PMRealty Advisors, Inc. ("PM") or any other party as an investment
manager of Alaska State Pension Investment Board (the employee benefit plan(s)
that has been identified by Buyer to Seller as having an interest in the
Separate Account on whose behalf the purchase is being made, and whose funds are
being used to effectuate the transaction contemplated in this Agreement); or (b)
negotiate the terms of any management agreement with Buyer on behalf of any such
plan; and (ii) Seller has negotiated and determined the terms of the transaction
contemplated hereunder at arm's length as such terms would be negotiated and
determined by Seller with unrelated parties.
13.2 Representations and Warranties Pertaining to Real Estate and
------------------------------------------------------------
Legal Matters.
- -------------
13.2.1 Recitals. The information contained in Recitals A, B and
--------
C is true and correct.
13.2.2 Adverse Claims. To the best of Seller's knowledge,
--------------
there are no pending, threatened or contemplated actions, suits, arbitrations,
claims or proceedings, at law or in equity, affecting the Property or in which
Seller is, or will be, a party by reason of Seller's ownership of the Property,
including, but not limited to, judicial, municipal or administrative proceedings
in eminent domain, unlawful detainer or tenant evictions, collections, alleged
building code, health and safety or zoning violations, employment discrimination
or unfair labor practices, or worker's compensation, personal injuries or
property damages alleged to have occurred at the Project or by reason of the
condition or use of the Property.
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<PAGE>
13.2.3 Insolvency. No attachments, execution proceedings,
----------
assignments for the benefit of creditors, insolvency, bankruptcy, reorganization
or other proceedings are pending or threatened against Seller or, to the best of
Seller's knowledge, any general partners of Seller, nor are any of such
proceedings contemplated by Seller or, to the best of Seller's knowledge, any
general partner of Seller.
13.2.4 Governmental Regulations. To the best of Seller's
------------------------
knowledge, Seller has received no notice that there are any violations of
Governmental Regulations relating to the Property.
13.2.5 Approvals. To the best of Seller's knowledge, all
---------
licenses, approvals, permits and certificates from the Authorities and private
parties necessary for the construction, development, alteration or
rehabilitation of the Improvements, or for the use and operation of the Project
as it is currently being used and operated were obtained prior to such
construction, development, alteration, rehabilitation, use and operation, and
are currently possessed by Seller, and the Project has been constructed,
completed or modified in accordance with (A) all such approvals, licenses,
permits and certificates, (B) all Governmental Regulations, (C) all covenants,
conditions, restrictions, easements and agreements of any kind or nature
affecting the Property, and (D) the plans and specifications delivered by Seller
to Buyer.
13.2.6 Assessments. Other than the amounts disclosed by the tax
-----------
bills delivered to Buyer by Seller and possible supplemental or escape
assessments which may be levied by the County Assessor after the date hereof,
Seller has no knowledge of any other real property taxes which have been or will
be assessed against the Property for the tax year covered by such tax bill.
Seller has no knowledge of any special assessments or charges which have been
levied against the Project or which will results from work, activities or
improvements done to the Property.
13.2.7 Intentionally Omitted.
13.2.8 Defect Notices. Seller has not received any notices from
--------------
any insurance company or Tenant of any defects or inadequacies in the Property.
13.2.9 Liens. All of Seller's right, title and interest in and
-----
to the Records and Plans, Licenses and Permits and Personal Property have been
fully paid for and will not be subject to any liens, encumbrances or claims of
any kind at the Close of Escrow. The transfer and assignment to Buyer of
Seller's right, title and interest in and to the Records and Plans, License and
Permits, Personal Property and Service Contracts not disapproved by Buyer does
not require the consent of third parties except as expressly indicated in such
Materials. Upon the Close of Escrow Seller will deliver to Buyer good and
marketable title to the Records and Plans, Licenses and Permits and Personal
Property.
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13.2.10 Offers to Sell. Seller has not entered into any other
--------------
contracts for the sale of the Property, nor do there exist any rights of first
refusal or options to purchase the Property.
13.2.11 Hazardous Materials. To Seller's actual knowledge, all
-------------------
operations or activities upon, or use or occupancy of, the Real Property and
Improvements, or any portion thereof, is in all material respects in compliance
with all state, federal and local laws and regulations governing or in any way
relating to the generation, handling, manufacturing, treatment, storage, use,
transportation, spillage, leakage, dumping, discharge, release or disposal
(whether accidental or intentional) of any toxic, hazardous or radioactive
substances, materials, or waste, including but not limited to, Hazardous
Materials. To the best of Seller's knowledge, there is no proceeding or inquiry
by any Authority with respect to the presence of any toxic, hazardous or
radioactive substance, material or waste, including, without limitation,
Hazardous Materials, on or under the Real Property and Improvements or any
portion thereof or the migration thereof from or to other property. To Seller's
knowledge, that certain Phase I Environmental Assessment dated November 2, 1998
prepared by Alt & Witzig Engineering, Inc., a true, correct and complete copy of
which was delivered by Seller to Buyer, accurately reflects the past and current
environmental condition of the Property. To the Seller's actual knowledge,
there are no underground storage tanks located on the Real Property.
13.3 Representations and Warranties Pertaining to Documents.
------------------------------------------------------
13.3.1 Accuracy of Materials. All instruments, documents,
---------------------
lists, schedules and items delivered to Buyer by Seller pursuant to this
Agreement will fairly present the information set forth in a manner that is not
misleading and will be true, complete and correct in all respects on the date of
delivery and upon the Close of Escrow, as they may be updated, modified or
supplemented in accordance with this Agreement.
13.3.2 Occupancy Agreements. There are no leases, subleases,
--------------------
occupancies or tenancies in effect pertaining to the Project, except the Tenant
Leases delivered to Buyer by Seller pursuant to Paragraph 6.1.2, and the copies
so delivered are true, correct and complete copies of all Tenant Leases. Seller
has no knowledge of any oral agreements with anyone, including Tenants, with
respect to the occupancy of the Project, except as may be shown by the Rent
Roll. The Rent Roll is true and complete in all material respects.
13.3.3 Service Contracts. There are no service or maintenance
-----------------
contracts, warranties, guarantees, listing agreements, parking agreements or
bonds (whether oral or written) which affect or will affect or which are or will
be obligations of the Buyer or the Project, other than the Service Contracts
delivered to Buyer by Seller pursuant to Paragraph 6.1.2 and not disapproved by
Buyer.
13.3.4 Title Documents. Seller has no actual knowledge of any
---------------
current default or breach under the terms and provisions of any of the Title
Documents or the Service Contracts not disapproved by Buyer.
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13.3.5 Tenant Leases. The Tenant Leases have been duly
-------------
authorized and executed by the landlord thereunder, and, to Seller's actual
knowledge, by the Tenant thereunder. The Tenant Leases are in full force and
effect according to the terms set forth therein. Seller has no knowledge of any
uncured defaults under the Tenant Leases nor that any Tenant has asserted, or
has any defense to, offsets or claims against rents payable or obligations under
its Tenant Lease. All of the landlord's obligations under the Tenant Leases to
be performed prior to the date of this Agreement have been performed. Seller has
no knowledge that any Tenant is unable or unwilling to perform any or all of the
Tenant's obligations under its Tenant Lease. Seller has no actual knowledge that
any Tenant intends to abandon its premises or default under its Tenant Lease.
Seller has no claim, controversy, dispute, quarrel or disagreement against or
with any Tenant, and Seller has no actual knowledge that any Tenant has any
claim, controversy, dispute, quarrel or disagreement against or with Seller.
Seller has made no representations to Tenant regarding the condition of the
premises covered by any Tenant Lease or the compliance of the premises with any
applicable Governmental Regulations, except as expressly set forth in the Tenant
Leases. All of the improvements to be constructed by the landlord, if any,
contemplated under the Tenant Leases pertaining to Molloy and Interactive have
been, or will be, completed by Seller as so required. Seller has not granted any
concessions to any Tenant not disclosed in such Tenant's Tenant Lease.
13.3.6 Prior Encumbrances. Neither Seller's interest in the
------------------
Tenant Leases nor any of the rentals due or to become due under the Tenant
Leases will be assigned, encumbered or subject to any liens at the Close of
Escrow.
13.3.7 Employees. Seller has no employees which will become
---------
employees of Buyer upon Buyer's acquisition of the Project.
13.3.8 Commissions. Except as set forth in Paragraph 11.8, no
----------- --------------
leasing or brokerage fees or commissions of any nature whatsoever shall be or
become due or owing to any person, firm, corporation or entity whomsoever after
the Close of Escrow with respect to the Tenant Leases, except for Option
Commissions pertaining to options to extend or expand which have not been
exercised prior to the Close of Escrow and which are disclosed on the Rent Roll
delivered to Buyer by Seller pursuant to Paragraph 6.1.2
13.3.9 Records and Plans, Licenses and Permits and Warranties.
------------------------------------------------------
The Records and Plans, the Licenses and Permits and the Warranties delivered to
Buyer by Seller pursuant to Paragraph 6.1.2 are all of such Licenses and
Permits, Records and Plans and Warranties which are in the possession of or
reasonably available to Seller.
Seller's representations and warranties made in this Paragraph 13 shall be
continuing and shall be true and correct as of the Close of Escrow with the same
force and effect as if remade by Seller in a separate certificate at that time.
The truth and accuracy of Seller's representations and warranties made herein
shall constitute a condition for the benefit of Buyer to the Close of Escrow (as
elsewhere provided herein) and shall survive and shall not merge into, the Close
of Escrow and the recording of the Deed in the Official Records for eighteen
(18) months after the
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<PAGE>
Closing Date with the same force and effect as if remade by Seller in a separate
certificate at that time. Buyer shall not bring a claim for any breach of
representations and warranties if, prior to the Close of Escrow, Buyer has
actual knowledge of such breach and nevertheless proceeds to close.
14.0 Seller's Covenants Regarding Operation of the Property Through the
------------------------------------------------------------------
Close of Escrow.
- ---------------
14.1 Existing Operations. Seller hereby agrees, through and including
-------------------
the Close of Escrow and at the Seller's sole cost and expense, to (A) keep all
existing insurance policies affecting the Project in full force and effect, (B)
use due diligence and its best efforts to keep in full force and effect and/or
renew all Licenses and Permits, (C) provide all services and to continue to
operate, manage and maintain the Project (including mechanical equipment of
every kind used in the operation thereof) in such condition so that the Project
shall be in the same condition on the Close of Escrow as on the date hereof,
reasonable wear and tear excepted, (D) use best efforts to comply with all
Governmental Regulations, (E) deliver to Buyer copies of any Operating
Statements prepared after the date of this Agreement, and (F) keep Buyer timely
advised of any repair or improvement required to keep the Project in such
condition as aforesaid and which costs in excess of Twenty-Five Thousand Dollars
($25,000.00).
14.2 New Leases. Seller hereby agrees that Seller will not hereafter
----------
modify, extend or otherwise change any of the terms, covenants or conditions of
the Tenant Leases or enter into new leases or any other obligations or
agreements affecting the Project without the prior written consent of Buyer,
which consent shall not be unreasonably withheld prior to the Contingency Date,
but may be withheld in Buyer's sole and absolute discretion thereafter (in the
event Buyer has not responded to Seller's written request for consent within
five (5) business days after Seller's delivery to Buyer of all pertinent
information concerning such lease, obligation or agreement, Buyer shall be
deemed to have consented thereto). Without the prior written consent of Buyer,
Seller shall not terminate any of the Tenant Leases, unless the Tenant
thereunder shall have materially defaulted in the payment of rent. Seller shall
not accept from any of the Tenants' payment of rent more than one month in
advance or apply any security deposit to rent due from any Tenant.
14.3 Service Contracts. Except as otherwise provided herein, Seller
-----------------
will not extend, renew, modify or replace any of the Service Contracts without
the prior written consent of Buyer.
14.4 Additional Liens. Seller will not, without the prior written
----------------
consent of Buyer, convey any interest in the Licenses and Permits, the Records
or Plans or any of the other Property, and Seller will not subject the Property
to any additional liens, encumbrances, covenants, conditions, easements, rights
of way or similar matters after the date of this Agreement which will not be
eliminated prior to the Close of Escrow.
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14.5 Alterations. Seller will not make any alterations to the
-----------
Property except for the Unfinished Work.
14.6 Vacant Space. Seller shall cause all vacant space in the
------------
Improvements to be delivered to Buyer upon the Close of Escrow in the same
condition as the condition of such vacant space upon the date of execution of
this Agreement.
14.7 Invoices. Seller has paid or will pay in full or bond around,
--------
prior to the Close of Escrow, all bills and invoices that are received by Seller
prior to the Close of Escrow for labor, goods, materials and services of any
kind relating to the Property and utility charges relating to the period prior
to the Close of Escrow. Any alterations, installations, decorations and other
work required to be performed under the Tenant Leases will by the Close of
Escrow be completed and paid for in full, except for the Unfinished Work for
which there shall be the Holdback Amount and for which Seller shall remain
responsible. Subject to Paragraph 13.3.8, any brokerage fee or similar
commission which is or will become due and payable in connection with any Tenant
Lease has been or will be paid by Seller prior to the Close of Escrow.
14.8 Changes in Circumstances. Seller shall promptly notify Buyer
------------------------
of any material change in any condition with respect to the Property or of any
event or circumstance which makes any representation or warranty of Seller under
this Agreement untrue or misleading in any material respect, or any covenant of
Buyer under this Agreement incapable or less likely of being performed, it being
understood that the Seller's obligation to provide notice to Buyer shall in no
way relieve Seller of any liability for a breach by Seller of any of its
representations, warranties or covenants under this Agreement.
14.9 New Contracts. Commencing upon the Opening of Escrow and
-------------
continuing through the Closing Date or any earlier termination of this
Agreement, Seller shall not take any of the following actions without obtaining
Buyer's prior written approval, which Buyer may withhold in its sole discretion:
(A) allow any Tenant to exercise any right or option which requires Seller to
approve or not disapprove it; and/or (B) incur any contract or other liability
with respect to the Property which exceeds $5,000.00 or which cannot be
terminated on thirty (30) days' notice without any cancellation fee or penalty.
Buyer's failure to deliver written disapproval of such action within five (5)
business days after delivery of a written request therefor shall constitute its
approval thereof.
15.0 Buyer's Representations and Warranties. In addition to any express
--------------------------------------
agreements of Buyer contained herein, the following constitute representations
and warranties of Buyer to Seller:
15.1 Power. Buyer has the legal power, right and authority to enter
-----
into this Agreement and the instruments referenced herein, and to consummate the
transaction contemplated hereby.
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<PAGE>
15.2 Requisite Action. Subject to the approval of Buyer's Committee
----------------
in accordance with Paragraph 6.1.10, all requisite action (corporate, trust,
partnership or otherwise) has been taken by Buyer in connection with the
entering into this Agreement and the instruments referenced herein, and the
consummation of the transaction contemplated hereby. No consent of any partner,
shareholder, creditor, investor, judicial or administrative body, Authority or
other party is required.
15.3 Authority. The individuals executing this Agreement and the
---------
instruments referenced herein on behalf of Buyer have the legal power, right and
actual authority to bind Buyer to the terms and conditions hereof and thereof.
15.4 Validity. This Agreement and all documents required hereby to
--------
be executed by Buyer are and shall be valid, legally binding obligations of and
enforceable against Buyer in accordance with their terms, subject only to
applicable bankruptcy, insolvency, reorganization, moratorium laws or similar
laws or equitable principals affecting or limiting the rights of contracting
parties generally.
Buyer's representations and warranties made in this Paragraph 15 shall be
continuing and shall be true and correct as of the Close of Escrow with the same
force and effect as if remade by Buyer in a separate certificate at that time.
The truth and accuracy of Buyer's representations and warranties made herein
shall constitute a condition for the benefit of Seller to the Close of Escrow
and shall survive and shall not merge into the Close of Escrow or the
recordation of the Deed in the Official Records for one year after the Closing
Date with the same force and effect as if remade by Buyer in a separate
certificate at that time.
16.0 Condemnation and Destruction.
----------------------------
16.1 Eminent Domain or Taking. If, prior to the Close of Escrow, any
------------------------
material portion of the Real Property is taken or if the access thereto or
available parking area therefor is materially reduced or restricted or reduced
such that the Project as it is currently used is not in compliance with zoning
requirements or any Tenant can terminate its Tenant Lease or if any of the
rentable square footage of the Improvements is taken, by eminent domain or
otherwise (or is the subject of a pending, threatened or contemplated taking
known to Seller which has not been consummated), Seller shall immediately notify
Buyer, in writing, of such fact. In such event, Buyer shall have the option, in
its sole and absolute discretion, to terminate this Agreement upon written
notice to Seller given not later than ten (10) days after receipt of Seller's
notice. If this Agreement is so terminated, the provisions of Paragraph 6.3 and
6.4 shall govern. If Buyer does not exercise this option to terminate this
Agreement, or if there has not been a material taking by eminent domain or
otherwise to give rise to such option, neither party shall have the right to
terminate this Agreement, but the Seller shall assign and turn over, and the
Buyer shall be entitled to receive and keep, all awards for the taking by
eminent domain which accrue to Seller and the parties shall proceed to the Close
of Escrow pursuant to the terms hereof, without modification of the terms of
this Agreement and without any reduction in the Purchase Price. Unless or until
this Agreement is terminated, Seller shall take no action with respect to any
eminent domain proceeding without the prior written consent of Buyer.
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<PAGE>
16.2 Fire or Casualty. Prior to the Close of Escrow, and
----------------
notwithstanding the pendency of this Agreement, the entire risk of loss or
damage by earthquake, flood, landslide, fire or other casualty shall be borne
and assumed by Seller, except as otherwise provided in this Paragraph 16.2. If,
prior to the Close of Escrow, any part of the Improvements is damaged or
destroyed by earthquake, flood, landslide, fire or other casualty, Seller shall
immediately notify Buyer, in writing, of such fact. If such damage or
destruction is "material", Buyer shall have the option to terminate this
Agreement upon written notice to the Seller given not later than ten (10) days
after receipt of Seller's notice. For purposes hereof, "material" shall be
deemed to be (A) any uninsured damage or destruction to the Project or (B) any
insured damage or destruction (i) where the cost of repair or replacement is
estimated to be Two Hundred Fifty Thousand Dollars ($250,000.00) or more or
shall take more than one hundred twenty (120) days to repair, in Buyer's good
faith judgment, or (ii) which allows any Tenant to terminate its Tenant Lease;
provided, however, in the case of uninsured damage or destruction, Seller may,
at Seller's option, elect to repair such damage and destruction and keep this
Agreement in full force and effect so long as such repair can be and is
completed by Seller prior to the Closing Date; and further provided that in the
event any Tenant abates its rent due to any damage or destruction, and this
Agreement is not otherwise terminated, Seller shall assign to Buyer Seller's
rent loss insurance policy (which names Buyer as an additional insured) and
Buyer shall pay the assumption fee, if any, required by the insurance company
which has issued such policy in order to effect such assignment. If this
Agreement is terminated pursuant to this Paragraph 16.2, the provisions of
Paragraph 6.3 shall govern. If Buyer does not exercise this option to terminate
this Agreement, or if the casualty is not material, neither party shall have the
right to terminate this Agreement but Seller shall assign and turn over, and
Buyer shall be entitled to receive and keep, all insurance proceeds payable to
it with respect to such destruction (which shall then be repaired or not at
Buyer's option and cost), plus Seller shall pay over to Buyer an amount equal to
the deductible amount with respect to the insurance and the parties shall
proceed to the Close of Escrow pursuant to the terms hereof without modification
of the terms of this Agreement and without any reduction in the Purchase Price.
If Buyer does not elect to terminate this Agreement by reason of any casualty,
Buyer shall have the right to participate in any adjustment of the insurance
claim.
17.0 Intentionally Omitted.
---------------------
18.0 Notices. Unless applicable law requires a different method of giving
-------
notice, any and all notices, demands or other communications required or desired
to be given hereunder by any party (hereafter, the "Notice") shall be in writing
and shall be validly given or made to another party if served personally or if
deposited in the United States mail, certified or registered, postage prepaid or
if transmitted by telegraph, telecopy or other electronic written transmission
device. If the Notice is served personally, service shall be conclusively deemed
made at the time of such personal service. If the Notice is given by mail, the
Notice shall be conclusively deemed given seventy-two (72) hours after the
deposit thereof in the United States mail. If the Notice is sent by telegraph or
if by other carrier service, the Notice shall be deemed given upon confirmation
of delivery by the carrier. If the Notice is sent by facsimile service,
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Notice shall be deemed given upon confirmation of transmission. The Notice shall
be addressed to the party to whom such notice, demand or other communication is
to be given at the address set forth on the signature page set forth
hereinbelow. Any party hereto may change its address for the purpose of
receiving Notices as herein provided by a written Notice given in the manner
aforesaid to the other party or parties hereto.
