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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
January 11, 1999
PHARMERICA, INC.
(Exact name of Registrant as specified in its charter)
Delaware 0-20606 11-2310352
- ---------------------------- ------------------------ ----------------------
(State or other jurisdiction (Commission file Number) (Employer
of incorporation) Identification Number)
175 Kelsey Lane, Tampa, Florida 33619
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(Address of principal executive offices)
(813) 626-7788
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(Registrant's telephone number, including area code)
3611 Queen Palm Dr., Tampa, Florida 33619
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(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS.
On January 11, 1999, Bergen Brunswig Corporation ("Bergen") and
PharMerica, Inc. ("PharMerica") announced that they have entered into an
Agreement and Plan of Merger, dated as of January 11, 1999 (the "Merger
Agreement"), pursuant to which Peacock Merger Corporation, a newly formed wholly
owned subsidiary of Bergen, will be merged with and into PharMerica, and
PharMerica will become a wholly owned subsidiary of Bergen (the "Merger"). Under
the terms of the Merger Agreement, upon consummation of the Merger, shareholders
of PharMerica will receive 0.275 of a share of Bergen Class A Common Stock in
exchange for each share of PharMerica common stock they hold. The Merger is
intended to be tax-free and will be treated as a purchase for financial
reporting purposes. Consummation of the transaction is subject to the
satisfaction of certain conditions, including approvals by the shareholders of
Bergen and PharMerica and receipt of certain regulatory approvals.
The Merger Agreement also provides that in the event the Merger
Agreement is terminated pursuant to certain of the circumstances specified under
Article VII thereof, PharMerica may be obligated to pay to Bergen a termination
fee of $38 million. In addition to such payment, in certain circumstances set
forth in such Article, PharMerica may become obligated to reimburse Bergen up to
$6 million for costs and expenses incurred in connection with the transaction.
In such event, certain amendments to the existing supply agreement between
Bergen and PharMerica also would be made.
In connection with the Merger, the Board of Directors of PharMerica
approved and PharMerica entered into a First Amendment to Stockholder Protection
Rights Agreement (the "Rights Agreement Amendment"). The Rights Agreement
Amendment excludes the Merger from certain restrictive provisions of
PharMerica's Stockholder Protection Rights Agreement.
The Merger Agreement and Rights Agreement Amendment are filed as
Exhibits 2.1 and 4.1 hereto, respectively, and are incorporated herein by
reference. The foregoing description of the Merger Agreement and Rights
Agreement Amendment is qualified in its entirety by reference to such Exhibits.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
Financial Statements, Pro Forma Financial Information and Exhibits
(c) Exhibits. The exhibits filed as a part of this Report are listed in
the Index to Exhibits immediately following the signature page.
2
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PHARMERICA, INC.
By: /s/ David Redmond
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David Redmond
Chief Financial Officer
Date: January 15, 1999
3
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EXHIBIT INDEX
EXHIBIT
NUMBERS
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2.1 Agreement and Plan of Merger, dated as of January 11, 1999, by
and among Bergen Brunswig Corporation, Peacock Merger
Corporation and PharMerica, Inc.
4.1 First Amendment to Stockholder Protection Rights Agreement
dated as of January 11, 1999, between PharMerica, Inc. and
Harris Trust and Savings Bank, as Rights Agent.
4
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EXHIBIT 2.1
EXECUTION COPY
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AGREEMENT AND PLAN OF MERGER
BY AND AMONG
BERGEN BRUNSWIG CORPORATION
("BERGEN"),
PEACOCK MERGER CORP.
A WHOLLY OWNED DIRECT SUBSIDIARY OF BERGEN
("SUBCORP"),
AND
PHARMERICA, INC.
("PHARMERICA")
Dated as of January 11, 1999
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TABLE OF CONTENTS
<TABLE>
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PAGE
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AGREEMENT AND PLAN OF MERGER......................................................................... 1
PRELIMINARY STATEMENTS............................................................................... 1
ARTICLE I. THE MERGER................................................................................ 1
1.1. The Merger ................................................................................. 1
1.2. Effective Time.............................................................................. 2
1.3. Effects of the Merger....................................................................... 2
1.4. Certificate of Incorporation and Bylaws..................................................... 2
1.5. Directors and Officers of the Surviving Corporation......................................... 2
ARTICLE II. CONVERSION OF SECURITIES................................................................. 2
2.1. Conversion of Capital Stock................................................................. 2
2.2. Exchange Ratio; Fractional Shares; Adjustments.............................................. 3
2.3. Exchange of Certificates.................................................................... 4
2.3.1 Exchange Agent........................................................................ 4
2.3.2 Exchange Procedures................................................................... 4
2.3.3 Distributions with Respect to Unexchanged Shares...................................... 5
2.3.4 No Further Ownership Rights in PharMerica Common Stock................................ 5
2.3.5 Termination of Exchange Fund.......................................................... 5
2.3.6 No Liability.......................................................................... 6
2.3.7 Investment of Exchange Fund........................................................... 6
2.4 Treatment of Stock Options and Warrants..................................................... 6
2.4.1 Conversion of Stock Options and Warrants.............................................. 6
2.2.4 Registration Statement................................................................ 7
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF PEACOCK............................................... 7
3.1 Organization and Qualification.............................................................. 7
3.2 Authority Relative to this Agreement........................................................ 8
3.3 Consents; No Conflicts...................................................................... 9
3.4 Board Recommendation ....................................................................... 10
3.5 State Anti-takeover Statutes; Stockholder Protection Rights.................................
Agreement; Other Provisions................................................................. 10
3.6 No Existing Violation, Default, Etc......................................................... 11
3.7 Licenses and Permits........................................................................ 11
3.8 Registration Statement; Prospectus/Joint Proxy Statement.................................... 11
3.9 Finders or Brokers; Compensation Arrangements............................................... 12
3.10 SEC Filings................................................................................. 12
3.11 Financial Statements ....................................................................... 13
3.12 Absence of Undisclosed Liabilities.......................................................... 13
3.13 Absence of Changes or Events................................................................ 14
3.14 Capitalization.............................................................................. 14
3.15 Capital Stock of Subsidiaries............................................................... 16
3.16 Litigation.................................................................................. 16
3.17 Insurance................................................................................... 16
3.18 Title to and Condition of Properties........................................................ 17
3.19 Leases...................................................................................... 17
3.20 Contracts and Commitments................................................................... 18
3.21 Labor Matters............................................................................... 19
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3.22 No Change in Control Puts................................................................... 19
3.23 Employment and Labor Contracts.............................................................. 19
3.24 Intellectual Property Rights ............................................................... 19
3.25 Taxes....................................................................................... 20
3.26 Employee Benefit Plans...................................................................... 22
3.27 Environmental Matters....................................................................... 25
3.28 Intentionally Omitted....................................................................... 28
3.29 Institutional Pharmacy Business............................................................. 28
3.30 Fairness Opinion............................................................................ 30
3.31 Year 2000................................................................................... 30
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF BLUEJAY
AND SUBCORP.......................................................................................... 30
4.1 Organization and Qualification.............................................................. 30
4.2 Authority Relative to this Agreement........................................................ 31
4.3 Consents; No Conflicts...................................................................... 31
4.4 Board Recommendation........................................................................ 33
4.5 No Existing Violation, Default, Etc......................................................... 33
4.6 Licenses and Permits........................................................................ 33
4.7 Registration Statement; Prospectus/Joint Proxy Statement.................................... 33
4.8 Finders or Brokers; Compensation Arrangements............................................... 34
4.9 SEC Filings................................................................................. 34
4.10 Financial Statements........................................................................ 35
4.11 Absence of Changes.......................................................................... 35
4.12 Capitalization.............................................................................. 35
4.13 Litigation.................................................................................. 36
4.14 Title to and Condition of Properties........................................................ 36
4.15 Taxes....................................................................................... 37
4.16 Absence of Undisclosed Liabilities.......................................................... 37
4.17 Year 2000................................................................................... 38
ARTICLE V. COVENANTS OF THE PARTIES.................................................................. 38
5.1. Access and Information...................................................................... 38
5.2. PharMerica's Affirmative Covenants.......................................................... 39
5.3. Bergen's Affirmative Covenants.............................................................. 40
5.4. PharMerica's Negative Covenants............................................................. 40
5.5. Bergen's Negative Covenants................................................................. 42