To Buyer: c/o PMRealty Advisors, Inc.,
800 Newport Center Drive, Suite 300
Newport Beach, California 92660
Attn: Steven H. McDowell,
Jeffrey S. Cavanaugh and
Carey P. Levy
Facsimile: (949) 721-5089
With a copy to: Jeffer, Mangels, Butler & Marmaro LLP
2121 Avenue of the Stars, 10th Floor
Los Angeles, California 90067
Attn: Keith D. Elkins, Esq.
Facsimile: (310) 203-0567
To Seller: c/o Bindley Western Industries, Inc.
8909 Purdue Road
Indianapolis, Indiana 46268
Attn: Scott Teets, Esq.
Facsimile: (317) 704-4603
With a copy to: Baker & Daniels
300 North Meridian Street, Suite 2700
Indianapolis, Indiana 46204-1782
Attn: Thomas A. Vogtner, Esq.
Facsimile: (317) 237-1000
Notice of change of address shall be given by written notice in the manner
detailed in this Paragraph 18.
19.0 Broker. At the Close of Escrow, Seller shall pay from funds accuring
------
to Seller through Escrow, any brokerage commission and fees owed to Broker in
connection with the transactions contemplated by this Agreement. Seller
represents and warrants to Buyer, and Buyer represents and warrants to Seller,
that no other broker or finder has been engaged by it, respectively, in
connection with any of the transactions contemplated by this Agreement, or to
its knowledge is in any way connected with any of such transactions. In the
event of any such claims for additional brokers' or finders' fees or commissions
in connection with the negotiation, execution or consummation of this Agreement,
then Buyer shall indemnify, save harmless and defend Seller from and against
such claims if they shall be based upon any statement,
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<PAGE>
representation or agreement made by Buyer, and Seller shall indemnify, save
harmless and defend Buyer if such claims shall be based upon any statement,
representation or agreement made by Seller.
20.0 Required Actions of Buyer and Seller. Buyer and Seller agree to
------------------------------------
execute all such instruments and documents and to take all actions pursuant to
the provisions hereof in order to consummate the purchase and sale herein
contemplated and shall use their commercially reasonable best efforts to
accomplish the Close of Escrow in accordance with the provisions hereof.
21.0 Entry. From and after the Opening of Escrow, Buyer and Buyer's
-----
representatives, agents and designees shall have the right, upon reasonable
prior notice, to enter upon the Property, at Buyer's sole cost, for any purpose
in connection with its proposed purchase, development or operation of the
Property, including, without limitation, the right to interview Tenants, examine
all books, records and files of Seller relating to the Property and the right to
make such inspections, investigations and tests (including all leased areas and
mechanical systems) as Buyer may elect to make or obtain, including without
limitation, environmental (Phase I and/or Phase II), soils, seismic, hydro
geologic and engineering tests, analyses and studies. Seller agrees to make all
such books, records and files available to Buyer and Buyer's attorneys,
accountants and other representatives at any time during business hours upon
reasonable notice from Buyer. From and after the Opening of Escrow, Buyer shall
be entitled to communicate directly with the Authorities in connection with
Buyer's proposed purchase, development or operation of the Property. The
exercise by Buyer of any of the preceding or any other act of Buyer shall not
negate any representation, warranty or covenant of Seller or modify any of
Buyer's rights or Seller's obligations in the event of any breach by Seller of
any of its representations, warranties or covenants under this Agreement. Buyer
hereby indemnifies Seller from any and all personal injury or damage to tangible
personal property and mechanics' liens to the extent caused by such entry by
Buyer or its agents, designees or representatives; provided, however, the
foregoing indemnity shall not apply with respect to any claims arising out of
any preexisting conditions or any acts or omissions of Seller, its officers,
directors, shareholders, agents or employees.
22.0 Legal and Equitable Enforcement of this Agreement.
-------------------------------------------------
22.1 Default by Seller. In the event the Close of Escrow and the
-----------------
consummation of the transactions herein contemplated do not occur by reason of
any default by Seller, Buyer shall be entitled to all of its out-of-pocket
expenses incurred in connection with the transaction, and shall have the right
to pursue any other remedy available to it at law or in equity, including the
specific performance of this Agreement.
22.2 DEFAULT BY BUYER. IN THE EVENT THE CLOSING AND THE CONSUMMATION
----------------
OF THE TRANSACTION HEREIN CONTEMPLATED DOES NOT OCCUR AS HEREIN PROVIDED BY
REASON OF A MATERIAL DEFAULT OF BUYER, BUYER AND SELLER AGREE THAT IT WOULD BE
IMPRACTICAL AND EXTREMELY
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<PAGE>
DIFFICULT TO ESTIMATE THE DAMAGES WHICH SELLER MAY SUFFER. THEREFORE BUYER AND
SELLER DO HEREBY AGREE THAT A REASONABLE ESTIMATE OF THE TOTAL NET DETRIMENT
THAT SELLER WOULD SUFFER IN THE EVENT THAT BUYER DEFAULTS AND FAILS TO COMPLETE
THE PURCHASE OF THE PROPERTY IS AND SHALL BE (SUBJECT TO PARAGRAPH 24.5), AS
--------------
SELLER'S SOLE AND EXCLUSIVE REMEDY (WHETHER AT LAW OR IN EQUITY), AN AMOUNT
EQUAL TO TWO HUNDRED SIXTEEN THOUSAND DOLLARS ($216,000.00). SAID AMOUNT SHALL
BE THE FULL, AGREED AND LIQUIDATED DAMAGES FOR THE BREACH OF THIS AGREEMENT BY
BUYER, ALL OTHER CLAIMS TO DAMAGES OR OTHER REMEDIES BEING HEREIN EXPRESSLY
WAIVED BY SELLER. THE PAYMENT OF SUCH AMOUNT AS LIQUIDATED DAMAGES IS NOT
INTENDED AS A FORFEITURE OR PENALTY, BUT IS INTENDED TO CONSTITUTE LIQUIDATED
DAMAGES TO SELLER. UPON DEFAULT BY BUYER, THIS AGREEMENT SHALL BE TERMINATED AND
NEITHER PARTY SHALL HAVE ANY FURTHER RIGHTS OR OBLIGATIONS HEREUNDER, EACH TO
THE OTHER, EXCEPT FOR THE RIGHT OF SELLER TO COLLECT SUCH LIQUIDATED DAMAGES
FROM BUYER AND ESCROW HOLDER.
___________________________ ____________________________
Buyer's Initials Seller's Initials
23.0 Assignment. Buyer shall have the right to assign its rights and
----------
obligations under this Agreement, by giving prior written notice to Seller, to
any person or entity related to Buyer and used by Buyer or including Buyer as a
partner or to any corporation, provided that such assignee expressly assumes the
obligations of Buyer hereunder. Any assignee shall succeed to all the rights
and remedies hereunder, including, but not limited to, the specific performance
of this Agreement and Buyer shall be fully relieved from any further liability
under this Agreement.
24.0 Miscellaneous.
-------------
24.1 Partial Invalidity. If any term or provision of this Agreement
------------------
or the application thereof to any person or circumstance shall, to any extent,
be invalid or unenforceable, the remainder of this Agreement, or the application
of such term or provision to persons or circumstances other than those as to
which it is held invalid or unenforceable, shall not be affected thereby, and
each such term and provision of this Agreement shall be valid and be enforced to
the fullest extent permitted by law.
24.2 Waivers. No waiver of any breach of any covenant or provision
-------
herein contained shall be deemed a waiver of any preceding or succeeding breach
thereof, or of any other covenant or provision herein contained. No extension
of time for performance of any obligation or act shall be deemed an extension of
the time for performance of any other obligation or act.
24.3 Survival of Representations. The covenants and agreements made
---------------------------
herein shall survive the Close of Escrow without limitation and shall not merge
into the Deed
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and the recordation thereof in the Official Records. The representations and
warranties contained Paragraphs 13 and 15 above shall survive the Close of
Escrow for a period of eighteen (18) months and shall not merge into the Deed
and the recordation thereof in the Official Records.
24.4 Successors and Assigns. This Agreement shall be binding upon
----------------------
and shall inure to the benefit of the permitted successors and assigns of the
parties hereto.
24.5 Professional Fees. In the event of the bringing of any action
-----------------
or suit by a party hereto against another party hereunder by reason of any
breach of any of the covenants, agreements or provisions on the part of the
other party arising out of this Agreement, then in that event the prevailing
party shall be entitled to have and recover from the other party all reasonable
costs and expenses of the action or suit, including actual attorneys' fees,
accounting and engineering fees, and any other professional fees resulting
therefrom.
24.6 Entire Agreement. This Agreement (including all Exhibits
----------------
attached hereto) is the final expression of, and contains the entire agreement
between, the parties with respect to the subject matter hereof and supersedes
all prior understandings with respect thereto. This Agreement may not be
modified, changed, supplemented or terminated, nor may any obligations hereunder
be waived, except by written instrument signed by the party to be charged or by
its agent duly authorized in writing or as otherwise expressly permitted herein.
The parties do not intend to confer any benefit hereunder on any person, firm or
corporation other than the parties hereto.
24.7 Time of Essence. Seller and Buyer hereby acknowledge and agree
---------------
that time is strictly of the essence with respect to each and every term,
condition, obligation and provision hereof and that failure to timely perform
any of the terms, conditions, obligations or provisions hereof by either party
shall constitute a material breach of and a non-curable default under this
Agreement by the party so failing to perform.
24.8 Construction. Headings at the beginning of each paragraph and
------------
subparagraph are solely for the convenience of the parties and are not a part of
the Agreement. Whenever required by the context of this Agreement, the singular
shall include the plural and the masculine shall include the feminine and vice
versa. This Agreement shall not be construed as if it had been prepared by one
of the parties, but rather as if both parties had prepared the same. Unless
otherwise indicated, all references to paragraphs and subparagraphs are to this
Agreement. All exhibits referred to in this Agreement and the Glossary of Terms
are attached and incorporated by this reference. In the event the date on which
Buyer or Seller is required to take any action under the terms of this Agreement
is not a business day, the action shall be taken on the next succeeding business
day.
24.9 Governing Law. The parties hereto acknowledge that this
-------------
Agreement has been negotiated and entered into in the State. The parties hereto
expressly agree that this Agreement shall be governed by, interpreted under, and
construed and enforced in accordance with the laws of the State. Each party
hereby irrevocably and unconditionally
-28-
<PAGE>
submits to the exclusive jurisdiction of any Indiana state court sitting in or
having jurisdiction over Marion County, Indiana or of any federal district court
having jurisdiction over Marion County, Indiana in any action or proceeding
arising out or relating to this Agreement, and each party hereby irrevocably and
unconditionally agrees that any process or notice or motion or other application
to any of said courts may be served within or without such court's jurisdiction
by certified United States mail at the address of such party set forth herein or
at such other address as such party shall designate in writing in accordance
herewith, or by personal service.
24.10 Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be deemed an original, and all of which,
together, shall constitute one and the same instrument.
24.11 No Joint Venture. This Agreement shall not create a partnership
----------------
or joint venture relationship between Buyer and Seller.
24.12 Limitation of Liability of Trustee, Shareholders, Advisors,
-----------------------------------------------------------
Investment Managers and Officers of Buyer. NOTICE IS HEREBY GIVEN THAT ALL
- -----------------------------------------
PERSONS DEALING WITH BUYER SHALL LOOK TO THE ASSETS OF BUYER FOR THE ENFORCEMENT
OF ANY CLAIM AGAINST BUYER, AS NEITHER THE TRUSTEES, SHAREHOLDERS, OFFICERS,
INVESTMENT MANAGERS NOR ADVISORS OF BUYER ASSUME ANY PERSONAL LIABILITY FOR
OBLIGATIONS ENTERED INTO BY OR ON BEHALF OF BUYER.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year hereinabove written.
"BUYER" "SELLER"
COLLEGE PARK PLAZA, INC., COLLEGE PARK PLAZA ASSOCIATES, INC., an
a Delaware corporation, Indiana corporation
By: /s/ James G. McWalters By: /s/ Scott D. Teets
--------------------------- -------------------------------------
Name: James G. McWalters Name: Scott D. Teets
-------------------------- -----------------------------------
Its: Vice President Its: Asso. Gen. Counsel & Ass't. Sec'y.
-------------------------- ------------------------------------
By: /s/ Jeffrey S. Cavanaugh By: /s/ Thomas J. Salentine
--------------------------- -------------------------------------
Name: Jeffrey S. Cavanaugh Name: Thomas J. Salentine
------------------------- -----------------------------------
Its: Vice President Its: EVP & Chief Financial Officer
-------------------------- -----------------------------------
-29-
<PAGE>
GLOSSARY OF TERMS
(1) "Authorities" means any governmental or quasi-governmental body
or agency having jurisdiction over the Project and/or Seller including, without
limitation, the State, the City and the County.
(2) "Broker" means Colliers Turley Martin Tucker.
(3) "Cash Equivalent" means a wire transfer of funds.
(4) "Close of Escrow" or "Closing" means the date the Deed is
recorded in the Official Records.
(5) "Closing Date" means fifteen (15) days after the later of: (a)
the Contingency Date, or (b) the date that Interactive has (i) commenced
occupancy of approximately 36,797 square feet commonly known as Suite 300 of the
Improvements ("Suite 300"); (ii) commenced paying rent for Suite 300; and (iii)
---
delivered a Tenant Estoppel Certificate reasonably acceptable to Buyer.
(6) "Contingency Date" means the earlier of the Closing Date or
forty-five (45) days after the Opening of Escrow.
(7) "Escrow" means the above-referenced escrow opened with Escrow
Holder for the consummation of the transaction described in this Agreement.
(8) "Escrow Holder" means Chicago Title Company.
(9) "Governmental Regulations" means any laws, ordinances, rules,
requirements, resolutions, policy statements and regulations (including, without
limitation, those relating to land use, subdivision, zoning, environmental,
toxic or hazardous waste, occupational health and safety, water, earthquake
hazard reduction, disabled persons and building and fire codes) of the
Authorities bearing on the construction, alteration, rehabilitation,
maintenance, use, operation or sale of the Project.
(10) "Hazardous Material" means any radioactive, hazardous or toxic
substance, material or waste which is or becomes regulated by any local
governmental authority, the State of Indiana or the United States Government.
The term "Hazardous Material" includes, without limitation, any material or
substance which is (i) defined as a "hazardous waste," "extremely hazardous
waste" or "restricted hazardous waste" or "hazardous substance" under any state
or federal law, (ii) asbestos, (iii) lead, and/or (iv) petroleum.
(11) "Improvements" means all buildings, fixtures, structures,
parking areas, landscaping and other improvements constructed and located on the
Real Property, including, but not limited to, an office building containing
approximately 180,460 net rentable square feet, together with all machinery and
mechanical, electrical, HVAC and plumbing systems (other than
-30-
<PAGE>
Personal Property) used in the operation thereof, but excluding any such items
owned by Tenants in possession or public or private utilities or contractors
under contract.
(12) "Licenses and Permits" means (A) all licenses, permits,
certificates of occupancy, approvals, dedications, subdivision maps and
entitlements issued, approved or granted by Authorities or otherwise in
connection with the Project, (B) all right, title and interest of Seller in and
to the use of the name "College Park Plaza" and any and all other trade names
and logos used by Seller in the operation and identification of the Project; (C)
any and all development rights and other intangible rights, titles, interests,
privileges and appurtenances owned by Seller and in any way related to or used
in connection with the Project and its operation; (D) licenses, permits, maps,
certificates of occupancy, building inspection approvals and unrecorded
covenants, conditions and restrictions, reciprocal easement agreements, area
easement agreements and other common or planned development agreements or
documents affecting the Project; and (E) all licenses, consents, easements,
rights of way and approvals required from private parties to make use of
utilities and to insure vehicular and pedestrian ingress and egress to the
Project.
(13) "Official Records" means the Official Records of the County.
(14) "Opening of Escrow" means the date on which a fully executed
copy of this Agreement is delivered to Escrow Holder by Buyer and Seller, which
shall occur no later than three (3) business days after the Execution Date.
(15) "Personal Property" means all equipment, appliances, tools,
machinery, supplies, building materials and other personal property of every
kind and character owned by Seller and attached to, appurtenant to, located in
or used in connection with the operation of the Project including, without
limitation, all attachments, appliances, fittings, gas and oil burners,
automatic stokers, lighting fixtures, doors, cabinets, partitions, mantles,
elevators, electric motors, pumps, screens, flag poles, waste disposal or
storage equipment, all sprinklers, plumbing, heating, air conditioning,
electrical, ventilating, lighting, incinerating, vacuum cleaning, refrigerating
and cooling systems, each with its respective furnaces, boilers, engines,
motors, dynamos, radiators, pipe, wiring and other apparatus, vaults, safes,
fire prevention and extinguishing equipment, carpets, floor covering, kitchen
appliances and antenna, and the Records and Plans.
(16) "Property" means, collectively, the Real Property, the
Improvements, the Licenses and Permits, the Records and Plans, the Personal
Property, the Warranties and all of Seller's interest in the Tenant Leases,
Tenant Deposits and the Service Contracts which are not disapproved by Buyer,
together with: (a) all appurtenances, streets, alleys, easements, right-of-way
in or to all streets or other interests in, on, across, in front of, abutting or
adjoining the Real Property, and (b) all of the rights, title, interests,
privileges and appurtenances which are in any way related to or used in
connection with the Real Property and Improvements.
-31-
<PAGE>
(17) "Property Management Agreement" means that certain Management
Agreement dated as of June 1, 1998 between Seller and Eaton & Lauth Real Estate
Services, Inc. pertaining to the Property, a true and complete copy of which has
been delivered by Seller to Buyer.
(18) "Real Property" means that certain real property located in the
City and County containing the Improvements and more particularly described in
Exhibit "A" attached hereto and incorporated herein by this reference, together
with all right, title and interest of the Seller in and to all streets, alleys,
easements and rights-of-way in, on, across, in front of, abutting or adjoining
said real property.
(19) "Records and Plans" means (A) all financial and other books and
records maintained in connection with the operation of the Project (excluding
the Operating Statements), (B) all preliminary, final and proposed building
plans and specifications (including "as-built" drawings) respecting the
Improvements, (C) all surveys, structural reviews, grading plans, topographical
maps, architectural drawings and engineering, soils, seismic, geologic,
environmental contamination and architectural reports, studies and certificates
and other documents pertaining to the Project.
(20) "Service Contracts" means any and all service contracts,
maintenance contracts, operating contracts, management contracts, warranties,
guarantees, bonds, listing agreements, parking contracts and like contracts and
agreements relating to the Project, together with all supplements, amendments
and modifications thereto, relating to the Property.
(21) "Tenant Deposits" means all security deposits, letters of credit,
prepaid rentals, cleaning fees and other deposits, plus any interest accrued
thereon, paid by Tenants to Seller or any other person relative to the Project.
(22) "Tenant Leases" means all leases, licenses, rental agreements or
occupancy agreements, and all amendments and supplements thereto, relating to
all or any portion of the Project (together with all rents, issues and profits
thereunder).
(23) "Tenant" means any person who is named tenant or lessee under a
Tenant Lease.
(24) "Title Company" means Chicago Title Company.
(25) "To the best of Seller's knowledge" or other references herein
to Seller's knowledge mean the knowledge a party would be expected to have by
reason of continued involvement with the Property as developer (as to those
portions of the Property developed or rehabilitated by Seller), owner, managing
agent and leasing agent.
(26) "Warranties" means all warranties, indemnities, guarantees and
bonds (express or implied) issued in connection with the Property or any portion
thereof.
-32-
<PAGE>
EXHIBIT "A"
-----------
LEGAL DESCRIPTION
[TO BE PROVIDED]
<PAGE>
EXHIBIT "B"
-----------
TENANT ESTOPPEL CERTIFICATE
____________, 1999
To:
____________________
____________________
____________________
____________________
Re: Lease Dated: _________________________________
Landlord: _________________________________
________________________ ("Landlord")
Tenant: _________________________________
__________________________ ("Tenant")
Premises: Approximately ____ square feet located at
________________________ ("Premises")
Ladies and Gentlemen:
The undersigned hereby certifies to ___________________________, a
___________________, or its assigns ("Buyer") as of the date hereof as follows:
1. The undersigned is the "Tenant" under the above-referenced lease
("Lease") covering the above-referenced Premises ("Premises").