5.6. Closing Documents........................................................................... 42
5.7. HSR Act..................................................................................... 42
5.8. Further Actions............................................................................. 44
5.9. Employment Agreements....................................................................... 44
5.10. Public Announcements........................................................................ 45
5.11. Stockholders' Meetings...................................................................... 45
5.11.1 Bergen Annual Meeting................................................................ 45
5.11.2 PharMerica Special Meeting........................................................... 45
5.12 Preparation of the Prospectus/Joint Proxy Statement and the Registration Statement.......... 45
5.13 Indemnification; Directors' and Officers' Insurance......................................... 46
5.14 Merger Subsidiary........................................................................... 47
5.15 NYSE Listing................................................................................ 47
5.16 Employee and Employee Benefits.............................................................. 47
5.17 No Solicitation; Withdrawal of the Board Recommendation..................................... 48
5.18 Termination Right........................................................................... 49
5.19 Affiliates of PharMerica.................................................................... 50
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5.20 Subsequent Financial Statements............................................................. 50
5.21 Environmental Matters....................................................................... 50
5.22 Financial Statements for a Current Report on Form 8-K....................................... 50
5.23 Tax-Free Treatment.......................................................................... 51
5.24 Employee Stock Purchase Plans............................................................... 51
ARTICLE VI. CONDITIONS............................................................................... 52
6.1. Conditions to the Obligations of Each Party................................................. 52
6.2. Conditions to Bergen's and Subcorp's Obligations............................................ 53
6.3. Conditions to PharMerica's Obligations...................................................... 55
ARTICLE VII. TERMINATION AND AMENDMENT............................................................... 56
7.1. Termination................................................................................. 56
7.2. Effect of Termination....................................................................... 59
7.3. Amendment................................................................................... 60
7.4. Exclusive Remedy............................................................................ 60
7.5. Extension; Waiver........................................................................... 60
7.6. Standstill.................................................................................. 61
ARTICLE VIII. MISCELLANEOUS.......................................................................... 61
8.1. No Survival of Representations and Warranties............................................... 61
8.2. Notices..................................................................................... 61
8.3. Interpretation.............................................................................. 62
8.4. Counterparts................................................................................ 62
8.5. Entire Agreement............................................................................ 62
8.6. Third-Party Beneficiaries................................................................... 62
8.7. Governing Law............................................................................... 62
8.8. Consent to Jurisdiction; Venue.............................................................. 63
8.9. Specific Performance........................................................................ 63
8.10. Assignment.................................................................................. 63
8.11. Expenses.................................................................................... 63
8.12. Severability................................................................................ 63
8.13. No Strict Construction...................................................................... 64
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Exhibits:
A-1 Affiliate's Letter
Definitions:
Acquisition Agreement Section 5.18
Agreement lead-in
Antitrust Laws Section 5.7.2
Applicable Laws Section 2.3.3
April 1997 Agreements Section 3.25
Antitrust Division Section 6.1.3
Bergen lead-in
Bergen Annual Meeting Section 3.8
Bergen Approvals Section 6.2.4
Bergen Balance Sheet Section 4.14
Bergen Common Stock Section 4.12.1
Bergen Compensation and Benefit Plans Section 4.3.2
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Bergen Contracts Section 4.3.2
Bergen Disclosure Statement Lead-in to Article IV
Bergen Exchange Option Section 2.4.1
Bergen Exchange Warrant Section 2.4.1
Bergen Licenses Section 4.6
Bergen Material Adverse Effect Section 4.1
Bergen Permitted Encumbrances Section 4.14
Bergen Preferred Stock Section 4.12.1
Bergen SEC Reports Section 4.9.1
Bergen Shareowners' Rights Plan Section 4.12.1
Bergen Supply Agreement Section 7.2
Bergen Tax Returns Section 4.15
Business Combination Section 7.2
CERCLA Section 3.27.4
Certificate of Merger Section 1.2
Certificates Section 2.3.2
Circumstance Sections 3.1 and 4.1
Closing Section 1.2
Closing Date Section 1.2
COBRA Section 3.26.13
Code Section 2.4.1
Competing Transaction Section 5.17
Confidentiality Agreement Section 8.5
Contingency Steps Section 7.2
Costs Section 7.2.2
Delaware Secretary of State Section 1.2
DGCL Section 1.1
Effective Time Section 1.2
Environment Section 3.27.9.1
Environmental Laws Section 3.27.9.2
Environmental Notice Section 3.27.9.3
ERISA Section 3.26.1
ERISA Affiliate Section 3.26.1
Exchange Act Section 3.8
Exchange Agent Section 2.3.1
Exchange Fund Section 2.3.1
Exchange Ratio 2.2.1
FDA Section 2.3.3
Governmental Authority Section 2.3.6
Hazardous Materials Section 3.27.9.4
HSR Act Section 3.3.1
Intellectual Property Rights Section 3.24
IRS Section 3.3.1
Lowenstein Sandler Section 5.23
Merger Preliminary Statement A
Merger Consideration Section 2.1.2
New Employment Agreement Section 5.9
NYSE Section 3.3.1
Order Section 5.7.2
Outside Date Section 7.1.3
PBGC Section 3.3.1
PharMerica Lead-in
PharMerica Affiliate Letter Section 5.19
PharMerica Approvals Section 6.2.4
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PharMerica Balance Sheet Section 3.18
PharMerica Board Recommendation Section 3.4
PharMerica Common Stock Section 3.14. 1
PharMerica Compensation and Benefit Plans Section 3.3.2
PharMerica Contracts Section 3.3.2
PharMerica Disclosure Statement Lead-in to Article III
PharMerica Employee Benefit Plans Section 3.26.3
PharMerica Employees Section 5.16
PharMerica Licenses Section 3.7
PharMerica Material Adverse Effect Section 3.1
PharMerica Option Plans Section 3.14. 1
PharMerica Pharmacy Contracts Section 3.29.2
PharMerica Pension Benefit Plans Section 3.26.1
PharMerica Permitted Encumbrances Section 3.18
PharMerica Preferred Stock Section 3.14.1
PharMerica Rights Agreement Section 3.5
PharMerica SEC Reports Section 3.10.1
PharMerica Special Meeting Section 3.8
PharMerica Stockholders Preliminary Statement B
PharMerica Warrants Section 3.14.1
PharMerica Welfare Plans Section 3.26.2
Premises Section 5.21
Prospectus/Joint Proxy Statement Section 3.5
Registration Statement Section 3.8
SEC Section 2.4.2
Securities Act Section 2.3.4
Subcorp Lead-in
Subsidiaries Sections 3.1 and 4.1
Surviving Corporation Section 1.1
Tax/Taxes Section 3.25
Tax Returns Section 3.25
Third Party Firm Section 7.1.8
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AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this "Agreement") is made and
entered into as of the 11th day of January, 1999, by and among Bergen Brunswig
Corporation, a New Jersey corporation ("Bergen"), Peacock Merger Corp., a
Delaware corporation and a wholly owned subsidiary of Bergen ("Subcorp"), and
PharMerica, Inc., a Delaware corporation ("PharMerica").
PRELIMINARY STATEMENTS
A. Bergen desires to combine its pharmaceutical distribution business
and other businesses with the institutional pharmacy and other businesses
operated by PharMerica through the merger of Subcorp with and into PharMerica,
with PharMerica as the surviving corporation (the "Merger"), pursuant to which
each share of PharMerica Common Stock (as defined in Section 3.14.1) outstanding
at the Effective Time (as defined in Section 1.2), together with each associated
right issued under the PharMerica Rights Agreement (as defined in Section 3.5),
will be converted into the right to receive a fraction of a share of Bergen
Common Stock (as defined in Section 4.12.1), together with a fraction of an
associated right under the Bergen Shareowners' Rights Plan (as defined in
Section 4.12.1) and cash in lieu of fractional shares, as more fully provided
herein.
B. The Board of Directors of PharMerica has determined that the Merger
is consistent with and in furtherance of the long-term business strategy of
PharMerica and PharMerica desires to combine its institutional pharmacy and
other businesses with the pharmaceutical distribution business and other
businesses operated by Bergen and for the holders of shares of PharMerica Common
Stock ("PharMerica Stockholders") to have a continuing equity interest in the
combined Bergen/PharMerica businesses through the ownership of Bergen Common
Stock.
C. The respective Boards of Directors of Bergen, Subcorp and PharMerica
have determined that the Merger, in the manner contemplated herein, is desirable
and in the best interests of their respective stockholders and, by resolutions
duly adopted, have approved and adopted this Agreement.
NOW, THEREFORE, in consideration of these premises and the mutual and
dependent promises hereinafter set forth, the parties hereto hereby agree as
follows:
ARTICLE I.
THE MERGER
1.1. The Merger. Upon the terms and subject to the conditions hereof,
and in accordance with the provisions of the Delaware General Corporation Law
(the "DGCL"), Subcorp shall be merged with and into PharMerica at the Effective
Time. As a result of the Merger, the separate corporate existence of Subcorp
shall cease and PharMerica shall continue its existence under the laws of the
State of Delaware. PharMerica, in its capacity as the corporation surviving the
Merger, is hereinafter sometimes referred to as the "Surviving Corporation."
1.2. Effective Time. As promptly as possible on the Closing Date (as
defined below), the parties shall cause the Merger to be consummated by filing
with the Secretary of State of the State of Delaware (the "Delaware Secretary of
State") a certificate of merger (the "Certificate of Merger") in such form as is
required by Section 251 of the DGCL and executed in accordance with Section 251
of the DGCL. The Merger shall become effective (the "Effective Time") when the
Certificate of Merger has been filed with the Delaware Secretary of State or at
such later time as shall be agreed upon by Bergen and PharMerica and specified
in the Certificate of Merger. Prior to the filing referred to in this Section
1.2, a closing (the "Closing") shall be held at the offices of Lowenstein
Sandler PC, 65 Livingston Avenue, Roseland, New Jersey 07068 or such other place
as the parties may agree, as soon as practicable (but in any event within five
business days) following the date upon which all conditions set forth in Article
VI hereof have been satisfied or waived, or at such other date as Bergen and
PharMerica may agree,
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provided that the conditions set forth in Article VI have been satisfied or
waived at or prior to such date. The date on which the Closing takes place is
referred to herein as the "Closing Date." For all tax purposes, the Closing
shall be effective at the end of the day on the Closing Date.
1.3. Effects of the Merger. From and after the Effective Time, the
Merger shall have the effects set forth in Section 259 of the DGCL.
1.4. Certificate of Incorporation and Bylaws. At the Effective Time,
(i) the Certificate of Incorporation of the Surviving Corporation as in effect
immediately prior to the Effective Time shall be amended as of the Effective
Time so as to contain the provisions, and only the provisions, contained
immediately prior thereto in the Certificate of Incorporation of Subcorp, except
for Article I thereof which shall continue to read "The name of the corporation
is PharMerica, Inc.", and (ii) the Bylaws of Subcorp in effect immediately prior
to the Effective Time shall be the Bylaws of the Surviving Corporation; in each
case until amended in accordance with applicable law.
1.5. Directors and Officers of the Surviving Corporation. From and
after the Effective Time, individuals designated by Bergen prior to the
Effective Time shall be the officers of the Surviving Corporation and the
directors of Subcorp shall be the directors of the Surviving Corporation, in
each case until their respective successors are duly elected and qualified. On
or prior to the Closing Date, PharMerica shall deliver to Bergen a written
resignation, in form and substance satisfactory to Bergen, from each director of
PharMerica, effective as of the Effective Time.
ARTICLE II.
CONVERSION OF SECURITIES
2.1. Conversion of Capital Stock. At the Effective Time, by virtue of
the Merger and without any action on the part of Bergen, Subcorp or PharMerica
or their respective stockholders:
2.1.1 Each share of common stock, $0.01 par value, of Subcorp
issued and outstanding immediately prior to the Effective Time shall be
converted into one share of common stock, par value $0.01 per share, of the
Surviving Corporation. Such newly issued shares shall thereafter constitute all
of the issued and outstanding capital stock of the Surviving Corporation.
2.1.2 Subject to the other provisions of this Article II, each
share of PharMerica Common Stock, together with each associated right issued
under the PharMerica Rights Agreement, issued and outstanding immediately prior
to the Effective Time shall be converted into the right to receive a fraction of
a share of Bergen Common Stock equal to the Exchange Ratio (as defined in
Section 2.2.1), together with the appropriate fraction of an associated right
under the Bergen Shareowners' Rights Plan (the consideration referred to in this
Section 2.1.2 being hereinafter referred to as the "Merger Consideration").
2.1.3 Each share of capital stock of PharMerica held in the
treasury of PharMerica shall be canceled and retired and no payment shall be
made in respect thereof.
2.2. Exchange Ratio; Fractional Shares; Adjustments.
2.2.1 The "Exchange Ratio" shall be equal to 0.275.
2.2.2 No certificates for fractional shares of Bergen Common
Stock shall be issued as a result of the conversion provided for in Section
2.1.2. In lieu of any such fractional shares, the holder of a certificate
previously evidencing PharMerica Common Stock, upon presentation of such
fractional interest represented by an appropriate certificate for PharMerica
Common Stock to the Exchange Agent pursuant to Section 2.3, shall be entitled to
receive a cash payment therefor in an amount equal to the value of such
fractional interest (determined by reference to the average of the per share
last daily closing prices of Bergen Common Stock as quoted on the NYSE (and as
reported by The Wall Street Journal or, if not reported thereby, by another
authoritative source)
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during the ten (10) consecutive trading days ending on the fourth trading day
immediately preceding the Closing Date. Such payment with respect to fractional
shares is merely intended to provide a mechanical rounding off of, and is not a
separately bargained for, consideration. If more than one certificate
representing shares of PharMerica Common Stock shall be surrendered for the
account of the same holder, the number of shares of Bergen Common Stock for
which certificates have been surrendered shall be computed on the basis of the
aggregate number of shares represented by the certificates so surrendered.
2.2.3 In the event that, subsequent to the date hereof and
prior to the Effective Time, Bergen shall declare a stock dividend or other
distribution payable in shares of Bergen Common Stock or securities convertible
into shares of Bergen Common Stock, or effect a stock split, reclassification,
combination or other change with respect to shares of Bergen Common Stock, the
Exchange Ratio set forth in this Section 2.2 shall be adjusted to reflect such
dividend, distribution, stock split, reclassification, combination or other
change.
2.3. Exchange of Certificates.
2.3.1 Exchange Agent. Promptly following the Effective Time,
Bergen shall deposit with ChaseMellon Stockholder Services, Inc. or such other
exchange agent as may be designated by Bergen (the "Exchange Agent"), for the
benefit of PharMerica Stockholders, for exchange in accordance with this Section
2.3, certificates representing shares of Bergen Common Stock issuable pursuant
to Section 2.1 in exchange for outstanding shares of PharMerica Common Stock and
shall from time-to-time deposit cash in an amount reasonably expected to be paid
pursuant to Section 2.2 (such shares of Bergen Common Stock and cash, together
with any dividends or distributions with respect thereto, being hereinafter
referred to as the "Exchange Fund").
2.3.2 Exchange Procedures. As soon as practicable after the
Effective Time, Bergen shall instruct the Exchange Agent to mail to each holder
of record of a certificate or certificates (the "Certificates") which
immediately prior to the Effective Time represented outstanding shares of
PharMerica Common Stock whose shares were converted into the right to receive
the Merger Consideration pursuant to Section 2.1.2 the following: (i) a letter
of transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent and shall be in such form and have such other
customary provisions as Bergen may reasonably specify) and (ii) instructions for
effecting the surrender of the Certificates in exchange for certificates
representing shares of Bergen Common Stock and cash in lieu of fractional
shares. Upon surrender of a Certificate for cancellation to the Exchange Agent,
together with a duly executed letter of transmittal, the holder of such
Certificate shall be entitled to receive in exchange therefor (x) a certificate
or certificates representing the whole number of shares of Bergen Common Stock
which such holder has the right to receive pursuant to Section 2.1.2 (and
representing each associated right under the Bergen Shareowners' Rights Plan) in
such denominations and registered in such names as such holder may request and
(y) a check representing the amount of cash in lieu of fractional shares, if
any, and unpaid dividends and distributions, if any, which such holder has the
right to receive pursuant to the provisions of this Article II, after giving
effect to any required withholding tax. The shares represented by the
Certificates so surrendered shall forthwith be canceled. No interest will be
paid or accrued on the cash in lieu of fractional shares, if any, and the unpaid
dividends and distributions, if any, payable to holders of shares of PharMerica
Common Stock. In the event of a transfer of ownership of shares of PharMerica
Common Stock which is not registered on the transfer records of PharMerica, a
certificate representing the proper number of shares of Bergen Common Stock (and
representing each associated right under the Bergen Shareowners' Rights Plan),
together with a check for the cash to be paid in lieu of fractional shares, if
any, and unpaid dividends and distributions, if any, may be issued to such
transferee if the Certificate representing such shares of PharMerica Common
Stock held by such transferee is presented to the Exchange Agent, accompanied by
all documents required to evidence and effect such transfer and to evidence that
any applicable stock transfer taxes have been paid. Until surrendered as
contemplated by this Section 2.3, each Certificate shall be deemed at any time
after the Effective Time to represent only the right to receive upon surrender a
certificate representing whole shares of Bergen Common Stock issuable pursuant
to Section 2.1.2 (and representing each associated right under the Bergen
Shareowners' Rights Plan) and cash in lieu of fractional shares, if any, and
unpaid dividends and distributions, if any, as provided in this Article II.
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2.3.3 Distributions with Respect to Unexchanged Shares.
Notwithstanding any other provisions of this Agreement, no dividends or other
distributions declared or made after the Effective Time with respect to shares
of Bergen Common Stock having a record date after the Effective Time shall be
paid to the holder of any unsurrendered Certificate until the holder shall
surrender such Certificate as provided in this Section 2.3. Subject to the
effect of all applicable laws, statutes, orders, rules, regulations, policies or
guidelines promulgated, or judgments, decisions or orders entered, by any
Governmental Authority (as defined in Section 2.3.6), including, without
limitation, the Federal Prescription Drug Marketing Act and comparable or
related state law provisions, the Federal Controlled Substances Act of 1970, the
Food, Drug and Cosmetic Act, the Good Manufacturing Practices standards of the
Food and Drug Administration (the "FDA"), federal Medicare and Medicaid
statutes, including, without limitation, 42 U.S.C. Section 1320a-7b and 42
U.S.C. Section 1395nn or related state or local statutes or regulations,
applicable state laws regulating pharmacy or wholesaling practices, the
Occupational Safety and Health Act and the regulations promulgated thereunder
(all such laws, statutes, orders, rules, regulations, policies, guidelines,
judgments, decisions and orders, collectively, "Applicable Laws"), following
surrender of any such Certificate, there shall be paid to the holder of the
certificates representing whole shares of Bergen Common Stock issued in exchange
therefor, without interest, (i) at the time of such surrender, the amount of
dividends or other distributions with a record date after the Effective Time
theretofore payable with respect to such whole shares of Bergen Common Stock and
not paid, less the amount of any withholding taxes which may be required
thereon, and (ii) at the appropriate payment date subsequent to surrender, the
amount of dividends or other distributions with a record date after the
Effective Time but prior to surrender and a payment date subsequent to surrender
payable with respect to such whole shares of Bergen Common Stock, less the
amount of any withholding taxes which may be required thereon.