2. The Lease, attached hereto as Exhibit "A", constitutes the entire
agreement between Landlord and Tenant with respect to the Premises and the Lease
has not been modified, changed, altered or amended in any respect except as
follows (if none, so state):
3. The term of the Lease commenced on _________, 19__, and, including
any presently exercised option or renewal term, will expire on _________, 19___.
Tenant has accepted complete possession of the Premises and is the actual
occupant in possession and has not sublet, assigned or hypothecated or otherwise
transferred all or any portion of Tenant's leasehold interest. All improvements
to be constructed on the Premises by Landlord have been completed to the
satisfaction of Tenant and accepted by Tenant and any tenant construction
allowances have been paid in full. All duties of an inducement nature required
of the Landlord in the Lease have been fulfilled. All of the Landlord's
obligations which have accrued prior to the date hereof have been performed.
4. There exists no breach or default, nor state of facts nor
condition which, with notice, the passage of time, or both, would result in a
breach or default on the part of either Tenant or Landlord. To the best of
Tenant's knowledge, no claim, controversy, dispute, quarrel or disagreement
exists between Tenant and Landlord.
5. Tenant is currently obligated to pay base annual rental in monthly
installments of $_________ per month and monthly installments of annual rental
have been paid
<PAGE>
through _______, 19__. In addition, Tenant is currently obligated to pay a
proportionate share of common area maintenance charges and real estate taxes
equal to $_________ per month, based on ___%. Reconcilement for the Tenant's
proportionate share of common area maintenance charges and real estate taxes
have been made through ,199__, and Tenant or Landlord, as appropriate,
has been fully and finally reimbursed for any deviations between the estimated
payments and the actual expense therefor. No other rent has been paid in advance
and Tenant has no claim or defense against Landlord under the Lease and is
asserting no offsets or credits against either the rent or Landlord. Tenant has
no claim against Landlord for any security, rental, cleaning or other deposits,
except for a security deposit in the amount of $________ which was paid pursuant
to the Lease.
6. The Lease is in full force and effect in accordance with its terms
and is a binding obligation of the undersigned.
7. The undersigned has received no notice of prior sale, transfer,
assignment, hypothecation or pledge of the Lease or of the rents secured
therein, except to Buyer.
8. Tenant has no option or preferential right to purchase all or any
part of the Premises (or the real property of which the Premises are a part) nor
any right or interest with respect to the Premises or the real property of which
the Premises are a part other than as set forth in the Lease. Tenant has no
right to renew or extend the terms of the Lease or expand the Premises except
____________________________________ (if none, so state).
9. Tenant has made no agreement with Landlord or any agent,
representative or employee of Landlord concerning free rent, partial rent,
rebate of rental payments or any other type of rental or other economic
inducement or concession except as expressly set forth in the Lease.
10. There has not been filed by or against Tenant a petition in
bankruptcy, voluntary or otherwise, any assignment for the benefit of creditors,
any petition seeking reorganization or arrangement under the bankruptcy laws of
the United States, or any state thereof, or any other action brought under said
bankruptcy laws with respect to Tenant.
11. All insurance required of Tenant by the Lease has been provided
by Tenant and all premiums paid.
12. The undersigned (i) is not presently engaged in nor does it
presently permit, (ii) has not at any time in the past engaged in nor permitted,
and (iii) has no knowledge that any third person or entity engaged in or
permitted any operations or activities upon, or any use or occupancy of the
Premises, or any portion thereof, for the purpose of or in any way involving
the handling, manufacturing, treatment, storage, use, transportation, spillage,
leakage, dumping, discharge or disposal (whether legal or illegal, accidental or
intentional) of any radioactive, toxic or hazardous substances, materials or
wastes, or any wastes regulated under any local, state or federal law, except as
follows:
-35-
<PAGE>
_______________________________
____________________________________________________ (if none, so state).
13. The undersigned acknowledges that:
(a) Buyer or Buyer's assignee is purchasing Landlord's interest in the
property which includes the Premises and, in connection with that purchase, will
be receiving an assignment of Landlord's interest under the Lease;
(b) Landlord, Buyer and Buyer's successors, agents and assigns
(including, but not limited to subsequent purchasers, lenders and title
insurers) will be relying upon each of the statements contained herein in
connection with Buyer's purchase of the property of which the Premises are a
part and but for the assurances and agreements contained herein Buyer would not
purchase the property of which the Premises are a part; and
(c) The undersigned will attorn to and recognize Buyer as the Landlord
under the Lease and will pay all rents and other amounts due thereunder to Buyer
upon notice to the undersigned that Buyer has become the owner of Landlord's
interest in the Premises under the Lease.
-36-
<PAGE>
LEASE
[TO BE PROVIDED]
<PAGE>
EXHIBIT "C"
-----------
SPECIAL WARRANTY DEED
---------------------
THIS INDENTURE WITNESSETH, that College Park Plaza Associates, Inc.,
an Indiana corporation ("Grantor"), CONVEYS to College Park Plaza, Inc., a
Delaware corporation ("Grantee"), for the sum of Ten and no/100 Dollars ($10.00)
and other valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the real estate in Marion County, Indiana, more
particularly described in the attached Exhibit A (the "Real Estate").
---------
SUBJECT TO the lien of real estate taxes due and payable in May, 1999,
and thereafter, and all general and special assessments and all other
governmental, municipal and public dues, charges and impositions not delinquent,
each of which Grantee assumes and agrees to pay, and to the following matters:
1. The matters identified on the attached Exhibit B; and
---------
2. All matters that would be disclosed by an accurate Indiana Land
Title Association minimum standard detail survey of the Real Estate.
Grantor, as its sole warranty herein, specially warrants to Grantee,
its successors and assigns, that Grantor will forever defend title to the Real
Estate (subject to the matters to which this conveyance is hereinabove made
subject) against only those claims of persons who shall claim title to or assert
claims affecting the title to the Real Estate, or any part thereof, under, by or
through Grantor, but not otherwise.
The undersigned person executing this deed on behalf of Grantor
represents and certifies that he is a duly elected officer of Grantor and has
been fully empowered and duly authorized by all necessary action of Grantor to
execute and deliver this Special Warranty Deed; that Grantor has full capacity
to convey the real estate described herein; and that all necessary action for
the making of such conveyance has been taken or done.
<PAGE>
IN WITNESS WHEREOF, Grantor has executed this Special Warranty Deed
this _______ day of _____________, 1999.
GRANTOR:
COLLEGE PARK PLAZA ASSOCIATES, INC.
By:__________________________________________
Printed:_____________________________________
Title:_______________________________________
STATE OF INDIANA )
) SS:
COUNTY OF MARION )
Before me, a Notary Public in and for the State of Indiana, personally
appeared _________________________, the ______________ of College Park Plaza
Associates, Inc., who, having been duly sworn, acknowledged the execution of the
foregoing Special Warranty Deed.
Witness my hand and Notarial Seal this ______ day of ______________,
1999.
______________________________________
Notary Public
______________________________________
Printed Name
My commission expires: ____________________________
I am a resident of _________________ County, Indiana.
This instrument was prepare by Thomas A. Vogtner, Attorney at Law, Baker &
Daniels, 300 North Meridian, Suite 2700, Indianapolis, Indiana, 46204.
Send document after recording and tax statements to College Park Plaza, Inc.,
800 Newport Center Drive, Suite 300, Newport Beach, California 92660, Attn:
David Hubbs.
<PAGE>
LEGAL DESCRIPTION
[TO BE PROVIDED]
<PAGE>
STATE OF )
) ss.
COUNTY OF )
On ________________________, before me, ________________________, a
Notary Public in and for said state, personally appeared
_______________________, personally known to me (or proved to me on the basis of
satisfactory evidence) to be the person whose name is subscribed to the within
instrument and acknowledged to me that he executed the same in his authorized
capacity, and that by his signature on the instrument, the person, or the entity
upon behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
_______________________________________
Notary Public in and for said State
<PAGE>
EXHIBIT "D"
-----------
TENANT LEASE ASSIGNMENT
This tenant lease assignment ("Assignment") is made this _____ day of
______, 199_ by and between ___________________________, a ________________
("Assignor"), and ______________________________, a ______________,
("Assignee") with respect to the following matters.
WITNESSETH:
Assignor and Assignee entered into that certain Agreement of Purchase
and Sale and Joint Escrow Instructions, dated as of _______, 199_ ("Agreement"),
respecting the sale of certain "Property" (as defined in the Agreement). Unless
otherwise indicated herein, all capitalized terms in this Assignment shall have
the meaning ascribed to them in the Agreement.
Under the Agreement, Assignor is obligated to assign to Assignee any
and all of its right, title and interest in and to all Tenant Leases and Tenant
Deposits, which Tenant Leases and Tenant Deposits are set forth on Exhibit "A"
attached hereto.
NOW, THEREFORE, incorporating the foregoing recitals and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Assignor hereby assigns, sells, transfers, sets over and delivers
unto Assignee all of Assignor's estate, right, title and interest in and to the
Tenant Leases and Tenant Deposits and Assignee hereby accepts such assignment.
Assignor hereby covenants that Assignor will, at any time and from
time to time upon written request therefor, execute and deliver to Assignee,
Assignee's successors, nominees or assigns, such documents as Assignee or they
may reasonably request to fully assign and transfer to and vest in Assignee or
Assignee's successors, nominees and assigns, all of Assignor's right, title and
interest in and to the Tenant Leases and the Tenant Deposits
Assignee hereby assumes the performance of all of the terms, covenants
and conditions imposed upon Assignor as landlord under the Tenant Leases first
accruing and arising on or after the date of delivery of this Assignment (the
"Assumed Obligations"). Assignor hereby acknowledges that the Assumed
Obligations shall expressly exclude therefrom any liabilities or obligations
associated with the Unfinished Work (as defined in the Agreement).
Assignor hereby agrees to indemnify, defend and hold harmless
Assignee, Assignee's agents and Assignee's and their successors and assigns from
and against any and all claims, losses, liabilities and expenses, including
reasonable attorneys' fees, suffered or incurred by Assignee by reason of: (i)
any breach by Assignor prior to the date hereof, of any Assignor's obligations
under the Tenant Leases or with respect to the Tenant Deposits, or (ii) any
leasing commissions, broker's commissions or finder's fees which accrue after
the date hereof with
<PAGE>
respect to the existing Tenant Leases, other than the Option Commissions that
are the responsibility of Assignee pursuant to the Agreement.
Assignee hereby agrees to indemnify, defend and hold harmless
Assignor, Assignor's agents and Assignor's and their successors and assigns from
and against any and all claims, losses, liabilities and expenses, including
reasonable attorneys' fees, suffered or incurred by Assignor by reason of (i)
any breach by Assignee from and after the date hereof, of any of Assignee's
Assumed Obligations under the Tenant Leases, or (ii) any Option Commissions that
are the responsibility of Assignee pursuant to the Agreement.
In the event of the bringing of any action or suit by a party hereto
against another party hereunder by reason of any breach of any of the covenants,
conditions, agreements or provisions on the part of the other party arising out
of this Assignment, then in that event the prevailing party shall be entitled to
have and recover of and from the other party all costs and expenses of the
action or suit, including actual attorneys' fees and costs.
This Assignment may be executed simultaneously in counterparts, each
of which shall be deemed an original, but all of which, together, shall
constitute one and the same instrument.
This Assignment shall be binding upon and inure to the benefit of the
successors, assignees, personal representatives, heirs and legatees of all the
respective parties hereto.
This Assignment shall be governed by, interpreted under, and construed
and enforceable in accordance with, the laws of the State of Indiana.
-43-
<PAGE>
TENANT LEASES AND TENANT DEPOSITS
[TO BE PROVIDED]
<PAGE>
EXHIBIT "E"
-----------
GENERAL ASSIGNMENT AND BILL OF SALE
THIS GENERAL ASSIGNMENT AND BILL OF SALE ("Assignment") is made this
____ day of _______, 199_ by and between _____________________________, a
_______________________ ("Assignor"), and _________________________, a
_________________, ("Assignee"), with respect to the following matters.
WITNESSETH
Assignor and Assignee entered into that certain Agreement of Purchase
and Sale and Joint Escrow Instructions, dated as of ______, 199_ ("Agreement"),
respecting the sale of certain "Property", including the "Real Property"
described in Exhibit "A" attached hereto and the "Improvements" located thereon
(all as defined in the Agreement). Unless otherwise indicated herein, all
capitalized terms in this Assignment shall have the meaning ascribed to them in
the Agreement.
Under the Agreement, Assignor is obligated to assign to Assignee any
and all of its right, title and interest in and to: (i) the Records and Plans,
(ii) the Licenses and Permits, (iii) the Service Contracts, (iv) the Personal
Property, and (v) the Warranties.
NOW, THEREFORE incorporating the foregoing recitals and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Assignor hereby assigns, sells, transfers, sets over and delivers
unto Assignee, to the extent assignable, all of Assignor's estate, right, title
and interest in and to, and Assignee hereby accepts such assignment, with
respect to:
(i) the Records and Plans;
(ii) the Licenses and Permits;
(iii) the Service Contracts;
(iv) the Personal Property;
(v) the Warranties;
(vi) any other tangible personal property and all intangible
rights in connection with the complete and comfortable use, enjoyment, occupancy
or operation of the Property, except that owned by Bindley Western Industries,
Inc. or any Tenant of the Property.
Assignor hereby covenants that Assignor will, at any time and from
time to time, upon written request therefor, execute and deliver to Assignee,
Assignee's successors, nominees and assigns, any new or confirmatory instruments
which Assignee, Assignee's successors,
<PAGE>
nominees and assigns may reasonably request in order to fully assign and
transfer to and vest in Assignee, or Assignee's successor, nominee and assigns,
all of Assignor's right, title and interest in and to the Records and Plans,
Licenses and Permits, Service Contracts, Personal Property, Warranties and all
related warranties, indemnities and guarantees, and all other tangible property
and intangible rights in connection with the Property.
Assignee hereby assumes the performance of all of the terms, covenants
and conditions imposed upon Assignor under the Service Contracts, first accruing
and arising on or after the date of this Agreement (the "Assumed Obligations").
Assignee hereby agrees to indemnify, defend and hold harmless
Assignor, Assignor's agents and their successors and assigns from and against
any and all claims, losses, liabilities and expenses, including reasonable
attorneys' fees, suffered or incurred by Assignor by reason of any breach by
Assignee from and after the date hereof of any of Assignee's Assumed Obligations
under the Service Contracts.
Assignor hereby agrees to indemnify, defend and hold harmless
Assignee, Assignee's agents and their successors and assigns from and against
any and all claims, losses, liabilities and expenses, including reasonable
attorneys' fees, suffered or incurred by Assignee by reason of any breach by
Assignor prior to the date hereof of any of Assignor's obligations under the
Service Contracts.
In the event of the bringing of any action or suit by a party hereto
against another party hereunder by reason of any breach of any of the covenants,
conditions, agreements or provisions on the part of the other party arising out
of this Assignment, then in that event the prevailing party shall be entitled to
have and recover of and from the other party all costs and expenses of the
action or suit, including actual attorneys' fees and costs.
This Assignment maybe executed simultaneously in counterparts, each of which
shall be deemed an original, but all of which, together, shall constitute one
and the same instrument.
This Assignment shall be binding upon and inure to the benefit of the
successors, assignees, personal representatives, heirs and legatees of all the
respective parties hereto.
This Assignment shall be governed by, interpreted under, and construed
and enforceable in accordance with, the laws of the State of Indiana.
IN WITNESS WHEREOF, Assignor and Assignee have executed and delivered
this Assignment as of the day and year first above written.
-46-
<PAGE>
LEGAL DESCRIPTION
[TO BE PROVIDED]
<PAGE>
EXHIBIT "F"
-----------
TRANSFEROR'S CERTIFICATION OF NON-FOREIGN STATUS
To inform _________________________________, a ____________________,
("Transferee"), that withholding of tax under Section 1445 of the Internal
Revenue Code of 1986, as amended ("Code") will not be required upon the transfer
of certain real property to the Transferee by __________________, a ____________
("Transferor"), the undersigned hereby certifies the following on behalf of the
Transferor:
1. The Transferor is not a foreign corporation, foreign partnership,
foreign trust, or foreign estate (as those terms are defined in the Code and the
Income Tax Regulations promulgated thereunder);
2. The Transferor's U.S. employer identification/social security
number is ____________________________; and
3. The Transferor's office/personal residence address is
____________________________.
The Transferor understands that this Certification may be disclosed to
the Internal Revenue Service by the Transferee and that any false statement
contained herein could be punished by fine, imprisonment, or both.
The Transferor understands that the Transferee is relying on this
Certification in determining whether withholding is required upon said transfer.
Under penalty of perjury I declare that I have examined this
Certification and to the best of my knowledge and belief it is true, correct and
complete, and I further declare that I have authority to sign this document on
behalf of the Transferor.
<PAGE>
EXHIBIT "G"
-----------
SURVEY REQUIREMENTS
1. The final survey must be an "as built" survey certified to
____________________________ by a registered land surveyor using the attached
surveyor's certificate. The survey is to have the surveyor's seal affixed,
manually signed by the surveyor, and is to reflect a current date. Older
surveys are acceptable if updated and re-certified.
2. The full legal description and street address must be shown. The
legal description must be identical to the title report description or
discrepancies explained.
3. All perimeter property lines must be specifically identified. The
survey must show the location by courses and distances of: (a) the parcel to be
conveyed, (b) the relation of the point of beginning of said parcel to the
monument from which it is fixed, (c) all easements affecting the property, (d)
the established building set back lines, and (e) the line of the street or
streets abutting the parcel and the width of said streets.
4. The number of square feet or acres contained in the parcel must be
specifically identified.
5. All streets adjacent to the property, R.O.W. lines, and the
distance from the nearest intersecting streets must be specifically identified.
The survey must disclose that access to the adjacent street exits.
6. All curb cuts, driveways, and fences must be shown.
7. All exceptions (including but not limited to all easements
affecting the property) on the title reports must be plotted (or identified on
the face of the survey as not plottable) and identified by recording information
(Book and Page or document number of instrument creating the exception) and
exception number on the title report. If any exception (except liens) is not
plottable, the reason why must be indicated.
8. All structures, improvements including sidewalks, planters,
stoops, overhangs, street lighting and parking areas must be shown. The square
footage and number of stories of all structures must be listed and any
improvements under construction. Show all structures and improvements on said
parcel with horizontal lengths of all sides and the relation thereof by distance
to: (a) all boundary lines of the parcel, (b) servient easements, (c)
established building lines, and (d) street lines.
If the survey comprises more than one parcel, it should show interior
lines and facts sufficient to insure contiguity.
The location of all easements and rights-of-ways benefitting the
subject property should be shown and the legal description set forth on the
survey.
<PAGE>
Illustration of all surface drainage lines, including their outfalls.
9. Identify all utility lines as they service the property and
improvements (including but not limited to sewer, water, gas, electric and
telephone). Indicate whether the utility line is above or below grade and show
the size of the respective services; however, gas and water lines shall be as
shown on plans provided by the gas company and water company.
10. Show and describe any encroachments upon adjoining property by
improvements located on the subject property, or encroachments by improvements
located on adjoining property or onto the subject property, or make a positive
statement that there are no encroachments. All perimeter fences and walls and
other improvements along property lines, should be shown with dimensions. All
party walls of buildings on the property line should indicate the thickness of
the portions on either side of the property line.
11. Identify parking and paved areas. Identify the number of
vehicles that may be parked, in each parking area.
12. State whether or not property appears on any F.E.M.A. Flood
Insurance Boundary Map and, if so, further state map number and whether or not
property appears in the "Flood Hazard Area" shown on the map.
13. Show the location and direction of flow for existing streams,
rivers, surface drainage systems, and water and sewer lines, if any.
14. Show the location of railroad tracks and railway rights-of-way
and sidings.
15. The location of rubbish fills, sloughs, springs, filled in wells
or cisterns and seep holes should be charted wherever possible.
16. North direction indicated by an arrow.
17. Zoning use and density classification (but not the calculation)
of the property and location of any lines that divide the property into
different classifications.
18. Show all wires and cables crossing, entering or leaving the
subject property indicating the amount of cross areas or wire overhang and all
anchors and/or guy wires affecting the subject property.
-50-
<PAGE>
SURVEYOR'S CERTIFICATE
The surveyor has been furnished with a preliminary title report
#____________________________ issued by ____________________________, dated as
of ____________________________.