2.3.4 No Further Ownership Rights in PharMerica Common Stock.
All shares of Bergen Common Stock issued upon surrender of Certificates in
accordance with the terms hereof (and each associated right under the Bergen
Shareowners' Rights Plan) and all cash paid pursuant to this Article II shall be
deemed to have been issued and paid in full satisfaction of all rights
pertaining to such shares of PharMerica Common Stock represented thereby, and
there shall be no further registration of transfers on the stock transfer books
of PharMerica of shares of PharMerica Common Stock outstanding immediately prior
to the Effective Time. If, after the Effective Time, Certificates are presented
to the Surviving Corporation for any reason, they shall be canceled and
exchanged as provided in this Section 2.3. Certificates surrendered for exchange
by any person constituting an "affiliate" of PharMerica for purposes of Rule
145(c) under the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder (the "Securities Act"), shall not be
exchanged until Bergen has received written undertakings from such person in the
form attached hereto as Exhibit A-1.
2.3.5 Termination of Exchange Fund. Any portion of the
Exchange Fund which remains undistributed to PharMerica Stockholders six months
after the date of the mailing required by Section 2.3.2 shall be delivered to
Bergen, upon demand therefor, and holders of Certificates previously
representing shares of PharMerica Common Stock who have not theretofore complied
with this Section 2.3 shall thereafter look only to Bergen for payment of any
claim to shares of Bergen Common Stock, cash in lieu of fractional shares
thereof, or dividends or distributions, if any, in respect thereof.
2.3.6 No Liability. None of Bergen, the Surviving Corporation
or the Exchange Agent shall be liable to any person in respect of any shares of
PharMerica Common Stock (or dividends or distributions with respect thereto) or
cash from the Exchange Fund delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law. If any Certificates shall
not have been surrendered prior to seven years after the Effective Time of the
Merger (or immediately prior to such earlier date on which any cash, any cash in
lieu of fractional shares or any dividends or distributions with respect to
whole shares of PharMerica Common Stock in respect of such Certificate would
otherwise escheat to or become the property of any local, domestic, foreign or
multi-national court, arbitration tribunal, administrative agency, commission,
legislative body or other governmental or regulatory body, agency,
instrumentality or authority (a "Governmental Authority")), any such cash,
dividends or distributions in respect of such Certificate shall, to the extent
permitted by Applicable Laws, become the property of Bergen, free and clear of
all claims or interest of any person previously entitled thereto.
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2.3.7 Investment of Exchange Fund. The Exchange Agent shall
invest any cash included in the Exchange Fund, as directed by Bergen, on a daily
basis. Any interest and other income resulting from such investments shall be
paid to Bergen upon termination of the Exchange Fund pursuant to Section 2.3.5.
2.4. Treatment of Stock Options and Warrants.
2.4.1 Conversion of Options. Prior to the Effective Time,
Bergen and PharMerica shall take all such actions as may be necessary to cause
each unexpired and unexercised option (each, a "PharMerica Option") under all
stock option plans of PharMerica in effect on the date hereof which has been
granted by PharMerica to current or former directors, officers, employees,
consultants or representatives of PharMerica or to other persons with
relationships to PharMerica and each PharMerica Warrant (as defined in Section
3.14) to be automatically converted at the Effective Time into an option (a
"Bergen Exchange Option") or warrant (a "Bergen Exchange Warrant"), as the case
may be, to purchase that number of shares of Bergen Common Stock equal to the
number of shares of PharMerica Common Stock issuable immediately prior to the
Effective Time upon exercise of the PharMerica Option or PharMerica Warrant
(without regard to actual restrictions on exercisability) multiplied by the
Exchange Ratio (the product of such multiplication to be rounded to the nearest
whole number), with an exercise price equal to the exercise price which existed
under the corresponding PharMerica Option or PharMerica Warrant divided by the
Exchange Ratio (the quotient of such division to be rounded to the nearest
penny), and with other terms and conditions that are the same as the terms and
conditions of such PharMerica Option or PharMerica Warrant immediately before
the Effective Time; provided that with respect to any PharMerica Option that is
an "incentive stock option" within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"), the foregoing conversion shall be
carried out in a manner satisfying the requirements of Section 424(a) of the
Code. In connection with the issuance of Bergen Exchange Options and Bergen
Exchange Warrants, Bergen shall (i) reserve for issuance the number of shares of
Bergen Common Stock that will become subject to Bergen Exchange Options and
Bergen Exchange Warrants pursuant to this Section 2.4 and (ii) from and after
the Effective Time, upon exercise of Bergen Exchange Options and Bergen Exchange
Warrants, make available for issuance all shares of Bergen Common Stock covered
thereby, subject to the terms and conditions applicable thereto.
2.4.2 S-8 Registration Statement. Bergen agrees to use its
reasonable efforts to file with the Securities and Exchange Commission (the
"SEC") as promptly as practicable (but in no event more than ten business days)
after the Closing Date a registration statement on Form S-8 or other appropriate
form under the Securities Act to register shares of Bergen Common Stock issuable
upon exercise of the Bergen Exchange Options and use its reasonable efforts to
cause such registration statement to remain effective until the exercise or
expiration of such options.
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF PEACOCK
Except as set forth in the disclosure statement delivered by PharMerica
to Bergen at or prior to the execution of this Agreement (the "PharMerica
Disclosure Statement") (each section of which qualifies the correspondingly
numbered representation and warranty, regardless of whether such representation
or warranty expressly refers to or is qualified by reference to such PharMerica
Disclosure Statement), PharMerica represents and warrants to Bergen as follows:
3.1 Organization and Qualification. Each of PharMerica and its
Subsidiaries (as defined in this Section 3.1) is an entity duly incorporated,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation and has the corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
PharMerica SEC Reports (as defined in Section 3.10.1). Each of PharMerica and
each of PharMerica's Subsidiaries is duly qualified to transact business as a
foreign corporation or other foreign entity and is in good standing in each
jurisdiction in which the conduct of its business or the ownership, leasing or
operation of its property requires such qualification, except for failures to be
so qualified or in good standing which would not, singly or in the aggregate
with all such other failures, have a PharMerica Material Adverse Effect.
"PharMerica Material Adverse Effect" means, with respect to any event,
occurrence, matter, failure of event or occurrence, change, effect, state of
affairs, breach, default, violation, fine, penalty or failure to comply (each, a
"Circumstance"), individually or taken together with all other Circumstances
contemplated by or in connection
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with any or all of the representations and warranties made in this Agreement, a
material adverse effect on the business, assets (including without limitation
intangible assets), liabilities (contingent or otherwise), financial condition
or results of operations of PharMerica and its Subsidiaries, taken as a whole;
provided, however, that PharMerica Material Adverse Effect shall not be deemed
to include the impact of: (A) any decline in the share price of either
PharMerica Common Stock or Bergen Common Stock, except that any effect
underlying such decline shall be considered in determining whether a PharMerica
Material Adverse Effect has occurred to the extent that such effect would
otherwise be so considered); (B) the implementation of changes in generally
accepted accounting principles; (C) actions and omissions of PharMerica or its
Subsidiaries taken or permitted with the prior written consent of Bergen after
the date hereof; (D) expenses reasonably incurred by PharMerica or its
Subsidiaries in consummating the transactions contemplated by this Agreement;
and (E) the impact of the implementation of the prospective payment system for
skilled nursing facilities and other long-term care providers, except to the
extent that such implementation would render consummation of the transactions
contemplated by this Agreement illegal. Neither PharMerica nor any of its
Subsidiaries is in violation of any of the provisions of its certificate of
incorporation (or other applicable charter document), as amended, or by-laws, as
amended, or, if it is a limited liability company or partnership, its operating
agreement, partnership agreement or other comparable agreement. True and
complete copies of the certificate of incorporation and by-laws, as currently in
effect, of PharMerica and copies that are true and complete in all material
respects of the certificate of incorporation and by-laws, as currently in
effect, of each Subsidiary of PharMerica have been previously delivered or made
available to Bergen. No amendments to the certificate of incorporation, as
amended, of PharMerica have been authorized since December 31, 1997 and, except
as set forth in minute books and other organizational documents made available
to Bergen for its review, no amendments to the by-laws, as amended, of
PharMerica have been authorized since December 31, 1997. For purposes of this
Agreement, all references to the "Subsidiaries" of PharMerica shall constitute
references to any entity (i) the accounts of which would be consolidated with
those of PharMerica in PharMerica's consolidated financial statements if such
financial statements were prepared in accordance with generally accepted
accounting principles or (ii) of which securities or other ownership interests
representing more than 50% of the equity or more than 50% of the ordinary voting
power or, in the case of a partnership, more than 50% of the general partnership
interests or more than 50% of the profits or losses are owned by PharMerica
and/or one or more subsidiaries of PharMerica.
3.2 Authority Relative to This Agreement . PharMerica has the corporate
power and authority to execute and deliver this Agreement and, upon obtaining
the approval of a majority of the outstanding shares of PharMerica Common Stock
at the PharMerica Special Meeting (as defined in Section 3.8.1) or any
adjournment thereof as authorized under the DGCL, to consummate the Merger and
the other transactions contemplated hereby. The execution and delivery of this
Agreement and the consummation of the Merger and the other transactions
contemplated hereby have been duly and validly authorized by the Board of
Directors of PharMerica, and except as stated in the preceding sentence, no
other corporate proceedings on the part of PharMerica are necessary to authorize
this Agreement or to consummate the Merger and the other transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by PharMerica and, assuming the due authorization, execution and
delivery hereof by Bergen and Subcorp and subject to stockholder approval as
aforesaid, constitutes a valid and binding agreement of PharMerica, enforceable
against PharMerica in accordance with its terms, except to the extent that its
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting the enforcement of creditors'
rights generally or by general equitable principles.
3.3 Consents, No Conflicts.
3.3.1 Except for actions to be taken in connection with (a)
the filing of the Certificate of Merger, (b) the filing and effectiveness of the
Registration Statement (as hereinafter defined), (c) the filings required under
and in connection with the applicable requirements of the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), (d) any filings
required under the New Jersey Industrial Site Recovery Act, (e) filings required
pursuant to any state securities or "blue sky" laws, (f) filings and other
matters relating to the listing on the New York Stock Exchange (the "NYSE") of
the shares of Bergen Common Stock required to be issued pursuant to this
Agreement, (g) notices to or filings with the Internal Revenue Service (the
"IRS") or the Pension
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Benefit Guaranty Corporation (the "PGBC") with respect to any employee benefit
plans (to the extent such notices to and filings with the IRS or the PGBC are
described in Section 3.3.1 of the PharMerica Disclosure Statement), (h) any
other filings, notices, disclosures or registrations set forth in Section 3.3.1
of the PharMerica Disclosure Statement and (i) other consents, filings or
notifications which, if not obtained or made, are not reasonably likely to have,
individually or in the aggregate, a PharMerica Material Adverse Effect, no
filing or registration with, notification or disclosure to, or permit,
authorization, consent or approval of, (x) any court, (y) any government agency
or body or (z) any third party, whether acting in an individual, fiduciary or
other capacity, is required for the consummation by PharMerica of the Merger or
the other transactions contemplated hereby.
3.3.2 Except as set forth in Section 3.3.2 of the PharMerica
Disclosure Statement, the execution, delivery and performance of this Agreement
and the consummation of the Merger and the other transactions contemplated
hereby and compliance by PharMerica with any of the provisions hereof do not and
will not: (i) subject to obtaining the approval of the Merger by a majority of
the outstanding shares of PharMerica Common Stock, conflict with or result in
any breach or violation of any provision of the certificate of incorporation (or
other comparable charter documents), as amended, or by-laws, as amended, of
PharMerica or any of its Subsidiaries or, with respect to a Subsidiary of
PharMerica that is a limited liability company or partnership, its operating
agreement, partnership agreement or other comparable agreement or (ii) result in
(1) a breach or violation of, a default under or an event triggering any
payment, obligation or acceleration of any obligation pursuant to any existing
pension plans, welfare plans, multiemployer plans, employee benefit plans,
benefit arrangements or similar plans, arrangements or policies, including
without limitation bonus, incentive, deferred compensation, stock purchase,
stock option, stock appreciation right, health or group insurance, severance
pay, retirement or other benefit plans, and all similar arrangements or policies
of PharMerica and its Subsidiaries (the "PharMerica Compensation and Benefit
Plans") or any grant or award made under any of the foregoing, (2) a breach or
violation of, a default under or an event triggering a right of termination of,
a default under, or the acceleration of any obligation or the creation of a
lien, pledge, security interest or other encumbrance on assets (with or without
the giving of notice or the lapse of time or both) pursuant to any provision of,
any agreement, lease of real or personal property, marketing agreement,
contract, note, mortgage, indenture or other obligation of PharMerica or any of
its Subsidiaries ("PharMerica Contracts") or, subject to making all filings,
notifications and disclosures and receipt of all permits, authorizations,
consents and approvals referred to in clauses "a" through "h" of Section 3.3.1
or in Section 3.3.1 of the PharMerica Disclosure Statement, any law, rule,
ordinance or regulation or judgment, decree, order or award to which PharMerica
or any of its Subsidiaries is subject or any governmental or non-governmental
authorization, consent, approval, registration, franchise, license or permit
under which PharMerica or any of its Subsidiaries conducts any of its business,
or (3) any other change in the rights or obligations of any party under any of
the PharMerica Contracts, except, with respect to this clause (ii), for
breaches, violations, defaults, triggering events, creations of liens, pledges,
security interests or other encumbrances on assets, or changes in rights or
obligations which would not, singly or in the aggregate with all other such
matters, have a PharMerica Material Adverse Effect.
3.4 Board Recommendation. The Board of Directors of PharMerica has, by
a unanimous vote of those Directors in attendance at a meeting of such Board
duly held on January 10, 1999 approved and adopted this Agreement, the Merger
and the other transactions contemplated hereby. At such meeting, the Board of
Directors of PharMerica determined that the consideration to be received by
holders of PharMerica Common Stock pursuant to the Merger is fair to the holders
of shares of PharMerica Common Stock and recommended that the holders of such
shares approve and adopt this Agreement, the Merger and the other transactions
contemplated hereby (the "PharMerica Board Recommendation").
3.5 State Anti-takeover Statutes; Stockholder Protection Rights
Agreement. PharMerica has granted all approvals and taken all other steps
necessary to exempt the Merger and the other transactions contemplated hereby
from the requirements and provisions of Section 203 of the DGCL, Section
607.0901 of the Florida Corporation Law, Section 607.0902 of the Florida
Corporation Law and any other state antitakeover statute or regulation such that
none of the provisions of any such "business combination," "moratorium,"
"control share" or other state antitakeover statute or regulation (x) prohibits
or restricts either PharMerica's ability to perform its obligations under this
Agreement or its ability to consummate the Merger and the other transactions
contemplated hereby, (y) would have the effect of invalidating or voiding this
Agreement or any provision hereof, or (z) would subject
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Bergen to any material impediment or condition in connection with the exercise
of any of its rights under this Agreement. A copy of the resolutions adopted by
PharMerica's Board to effect such results, which resolutions have been adopted
by a majority of the "disinterested directors" (as such term is defined in
Section 607.0901(1)(h) of the Florida Corporation Law) of PharMerica's Board,
has been provided to Bergen prior to the execution of this Agreement. The
Stockholder Protection Rights Agreement, dated as of August 13, 1998 (the
"PharMerica Rights Agreement"), between PharMerica and Harris Trust and Savings
Bank, as Rights Agent, has been amended so that, solely with respect to the
transactions contemplated by this Agreement (after taking into consideration the
rights granted by Counsel Corporation and its affiliates to Bergen as described
by Bergen in a report on Schedule 13D filed by Bergen with the SEC in November
1998), Bergen is exempt from the definition of "Acquiring Person" contained in
the PharMerica Rights Agreement and no "Stock Acquisition Date", "Separation
Time" or "Flip-in Date" (as such terms are defined in the PharMerica Rights
Agreement) will occur as a result of the execution of this Agreement or the
consummation of the Merger pursuant to this Agreement. The PharMerica Rights
Agreement, as so amended, has not been further amended or modified. Copies of
all such amendments to the PharMerica Rights Agreement have been previously
provided to Bergen. The PharMerica Rights Agreement will expire pursuant to
Section 5.2 thereof immediately prior to the Effective Time.
3.6 No Existing Violation, Default, Etc. None of PharMerica or its
Subsidiaries is in violation (except for any violations which would not, singly
or in the aggregate with all such other violations, have a PharMerica Material
Adverse Effect) of (A) any Applicable Law or (B) any order, decree or judgment
of any Governmental Authority having jurisdiction over PharMerica or any of its
Subsidiaries. No event of default or event that, but for the giving of notice or
the lapse of time or both, would constitute an event of default, exists under
any PharMerica Contract or any lease, permit, license or other agreement or
instrument to which PharMerica or any of its Subsidiaries is a party or by which
any of them is bound or to which any of the properties, assets or operations of
PharMerica or any of its Subsidiaries is subject (except for any events of
default or other defaults which would not, singly or in the aggregate with all
such other defaults, have a PharMerica Material Adverse Effect).