I hereby certify to ____________________________ as of the date
hereof, that (I) the survey was made in accordance with the
____________________________ survey requirements; (II) the legal description on
the survey is a true, correct and complete description of the property depicted
on the survey; (III) the attached print of the survey prepared by me was
actually made upon the ground; (IV) the survey and the information, courses and
distances shown thereon are correct including without limitation all set-backs
and yard lines; (V) the survey correctly shows affixed and determinable position
and location of the land described thereon (including the position of the point
of beginning if the land is described by metes and bounds); (VI) the print of
survey accurately reflects boundary lines of the described property which "close
by engineering calculation"; (VII) the size, location, type and relation of
buildings and improvements and bodies of water are correct as shown and all are
within the boundary lines of the property; (VIII) all driveways or other cuts in
the curb along any street upon which the land abuts are correct as shown; (IX)
there are no violations of zoning ordinances, restrictions or other rules and
regulations with reference to the location of said buildings and improvements;
(X) there are no easements, encroachments, rights of way or uses affecting this
property appearing from a careful physical inspection of the same, other than
those shown and depicted on the survey; (XI) there are no building restrictions
or setback lines, party walls, encroachments, overhangs of any improvements upon
any easements, rights of way or adjacent land upon this property, except as
shown and depicted on the survey; (XII) there are no encroachments by the
improvements on the subject property onto adjacent property or third party
easement rights except as shown on the survey; encroachments, as used herein,
include encroachments or protrusions onto the subject property by above-ground
improvements on adjacent property, rights-of-way, easements or building setbacks
by any above-ground improvements on the subject property and any conflicts or
overlaps of the metes and bounds calls of the subject property and those of
adjacent property, easements, or rights-of-way; and (XIII) flood zone
certification;
This survey is made in accordance with the "MINIMUM STANDARD DETAIL
REQUIREMENTS FOR LAND TITLE SURVEYS" jointly established and most recently
adopted by ALTA ACSM.
Signature: ____________________________
Registered Land Surveyor ____________________________
Registration #: ____________________________
Date: ____________________________
<PAGE>
EXHIBIT "H"
-----------
BINDLEY LEASE
<PAGE>
EXHIBIT 10-K
FIRST AMENDMENT TO
AGREEMENT OF PURCHASE AND SALE
AND JOINT ESCROW INSTRUCTIONS
This First Amendment to Agreement of Purchase and Sale and Joint
Escrow Instructions (this "First Amendment") is made this 12th day of April 1999
by and between COLLEGE PARK PLAZA ASSOCIATES, INC., an Indiana corporation
("Seller"), and COLLEGE PARK PLAZA, INC., a Delaware corporation ("Buyer").
Recitals
A. Buyer and Seller entered into that certain Agreement of Purchase
and Sale and Joint Escrow Instructions with an Execution Date of March 30, 1999
(the "Agreement"). The Agreement concerns the purchase and sale of the Property
(as defined in the Agreement).
B. Subject to the terms and conditions set forth in this First
Amendment, Buyer and Seller now desire: (i) to recalculate the Purchase Price
based on the revised rentable square footage of the Improvements; and (ii) to
make certain other changes, as more particularly set forth herein.
Agreement Terms and Conditions
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are acknowledged, Buyer and Seller agree as follows:
1. Rentable Square Footage of Improvements. Buyer and Seller agree
---------------------------------------
that the Improvements consist of 179,460 rentable square feet.
2. Purchase Price. In accordance with Section 2 of the Agreement,
--------------
the Purchase Price is reduced from $21,600,000.00 to $21,480,310.00. Buyer and
Seller agree that the reduction in the Purchase Price was calculated per the
formula in Section 2 of the Agreement, as follows: $21,600,000.00 - [$119.69 X
(180,460 - 179,460)].
3. Rentable Area of Premises Leased to Bindley Western Industries,
---------------------------------------------------------------
Inc. Buyer and Seller agree that, notwithstanding the change in the rentable
- ---
square footage of the Improvements as set forth in Paragraph 1 above, the
rentable area of the premises to be leased to Bindley Western Industries, Inc.
pursuant to the Bindley Lease shall remain 75,948 square feet.
4. Building Percentage. For purposes of the Bindley Lease, the
-------------------
Building Percentage set forth in Section 1.02(C) shall be changed from 42.09% to
42.32%.
<PAGE>
5. Effectiveness of Bindley Lease. Notwithstanding the execution of
------------------------------
the Bindley Lease before the date of this First Amendment, the Bindley Lease
shall be effective only upon the Close of Escrow.
6. Agreement in Full Force. Except for those provisions which are
-----------------------
inconsistent with this First Amendment and those terms, covenants and conditions
for which performance has heretofore been completed, all other terms, covenants
and conditions of the Agreement shall remain in full force and effect. The term
"Agreement" where used in the Agreement shall hereinafter refer to the
Agreement, as amended by this First Amendment.
7. Capitalized Terms. All capitalized terms used but not
-----------------
specifically defined in this First Amendment shall have the meanings ascribed to
such terms in the Agreement.
8. Binding Effect. This First Amendment shall be binding upon and
--------------
inure to the benefit of Buyer, Seller, and their respective successors and
assigns.
9. Facsimile. Each party hereto, and their respective successors
---------
and assigns shall be authorized to rely upon the signatures of all of the
parties hereto on this First Amendment which are delivered by facsimile as
constituting a duly authorized, irrevocable, actual, current delivery of this
First Amendment with original ink signatures of each person and entity;
provided, however, that each party hereto that delivers such facsimile
signatures to another party hereto, covenants and agrees that it shall deliver
an executed original of the same to the party(s) so receiving the previous
facsimile signatures within ten (10) days after the delivery of such facsimile
signatures.
10. Counterparts. This First Amendment may be executed in
------------
counterparts, each of which shall be deemed an original part and all of which
together shall constitute a single agreement.
IN WITNESS WHEREOF, Buyer and Seller have executed this First
Amendment as of the date first written above.
BUYER: SELLER:
COLLEGE PARK PLAZA, INC., COLLEGE PARK PLAZA ASSOCIATES,
INC., an Indiana corporation
a Delaware corporation
By: /s/ Jeffrey S. Cavanaugh By: /s/ Scott D. Teets
---------------------------- --------------------------------
Name: Jeffrey S. Cavanaugh Name: Scott D. Teets
----------------------- --------------------------
Position: Vice President Position: Asso. Gen. Counsel &
------------------- ---------------------
Assistant Secretary
---------------------
-2-
<PAGE>
By: /s/ David K. Hubbs By: /s/ Michael D. McCormick
------------------------- --------------------------------
Name: David K. Hubbs Name: Michael D. McCormick
------------------- --------------------------
Position: President Position: EVP, General Counsel &
---------------- -----------------------
Secretary
-----------------------
JOINDER
The undersigned, as Tenant under the Bindley Lease, joins herein to
evidence its agreement with the provisions of this First Amendment, including,
without limitation, the terms of Paragraphs 1, 3, 4 and 5 hereof.
TENANT:
Dated: April ___, 1999 BINDLEY WESTERN INDUSTRIES, INC.,
an Indiana corporation
By: ________________________________
Name: ______________________________
Position: __________________________
ACKNOWLEDGMENT OF RECEIPT
By signing below, Chicago Title Insurance Company, as Escrow Holder,
acknowledges receipt of this First Amendment.
ESCROW HOLDER:
Dated: April ___, 1999 CHICAGO TITLE INSURANCE COMPANY
By: ________________________________
-3-
<PAGE>
Name: _________________________
Position: _____________________
-4-
<PAGE>
Exhibit 10-K
SECOND AMENDMENT TO
AGREEMENT OF PURCHASE AND SALE
AND JOINT ESCROW INSTRUCTIONS
This Second Amendment to Agreement of Purchase and Sale and Joint
Escrow Instructions (this "Second Amendment") is made this 22nd day of April
1999 by and between COLLEGE PARK PLAZA ASSOCIATES, INC., an Indiana corporation
("Seller"), and COLLEGE PARK PLAZA, LLC, a Delaware limited liability company
("Buyer").
Recitals
A. Seller and College Park Plaza, Inc., a Delaware corporation
("Original Entity"), entered into that certain Agreement of Purchase and Sale
and Joint Escrow Instructions with an Execution Date of March 30, 1999 (the
"Original Agreement").
B. Seller and Original Entity modified the Original Agreement
pursuant to that certain First Amendment to Agreement of Purchase and Sale and
Joint Escrow Instructions dated as of April 12, 1999 (the "First Amendment").
C. The Original Agreement, as modified by the First Amendment, shall
be referred to herein as the "Agreement."
D. The Agreement concerns the purchase and sale of the Property (as
defined in the Agreement).
E. Buyer, as a limited liability company, was formed to take title
to the Property.
F. Subject to the terms and conditions set forth in this Second
Amendment, Buyer and Seller now desire to amend the Agreement to confirm that
Buyer, not Original Entity, is the buyer under the Agreement.
Agreement Terms and Conditions
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are acknowledged, Buyer and Seller agree as follows:
1. Identification of Buyer in Agreement. For all purposes under the
------------------------------------
Agreement (including all exhibits), the buyer shall be College Park Plaza, LLC,
a Delaware limited liability company. All references to "College Park Plaza,
Inc. a Delaware corporation" are hereby deleted and replaced with "College Park
Plaza, LLC, a Delaware limited liability
<PAGE>
company." Buyer and Seller acknowledge and agree that the Agreement shall be
effective and shall continue in full force and effect as if the original parties
thereto had been Buyer and Seller.
2. Agreement in Full Force. Except for those provisions which are
-----------------------
inconsistent with this Second Amendment and those terms, covenants and
conditions for which performance has heretofore been completed, all other terms,
covenants and conditions of the Agreement shall remain in full force and effect.
The term "Agreement" where used in the Agreement shall hereinafter refer to the
Agreement, as amended by this Second Amendment.
3. Capitalized Terms. All capitalized terms used but not
-----------------
specifically defined in this Second Amendment shall have the meanings ascribed
to such terms in the Agreement.
4. Binding Effect. This Second Amendment shall be binding upon
--------------
and inure to the benefit of Buyer, Seller, and their respective successors and
assigns.
5. Facsimile. Each party hereto, and their respective successors
---------
and assigns shall be authorized to rely upon the signatures of all of the
parties hereto on this Second Amendment which are delivered by facsimile as
constituting a duly authorized, irrevocable, actual, current delivery of this
Second Amendment with original ink signatures of each person and entity;
provided, however, that each party hereto that delivers such facsimile
signatures to another party hereto, covenants and agrees that it shall deliver
an executed original of the same to the party(s) so receiving the previous
facsimile signatures within ten (10) days after the delivery of such facsimile
signatures.
-2-
<PAGE>
Exhibit 10-K
6. Counterparts. This Second Amendment may be executed in
------------
counterparts, each of which shall be deemed an original part and all of which
together shall constitute a single agreement.
IN WITNESS WHEREOF, Buyer and Seller have executed this Second
Amendment as of the date first written above.
BUYER: SELLER:
COLLEGE PARK PLAZA, LLC, COLLEGE PARK PLAZA ASSOCIATES, INC.,
a Delaware limited liability company an Indiana corporation
By: /s/ David K. Hubbs By: /s/ Scott D. Teets
-------------------------------- -------------------------------
Name: David K. Hubbs Name: Scott D. Teets
-------------------------- -------------------------
Position: President Position: Asso. Gen. Counsel &
---------------------- ---------------------
Assistant Secretary
---------------------
By: /s/ David R. Brush By: /s/ Michael D. McCormick
-------------------------------- -------------------------------
Name: David R. Brush Name: Michael D. McCormick
-------------------------- -------------------------
Position: Assistant Secretary Position: EVP, General Counsel
---------------------- ---------------------
& Secretary
---------------------
<PAGE>
Exhibit 10-K
ACKNOWLEDGMENT OF RECEIPT
By signing below, Chicago Title Insurance Company, as Escrow Holder,
acknowledges receipt of this Second Amendment.
ESCROW HOLDER:
Dated: April ___, 1999 CHICAGO TITLE INSURANCE COMPANY
By: _______________________________
Name: _________________________
Position: __________________________
<PAGE>
THIRD AMENDMENT TO
AGREEMENT OF PURCHASE AND SALE
AND JOINT ESCROW INSTRUCTIONS
This Third Amendment to Agreement of Purchase and Sale and Joint
Escrow Instructions (this "Third Amendment") is made as of this 30/th/ day of
April, 1999 by and between COLLEGE PARK PLAZA ASSOCIATES, INC., an Indiana
corporation ("Seller"), and COLLEGE PARK PLAZA, LLC, a Delaware limited
liability company ("Buyer").
R E C I T A L S
1. Seller and College Park Plaza, Inc., a Delaware corporation
("Original Entity"), entered into that certain Agreement of Purchase and
Sale and Joint Escrow Instructions with an execution date of March 30, 1999
(the "Original Agreement").
2. Seller and Original Entity modified the Original Agreement
pursuant to that certain First Amendment to Agreement of Purchase and Sale
and Joint Escrow Instructions dated April 12, 1999 (the "First Amendment").
3. Seller and Buyer further modified the Original Agreement pursuant
to that certain Second Amendment of Purchase and Sale and Joint Escrow
Instructions, dated April 22, 1999 (the "Second Amendment").
4. The Original Agreement, as modified by the First Amendment and
the Second Amendment, shall be referred to herein as the "Agreement."
5. The Agreement concerns the purchase and sale of the Property (as
defined in the Agreement).
6. Buyer and Seller now desire to amend the Agreement as set forth
herein.
AGREEMENT TERMS AND CONDITIONS
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are acknowledged, Buyer and Seller agree as follows:
1. Real estate taxes attributable to the Property are being prorated
at closing. As a result, Seller will pay through escrow at closing the
installment of real estate taxes due May 10, 1999, and Buyer will receive a
credit at closing for the installment of real estate taxes due November 10, 1999
and a credit for 65.75% of the estimated total installment of real estate taxes
due May 10, 2000.
2. Since the amount of the May 10, 2000 installment has not yet been
determined, Buyer and Seller agree to use for closing purposes a figure equal to
110% of the May
<PAGE>
10, 1999 full installment. Upon receipt of the tax bill for the May 10, 2000
installment, Buyer shall provide Seller with a copy thereof. If the actual tax
bill exceeds the amount used for closing proration, Seller shall pay Buyer
65.75% of the difference on the later of May 1, 2000 or ten (10) days after its
receipt of the copy of the tax bill. If the actual tax bill is less than the
amount used for closing proration, Buyer shall pay 65.75% of the difference to
Seller within ten (10) days of its receipt of the actual tax bill.
3. Buyer and Seller agree that, to the extent Buyer receives
payments from the tenants of the Property for installments of real estate taxes
paid by Seller or credited to Buyer at closing, such payments shall be paid by
Buyer to Seller. As to Bindley Western Industries, Inc. ("Bindley") and J.F.
Molloy and Associates, Inc. ("Molloy"), such payment shall be tax payments made
by such tenants to Buyer. As to Interactive Intelligence, Inc. ("Interactive")
and Wang Laboratories, Inc. ("Wang"), such payments shall be that portion of
excess operating expenses paid by such tenants to Buyer equal to the percentage
of such portion of excess operating expenses that are attributable to increases
in real estate taxes over such amounts payable in 1999. Payments received from
Bindley and Molloy shall be paid to Seller within ten (10) days of receipt by
Buyer. Payments received from Interactive and Wang shall be made within ten (10)
days of the completion of the annual reconciliation of operating expenses for
calendar years 1999 or 2000 contemplated by their respective leases.
Notwithstanding the foregoing, Buyer shall have the right to pay itself current
before paying such amounts to Seller.
4. Attached as Exhibit A hereto is a copy of a letter to Seller's
---------
property manager from Molloy concerning its build out allowance. In its
estoppel, Molloy has also expressed concern about carpeting in its space. In
addition, Seller recognizes that certain punch list items may arise in
connection with the Interactive space. Seller recognizes that the resolution of
these items is Seller's responsibility, agrees to do so with reasonable
diligence and will indemnify, defend and protect Buyer from all claims, demands,
actions, losses or costs sustained or incurred by Buyer resulting from these
items.
5. Seller agrees to cause the transfer of the roof warranties
attached as Exhibits B and C to Buyer within thirty (30) days of the date hereof
----------------
without expense to Buyer.
6. Seller agrees to deliver to Buyer copies of the general contract
for the construction of the Building and the as built plans for the Building and
the tenant improvements within thirty (30) days of the date hereof. To the
extent such documents are in the possession of Eaton & Lauth Real Estate
Services, Inc. ("E&L"), Buyer agrees to direct E&L to provide such documents to
Seller within ten (10) days of the date hereof.
7. Except for those provisions which are inconsistent with this
Third Amendment and those terms, covenants and conditions for which performance
has heretofore been completed, all other terms, covenants and conditions of the
Agreement shall remain in full force and effect. The term "Agreement" where used
in the Agreement shall hereinafter refer to the Agreement, as amended by this
Third Amendment.
-2-
<PAGE>
8. All capitalized terms used but not specifically defined in this
Third Amendment shall have the meanings ascribed to such terms in the Agreement.
9. This Third Amendment shall be binding upon and inure to the
benefit of Buyer, Seller, and their respective successors and assigns.
10. Each party hereto, and their respective successors and assigns
shall be authorized to rely upon the signatures of all of the parties hereto on
this Third Amendment which are delivered by facsimile as constituting a duly
authorized, irrevocable, actual, current delivery of this Third Amendment with
original ink signatures of each person and entity; provided, however, that each
party hereto that delivers such facsimile signatures to another party hereto,
covenants and agrees that it shall deliver an executed original of the same to
the party(s) so receiving the previous facsimile signatures within ten (10) days
after the delivery of such facsimile signatures.
11. This Third Amendment may be executed in counterparts, each of
which shall be deemed an original part and all of which together shall
constitute a single agreement.
IN WITNESS WHEREOF, Buyer and Seller have executed this Third
Amendment as of the date first written above.
BUYER: SELLER:
COLLEGE PARK PLAZA, LLC, COLLEGE PARK PLAZA
a Delaware limited liability company ASSOCIATES, INC., an Indiana
corporation
By: /s/ Lawrence K. Sullivan By: /s/ Scott D. Teets,
-------------------------------- ------------------------------
Lawrence K. Sullivan, Scott D. Teets, Associate
Vice President General Counsel and
Assistant Secretary
ACKNOWLEDGMENT OF RECEIPT
By signing below, Chicago Title Insurance Company, as Escrow Holder,
acknowledges receipt of this Third Amendment.
ESCROW HOLDER:
Dated: April ____, 1999 CHICAGO TITLE INSURANCE COMPANY
By: _________________________________
Printed: ____________________________
Title: ______________________________
-3-
<PAGE>
GUARANTY
Bindley Western Industries, Inc. hereby guarantees the performance of
Seller's obligations under paragraphs 2 and 4 of this Third Amendment. Such
guaranty is primary and absolute. Buyer shall not be required to pursue its
remedies against Seller in order to enforce this guaranty.
BINDLEY WESTERN INDUSTRIES, INC.
By: __________________________________
Printed: _____________________________
Title: _______________________________
-4-
<PAGE>
Exhibit 10-L
LEASE AGREEMENT
THIS LEASE, made as of this 30th day of April, 1999 by and between College
Park Plaza, LLC, a Delaware limited liability company ("Landlord"), and Bindley
Western Industries, Inc., an Indiana corporation ("Tenant").
W I T N E S S E T H:
ARTICLE 1
Lease of Premises
Section 1.01. Lease of Premises. Landlord hereby leases to Tenant and
------------------
Tenant hereby leases from Landlord certain office space commonly known as Suites
400 and 500 in the College Park Plaza building, located in Marion County,
Indiana, and which is situated on the tract of land described in Exhibit A
---------
attached hereto (the "Building"), subject to the terms and conditions herein set
forth, for the specific term hereinafter specified. The leased space in the
Building is described in Item A, Section 1.02 hereinafter, and is outlined on
Exhibit B attached ("Leased Premises"). Leased Premises shall include the area
- ---------
for the emergency generator located to the south of the Building, as well as the
area for the satellite dish(es) and Liebert units located on the roof of the
Building. The elevators, however, are not part of the Leased Premises and shall
therefore remain in the exclusive control of the Landlord.
Section 1.02. Basic Lease Provisions.