3.7 Licenses and Permits. Each of PharMerica and its Subsidiaries has
such certificates, permits, licenses, franchises, consents, approvals, orders,
authorizations and clearances from appropriate governmental agencies and bodies
("PharMerica Licenses") as are necessary to own, lease or operate its properties
and to conduct its business in the manner described in the PharMerica SEC
Reports and as presently conducted and all such PharMerica Licenses are valid
and in full force and effect, other than any failure to have any such PharMerica
License or any failure of any such PharMerica License to be valid and in full
force and effect as would not, singly or in the aggregate with all such other
failures, have a PharMerica Material Adverse Effect. PharMerica or one or more
of its Subsidiaries are participants in the Medicaid program in the states
listed in Section 3.7 of the PharMerica Disclosure Statement. Each of PharMerica
and its Subsidiaries is and, within the period of all applicable statutes of
limitations, has been in compliance with its obligations under such PharMerica
Licenses and no event has occurred that allows, or after notice or lapse of time
would allow, revocation or termination of such PharMerica Licenses, other than
any such failure to be in compliance with such obligations or any such
revocation or termination as would not, singly or in the aggregate with all such
other failures, revocations or terminations, have a PharMerica Material Adverse
Effect. PharMerica has no knowledge of any facts or circumstances that could
reasonably be expected to result in an inability of PharMerica or any of its
Subsidiaries to renew any PharMerica License, other than any such non-renewal as
would not, singly or in the aggregate with all such non-renewals, have a
PharMerica Material Adverse Effect. Subject to making all filings, notifications
and disclosures and receipt of all permits, authorizations, consents and
approvals referred to in Section 3.3.1 of the PharMerica Disclosure Statement,
neither the execution and delivery by PharMerica of this Agreement nor the
consummation of any of the transactions contemplated herein will result in any
revocation or termination of any material PharMerica License. Set forth in
Section 3.7 of the PharMerica Disclosure Statement is a true and complete list
of all material PharMerica Licenses which are necessary for the conduct of the
business presently conducted by PharMerica and its Subsidiaries.
3.8 Registration Statement; Prospectus/Joint Proxy Statement. None of
the information supplied by PharMerica for inclusion in, and none of the
information regarding PharMerica and its Subsidiaries incorporated by reference
in, the registration statement under the Securities Act registering the Bergen
Common Stock to be issued pursuant to the Merger (such registration statement,
as amended by any amendments thereto, being referred to herein as the
"Registration Statement") or the prospectus/joint proxy statement to be sent to
the stockholders of
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Bergen and PharMerica in connection with the annual meeting of stockholders of
Bergen at which such stockholders will be asked to approve the issuance of
Bergen Common Stock pursuant to the Merger (the "Bergen Annual Meeting") and the
special meeting of the stockholders of PharMerica at which such stockholders
will be asked to approve the Merger and this Agreement (the "PharMerica Special
Meeting") (such prospectus/joint proxy statement, as amended by any amendments
thereto, being referred to herein as the "Prospectus/Joint Proxy Statement"),
including all amendments and supplements to the Registration Statement and
Prospectus/Joint Proxy Statement, shall, in the case of the Registration
Statement, at the time the Registration Statement becomes effective and, in the
case of the Prospectus/Joint Proxy Statement, on the date or dates the
Prospectus/Joint Proxy Statement is first mailed to Bergen and PharMerica
stockholders and on the date or dates of the Bergen Annual Meeting and the
PharMerica Special Meeting, contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
3.9 Finders or Brokers; Compensation Arrangements. Except as set forth
in Section 3.9 of the PharMerica Disclosure Statement, neither PharMerica nor
any Subsidiary of PharMerica has employed any investment banker, broker, finder
or intermediary in connection with the transactions contemplated hereby who
might be entitled to a fee or any commission the receipt of which is conditioned
in whole or part upon consummation of the Merger. The compensation payable by or
on behalf of PharMerica and its Subsidiaries (with respect to the transactions
contemplated hereby) to any investment banker, broker, finder or intermediary
identified in Section 3.9 of the PharMerica Disclosure Statement is set forth in
one or more engagement letters delivered to Bergen prior to the execution of
this Agreement.
3.10 SEC Filings.
3.10.1 Except as set forth in Section 3.10 of the PharMerica
Disclosure Statement, PharMerica (and, with respect to periods prior to December
30, 1997, Captsone Pharmacy Services, Inc.) has, in all material respects, filed
with the SEC all required forms, reports and documents required to be filed by
it with the SEC since December 31, 1994 (collectively, the "PharMerica SEC
Reports"), all of which, when filed (in the case of forms, reports and documents
filed pursuant to the Exchange Act) or when declared effective (in the case of
registration statements filed pursuant to the Securities Act), complied as to
form in all material respects with the applicable provisions of the Securities
Act and the Exchange Act, as the case may be. As of their respective dates, the
PharMerica SEC Reports (including documents included as exhibits thereto or
incorporated by reference therein) did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
3.10.2 PharMerica will deliver to Bergen as soon as they
become available true and complete copies of any report or statement mailed by
PharMerica to its security holders generally or filed by it with the SEC, in
each case subsequent to the date hereof and prior to the Effective Time. As of
their respective dates, such reports and statements (excluding any information
therein provided by Bergen, as to which PharMerica makes no representation) will
comply as to form in all material respects with the applicable provisions of the
Securities Act and the Exchange Act, will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they are made, not misleading, and will further comply in all material
respects with all applicable requirements of law, except for such failures to
comply as to form, untrue statements or omissions or further failures to comply
which would not be reasonably likely to have, individually or in the aggregate,
a PharMerica Material Adverse Effect. The audited consolidated financial
statements and unaudited consolidated interim financial statements of PharMerica
and its Subsidiaries to be included or incorporated by reference in such reports
and statements will be prepared in accordance with generally accepted accounting
principles applied on a consistent basis throughout the periods involved (except
as may be indicated in the notes to such financial statements), and in
accordance with all applicable published accounting requirements under the
Securities Act and the Exchange Act, and will fairly present in all material
respects the consolidated financial position of PharMerica and its Subsidiaries
as of the dates thereof and the consolidated results of operations and
consolidated cash flows of PharMerica and its Subsidiaries for the periods then
ended (subject, in the case of any unaudited interim financial statements, to
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normal year-end adjustments and to the extent that they may not include
footnotes or may be condensed or summary statements); provided, however, that
any pro forma financial statements will not necessarily be indicative of the
consolidated financial position of PharMerica as of the respective dates thereof
and the consolidated results of operations and cash flows of PharMerica for the
periods indicated.
3.11 Financial Statements. The audited year-end consolidated financial
statements and unaudited consolidated interim financial statements included or
incorporated by reference in the PharMerica SEC Reports have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis during the periods involved (except as may be indicated in the notes to
such financial statements), and in accordance with all applicable published
accounting requirements under the Securities Act and the Exchange Act, and
fairly present in all material respects the consolidated financial position of
the entities described therein as of the dates thereof and the consolidated
results of operations and consolidated cash flows of such entities for the
periods then ended (subject, in the case of any unaudited interim financial
statements, to normal year-end adjustments and to the extent they may not
include footnotes or may be condensed or summary statements); provided, however,
that any pro forma financial statements will not necessarily be indicative of
the consolidated financial position of PharMerica as of the respective dates
thereof and the consolidated results of operations and cash flows of PharMerica
for the periods indicated.
3.12 Absence of Undisclosed Liabilities. Neither PharMerica nor any of
its Subsidiaries has any liabilities or obligations of any nature, whether
absolute, accrued, unmatured, contingent or otherwise, or any unsatisfied
judgments or any leases of personalty or realty or unusual or extraordinary
commitments, except for those liabilities or allowances recorded, accrued or
reserved against on the PharMerica Balance Sheet (as defined in Section 3.18) or
described in the notes thereto, and except for liabilities or obligations that
would not, singly or in the aggregate, be reasonably expected to have a
PharMerica Material Adverse Effect.
3.13 Absence of Changes or Events. Except for (a) matters publicly
disclosed by PharMerica prior to the date hereof (including without limitation
matters disclosed in PharMerica SEC Reports filed prior to the date hereof), (b)
matters disclosed in Section 3.13 of the PharMerica Disclosure Statement and (c)
matters disclosed in Section 3.16 of the PharMerica Disclosure Statement:
3.13.1 Since September 30, 1998: (i) PharMerica and its
Subsidiaries have conducted their business in the ordinary course and have not
entered into any material oral or written agreement or other material
transaction that is not in the ordinary course of business (other than this
Agreement) or that could reasonably be expected to result in a PharMerica
Material Adverse Effect; (ii) neither PharMerica nor any of its Subsidiaries
have sustained any material loss or interference with their business or
properties from fire, flood, windstorm, accident, strike or other calamity
(whether or not covered by insurance); (iii) there has been no material change
in the indebtedness of PharMerica and its Subsidiaries, no change in the capital
stock of PharMerica and no dividend or distribution of any kind declared, paid
or made by PharMerica on any class of its capital stock; (iv) there has been no
event or condition which has caused a PharMerica Material Adverse Effect, nor
any development, occurrence or state of facts or circumstances known to
PharMerica that could, singly or in the aggregate, reasonably be expected to
result in a PharMerica Material Adverse Effect; and (v) there has been no
material change by PharMerica in its accounting principles, practices or
methods.
3.13.2 Since September 30, 1998, other than in the ordinary
course of business consistent with past practice, there has not been any
increase in the compensation or other benefits payable, or which could become
payable, by PharMerica, to its officers or key employees, or any amendment of
any of the PharMerica Compensation and Benefit Plans.
3.14 Capitalization.
3.14.1 The authorized capital stock of PharMerica consists
solely of 300,000,000 shares of PharMerica's common stock, par value $0.01 per
share (the "PharMerica Common Stock"), and 500,000 shares of PharMerica's
preferred stock, par value $0.01 per share (the "PharMerica Preferred Stock").
As of December 31, 1998, there were 89,387,106 shares of PharMerica Common Stock
and no shares of PharMerica Preferred Stock
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outstanding and no shares of PharMerica Common Stock or PharMerica Preferred
Stock were held in PharMerica's treasury; and except for shares which have been
issued upon the exercise of PharMerica Warrants and PharMerica Options
outstanding on December 31, 1998, there have been no issuances of capital stock
of PharMerica since December 31, 1998. As of December 31, 1998, 290,000 shares
of PharMerica Common Stock were issuable upon the exercise of outstanding
warrants (the "PharMerica Warrants") and 5,969,272 shares of PharMerica Common
Stock were issuable upon the exercise of outstanding PharMerica Options granted
under the stock option plans of PharMerica (the "PharMerica Option Plans"); no
shares of PharMerica Common Stock are reserved for issuance for any purpose
other than upon exercise of such outstanding PharMerica Warrants or such
outstanding PharMerica Options or upon the grant of other options pursuant to
the PharMerica Option Plans or pursuant to the PharMerica Rights Agreement.
Since December 31, 1998, no PharMerica Warrants or PharMerica Options have been
granted and no agreements or commitments have been made to grant any PharMerica
Warrants or PharMerica Options. Except for the foregoing, there are not any
existing options, warrants, calls, subscriptions, or other rights or other
agreements or commitments obligating PharMerica to issue, transfer or sell any
shares of capital stock of PharMerica or any other securities convertible into
or evidencing the right to subscribe for any such shares. There are no
outstanding stock appreciation rights with respect to the capital stock of
PharMerica. All issued and outstanding shares of PharMerica Common Stock are
duly authorized and validly issued, fully paid and nonassessable and have not
been issued in violation of (nor are any of the authorized shares of capital
stock of, or other equity interests in, PharMerica subject to) any preemptive or
similar rights created by statute, the Certificate of Incorporation or By-laws
of PharMerica or any agreement to which PharMerica is a party or by which it may
be bound.
3.14.2 Except as set forth in Section 3.14.2 of the PharMerica
Disclosure Statement, there are no (i) obligations, contingent or otherwise, of
PharMerica or its Subsidiaries to repurchase, redeem or otherwise acquire any
shares of PharMerica Common Stock or provide funds to, or make any investment in
(in the form of a loan, capital contribution or otherwise), or provide any
guarantee with respect to the obligations of, any other person, or (ii)
agreements, arrangements or commitments of any character (contingent or
otherwise) pursuant to which any person is or may be entitled to receive any
payment based on the revenues or earnings (or any component thereof), or
calculated in accordance therewith, of PharMerica or any of its Subsidiaries.
Section 3.14.2 of the PharMerica Disclosure Statement sets forth the contingent
earn-out obligations to which PharMerica or any of its Subsidiaries is subject.
There are no voting trusts, proxies or other agreements or understandings to
which PharMerica is a party or by which PharMerica is bound with respect to the
voting of any shares of capital stock of PharMerica.
3.14.3 PharMerica has delivered or made available to Bergen
complete and correct copies of each of the PharMerica Warrants and each of the
plans or agreements pursuant to which the PharMerica Options have been granted,
including all amendments thereto. Section 3.14.3 of the PharMerica Disclosure
Statement sets forth a complete and correct list of all outstanding PharMerica
Warrants and PharMerica Options, setting forth (i) the exercise price of each
outstanding PharMerica Warrant and PharMerica Option, (ii) the number of
PharMerica Warrants and PharMerica Options and (iii) the date of issuance or
grant of each such PharMerica Warrant or PharMerica Option. Since September 30,
1998, the time periods during which the PharMerica Options may be exercised have
not been extended with respect to any of the PharMerica Options. Section 3.14.3
of the PharMerica Disclosure Statement sets forth a complete and correct list of
all restricted stock awards applicable to PharMerica Common Stock, including the
recipients and the number of shares of PharMerica Common Stock received or to be
received by each.
3.15 Capital Stock of Subsidiaries. The only direct or indirect
Subsidiaries of PharMerica are those listed in Section 3.15 of the PharMerica
Disclosure Statement. PharMerica is directly or indirectly the record and
beneficial owner of all of the outstanding shares of capital stock of each of
its Subsidiaries, there are no proxies with respect to such shares, and there
are not any existing options, warrants, calls, subscriptions, or other rights or
other agreements or commitments obligating PharMerica or any of such
Subsidiaries to issue, transfer or sell any shares of capital stock of any of
such Subsidiaries or any other securities convertible into or evidencing the
right to subscribe for any such shares. All of such shares so beneficially owned
by PharMerica are duly authorized and validly issued, fully paid, nonassessable
and free of preemptive rights with respect thereto and are owned by PharMerica,
directly or indirectly, free and clear of any claim, lien or encumbrance of any
kind with respect
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thereto. Except as set forth in Section 3.15 of the PharMerica Disclosure
Statement, PharMerica does not directly or indirectly own any interest in any
corporation, partnership, limited liability company, joint venture or other
business association or entity.
3.16 Litigation. Except as set forth in Section 3.16 of the PharMerica
Disclosure Statement or in the PharMerica SEC Reports, as of the date hereof
there are no material pending actions, suits, proceedings or, to the knowledge
of PharMerica, investigations by, against or affecting PharMerica, any of its
Subsidiaries or any of their properties, assets or operations, or with respect
to which PharMerica or any of its Subsidiaries is responsible by way of
indemnity or otherwise. Except as set forth in Section 3.16 of the PharMerica
Disclosure Statement: (i) no pending or, to the knowledge of PharMerica,
threatened actions, suits, proceedings or investigations by, against or
affecting PharMerica, any of its Subsidiaries or any of their properties, assets
or operations, or with respect to which they are responsible by way of indemnity
or otherwise, whether or not disclosed in such PharMerica SEC Reports, would,
singly or in the aggregate with all such other actions, suits, investigations or
proceedings, reasonably be expected to have a PharMerica Material Adverse
Effect; and (ii) to the knowledge of PharMerica, no actions, suits, proceedings
or investigations which would reasonably be expected to have a PharMerica
Material Adverse Effect are threatened or contemplated and there is no
reasonable basis, to the knowledge of PharMerica, for any action, suit,
proceeding or investigation, whether or not threatened or contemplated, which
could reasonably be expected to have a PharMerica Material Adverse Effect.
3.17 Insurance. PharMerica and its Subsidiaries have insurance policies
and fidelity bonds covering it and its Subsidiaries' assets, business,
equipment, properties, operations, employees, officers and directors which
PharMerica reasonably and in good faith believes are adequate to conduct the
business of PharMerica and its Subsidiaries. All premiums due and payable under
all such policies and bonds have been paid, and PharMerica is otherwise in full
compliance with the terms and conditions of all such policies and bonds, except
where the failure to have made payment or to be in full compliance would not,
individually or in the aggregate with all such other failures, have a PharMerica
Material Adverse Effect. PharMerica reasonably believes that the reserves
established by PharMerica and its Subsidiaries in respect of all matters as to
which PharMerica or any of its Subsidiaries self-insures or carries retention
and/or deductibles, including without limitation workers' medical coverage and
workers' compensation, are adequate and appropriate, and PharMerica is not aware
of any facts or circumstances existing as of the date hereof that would
reasonably be expected to cause such reserves to be materially inadequate or
inappropriate. Section 3.17 of the PharMerica Disclosure Statement sets forth a
true and complete list of all insurance policies, including retention and/or
deductible programs, and fidelity bonds of PharMerica. PharMerica has previously
provided to Bergen's counsel a copy of the existing insurance policies referred
to in Section 5.13.2. Section 3.17 of the PharMerica Disclosure Statement sets
forth the amount of the annual premium currently paid for directors' and
officers' liability insurance by PharMerica and its Subsidiaries.
3.18 Title to and Condition of Properties. PharMerica and its
Subsidiaries have good title to all of the real property and personal property
reflected on PharMerica's September 30, 1998 unaudited consolidated balance
sheet contained in PharMerica's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1998 filed with the SEC (the "PharMerica Balance Sheet"),
except for property since sold or otherwise disposed of in the ordinary course
of business and consistent with past practice and except for defects of title
which are not material to PharMerica and its Subsidiaries taken as a whole.
Neither PharMerica nor any of its Subsidiaries owns any material real property.
No real or personal property owned or leased by PharMerica or any of its
Subsidiaries is subject to claims, liens or other encumbrances of any kind or
character, including, without limitation, mortgages, pledges, liens, conditional
sale agreements, charges, security interests, easements, restrictive covenants,
rights of way or options, except for (i) liens for taxes not yet delinquent or
which are being contested in good faith by appropriate proceedings and in
respect of which PharMerica or its appropriate Subsidiary has set aside on its
books adequate reserves in accordance with generally accepted accounting
principles; (ii) mechanics', carriers', workers', repairers', materialmen's,
landlords' and other similar statutory or common law liens incurred in the
ordinary course of business for obligations not yet delinquent or the validity
of which is being contested in good faith by appropriate proceedings and in
respect of which PharMerica or its appropriate Subsidiary has set aside on its
books adequate reserves in accordance with generally accepted accounting
principles; (iii) in the case of real property, easements, rights of way,
restrictions, minor defects or irregularities in title that do not individually
or in the aggregate have a material adverse effect on the value or use of the
real property encumbered thereby as currently
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<PAGE> 19
used in the operation of the business of PharMerica or its Subsidiaries; (iv)
those which would not materially interfere with the conduct of the business of
PharMerica and its Subsidiaries (the encumbrances described in clauses (i)
through (iv) of this sentence, collectively, the "PharMerica Permitted
Encumbrances"); (v) those securing liabilities reflected in the PharMerica
Balance Sheet; or (vi) those described in Section 3.18 of the PharMerica
Disclosure Statement.