-----------------------
(A) BUILDING ADDRESS: 8909 Purdue Road
CITY, STATE: Indianapolis, Indiana ZIP CODE: 46268 FLOORS: 4 and 5
SUITES: 400 and 500
(B) RENTABLE AREA: 75,948 Square Feet
(C) BUILDING PERCENTAGE: 42.32%
(D) MONTHLY RENTAL INSTALLMENTS:
Commencing on the date hereof through April 30, 2004 --- $99,998.20 per
month
Commencing May 1, 2004 through April 30, 2009 --- $114,997.93 per month
Commencing May 1, 2009 through April 30, 2014 --- $132,276.10 per month
(E) LANDLORD'S SHARE OF OPERATING COSTS: $ 3.75 Per Square Foot Per Year (net
of real estate taxes);
(F) TERM: Fifteen (15) Years
(G) COMMENCEMENT DATE: The date hereof
(H) TERMINATION DATE: April 30, 2014 (exclusive of Tenant's renewal options)
(I) CONSTRUCTION DRAWINGS APPROVAL DATE: Not Applicable
(J) SECURITY DEPOSIT: None
(K) BROKER: None
(L) PERMITTED USE: General Office Purposes
(M) ADDRESS FOR PAYMENTS AND NOTICES AS FOLLOWS:
<PAGE>
Landlord: College Park Plaza, LLC Tenant: Bindley Western Industries, Inc.
- -------- ------
800 Newport Center Drive, 8909 Purdue Road
Suite 300 Indianapolis, Indiana 46268
Newport Beach, California
92660
Attn: David Hubbs Attn: Michael D. McCormick
and Scott D. Teets
Phone: (949) 721-5000 Phone: (317) 704-4223
Fax: (949) 721-5089 Fax: (317) 704-4603
(N) ADDITIONAL PROVISIONS ARE SET FORTH IN ARTICLE 16: Sections 16.01
through 16.06.
ARTICLE 2
Lease Term
Section 2.01. Term. The term of this Lease shall be for the period
-----
specified in Item F of Section 1.02 ("Original Term"). "Lease Term", when used
in this Lease, shall include the Original Term and any renewal term.
Section 2.02. Condition of Premises. Notwithstanding anything herein to
----------------------
the contrary, Tenant agrees to accept the Leased Premises in its present, "as-
is" condition. Tenant acknowledges that no representations as to the repair or
condition of the Leased Premises have been made by Landlord. Tenant waives any
implied warranty that the Leased Premises are suitable for Tenant's intended
purposes. Except as otherwise provided herein, in no event shall Landlord have
any obligation for any defects in the Leased Premises or any limitation on its
use. The taking of possession by Tenant shall be conclusive to establish that
the Leased Premises are in good and satisfactory condition when possession is
taken.
ARTICLE 3
Occupancy and Use
Section 3.01. Occupancy and Use. Tenant shall use and occupy the Leased
------------------
Premises for the purposes as set out in Item L of Section 1.02, and for no other
purposes except with the prior written consent of the Landlord. Tenant shall use
the Leased Premises for no unlawful purpose or act; shall commit or permit no
waste or damage to the Leased Premises; shall comply with and obey all
reasonable directions of the Landlord, including Rules and Regulations
promulgated for all tenants of the Building which are adopted, changed or
modified from time to time by Landlord upon reasonable notice to Tenant, all of
which are and will be a part of this Lease as Exhibit C; shall not do or
---------
permit anything to be done in or about the Leased Premises which will in any way
obstruct or interfere with the rights of other tenants or occupants of the
Building or injure or annoy them, and shall not do or permit anything to be done
which will increase the rate of fire insurance upon the Building.
Tenant, at its expense, shall comply with all laws, rules, regulations,
ordinances or orders of Federal, State, County and Municipal authorities having
jurisdiction, and with any lawful direction of any public officer or officers,
which shall impose any duty upon Landlord or Tenant
<PAGE>
with respect to the Leased Premises, or the use, occupation or alteration
thereof, provided such duty arises from or results from Tenant's failure to
comply with Tenant's covenants in this Lease or from Tenant's negligence or from
the use of the Leased Premises in a manner contrary to the purposes for which
the same are leased to Tenant.
Section 3.02. Landlord's Rights Regarding Use. In addition to the rights
--------------------------------
specified elsewhere in this Lease, Landlord shall have the following rights
regarding the use of the Leased Premises and common areas by Tenant, its
employees, agents, customers and invitees, which may be exercised without notice
or liability to Tenant, to install such signs, notices or Tenant identification
information on the directory board, or Tenant access doors it shall deem
appropriate; to grant any tenant exclusive right to conduct any business or
render service in the Building, provided that such exclusive right shall not in
any way operate to limit Tenant from using the Leased Premises for the permitted
use as outlined in Item L of Section 1.02; and to control the Common Areas in
such a manner as the Landlord reasonably deems necessary and proper including,
but not limited to, requiring all persons entering or leaving the Building to
identify themselves to security guards; excluding or expelling peddlers,
solicitors or loud or unruly persons from the Building; and closing and limiting
access to the Building or other part thereof, including entrances, corridors,
doors, elevators, during times of emergencies, or repairs.
Section 3.03. Access to Leased Premises. Landlord reserves the right to
--------------------------
enter the Leased Premises to inspect the same, to alter, improve, remodel or
repair the Leased Premises or any portion of the real estate of which the Leased
Premises are a part, without abatement of rent, provided that Tenant is given
reasonable advance notice and is present at the time of entry, provided no
advance notice or Tenant presence shall be necessary for entry in an emergency.
Landlord shall upon similar advance notice to Tenant also have the right to
enter the Leased Premises during Tenant's normal business hours, and to show the
same to prospective purchasers, mortgagees and tenants. In addition, during the
final six (6) months of this Lease or any renewal term, Landlord may place on
the Leased Premises where appropriate the usual notices "For Lease" or "For
Sale" or other similar notices which Tenant shall permit to remain without
molestation.
Section 3.04. Surrender of Leased Premises. At the end of the Lease Term
-----------------------------
or other sooner termination of this Lease, Tenant will peaceably deliver up to
the Landlord possession of the Leased Premises, together with all improvements
or additions upon or belonging to the same, by whomsoever made, in the same
condition as received, or first installed, ordinary wear and tear, condemnation,
damage by fire, earthquake, Act of God or the elements and matters which are
Landlord's obligations excepted. Upon the termination of this Lease, Tenant
shall at Tenant's sole cost, remove all counter, trade fixtures, office
furniture and equipment installed by Tenant unless otherwise agreed to in
writing by Landlord. Tenant shall also repair any damage caused by such removal.
Property not so removed shall be deemed abandoned at the termination of this
Lease by Tenant and title to the same shall thereupon pass to Landlord. Tenant
shall indemnify Landlord against any loss or liability resulting from delay by
Tenant in so surrendering the Leased Premises, including without limitation, any
claims made by any succeeding Tenant founded on such delay.
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Section 3.05. Holding Over. In the event Tenant remains in possession of
-------------
the Leased Premises or any part thereof without the consent of Landlord after
the expiration or earlier termination of this Lease, Tenant shall be deemed to
hold the Leased Premises as a tenant on a month-to-month basis subject to all of
the terms, conditions, covenants and provisions of this Lease (which shall be
applicable during the holdover period), except that Tenant shall pay to Landlord
monthly rent in the amount of 150% of the last Monthly Rental Installment plus
Excess Operating Costs (hereinafter defined), which rent shall be payable to
Landlord on the first day of each calendar month. No holding over by Tenant,
whether with or without the consent of Landlord, shall operate to extend this
Lease except as otherwise expressly provided herein.
ARTICLE 4
Rent
Section 4.01. Components of Rent. Tenant hereby agrees to pay to Landlord
-------------------
as rent for the Leased Premises an amount composed of the aggregate of the
components of rent hereinafter identified and defined as "Basic Annual Rent" and
Tenant's share of "Excess Operating Costs". The aggregate of all such rentals
may be referred to hereinafter as "Rental". The annual Rental shall be due and
payable in twelve (12) equal installments on the first day of each calendar
month during the term of this Lease. Tenant hereby agrees to pay the monthly
Rental installments to Landlord at the address provided in Item M Section 1.02
of this Lease or at such other location as Landlord may designate from time to
time, in advance without demand and without any deduction, abatement,
counterclaim or set off. In the event of a partial month at the beginning or end
of the Term, the Rental and any other charges or costs, payable by Tenant shall
be prorated on the basis of a thirty (30) day month. Any portion of the monthly
Rental installments not paid within five days of the date due bears a
delinquency charge equal to five percent (5%) of the amount of the Rental due
and unpaid multiplied by the number of months or fraction thereof, during which
time such Rental remains overdue. All Rental and other charges payable by Tenant
pursuant to the terms of this Lease shall be payable without relief from
valuation and appraisement laws, and with reasonable attorneys' fees and costs
of collection.
Section 4.02. Basic Annual Rent. Tenant hereby agrees to pay Basic Rent
------------------
for Leased Premises in the amount specified in Item D, Section 1.02 of this
Lease, payable in advance in equal consecutive monthly installments, on or
before the first day of each month during the Lease Term.
Section 4.03. Excess Operating Cost. Tenant shall pay as additional rental
----------------------
each calendar year its pro rata share of the reasonable operating costs that are
in excess of Landlord's Share of Operating Costs as specified in Item E, Section
1.02 of this Lease ("Excess Operating Costs"). "Operating Costs", as that term
is used herein, shall consist of all costs and expenses, excluding all property
taxes as well as costs associated with the payment of property taxes, incurred
by Landlord to maintain all facilities used in the operation of the Building and
its environs as may be determined by Landlord to be necessary. All operating
costs shall be determined in accordance with generally accepted accounting
principles which shall be consistently applied, and shall be
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<PAGE>
annualized in new or refurbished structures that commence operation during a
calendar year, by dividing the total costs by the number of months the structure
is in operation, and multiplying that result by twelve (12). Except to the
extent herein otherwise provided, the term "operating costs" as used herein
shall mean all costs and expenses (but not specific costs which are separately
billed to and paid or reimbursed by specific tenants) of every kind and nature
which Landlord shall pay, become obligated to pay, or would have paid or
incurred if the Building had been ninety-five percent (95%) occupied, because
of, or in connection with the operation of the Building, including, but not
limited to, the following:
(A) Wages, salaries, fringe benefit costs, payroll taxes, unemployment
compensation payments, workmen's compensation insurance premiums and other
related costs of all on-site and off-site employees engaged in the operation,
maintenance and security of the Building; costs of building employee uniforms
and cleaning thereof; the cost of fair rental value of a Building Management
Office in the Building; and the management fees payable by Landlord (excluding
brokerage commission for leasing) for management of the Building.
(B) All labor, supplies and materials used in the operation, cleaning and
maintenance of the Building and all of its machinery and equipment.
(C) Cost of all utilities, including water, sewer, gas, steam, electric
fuel adjustment charges, sewer use charges and utility taxes incurred by
Landlord during the operation of the Building.
(D) Cost of all management, maintenance and service agreements of the
Building and the equipment therein, including, without limitation, alarm
service, trash removal and window cleaning and maintenance.
(E) Accounting costs, including the costs of audits by certified public
accountants, pertaining to the management and operation of the Building.
(F) Cost of all insurance, including without limitation, fire, casualty,
liability and rental abatement insurance applicable to the Building and
Landlord's personal property used in connection with the operation and
maintenance of the Building.
(G) Cost of repairs and general maintenance of the Building and each part
thereof (excluding repairs, replacements and general maintenance paid by
proceeds of insurance or by Tenant or other third parties, and alterations
attributable solely to other tenants of the Building).
(H) Snow removal, landscaping and any and all other common area
maintenance costs related to Common Areas, including sidewalks and landscaping
on the Building site.
(I) Amortization of capital improvements made to the Building subsequent
to the Commencement Date of the Lease which may be required by governmental
authorities, or which
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<PAGE>
may improve the operating efficiency of the Building from Landlord's efforts to
reduce operating costs. However, this does not include improvements or repairs
made in connection with Landlord's violation or alleged violation of applicable
laws or regulations, including but not limited to the Americans with
Disabilities Act of 1990, as amended except to the extent that any alterations
or improvements made by or requested by Tenant cause such violation or alleged
violation or that such violation or alleged violation is based on a condition
existing on the date hereof.
Operating Costs shall not include expenses incurred by Landlord with regard
to: (i) replacement of the roof, foundation or structure of the Building, or
restoration or repair of any damage by fire, windstorm or other casualty to the
extent such causes are covered by the types of insurance required to be
maintained by Landlord hereunder; (ii) repairs, replacement or maintenance
incurred as a result of the negligence or misconduct of Landlord, its agents or
employees, or other tenants of the Building; (iii) expenses incurred at the
request of a specific tenant which benefit only that tenant; (iv) any
depreciation allowance or charge in respect to any capital improvements, except
as otherwise specifically provided in this Lease; (v) expenses incurred in
leasing or procuring tenants; (vi) legal expenses or costs incidental to any
disputes or negotiations with tenants or mortgagees; (vii) interest or principal
payments (or late charges, fees or premiums) on any mortgage or other similar
indebtedness of Landlord; or (viii) any cost billed to and paid directly or
reimbursed by a tenant, or for which Landlord is otherwise reimbursed in any
manner, other than by proportionate payments of tenants as provided for in all
tenants' leases.
The amortization of any cost-saving capital improvements shall be done on a
straight line basis, using the reasonably estimated useful life or the
approximate annual cost savings of the cost-saving capital improvements, and the
annual amortization amount included in Operating Expenses (including any
interest charge) on account of any such cost-saving improvement shall not exceed
the amount of the annual cost savings resulting therefrom, as certified in
connection with each annual Operating Expense statement in which any such annual
amortization charge shall be included.
Section 4.04. Estimated Excess Operating Cost. Landlord shall estimate
--------------------------------
the Excess Operating Costs annually, and written notice thereof shall be given
to Tenant prior to, or within a reasonable time after, the beginning of each
calendar year. Tenant shall pay its share of the Estimated Excess Operating
Costs in twelve (12) equal monthly installments payable on the first day of each
month as part of the Rental. On the expiration or earlier termination of the
Lease Term, Landlord shall have the right to adjust the Estimated Excess
Operating Cost based on year to date information, with Tenant to pay Landlord or
Landlord to pay Tenant, within fifteen (15) days after receipt of notice
thereof, any increase or decrease in the estimate attributable to the period
before the Lease Term expiration. Within sixty (60) calendar days after the end
of each calendar year, even in cases where the Lease terminated in the prior
year, Landlord shall render to Tenant a statement showing the actual Excess
Operating Cost for Landlord's operation of the Building during the prior
calendar year, setting forth a computation of Tenant's share of the Excess
Operating Cost for the portion of the year covered by the Lease Term. Within
fifteen (15)
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<PAGE>
days after receipt of said statement, Tenant shall pay Landlord, or Landlord
shall credit or pay to Tenant, as the case may be, the difference between the
actual Excess Operating Costs for the preceding calendar year and the Estimated
Excess Operating Costs paid by Tenant during such year.
Section 4.05. Tenant Verification. Tenant or its designated agents shall
--------------------
have the right to inspect, at reasonable times and in a reasonable manner,
during the ninety (90) day period following the delivery of Landlord's statement
of the actual amount of Operating Costs, such of Landlord's books of account and
records as pertain to and contain information concerning such costs and expenses
in order to verify the amounts thereof. Where the audit discloses errors
resulting in an overcharge to Tenant of more than five percent (5%), Landlord
shall pay for such audit and, if the audit discloses errors resulting in an
overcharge equal to or less than five percent (5%) of the Operating Costs,
Tenant shall pay the costs of the audit. If Tenant shall not elect to cause an
audit within the time period permitted hereby, then Landlord's statement shall
be conclusively deemed to have been approved and accepted by Tenant.
Section 4.06. Property Taxes. Tenant shall pay as additional rental each
---------------
calendar year 42.32% of the Taxes, less the credit for tax abatement. "Taxes,"
as that term is used herein, shall consist of all taxes, tax appeal costs,
expenses and fees, service payments in lieu of taxes, assessments, excises,
levies, fees or charges, general and special, ordinary and extraordinary,
unforeseen as well as foreseen, of any kind which are assessed, levied, charged,
confirmed, or imposed by any public authority upon the Building, personal
property owned or used in connection with the operation of the Building or upon
its operations or the rent provided for in this Lease and payable during the
term of this Lease, but excluding any income taxes upon Landlord's rental
receipts. It is agreed that Tenant will be responsible for the ad valorem taxes
on its own personal property, in or about the Building, and on the value of any
leasehold improvements to the Leased Premises made by Tenant. The amount of any
tax abatement previously granted to Tenant shall be credited in full to Tenant.
Section 4.07. Security Deposit. None.
-----------------
ARTICLE 5
Utility and Other Building Services
Section 5.01. Services to be Provided. Landlord shall furnish to Tenant,
------------------------
except as noted below, the following utilities and other building services to
the extent reasonably necessary for Tenant's comfortable use and occupancy of
the Leased Premises for general office use or as may be required by law or
directed by governmental authority:
(A) Heating, ventilation and air-conditioning ("HVAC") between the hours
of 7:00 a.m. and 6:00 p.m. Monday through Friday and 8:00 a.m. to 12:00 p.m. on
Saturday of each week except on legal holidays, and HVAC twenty-four (24) hours
per day, seven days a week for the computer room located on the fourth floor of
the Leased Premises.
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<PAGE>
(B) Subject to interruptions beyond Landlord's control, electrical current
not to exceed seven (7) watts per square foot, excluding HVAC. At all times,
Tenant's use of electric current shall never exceed the capacity of the feeders
to the Building or the risers or wiring installation.
(C) Water in the Common Areas and Leased Premises for lavatory and
drinking purposes.
(D) Automatic elevator service.
(E) Cleaning and janitorial service in the Leased Premises and the Common
Areas, including the supplying and installing of paper towels, toilet tissue and
soap in the Common Areas Monday through Friday of each week except legal
holidays.
(F) Washing of windows at intervals reasonably established by Landlord.
(G) Replacement of all lamps, bulbs, starters and ballasts in Building
standard lighting as required from time to time as a result of normal usage.
(H) Cleaning and maintenance of the Common Areas, including the removal of
rubbish and snow.
(I) Except as otherwise specified in this Lease, repair and maintenance of
the Leased Premises, and Building.
(J) Access to the Leased Premises twenty-four (24) hours a day, seven days
per week.
and
(K) Security for the Building and Leased Premises.
Section 5.02. Additional Services. If Tenant requests any other utilities
--------------------
or building services in addition to those identified above or any of the above
utilities or building services in frequency, scope, quality or quantity
substantially greater than those which Landlord reasonably determines are
normally required by other tenants in the Building for general office use, then
Landlord shall use reasonable efforts to attempt to furnish Tenant with such
additional utilities or building services. In the event Landlord is able to and
does furnish such additional utilities or building services, the costs thereof
shall be borne by Tenant, who shall reimburse Landlord monthly for the same as
additional rent at the same time Monthly Rental Installments and other Rental is
due.
If any lights, machines or equipment (including but not limited to
computers) used by Tenant in the Leased Premises materially affect the
temperature otherwise maintained by the Building's air-conditioning system or
generate substantially more heat in the Leased Premises than that which would
normally be generated by the lights and business machines typically used by
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<PAGE>
other tenants in the Building or by tenants in comparable office buildings, then
Landlord shall have the right to install any machinery or equipment, which
Landlord considers reasonably necessary in order to restore the temperature
balance between the Leased Premises and the rest of the Building, including
equipment which modifies the Building's air-conditioning system. All costs
expended by Landlord to install any such machinery and equipment and any
additional costs of operation and maintenance occasioned thereby shall be borne
by Tenant, who shall reimburse Landlord for the same.
Other than equipment of the type located in the Leased Premises on the date
hereof, Tenant shall not install or connect any electrical equipment other than
the business machines and equipment typically used for general office purposes
by tenants in office buildings comparable to the Building (a computer not being
an example of such a typical business machine with the exception of personal
computers and word processors) without Landlord's prior written consent. If
Landlord determines that the electricity used by the equipment to be so
installed or connected exceeds the designed load capacity of the Building's
electrical system or is in any way incompatible therewith, then Landlord shall
have the right, as a condition to granting its consent, to make such
modifications to the electrical system or other parts of the Building or Leased
Premises, or to require Tenant to make such modifications to the equipment to be
installed or connected, as Landlord considers to be reasonably necessary before
such equipment may be so installed or connected. The cost of any such
modifications shall be borne by Tenant, who shall reimburse Landlord for the
same (or any portion thereof paid by Landlord).
Section 5.03. Interruption of Services. Tenant understands, acknowledges
-------------------------
and agrees that any one or more of the utilities or other building services
identified in Section 5.01 may be interrupted by reason of accident, emergency
or other causes beyond Landlord's control, or may be discontinued or diminished
temporarily by Landlord or other persons until certain repairs, alterations or
improvements can be made; that Landlord does not represent or warrant that the
availability and capacity of such utilities or building services shall continue
uninterrupted and unchanged, and that any such interruption or change shall not
be deemed an eviction or disturbance of Tenant's right to possession, occupancy
and use of the Leased Premises.
Section 5.04. Commercially Reasonable Efforts to Restore Services.
----------------------------------------------------
Notwithstanding anything in this Lease to the contrary, Landlord shall use
commercially reasonable efforts to promptly restore utility service, and in the
event restoration of service is within Landlord's control and Landlord fails to
restore such service, thereby causing all or a portion of the Leased Premises to
be rendered untenantable (meaning that Tenant is unable to use such space in the
normal course of its business) by Tenant for the use permitted under this Lease
for more then three (3) consecutive business days after notice from Tenant to
Landlord that such service has been interrupted, "Basic Annual Rent" and
Tenant's share of "Excess Operating Costs" shall be abated on a per diem basis
in the proportion which the untenantable portion of the Leased Premises bears to
the total area of the Leased Premises for each day after such three (3) business
day period during which all or a portion of the Leased Premises remain
untenantable.
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<PAGE>
ARTICLE 6
Repairs, Maintenance, Alterations,
Improvements and Fixtures
Section 6.01. Repair and Maintenance of Building. Subject to Section 6.02
-----------------------------------
and except for repairs necessitated by the negligence, misuse or default of
Tenant, its employees, agents, customers and invitees and not covered by
insurance, Landlord shall make all necessary repairs to the roof, exterior
walls, exterior doors, windows, corridors and other Common Areas of the
Building, shall keep the Building in a safe, clean and neat condition, and shall
keep all equipment used in common with other tenants such as elevators,
plumbing, heating, air conditioning and similar equipment, in good condition and
repair. Except as provided in Article 7 hereof, there shall be no abatement of
rent and no liability of Landlord by reason of any injury to or interference
with Tenant's business arising from the making of any repairs, alterations or
improvements in or to any portion of the Building or the Leased Premises or in
or to any fixtures, appurtenances and equipment therein or thereon.
Section 6.02. Repair and Maintenance of Leased Premises. Except for any
------------------------------------------
repairs necessitated by the negligence, misuse or default of Landlord, its
employees, agents, customers and invitees (other than Tenant), Tenant shall keep
and maintain the Leased Premises in good order, condition and repair. Except for
the services specified in Section 5.01, and except for ordinary wear and tear
and damage which Tenant is not obligated to repair as provided elsewhere in this
Lease, the cost of all reasonable repairs and maintenance to the Leased Premises
shall be borne by Tenant, who shall be separately billed and shall reimburse
Landlord for the same as additional rent.
Section 6.03. Alterations or Improvements. Upon prior written consent
----------------------------
from Landlord which shall not be unreasonably delayed, conditioned or withheld,
alterations or improvements may be made to the Leased Premises; provided
however, such alterations or improvements shall be made by Landlord, or
contractors approved by Landlord. All costs attributable to said alterations or
improvements shall be borne by Tenant, including but not limited to all
construction costs, fees, architectural costs, permit fees, and attorney fees.
Any alterations or improvements to the Leased Premises, except movable office
furniture, equipment and trade fixtures, shall become part of the realty and be
the property of Landlord, and shall not be removed by Tenant.
Section 6.04. Trade Fixtures. Any trade fixtures installed on the Leased
---------------
Premises by Tenant at its own expense, such as movable partitions, counters,
shelving, showcases, mirrors and the like shall, at the request of Landlord, be
removed on the expiration or earlier termination of this Lease, provided that
Tenant is not then in default, that Tenant bears the cost of such removal, and
further that Tenant repairs at its own expense any and all damages to the Leased
Premises resulting from such removal. If Tenant fails to remove any and all such
trade fixtures from the Leased Premises within a reasonable time following the
expiration or earlier termination of this Lease, all such trade fixtures shall
become the property of Landlord unless Landlord elects to
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<PAGE>
require their removal. In which case Tenant shall, at its expense, promptly
remove the same and restore the Leased Premises to their prior condition.
Section 6.05. Tenant's Access to Roof. (a) Grant of License. Landlord
------------------------
hereby grants to Tenant for the term of this Lease (including any option
periods) a license to use, operate, maintain and replace, all at Tenant's sole
cost and expense, on the roof of the Building in their present location the air
conditioning units, satellite dishes, Liebert units and communication equipment
(each piece, a "Satellite Dish") presently located on the roof of the Building.
If Tenant desires to install any new Satellite Dish (being an additional
Satellite Dish, not a replacement of an existing Satellite Dish, the location,
dimension, size and appearance shall be subject to Landlord's approval in its
sole discretion.
(b) Installation and Use. Before commencing installation of any new
Satellite Dish, Tenant shall submit to Landlord for Landlord's approval, which
shall not be withheld or delayed unreasonably, a form describing the dimensions
and appearance of the Satellite Dish, its proposed mounting method, point of
entry to the Building and cable route (the "Installation Approval Form").
Landlord shall approve or disapprove any aspect of the Satellite Dish within ten
(10) business days of receiving the Installation Approval Form. Once approved by
Landlord (as evidenced by Landlord's signature on the Installation Approval
Form), all work by Tenant (subject to Landlord's approval of the contractor
completing the installation) shall be in strict accordance with the Installation
Approval Form. Any modifications to the work set forth on the Installation
Approval Form must be approved by Landlord in writing. Landlord may impose such
requirements as to color and/or architectural treatment to mask said
installation to Landlord's reasonable satisfaction. The new Satellite Dish and
all supporting frames and structures shall be painted in a color of Landlord's
choice and shall bear no advertising material or wording of any sort (other than
the manufacturer's name and/or logo). The new Satellite Dish and supporting
framework or structure and cabling for such Satellite Dish and ancillary
equipment shall be installed in a good and workmanlike manner. Tenant shall use
commercially reasonable efforts to take all necessary precautions so that its
equipment and the installation and maintenance of the same will (i) in no way
damage the Building or existing structures thereon; (ii) not interfere with the
maintenance of the Building HVAC system, lighting system, the parking area, or
any other system of the Building; (iii) as to any new Satellite Dish only, not
interfere with the operation of any existing satellite, radio, microwave or
other communications equipment of Landlord or any other tenant of the Building,
or in the event there is such an interference, Tenant will take all appropriate
necessary steps in order to promptly correct and thereby eliminate such
interference; and (iv) comply with all applicable rules and regulations of all
governmental agencies having jurisdiction over such equipment, and the operation
and maintenance of the same. Any Satellite Dish will be used exclusively by
Tenant in connection with Tenant's own main business purposes and shall be
removed by Tenant (at its sole cost and expense) upon the termination of the
Lease.
(c) Approvals. Tenant shall obtain any and all licenses and approvals
required by federal, state or municipal authorities with respect to the
installation or operation of any Satellite Dish and shall provide evidence
thereof to Landlord. Landlord shall cooperate with
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<PAGE>
Tenant in obtaining such licenses and approvals; Tenant, however, shall
reimburse Landlord for any and a ll reasonable costs incurred in connection
therewith.
(d) Indemnification. To the fullest extent permitted by law, Tenant
shall indemnify, protect, defend and hold harmless Landlord, its agents and
employees, from and against any and all actions, causes of action, claims,
liabilities, losses, damages, fines, penalties and expenses (including but not
limited to reasonable attorneys' fees, court costs and litigation expenses,
including expert costs and costs of investigation), whether threatened or
actual, direct or indirect, caused by, arising out of, resulting from or related
to the installation, operation, maintenance or removal of any Satellite Dish and
any supporting framework or structure or other equipment in the area of any
Satellite Dish or in the conduit for the cable connecting any Satellite Dish and
the Leased Premises.
(e) Scope of License. The license granted hereunder is non-exclusive;
accordingly, Landlord shall continue to have the right to grant similar licenses
or rights to other tenants of the Building in Landlord's sole discretion, so
long as the granting of such licenses or rights does not adversely affect the
operation of any Satellite Dish existing on the date hereof or any replacement
thereof. Tenant specifically understands and agrees that its license and rights
contained in this paragraph are personal to Bindley Western Industries, Inc.
Section 6.06. Right to Change Common Areas of the Building. At any time
--------------------------------------------
after the completion of the Building, Landlord shall have the right to change
the arrangement or location of such of the following as are not contained within
the Leased Premises or any part thereof: entrances, passageways, doors and
doorways, corridors, stairs, toilets and other like public service portions of
the Building; provided, however, that in no event shall Landlord change the
arrangement or location of the elevators serving the Leased Premises, make any
change which shall diminish the area of the Leased Premises including the Common
Areas, make any change to the number of parking spaces (including reserved
parking spaces) available to Tenant, make any change which shall interfere with
the access to the Leased Premises from and through the Building, or change the
character of the Building from that of a first-class office building.
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ARTICLE 7
Fire or Other Casualty; Eminent Domain
Section 7.01. Substantial Destruction of the Building or the Leased
-----------------------------------------------------
Premises. If either the Building or the Leased Premises should be substantially
- ---------
destroyed or damaged (which as used herein, means destruction or material damage
to at least 50% of the Building or 50% of the Leased Premises) by fire or other
casualty, then Landlord or Tenant may, at its option, terminate this Lease by
giving written notice of such termination to the other party within thirty (30)
days after the date of such casualty. In addition, Landlord may terminate this
Lease within sixty (60) days of the date of such casualty if Landlord shall
determine that sufficient insurance proceeds to complete such reconstruction and
repair are not available to Landlord, provided that Landlord shall not have such
right to terminate if the insufficiency of insurance proceeds is a result of
Landlord's failure to maintain insurance as required by this Lease. In the event
of such termination, Rental shall cease as of the date of such casualty. If
neither party exercises its option, then the Leased Premises shall be
reconstructed and restored, at Landlord's expense, to substantially the same
condition as existed prior to the casualty within not more than 270 days of the
date of substantial destruction; provided however, that Landlord's obligation
hereunder shall be limited to the reconstruction of the Leased Premises to its
condition on the date of commencement of the Lease Term; and further provided
that if Tenant has made any additional improvements pursuant to Section 6.03,
Tenant shall reimburse Landlord for the cost of reconstructing the same if
Tenant desires such reconstruction. Landlord shall use reasonable diligence in
completing such reconstruction repairs, but in the event Landlord fails to
complete the same within 270 days from the date of the casualty, Tenant may, at
its option, terminate this Lease by giving Landlord written notice of such
termination, whereupon both parties shall be released from all further
obligations and liability hereunder; provided, however, Tenant's termination
notice shall be null and void if Landlord completes the reconstruction and
repair within thirty (30) days following such notice. In the event of such
reconstruction, Rental shall be abated from the date of the casualty until
substantial completion of the reconstruction repairs; and this Lease shall
continue in full force and effect for the balance of the Lease Term.
Section 7.02. Partial Destruction of the Leased Premises. If the Leased
-------------------------------------------
Premises should be damaged by fire or other casualty, but not substantially
destroyed or damaged to the extent provided in Section 7.01, then such damaged
part of the Leased Premises shall be reconstructed and restored, at Landlord's
expense, to substantially the same condition as existed prior to the casualty;
provided however, that Landlord's obligation hereunder shall be limited to the
reconstruction of the Leased Premises to its condition on the date of
commencement of the Lease Term; and further provided that if Tenant has made any
additional improvements pursuant to Section 6.03, Tenant shall reimburse
Landlord for the cost of reconstructing the same if Tenant desires such
reconstruction. In addition, Landlord may terminate this Lease within sixty (60)
days of the date of such casualty if Landlord shall determine that sufficient
insurance proceeds to complete such reconstruction and repair are not available
to Landlord, provided that Landlord shall not have such right to terminate if
the insufficiency of insurance proceeds is a result of Landlord's failure to
maintain insurance as required by this Lease. In such event, if the damage is
expected to prevent Tenant from carrying on its business in the Leased Premises
to any extent,
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Rental shall be abated in the proportion which the approximate area of the
damaged part bears to the total area in the Leased Premises from the date of the
casualty until substantial completion of the reconstruction repairs; and this
Lease shall continue in full force and effect for the balance of the Lease Term.
Landlord shall use reasonable diligence in completing such reconstruction
repairs, but in the event Landlord fails to complete the same within 180 days
from the date of the casualty, Tenant may, at its option, terminate this Lease
by giving Landlord written notice of such termination, whereupon both parties
shall be released from all further obligations and liability hereunder;
provided, however, Tenant's termination notice shall be null and void if
Landlord completes the reconstruction and repair within thirty (30) days
following such notice.
Section 7.03. Eminent Domain. If the whole or any part of the Leased
---------------
Premises or Common Areas shall be taken for public or quasi-public use by a
governmental or other authority having the power of eminent domain or shall be
conveyed to such authority in lieu of such taking, and if such taking or
conveyance shall cause the remaining part of the Leased Premises to be
untenantable or inadequate for use by Tenant for the purpose for which they were
leased, then either Landlord or Tenant may, at their respective option,
terminate this Lease as of the date Tenant is required to surrender possession
of the Leased Premises or use of the Common Areas by giving written notice of
such termination to the other party. If a part of the Leased Premises shall be
taken or conveyed but the remaining part is adequate for Tenant's use, then this
Lease shall be terminated as to the part taken or conveyed as of the date Tenant
surrenders possession; Landlord shall make such repairs, alterations or
improvements as may be necessary to render the part not taken or conveyed
tenantable; and Rental shall be reduced in proportion to the part of the Leased
Premises so taken or conveyed. If Landlord elects to restore the Leased Premises
or the Building, such restoration shall be complete within one hundred and
twenty (120) days of the condemnation or taking. Failing such timely completion,
Tenant may terminate this Lease upon ten (10) days' written notice to Landlord.
All such repairs and restoration shall be made in a good and workmanlike manner,
and in compliance with all laws. All compensation awarded for such taking or
conveyance shall be the property of Landlord without any deduction therefrom for
any present or future estate of Tenant, and Tenant hereby assigns to Landlord
all its right, title and interest in and to any such award. However, Tenant
shall have the right to recover from such authority, but not from Landlord, such
compensation as may be awarded to Tenant on account of moving and relocation
expenses and depreciation to and removal of Tenant's property.
ARTICLE 8
Insurance
Section 8.01. Landlord's Insurance. Landlord shall at all times during the
---------------------
Lease Term carry, at its expense, a policy of insurance which insures the
Building, including the Leased Premises, against loss or damage by fire or other
casualty (namely, the perils against which insurance is afforded by a standard
fire insurance policy and extended coverage endorsement) for the full
replacement value of the Building; provided, however, that Landlord shall not be
responsible for, and shall not be obligated to insure against, any loss of or
damage to any personal property of Tenant or which Tenant may have in the
Building or the Leased Premises or any trade
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fixtures installed by or paid for by the Tenant on the Leased Premises or any
additional improvements which Tenant may construct on the Leased Premises, and
Landlord shall not be liable for any loss or damage to such property, regardless
of cause, including the negligence of Landlord and its employees, agents,
customer and invitees. If any alterations or improvements made by Tenant
pursuant to Section 6.03 result in an increase in the premiums charged during
the Lease Term on the casualty insurance carried by Landlord on the Building,
then the cost of such increase in insurance premiums shall be borne by Tenant,
who shall reimburse Landlord for the same as additional rent after being
separately billed therefor.
Landlord shall keep in full force and effect during the term of this Lease
public liability and property damage insurance in standard form with respect to
the Common Areas and the operation thereof having a minimum limit of combined
coverage of bodily injury and property damage of not less than Three Million
Dollars ($3,000,000). The limit of any such insurance shall not limit the
liability of Landlord hereunder. Such policies of insurance shall be issued by
an insurance company authorized to do business in the state in which the Leased
Premises are located for the issuance of such type of insurance coverage and
rated B+XIII or better in Best's Key Rating Guide.
Section 8.02. Landlord's Responsibility. Landlord shall assume the risk
--------------------------
of, be responsible for, have the obligation to insure against, and indemnify
Tenant and hold it harmless from, any and all liability for any loss of or
damage or injury to person (including death resulting therefrom) or property
(other than Tenant's property as provided in Section 8.01) occurring in, or
about the Common Areas, regardless of cause, and Landlord hereby releases Tenant
from any and all liability for the same. Landlord's obligation to indemnify
Tenant hereunder shall include the duty to defend against any claims asserted by
reason of such loss, damage or injury and to pay any judgment, settlements,
costs, fees and expenses, including attorneys' fees, incurred in connection
therewith.
Section 8.03. Tenant's Insurance. Tenant, in order to enable it to meet
-------------------
its obligation to insure against the liabilities specified in this Lease, shall
at all times during the Lease Term carry, at its own expense, for the protection
of Tenant, Landlord and Landlord's management agent, as their interest may
appear, one or more policies of general public liability and property damage
insurance, issued by one or more insurance companies acceptable to Landlord,
with the following minimum coverages:
(A) Workers' Compensation - The minimum statutory amount.
(B) Comprehensive General Liability - Not less than $1,000,000
Insurance including Blanket, Combined Single Limit for
Contractual Liability, Broad both bodily & property damage.
Form Property Damage, Personal
Injury, Completed Operations and
Product Liability
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(C) Fire and Extended Coverage, Vandalism and Malicious Mischief, and Sprinkler
Leakage insurance, for the full cost of replacement of Tenant's property.
Such insurance policy or policies shall name Landlord and Landlord's
management agent as additional insureds and shall provide that they may not be
canceled on less than thirty (30) days' prior written notice to Landlord. Tenant
shall furnish Landlord with Certificates of Insurance evidencing such coverage.
Should Tenant fail to carry such insurance and furnish Landlord with such
Certificates of Insurance after a request to do so, Landlord shall have the
right to obtain such insurance and collect the cost thereof from Tenant as
additional rent.
Section 8.04. Tenant's Responsibility. Tenant shall assume the risk of,
------------------------
be responsible for, have the obligation to insure against, and indemnify
Landlord and hold it harmless from any and all liability for any loss of or
damage or injury to any person (including death resulting therefrom) or property
occurring in, or about the Leased Premises, regardless of cause, except for any
loss or damage from fire or other casualty as provided in Section 8.01, and
Tenant hereby releases Landlord from any and all liability for the same.
Tenant's obligation to indemnify Landlord hereunder shall include the duty to
defend against any claims asserted by reason of such loss, damage or injury and
to pay any judgment, settlements, costs, fees and expenses, including attorneys'
fees, incurred in connection therewith. Notwithstanding anything herein to the
contrary, Tenant shall bear the risk of any loss or damage to its property.
Section 8.05. Waiver of Subrogation. Landlord and Tenant hereby release
----------------------
each other and each other's employees, agents, customers and invitees from any
and all liability for any loss of or damage or injury to person or property
occurring in, on or about or to the Leased Premises, the Building, the Common
Areas or personal property within the Building by reason of fire or other
casualty which could be insured against under a standard fire and extended
coverage insurance policy, regardless of cause, including negligence of Landlord
or Tenant and their respective employees, agents, customers and invitees, and
agree that such insurance carried by either of them shall contain a clause
whereby the insurer waives its right of subrogation against the other party.
Because the provisions of this Section 8.05 are intended to preclude the
assignment of any claim mentioned herein by way of subrogation or otherwise to
an insurer or any other person, each party to this Lease shall give to each
insurance company which has issued to it one or more policies of fire and
extended coverage insurance notice of the provisions of this Section 8.05 and
have such insurance policies properly endorsed, if necessary, to prevent the
invalidation of such insurance by reason of the provisions of this Section 8.05.
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ARTICLE 9
Liens
Section 9.01. Liens. If, because of any act or omission of Tenant or any
------
person claiming by, through, or under Tenant, any mechanic's lien or other lien
shall be filed against the Leased Premises or the Building or against other
property of Landlord (whether or not such lien is valid or enforceable as such),
Tenant shall, at its own expense, cause the same to be discharged of record or
bonded over within sixty (60) days after the date of filing thereof, and shall
also indemnify Landlord and hold it harmless from any and all claims, losses,
damages, judgments, settlements, costs and expenses, including attorneys' fees,
resulting therefrom or by reason thereof. Landlord may, but shall not be
obligated to, pay the claim upon which such lien is based so as to have such
lien released of record; and, if Landlord does so, then Tenant shall pay to
Landlord, as additional rent, upon demand, the amount of such claim, plus all
other costs and expenses incurred in connection therewith, plus interest thereon
at the rate of eighteen percent (18%) per annum until paid.
ARTICLE 10
Rental, Personal Property and Other Taxes
Section 10.01. Taxes. Tenant shall pay before delinquency any and all
------
taxes, assessments, fees or charges, including any property, sales, gross
income, rental, business occupation or other taxes, levied or imposed upon
Tenant's business operations in the Leased Premises and any personal property or
similar taxes levied or imposed upon Tenant's trade fixtures, leasehold
improvements or personal property located within the Leased Premises. In the
event any such taxes, assessments, fees or charges are charged to the account
of, or are levied or imposed upon the property of Landlord, Tenant shall
reimburse Landlord for the same as additional rent. Notwithstanding the
foregoing, Tenant shall have the right to contest in good faith any such item
and to defer payment until after Tenant's liability therefor is finally
determined.
If any tenant finish improvements, trade fixtures, alterations,
improvements or business machines and equipment located in or about the Leased
Premises, installed or paid for by Tenant, and whether or not they are affixed
to and become a part of the realty and the property of Landlord, are assessed
for real property tax purposes at a valuation higher than that at which other
such property in other leased space in the Building is assessed, then Tenant
shall reimburse Landlord as additional rent for the amount of real property
taxes shown on the appropriate county official's records as having been levied
upon the Building or other property of Landlord by reason of such excess
assessed valuation.
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ARTICLE 11
Assignment and Subletting
Section 11.01. Assignment and Subletting by Tenant. Tenant may not sell,
------------------------------------
assign, or mortgage this Lease or sublet the Leased Premises or any part
thereof, without the prior written consent of Landlord which shall not be
unreasonably withheld. In the event of a permitted assignment or subletting,
Tenant shall nevertheless at all times remain fully responsible and liable for
the payment of rent and the performance and observance of all of Tenant's other
obligations under the terms, conditions and covenants of this Lease. No
assignment or subletting of the Leased Premises or any part thereof shall be
binding upon Landlord unless such assignee or subtenant shall deliver to
Landlord an instrument containing an agreement of assumption of all Tenant's
obligations under this Lease. Upon the occurrence of an Event of Default, if all
or any part of the Leased Premises are then assigned or sublet, Landlord, in
addition to any other remedies provided by this Lease or by law, may, at its
option, collect directly from the assignee or subtenant all rent becoming due to
Landlord by reason of the assignment or subletting. Any collection by Landlord
from the assignee or subtenant shall not be construed to constitute a waiver or
release of Tenant from the further performance of its obligations under this
Lease or the making of a new lease with such assignee or subtenant.
Notwithstanding the foregoing, if Landlord shall be adjudged to have
unreasonably withheld consent to a proposed assignment or subletting, Tenant
shall be entitled to receive an amount from Landlord equal to the net present
value of the proposed sublease or assignment and all direct reasonable costs
incurred by Tenant in connection with the proposed sublease or assignment.
Section 11.02. Permitted Assignments. Notwithstanding anything to the
----------------------
contrary contained herein, Tenant shall have the right, upon ten (10) days'
prior written notice to Landlord, to (i) assign or sublet all or part of the
Leased Premises to any corporation or other entity which controls Tenant, is
controlled by Tenant, or is under common control with Tenant; or (ii) assign
this Lease to a successor corporation or other entity into which or with which
Tenant is merged or consolidated or which acquired substantially all of Tenant's
assets and property; provided that such successor corporation assumes
substantially all of the obligations and liabilities of Tenant and shall have
assets, capitalization and net worth at least equal to the assets,
capitalization and net worth of Tenant as of the date of this Lease as
determined by generally accepted accounting principles.
Section 11.03. Assignment with Consent. Upon Landlord's consent to any
-----------------------
Transfer (meaning any transfer, sale, assignment, or subletting), Tenant shall
pay and continue to pay fifty percent (50%) of any "Transfer Premium" (defined
below), received by Tenant from the transferee. "Transfer Premium" shall mean
all rent, additional rent or other consideration payable by a Transferee in
connection with a Transfer in excess of the rent payable by Tenant under this
Lease during the term of the Transfer in excess of the rent payable by Tenant
under this Lease during the term of the Transfer and if such Transfer is less
than all of the Leased Premises, the Transfer Premium shall be calculated on a
rentable square foot basis after deducting the reasonable expenses incurred by
Tenant for (i) any changes, alterations and improvements to the Leased
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Premises paid for by Tenant in connection with the Transfer; (ii) any other out-
of-pocket monetary concessions provided by Tenant to the transferee, and (iii)
any brokerage commissions paid for by Tenant in connection with such Transfer.
ARTICLE 12
Transfer by Landlord
Section 12.01. Sale and Conveyance of the Building. Landlord shall have
------------------------------------
the right to sell and convey the Building at any time during the Lease Term,
subject only to the rights of Tenant hereunder; and such sale and conveyance
shall operate to release Landlord from liability hereunder after the date of
such conveyance as provided in Section 13.08.
Section 12.02. Subordination. Landlord shall have the right to
--------------
subordinate this Lease to any mortgage presently existing or hereafter placed
upon the Building by so declaring in such mortgage provided that the mortgagee
or lender enters into a non-disturbance agreement with Tenant. Tenant shall, at
Landlord's request, execute and deliver to Landlord, without cost, any
instrument which may reasonably be deemed necessary or desirable by Landlord to
confirm the subordination of this Lease and an Estoppel Certificate in the form
required by Landlord, and as provided in Section 15.11 of this Lease; and, if
Tenant fails or refuses to do so, Landlord may execute such instrument in the
name and as the act of Tenant. Notwithstanding the foregoing, no default by
Landlord under any such mortgage shall affect Tenant's rights hereunder so long
as Tenant is not in default under this Lease. Tenant shall, in the event any
proceedings are brought for the foreclosure of any such mortgage, attorn to the
purchaser upon any such foreclosure and recognize such purchaser as the Landlord
under this Lease, provided such purchaser shall accept such responsibilities of
the landlord hereunder.
ARTICLE 13
Defaults and Remedies
Section 13.01. Defaults by Tenants. Each of the following events shall be
--------------------
an "Event of Default" hereunder:
(A) Failure of Tenant to pay any installment of rent or any other payment
required herein when due, and such failure shall continue for a period of three
(3) business days after receipt of written notice from Landlord that said
payment is due;
(B) Failure to observe or perform one or more of the other terms,
conditions, covenants, or agreements of this Lease and the continuance of such
failure for a period of ten (10) days after receipt of written notice by
Landlord specifying such failure (unless such failure requires work to be
performed, acts to be done, or conditions to be removed which cannot by their
nature reasonably be performed, done, or removed, as the case may be, within
such ten (10) day
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period or other such period required in this Lease, in which case no default
shall be deemed to exist so long as Tenant shall have commenced doing the same
within such ten (10) day period and shall diligently and continuously prosecute
the same to completion);
(C) The filing of an application by Tenant for, or a consent to the
appointment of, a receiver, trustee, or liquidator of itself or of all its
assets;
(D) The filing by Tenant of a voluntary petition in bankruptcy, or the
filing of a pleading in any court of record admitting in writing its inability
to pay its debts as they become due;
(E) The making by Tenant of a general assignment for the benefit of
creditors;
(F) The filing by Tenant of an answer admitting material allegations of or
consenting to or defaulting in answering in petition filed against it in any
bankruptcy proceedings;
(G) The entry of an order, judgment, or decree by any Court of competent
jurisdiction adjudging Tenant a bankrupt or appointing a receiver, trustee, or
liquidator of it, or all of its assets, and such order, judgment, or decree
continuing unstayed and in effect for any period of sixty (60) consecutive days;
(H) If this Lease or the estate of Tenant hereunder shall be transferred
to or assigned to or subleased to or shall pass to or devolve upon any person or
party, except in a manner herein expressly permitted;
(I) If a levy under execution or attachment shall be made against Tenant
or its property and such execution or attachment shall not be vacated or removed
by court order, bonding, or otherwise within a period of thirty (30) days; or
(J) Abandonment of the Leases Premises, providing that no default shall
exist if Tenant pays the Rental hereunder and otherwise complies with the terms
hereof.
Section 13.02. Remedies of Landlord. Upon the occurrence of any event of
---------------------
default set forth in Section 13.01, Landlord shall have the following rights and
remedies, in addition to those allowed by law, any, or all of which may be
exercised without additional notice or demand upon Tenant.
(A) Landlord may apply any prepaid funds to the cost of cure of any
default and/or reenter the Leased Premises and cure any default of Tenant. In
such event Tenant shall immediately reimburse Landlord as additional rental for
any such costs, and shall restore the security deposit, or other prepaid funds
used by Landlord to cure Tenant's default; and Landlord shall not be liable to
Tenant for any loss or damage which Tenant may sustain by reason of Landlord's
actions, whether or not caused by Landlord's negligence.
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(B) Landlord may at its option provide written notice to Tenant stating
that this Lease and the Lease Term shall expire and terminate on the date
specified in such notice, and upon the date specified in such notice, this Lease
and the term hereby demised, and all rights of Tenant under this Lease shall
expire and terminate, in which event Tenant shall thereupon quit and surrender
the Leased Premises but shall remain liable as hereinafter provided and Landlord
may without notice, reenter and repossess the Leased Premises without use of
force, and Tenant shall nevertheless remain liable as hereinafter provided for
the remainder of the term hereof. Notwithstanding the termination of this Lease,
Landlord shall be entitled to recover from Tenant all Rent accrued and unpaid
for the period up to and including such termination date, plus (i) the
unamortized cost of improvements, additions and alterations, if any, paid for by
Landlord pursuant to this Lease, plus (ii) the aggregate sum which at the time
of such termination represents the excess, if any, of (y) the present value of
the aggregate Rents to be due during the remainder of the term, minus (z) the
amount of such rental loss that Tenant proves could have been reasonably
avoided, such present value to be computed on the basis of a four percent (4%)
per annum discount, and (iii) any further damages which Landlord shall have
incurred by reason of the breach of any of the covenants of this Lease.
(C) Landlord may, without terminating this Lease, reenter the Leased
Premises and at its option, repair and alter the Leased Premises in such manner
as Landlord may reasonably deem necessary or advisable, and/or let or relet the
Leased Premises or any parts thereof for the whole or any part of the remainder
of the Lease Term hereof or for a longer period, in Landlord's name or as agent
of Tenant, and out of any rental collected or received as a result of such
letting or reletting Landlord shall (i) pay to itself the reasonable cost and
expense of retaking, repossessing, repairing and/or altering the Leased
Premises, and the reasonable cost and expense of removing all personal property
therefrom; (ii) pay to itself the reasonable cost and expense sustained in
securing any new tenants and, if Landlord shall maintain and operate the Leased
Premises, the reasonable cost and expense of operating and maintaining the
Leased Premises; and (iii) pay to itself any balance remaining on account of the
liability of Tenant to Landlord. No reentry by Landlord shall absolve or
discharge Tenant from liability hereunder.
(D) Landlord may sue for injunctive relief or to recover damages for any
loss resulting from the breach.
Section 13.03. Suit Prior to Expiration. Suit or suits for the recovery of
-------------------------
any deficiency or damages, or for a sum equal to any installment or installments
of Rental and other charges hereunder, may be brought by Landlord, from time to
time at Landlord's election, and nothing herein contained shall be deemed to
require Landlord to await the date whereon this Lease or the term hereof would
have expired by its term had there been no such default by Tenant or
termination.
Section 13.04. Reinstatement. No receipt of monies by Landlord from Tenant
--------------
after termination of this Lease, or after the giving of any notice of
termination of this Lease, shall
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reinstate, continue, or extend the Lease Term or affect any notice given to
Tenant, or operate as a waiver of the right of Landlord to enforce the payment
of Rental and other sum or sums of money and other charges herein reserved and
agreed to be paid by Tenant then due or thereafter falling due, or operate as a
waiver of the right of Landlord to recover possession of the Leased Premises by
proper remedy, except as herein otherwise expressly provided, it being agreed
that after the service of notice to terminate this Lease or the commencement of
suit or summary proceedings, or after final order or judgment for the possession
of the Leased Premises, Landlord may demand, receive, and collect any moneys due
or thereafter falling due without in any matter effecting such money collected
being deemed payments on account of the use and occupation of said Leased
Premises, or at the election of Landlord, on account of Tenant's liability
hereunder.
Section 13.05. Default by Landlord and Remedies of Tenant. It shall be a
-------------------------------------------
default under and breach of this Lease by Landlord if it shall fail to perform
or observe any term, condition, covenant or obligation required to be performed
or observed by it under this Lease for a period of thirty (30) days after notice
thereof from Tenant; provided, however, that if the term, condition, covenant or
obligation to be performed by Landlord is of such nature that the same cannot
reasonably be performed within such thirty-day period, such default shall be
deemed to have been cured if Landlord commences such performance within said
thirty-day period and thereafter diligently undertakes to complete the same and
completes the same within a reasonable period. Tenant may pursue all remedies
available to it at law or in equity.
Section 13.06. Cumulative Remedies. Each right and remedy provided for in
--------------------
this Lease shall be cumulative and shall be in addition to every other right and
remedy provided for in this Lease or now or hereafter existing at law or in
equity or by statute or otherwise, and the exercise or beginning of the exercise
of any one or more of the right or remedies provided for in this Lease or now or
hereafter existing at law or in equity or by statute or otherwise shall not
preclude the simultaneous or later exercise by Landlord of any or all other
rights or remedies provided for in this Lease or now or hereafter existing at
law or in equity or by statute or otherwise.
Section 13.07. Non-Waiver of Defaults. The failure or delay by either party
-----------------------
hereto to exercise or enforce at any time any of the rights or remedies or other
provisions of this Lease shall not be construed to be a waiver thereof, nor
affect the validity of any part of this Lease or the right of either party
thereafter to exercise or enforce each and every such right or remedy or other
provision. No waiver of any default and breach of the Lease shall be deemed to
be a waiver of any other default and breach. The receipt by Landlord of less
than the full rent due shall not be construed to be other than a payment on
account of rent then due, nor shall any statement on Tenant's check or any
letter accompanying Tenant's check be deemed an accord and satisfaction, and
Landlord may accept such payment without prejudice to Landlord's right to
recover the balance of the rent due or to pursue any other remedies provided in
this Lease. No act or omission by Landlord or its employees or agents during the
Lease Term shall be deemed an acceptance of a surrender of the Leased Premises,
and no agreement to accept such a surrender shall be valid unless in writing and
signed by Landlord.
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Section 13.08. Landlord's Liability upon Sale or Transfer. If Landlord
-------------------------------------------
shall fail to perform or observe any term, condition, covenant or obligation
required to be performed or observed by it under this Lease and if Tenant shall,
as a consequence thereof, recover a money judgment against Landlord, Tenant
agrees that it shall look solely to Landlord's right, title and interest in and
to the Building for the collection of such judgment; and Tenant further agrees
that no other assets of Landlord shall be subject to levy, execution or other
process for the satisfaction of Tenant's judgment and that Landlord shall not be
liable for any deficiency.
The references to "Landlord" in this Lease shall be limited to mean and
include only the owner or owners, at the time, of the fee simple interest in the
Building. In the event of a sale or transfer of such interest (except a mortgage
or other transfer as security for a debt), the "Landlord" named herein, or, in
the case of a subsequent transfer, the transferor, shall, after the date of such
transfer, be automatically released from all personal liability for the
performance or observance of any term, condition, covenant or obligation
required to be performed or observed by Landlord hereunder; and the transferee
shall be deemed to have assumed all of such terms, conditions, covenants and
obligations.
Section 13.09. Transfer upon Termination. In the event of a termination
--------------------------
of this Lease by reason of default or breach by Tenant hereunder: (i) all
unexpired insurance premiums, all deposits theretofore made by Tenant with
utility companies and all rights of Tenant under all insurance policies shall be
deemed to be assigned to and transferred to Landlord; and (ii) Tenant shall
deliver and assign to Landlord all leases of subtenants, and concession,
license, and occupancy agreements and all security deposits and advance rents
then held by Tenant with respect to any and all subleases upon the assumption by
Landlord of the obligation to apply all such security deposits and advance rents
held by Landlord in accordance with such subleases, and concession, license, and
occupancy agreements.
Section 13.10. Attorneys' Fees and Costs. In the event either party
--------------------------
defaults in the performance or observance of any of the terms, conditions,
covenants or obligations contained in this Lease and the other party employs
attorneys to enforce all or part of this Lease, to collect any rent due or to
become due or recover possession of the Leased Premises, the defaulting party
agrees to reimburse the non-defaulting party for all reasonable attorneys' fees
incurred thereby, whether or not suit has actually been filed. The defaulting
party shall also pay the non-defaulting party all reasonable costs and expenses,
other than attorneys' fees, incurred in the enforcement of any of the terms,
conditions, covenants or obligations contained in this Lease. All the sums paid
or obligations incurred by the non-defaulting party together with interest and
costs shall be paid by the defaulting party to the non-defaulting party ten (10)
days after the rendition of any bill or statement therefor.
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ARTICLE 14
Notices
Section 14.01. Notices. All notices and demands which may or are required
--------
to be given by either party to the other hereunder shall be in writing and shall
be sent by hand delivery, telefax or United States certified or registered mail,
postage prepaid, addressed as specified in Item M, Section 1.02 of this Lease,
or to such other firm or to such other place as the Landlord or Tenant may from
time to time designate in writing. Notice by hand delivery or facsimile
transmission shall be deemed to be received upon receipt. Notices sent by mail
shall be deemed received three (3) business days after mailing.
Section 14.02. Place of Payment. All Rental and other payment required to
-----------------
be made by Tenant to Landlord shall be delivered, or mailed to Landlord at the
address as Specified in Item M, Section 1.02 of this Lease, and such payments
shall be deemed made when received by Landlord.
ARTICLE 15
Miscellaneous Provisions
Section 15.01. Condition of Premises. Tenant acknowledges that neither
----------------------
Landlord nor any agent of Landlord has made any representation or warranty with
respect to the Leased Premises or the Building or with respect to the
suitability or condition of any part of the Building for the conduct of Tenant's
business except as provided in this Lease.
Section 15.02. Common Areas. The term "Common Areas", as used in this
-------------
Lease, refers to the areas of the Building and the land described in Exhibit A
---------
which are designed for use in common by all tenants of the Building and their
respective employees, agents, customers, invitees and others, and includes, by
way of illustration and not limitation, entrances and exits, hallways and
stairwells, elevators, restrooms, sidewalks, driveways, parking areas,
landscaped areas and other areas as may be designated by Landlord as part of the
Common Areas of the building. Tenant shall have the non-exclusive right, in
common with others, to the use of the Common Areas, subject to such reasonable,
non-discriminatory rules and regulations as may be adopted by Landlord including
those set forth in Section 3.02 and Exhibit C of this Lease.
---------
Section 15.03. Quiet Enjoyment. If Tenant shall perform all of the
----------------
covenants and agreements herein required to be performed by Tenant, Tenant
shall, subject to the terms of this Lease, at all times during the Lease Term,
have peaceful and quiet enjoyment of the Leased Premises.
Section 15.04. Choice of Law. This Lease shall be governed by and
--------------
construed pursuant to the laws of the State of Indiana.
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<PAGE>
Section 15.05. Venue. Tenant agrees that the venue of any action arising
------
between the parties to this Lease shall be in the County wherein the Leased
Premises are located, and that the Federal jurisdiction shall be in the district
wherein the Leased Premises are located, and each party hereby waives any claims
of preferred venue under the Federal or Indiana Trial Rules, or any claim of a
more convenient forum.
Section 15.06. Successors and Assigns. Except as otherwise provided in
-----------------------
this Lease, all of the covenants, conditions and provisions of this Lease shall
be binding upon and shall inure to the benefit of the parties hereto and their
respective heirs, personal representatives, successors and assigns.
Section 15.07. Time. Time is of the essence of this Lease and each and
-----
all of its provisions.
Section 15.08. Defined Terms and Marginal Headings. The words "Landlord"
------------------------------------
and "Tenant" as used herein shall include the plural as well as the singular. If
more than one person is named as Tenant, the obligations of such persons are
joint and several. The marginal headings and titles to the articles of this
Lease are not a part of this Lease and shall have no effect upon the
construction or interpretation any part hereof.
Section 15.09. Entire Agreement; Amendments. This Lease contains all of
-----------------------------
the agreements of the parties hereto with respect to any matter covered or
mentioned in this Lease, and no prior agreement, understanding or representation
pertaining to any such matter shall be effective for any purpose. No provision
of this Lease may be amended or added to except by an agreement in writing
signed by the parties hereto or their respective successors in interest.
Section 15.10. Severability of Invalid Provisions. If any provisions of
-----------------------------------
this Lease shall be held to be invalid, void or unenforceable, the remaining
provisions hereof shall not be affected or impaired, and such remaining
provisions shall remain in full force and effect.
Section 15.11. Estoppel Certificate. Tenant shall, within ten (10)
---------------------
business days following receipt of a written request from Landlord, execute,
acknowledge and deliver to Landlord or to any lender, purchaser or prospective
lender or purchaser designated by Landlord, a statement in such form as Landlord
may reasonably request, certifying (i) that this Lease is in full force and
effect and unmodified (or, if modified, stating the nature of such
modification), (ii) the date to which rent has been paid, and (iii) that there
are not, to Tenant's knowledge, any uncured defaults (or specifying such
defaults if any are claimed). Tenant's failure to deliver such statement within
such period shall be conclusive upon Tenant that this Lease is in full force and
effect and unmodified, and that there are no uncured defaults in Landlord's
performance hereunder.
Section 15.12. Force Majeure. Either party shall be excused for the
--------------
period of any delay in the performance of any obligation hereunder when such
delay is occasioned by causes beyond
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<PAGE>
its control, including, but not limited to, war, invasion or hostility; work
stoppages, boycotts, slowdowns or strikes; shortages of materials, equipment,
labor or energy; man-made or natural casualties; unusual weather conditions;
acts or omissions of governmental or political bodies; or civil disturbances or
riots.
Section 15.13. Authority. The individual or individuals executing this
----------
Lease warrant their capacity and authority to execute this Lease on behalf of
their respective companies.
Section 15.14. Memorandum of Lease. The parties hereto shall not record
--------------------
this Lease, but each party shall execute upon the request of the other a
"memorandum of lease" suitable for recording.
Section 15.15. Reciprocal Covenant on Notification of ADA Violations.
-----------------------------------------------------
Within ten (10) business days after receipt, Landlord and Tenant shall advise
the other party in writing and provide the other with copies of (as applicable)
any notices alleging violation of the Americans with Disabilities Act of 1990
("ADA") relating to any portion of the Building, Common Areas or the Leased
Premises; any claims made or threatened in writing regarding noncompliance with
the ADA and relating to any portion of the Building, Common Areas or the Leased
Premises; or any governmental or regulatory actions or investigations instituted
or threatened regarding noncompliance with the ADA and relating to any portion
of the Building, Common Areas or the Leased Premises.
Section 15.16. Sorting and Separation of Refuse and Trash. Tenant
------------------------------------------
covenants and agrees, as its sole cost and expense, to comply with all present
and future laws, orders and regulations of all state, federal, municipal and
local governments, departments, commissions and boards regarding the collection,
sorting, separation and recycling of waste products, garbage, refuse and trash.
Landlord reserves the right to refuse to collect or accept from Tenant any waste
products, garbage, refuse or trash that is not separated and sorted as required
by law, and to require that Tenant arrange for such collection at Tenant's sole
cost and expense, utilizing a contractor satisfactory to Landlord. Tenant shall
pay all costs, expenses, fines, penalties or damages that may be imposed on
Landlord or Tenant by reason of Tenant's failure to comply with the provisions
of this paragraph and, at Tenant's sole cost and expense, shall indemnify,
defend and hold Landlord harmless (including legal fees and expenses) from and
against any actions, claims and suits arising from such noncompliance, utilizing
counsel reasonably satisfactory to Landlord.
Section 15.17. Hazardous Waste. (a) The term "Hazardous Substances", as
----------------
used in this Lease shall mean pollutants, contaminants, toxic or hazardous
wastes, or any other substances, the use and/or the removal of which is required
or the use of which is restricted, prohibited or penalized by any "Environmental
Law", which term shall mean any federal, state or local law, ordinance or other
statute of a governmental or quasi-governmental authority relating to pollution
or protection of the environment and applicable to the Building, Common Areas
and the Leased Premises. Tenant hereby agrees that (i) no activity will be
conducted on the Leased Premises by
-26-
<PAGE>
Tenant that will produce any Hazardous Substance, except for such activities
that are part of the ordinary course of Tenant's business activities (the
"Permitted Activities") provided said Permitted Activities are conducted in
accordance with all Environmental Laws and have been approved in advance in
writing by Landlord; (ii) Tenant shall be responsible for obtaining any required
permits and paying any fees and providing any testing required by any
governmental agency; (iii) the Leased Premises will not be used in any manner
for the storage of any Hazardous Substances except for the temporary storage of
such materials that are used in the ordinary course of Tenant's business (the
"Permitted Materials") provided such Permitted Materials are properly stored in
a manner and location meeting all Environmental Laws; and (iv) Tenant will not
permit any Hazardous Substances to be brought onto the Leased Premises, except
for the Permitted Materials described above, and if so brought or found located
thereon, the same shall be immediately removed, with proper disposal, and all
required cleanup procedures shall be diligently undertaken pursuant to all
Environmental Laws.
(b) During the Lease Term, Tenant shall promptly provide Landlord with
copies of all summons, citations, directives, information inquiries or requests,
notices of potential responsibility, notices of violation or deficiency, orders
or decrees, claims, complaints, investigations, judgments, letters, notice of
environmental liens, and other communications, written or oral, actual or
threatened, from the United States Environmental Protection Agency, Occupational
Safety and Health Administration, the State of Indiana Environmental Protection
Agency or other federal, state, or local agency or authority, or any other
entity or individual, concerning (i) any Hazardous Substance and the Leased
Premises, (ii) the imposition of any related lien on the Leased Premises, or
(iii) any alleged violation of or responsibility under any Environmental Law.
(c) Without limiting in any way Tenant's obligations under any other
provision of this Lease, Tenant and its successors and assigns shall indemnify,
protect, defend and hold Landlord, its partners, officers, directors,
shareholders, employees, agents, lenders, contractors and each of their
respective successors and assigns harmless from any and all claims, judgments,
damages, penalties, enforcement actions, taxes, fines, remedial actions,
liabilities, losses, costs and expenses (including, without limitation,
reasonable attorneys' fees, litigation, arbitration and administrative
proceeding costs, expert and consultant fees and laboratory costs) including,
without limitation, damages arising out of the diminution in the value of the
Leased Premises or Building or any portion thereof, damages for the loss of the
Leased Premises or Building, damages arising from any adverse impact on the
marketing of space in the Leased Premises or Building, and sums paid in
settlement of claims, which arise during or after the Term, in whole or in part,
as a result of the presence or suspected presence of any Hazardous Substances,
in, on, under, from or about the Leased Premises or the Building and/or other
adjacent properties due to the activities, or failures to act (including,
without limitation, Tenant's failure to report any spill or release to the
appropriate regulatory agencies) of Tenant or its agents, employees,
contractors, shareholders, partners, invitees, subtenants or assignees, on or
about the Leased Premises or Building.
-27-
<PAGE>
(d) Without limiting in any way Landlord's obligations under any other
provision of this Lease, Landlord and its successors and assigns shall
indemnify, protect, defend and hold Tenant, its partners, officers, directors,
shareholders, employees, agents, lenders, contractors and each of their
respective successors and assigns harmless from any and all claims, judgments,
damages, penalties, enforcement actions, taxes, fines remedial actions,
liabilities, losses, costs and expenses (including, without limitation,
reasonable attorneys' fees, litigation, arbitration and administrative
proceeding costs, expert and consultant fees and laboratory costs) and sums paid
in settlement of claims, which arise during or after the Term, in whole or in
part, as a result of the presence or suspected presence of any Hazardous
Substances, in, on, under, from or about the Leased Premises or the Building
and/or other adjacent properties due to the activities, or failures to act
(including, without limitation, Landlord's failure to report any spill or
release to the appropriate regulatory agencies) of Landlord or its agents,
employees, contractors, shareholders, partners, invitees, tenants (other than
Tenant) or assigns, on or about the Leased Premises or Building.
ARTICLE 16
Additional Provisions
Section 16.01 Refurbishment Allowance. Provided Tenant is not then in
------------------------
default, Landlord shall provide Tenant with $8.75 per square foot at the end of
year seven (7) of the Lease Term for the purpose of refurbishing the Leased
Premises ("Tenant Refurbishment Allowance"). Such amount shall be paid to Tenant
within thirty (30) days of Landlord's receipt of paid invoices in respect to
work on the Leased Premises, approved under Section 6.03, if applicable.
Section 16.02. Reserved Parking. Seven (7) spaces, designated as numbers
-----------------
1 through 7.
Section 16.03 Exterior Signage. Tenant shall be permitted to maintain
-----------------
exterior signage as it appears on the front (west face) of the Building on the
date of execution, subject to compliance with existing government regulations.
Not more than two (2) additional exterior signs shall be placed on Building, one
on the north face of the Building and one on the south face of the Building,
without Tenant's prior written approval which Tenant may withhold for any
reason. Landlord furthermore agrees not to enter or disturb the office of
William E. Bindley, during normal working hours or otherwise, for any purpose
including, but not limited to, installing or maintaining exterior signage
without Tenant's prior written approval which Tenant may not unreasonably
withhold.
Section 16.04. Option to Renew. Provided Tenant is not in material
----------------
default of any of the terms, covenants and conditions hereof at the time such
option is exercised, Tenant shall have two (2) five (5) year options to extend
the term of this Lease. Such extensions of the original term of this Lease shall
be under the same terms and conditions as provided for in the original Lease
except for this paragraph, and except that the Rental during the extension term
shall be the net fair market value (taking into account tenant improvement
allowances, expense stops, free rent or other
-28-
<PAGE>
concessions, and cost of Rental including commissions) in effect for comparable
facilities existing in Indianapolis, Indiana. Notice of the Tenant's intention
to exercise the option must be given to Landlord, in writing, at least twelve
(12) months but not more than eighteen (18) months prior to the expiration of
either the original term or the first renewal term of this Lease. If, within
ninety (90) days following notification by Tenant that Tenant wishes to renew,
Landlord and Tenant are unable to agree upon a fair market rental rate for the
renewal term in question, then the rent shall be determined as follows: Landlord
and Tenant shall each select, at their own cost and expense, an independent,
certified Appraiser familiar with commercial rental rates in the Indianapolis
metropolitan area. The two Appraisers so chosen shall each use their good faith
and judgment to agree upon a fair market rental for the Leased Premises during
the renewal period in question. If they are unable to agree within thirty (30)
days of their appointment, then a third Appraiser, having similar
qualifications, shall be chosen by the first two Appraisers. The third Appraiser
shall then select from the fair market values submitted by the other two
Appraisers, the value of which the third Appraiser deems to more closely
represent the fair market value. The fair market value selected by the third
Appraiser shall be the rent for the five year term of the option to renew being
exercised by Tenant.
Section 16.05. Right of First Refusal. Provided Tenant is not in material
-----------------------
default of any of the terms, covenants and conditions hereof at the time such
option is exercised, Tenant shall have the Right of First Refusal to lease
additional space throughout the entire Building subject only to the prior and
existing rights of (a) J.F. Molloy & Associates as to the first and second
floors of the Building, and (b) Interactive Intelligence as to the second floor
of the Building until on or about March 1, 2002, or 36 months following the
Actual Commencement Date of the Interactive Intelligence lease when the prior
rights of Interactive Intelligence expire.
Right of First Refusal process shall be structured as follows: Upon receipt
of a bona fide, acceptable Letter of Intent from a third party, Landlord will
inform Tenant in writing of said offer. Tenant shall then have five (5) business
days after receipt of Landlord's notification in which to enter into a firm
agreement with Landlord to lease this space on the same terms and conditions to
which the third party has agreed, provided that the term of any such expansion
lease would be coterminous herewith. This would include rental rate, interior
finish and the amount of space included in the Letter of Intent. In the event
Tenant fails to exercise its right of first refusal within the time period
provided herein, Tenant shall have no further right of first refusal as to such
Letter of Intent.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Lease as of the
day and year first written above.
TENANT: LANDLORD:
- ------ --------
BINDLEY WESTERN INDUSTRIES, INC. COLLEGE PARK PLAZA, LLC
BY: /s/ Scott D. Teets BY: /s/ Jeffrey S. Cavanaugh
--------------------------------- ------------------------------
PRINTED: Scott D. Teets PRINTED: Jeffrey S. Cavanaugh
---------------------------- -------------------------
TITLE: Asso. Gen. Counsel & Ass't. TITLE: Vice President
------------------------------ ---------------------------
Sec'y.
------------------------------
DATE: April 26, 1999 DATE: April 27, 1999
------------------------------ ---------------------------
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<PAGE>
EXHIBIT A
Block 22 in "College Park West" the Plat of which was recorded September 20,
1971 as Instrument No. 71-50458 in the Office of the Recorder of Marion County,
Indiana.
Also a part of Block 251 in College Park West, an Addition in Marion County,
Indiana, as per plat thereof recorded September 20, 1971 as Instrument No. 71-
50458, in the Office of the Recorder of Marion County, Indiana, more
particularly described as follows:
Beginning at the Northwest corner of said Block 251, said point being on the
East right of way line of Purdue Road and also on the South line of Block 22
(the "Point of Beginning"); thence South 18 degrees 50 minutes 00 seconds East
along the West line of said Block 251 and East right of way line of Purdue Road,
74.90 feet; thence North 71 degrees 10 minutes 00 seconds East 219.59 feet, to a
point which is the Southeast corner of Block 22 in College Park West, the Plat
of which was recorded September 20, 1971 as Instrument No. 71-50458, in the
Office of the Recorder of Marion County, Indiana; thence West along the said
South line of Block 22 a distance of 232.01 feet to the Point of Beginning.
-31-
<PAGE>
Exhibit 10-Z
Spin-Off Amendment
for the Separation
of Assets and Liabilities
of the
Bindley Western Industries, Inc.
&
Subsidiaries Profit Sharing Plan
WHEREAS, Bindley Western Industries, Inc. (the "Company") previously adopted and
presently maintains the Bindley Western Industries, Inc. & Subsidiaries Profit
Sharing Plan (the "Bindley Western Plan"), and Priority Healthcare Corporation
(the "Subsidiary") participated in the Bindley Western Plan; and,
WHEREAS, Section 14.5 of the Bindley Western Plan expressly provides that the
Company has the right to transfer assets to any other Plan or otherwise modify
the terms of the Bindley Western Plan, retroactively if necessary; and,
WHEREAS, the Company and Subsidiary desires to spin-off assets and liabilities
of the Subsidiaries Employees effective as of January 1, 1999 (the "Setup
Date"), and establish the Profit Sharing Plan of Priority Healthcare Corporation
and Affiliates (the "Priority Plan") independent of the Bindley Western Plan to
benefit the Subsidiary's Employees pursuant to the terms of the Priority Plan
with no obligation to make contributions to the Bindley Western Plan;
NOW THEREFORE,
BE IT RESOLVED, the assets and liabilities of the Subsidiary are hereby
separated and transferred into the Priority Plan with identical terms (except as
modified for purposes of accomplishing the spin-off) as the Bindley Western Plan
prior to separation. Capitalized terms, to the extent not defined herein, shall
have the same meaning as in the Bindley Western Plan:
Modification of the Bindley Western Plan:
Notwithstanding anything in the Bindley Western Plan to the contrary, the
Bindley Western Plan is hereby amended, as of the Setup Date, as follows:
1. All contributions (or other benefit accruals) from the Subsidiary
shall cease, effective as of the Setup Date, no Participant of the
Subsidiary therein Shall accrue any additional benefits thereunder,
and no Employee of the Subsidiary, otherwise eligible to participate
in the Bindley Western Plan as of the Setup Date, Shall enter the
Bindley Western Plan;
2. All amounts held for the benefit of Participants of the Subsidiary in
the Bindley Western Plan, including the non-vested portions thereof,
Shall be preserved, and transferred, as soon as practicable, to the
Priority Plan;
<PAGE>
3. Notwithstanding anything contained in the provisions of the Bindley
Western Plan, the Priority Plan, or this amendment, all Participants
under the Bindley Western Plan will receive a benefit immediately
after the separation which is at least as great as the benefit the
Participant would have received under the terms of the Bindley Western
Plan had the Bindley Western Plan terminated on the day before the
Setup Date, subject only to vesting pursuant to the terms of the
Bindley Western Plan; and
4. On and after the Setup Date (or the date assets of the Bindley Western
Plan are received and held under the terms of the Priority Plan and
this amendment, if later) the Bindley Western Plan Shall continue to
exist, and all provisions thereof, except as modified pursuant to this
amendment Shall be in full force and effect.
Terms of the Priority Plan:
Notwithstanding anything in the Priority Plan to the contrary, the Priority Plan
is hereby established, as of the Setup Date, as follows:
1. The Priority Plan Shall accept, and hold, assets transferred from the
Bindley Western Plan pursuant to this amendment and separation. The
Priority Plan Shall accept all records, accountings, and other
descriptions of benefits accrued under the Bindley Western Plan, and
Shall maintain such benefits as part of and payable from the Priority
Plan, to the extent of assets actually received by the Priority Plan;
2. All benefits payable to Employees of the Subsidiary from the Bindley
Western Plan as of the Setup Date will be provided by the Priority
Plan on the same terms and conditions, in the same amount, form and
manner, and at the same time and frequency as under the Bindley
Western Plan as in effect from time to time prior to the Setup Date,
and the Priority Plan shall contain appropriate provisions to protect
all benefits, rights and features required to be protected under the
provisions of Internal Revenue Code Section 411(d)(6);
3. All beneficiary designation forms, option election forms, spousal
consent forms, and other administrative forms and materials executed
under the terms of the Bindley Western Plan Shall continue in full
force and effect with respect to the Priority Plan, unless otherwise
required by law; and
4. All Priority Healthcare Corporation Participants of the Bindley
Western Plan shall immediately become Participants of the Priority
Plan, as of the Setup Date, and all Subsidiary employees otherwise
eligible to participate in the Bindley Western Plan, but who have not
yet entered as Participants in the Bindley Western Plan Shall become
Participants in the Priority Plan as of the next Entry Date. All
service performed by Employees of the Subsidiary, as credited pursuant
to the terms of the Bindley Western Plan Shall be credited for
purposes of calculating eligibility and vesting Years of Service under
the terms of the Priority Plan. Notwithstanding the foregoing, under
no circumstances Shall the vested percentage of a Participant credited
with Years of Service while in the employ of the Subsidiary be reduced
with respect to any benefits accrued under the terms of the Bindley
Western Plan prior to the Setup Date, or with respect to the benefits
accrued under the terms of the Priority Plan on or after the Setup
Date; and
<PAGE>
5. Notwithstanding anything contained in the provisions of the Priority
Plan, the Bindley Western Plan, or this amendment, all Participants
under the Priority Plan will receive a benefit immediately after the
separation which is at least as great as the benefit the Participant
would have received under the terms of the Bindley Western Plan had
the Bindley Western Plan terminated on the day before the Setup Date,
subject only to vesting pursuant to the terms of the Bindley Western
Plan.
IN WITNESS WHEREOF, the Company and the Subsidiary have executed this Amendment,
as of this 11th day of December, 1998.
Bindley Western Industries, Inc.
By: /s/ Michael D. McCormick
------------------------------------
Secretary
------------------------------------
Priority Healthcare Corporation
By: /s/ Barbara Luttrell
------------------------------------
Vice President of Administration
------------------------------------
<PAGE>
Exhibit 21
List of Subsidiaries of Registrant
1. BW Food Distributors, Inc. -- Salem, New Hampshire
2. BW Transportation Services, Inc. -- Indianapolis, Indiana
3. Special Services Company -- Orange, Connecticut
4. Priority Healthcare Services Corporation -- Indianapolis, Indiana
5. College Park Plaza Associates, Inc. -- Indianapolis, Indiana
6. Bindley Western Funding Corporation -- Woodland, California
(a Delaware Corporation)
7. Central Pharmacy Services, inc. -- Atlanta, Georgia
(a Georgia Corporation)
NOTE: All subsidiaries listed are Indiana corporations except as otherwise
noted.
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------------
We hereby consent to the incorporation by reference in the Registration
Statements on Form S-3 (No. 333-91149) and Form S-8 (Nos. 333-91153, 333-75577,
333-85379, 333-60279, 333-04517, 33-64828, 33-58947, 333-57975, 33-15471 and
33-37781) of Bindley Western Industries, Inc. of our report dated March 21, 2000
relating to the financial statements, which appears in this Form 10-K.
PricewaterhouseCoopers LLP
Indianapolis, Indiana
March 21, 2000
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<PAGE>
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<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 34,910
<SECURITIES> 0
<RECEIVABLES> 721,830
<ALLOWANCES> 9,547
<INVENTORY> 803,021
<CURRENT-ASSETS> 1,582,855
<PP&E> 129,140
<DEPRECIATION> 27,773
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<CURRENT-LIABILITIES> 1,284,706
<BONDS> 38,698
0
0
<COMMON> 3,415
<OTHER-SE> 371,300
<TOTAL-LIABILITY-AND-EQUITY> 1,702,822
<SALES> 8,507,605
<TOTAL-REVENUES> 8,509,544
<CGS> 8,287,842
<TOTAL-COSTS> 8,445,466
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 3,078
<INTEREST-EXPENSE> 23,438
<INCOME-PRETAX> 64,078
<INCOME-TAX> 25,782
<INCOME-CONTINUING> 38,296
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