3.19 Leases. There have been delivered or made available to Bergen true
and complete copies of each lease pursuant to which real or personal property is
held under lease by PharMerica or any of its Subsidiaries (limited, in the case
of personal property, to leases pursuant to which annual rentals are reasonably
expected to be at least $100,000 per year), and true and complete copies of each
lease pursuant to which PharMerica or any of its Subsidiaries leases real or
personal property to others (limited in the case of personal property, to leases
pursuant to which annual rentals are reasonably expected to be at least $100,000
per year). Section 3.19 of the PharMerica Disclosure Statement sets forth a true
and complete list of all such leases, and such leases are the only leases that
are material to the business conducted by PharMerica and its Subsidiaries taken
as a whole. All of the leases so listed (i) are, in all material respects, valid
and subsisting and in full force and effect with respect to PharMerica and its
Subsidiaries, as the case may be, and, to PharMerica's knowledge, with respect
to any other party thereto and (ii) were entered into as a result of bona fide
arm's length negotiations with the other party or parties thereto. PharMerica or
its Subsidiaries, as the case may be, have valid leasehold interests in all
properties leased thereunder free and clear of all material liens and
encumbrances other than PharMerica Permitted Encumbrances. The real properties
leased by PharMerica and its Subsidiaries are, in all material respects, in good
operating order and condition, subject to ordinary wear and tear. To
PharMerica's knowledge, there are no material structural, mechanical or other
defects in any improvements located on such real properties.
3.20 Contracts and Commitments. Except as set forth in Section 3.20 of
the PharMerica Disclosure Statement or as set forth as an exhibit in a
PharMerica SEC Report filed since December 31, 1997, neither PharMerica nor any
of its Subsidiaries is a party to any existing contract, obligation or
commitment of any type in any of the following categories:
3.20.1 contracts for the purchase by PharMerica or any of its
Subsidiaries of medicines, materials, supplies or equipment which are not
cancelable upon 90 days' or less notice and which either (i) have not been
entered into in the ordinary course of business and consistent with past
practice or (ii) provide for purchase prices substantially greater than those
presently prevailing for such materials, supplies or equipment, or (iii)
contracts obligating PharMerica or its Subsidiaries to make capital expenditures
in excess of $200,000;
3.20.2 contracts under which PharMerica or any of its
Subsidiaries has, except by way of endorsement of negotiable instruments for
collection in the ordinary course of business and consistent with past practice,
become absolutely or contingently or otherwise liable for (i) the performance of
any other person, firm or corporation under a contract, or (ii) the whole or any
part of the indebtedness or liabilities of any other person, firm or
corporation;
3.20.3 powers of attorney outstanding from PharMerica or any
of its Subsidiaries other than as issued in the ordinary course of business and
consistent with past practice with respect to customs, insurance, patent,
trademark or tax matters, or to agents for service of process;
3.20.4 contracts under which any amount payable by PharMerica
or any of its Subsidiaries is dependent upon, or calculated in accordance with,
the revenues or earnings (or any component thereof of PharMerica or any of its
Subsidiaries;
3.20.5 contracts with any director, officer, employee or
affiliate of PharMerica or any of its Subsidiaries other than in such person's
capacity as a director, officer or employee of PharMerica or any of its
Subsidiaries;
3.20.6 contracts which limit or restrict where PharMerica or
any of its Subsidiaries may conduct its business or the type or line of business
in which PharMerica or any of its Subsidiaries may engage;
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<PAGE> 20
3.20.7 contracts with any party for the loan of money or
availability of credit to or from PharMerica or any of its Subsidiaries (except
credit extended by PharMerica or any of its Subsidiaries to its customers in the
ordinary course of business and consistent with past practice); or
3.20.8 any material hedging, option, derivative or other
similar transaction.
True and complete copies of all contracts, obligations and commitments listed in
Section 3.20 of the PharMerica Disclosure Statement have been delivered or made
available to Bergen. None of PharMerica or its Subsidiaries or, to the knowledge
of PharMerica, any other party is in breach of or default under any of the
contracts, obligations and commitments listed in Section 3.20 of the PharMerica
Disclosure Statement or under any other PharMerica Contracts (and, to the
knowledge of PharMerica, no facts or circumstances exist which could reasonably
support the assertion of any such breach or default) except for breaches and
defaults which would not, singly or in the aggregate with all other such
breaches, have a PharMerica Material Adverse Effect.
3.2l Labor Matters. None of PharMerica or its Subsidiaries is a party
to any union contract or other collective bargaining agreement. Each of
PharMerica and its Subsidiaries is in compliance in all material respects with
all applicable laws respecting employment and employment practices, terms and
conditions of employment, safety, wages and hours, and neither PharMerica nor
any of its Subsidiaries is engaged in any unfair labor practice, except for such
failures to comply or unfair labor practices as could not, individually or in
the aggregate, reasonably be expected to result in a PharMerica Material Adverse
Effect. There is no labor strike, slowdown or stoppage pending (or, to the
knowledge of PharMerica, any labor strike or stoppage threatened) against or
affecting PharMerica or any of its Subsidiaries. To PharMerica's knowledge, no
union organizing activities with respect to any of its or its Subsidiaries'
employees are occurring or threatened.
3.22 No Change of Control Puts. Except as described in Section 3.22 of
the PharMerica Disclosure Statement, neither the execution and delivery by
PharMerica of this Agreement nor the consummation of the Merger or any other
transaction contemplated hereby gives rise to any obligation of PharMerica or
any of its Subsidiaries to, or any right of any holder of any security of
PharMerica or any of its Subsidiaries to require PharMerica to, purchase, offer
to purchase, redeem or otherwise prepay or repay any such security, or deposit
any funds to effect the same.
3.23 Employment and Labor Contracts. Except as set forth in Section
3.23 of the PharMerica Disclosure Statement, neither PharMerica nor any of its
Subsidiaries is a party to any employment, management services, consultation or
other contract or agreement with any past or present officer, director or
employee or, to the knowledge of PharMerica, any entity affiliated with any past
or present officer, director or employee, other than the agreements executed by
employees generally, the forms of which have been provided to Bergen.
3.24 Intellectual Property Rights. PharMerica or its Subsidiaries own
or have the right to use all material Intellectual Property Rights (as defined
in this Section 3.24) necessary to the conduct of their respective businesses.
Subject to obtaining any associated consents with respect to agreements or
licenses listed in Section 3.3.2 of the PharMerica Disclosure Statement, each
Intellectual Property Right owned or used by PharMerica or any of its
Subsidiaries immediately prior to the Effective Time will be owned or available
for use, in all material respects, by the Surviving Corporation or its
subsidiaries on substantially the same terms and conditions immediately
subsequent to the Effective Time. Section 3.24 of the PharMerica Disclosure
Statement contains a list of all material patents, trade names, registered
copyrights, trademarks and service marks, mask works and applications for the
foregoing owned or used by PharMerica or its Subsidiaries. Except as set forth
in Section 3.24 of the PharMerica Disclosure Statement, (i) PharMerica and/or
its Subsidiaries have valid and unencumbered (except for PharMerica Permitted
Encumbrances) title to the Intellectual Property Rights set forth in such
Section 3.24 and, to PharMerica's knowledge, such title has not been challenged
(pending or threatened) by others except for the encumbrances listed therein;
(ii) no material rights or licenses to use Intellectual Property Rights have
been granted or acquired by PharMerica or its Subsidiaries; (iii) there have
been no claims or assertions made by others that PharMerica or its Subsidiaries
has infringed any Intellectual Property Rights of others by the sale of
products, the rendering of services or any other activity since December 31,
1992; (iv) to the knowledge of PharMerica, there
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has been no such infringement by PharMerica or any of its Subsidiaries since
December 31, 1992; (v) PharMerica has no knowledge of any infringement of
Intellectual Property Rights of PharMerica or any of its Subsidiaries by others;
and (vi) all Intellectual Property Rights owned by PharMerica or its
Subsidiaries are in good standing with the registration authority therefor, if
any, and, to the extent recorded on the public record, are recorded in the name
of PharMerica or its Subsidiaries. True and complete copies of all material
listed in Section 3.24 of the PharMerica Disclosure Statement have been
delivered or made available to Bergen. For purposes of this Agreement, the
phrase "Intellectual Property Rights" shall mean and include rights relating to
patents, trademarks, service marks, trade names, copyrights, mask works,
inventions, processes, trade secrets, know-how, confidentiality agreements,
consulting agreements, software and any documentation relating to the
manufacture, marketing, sale, licensing or maintenance of products or services
by PharMerica or its Subsidiaries.
3.25 Taxes. (i) PharMerica and its Subsidiaries have, in all material
respects, prepared and timely filed or will, in all material respects, timely
file with the appropriate governmental agencies all franchise, income and all
other Tax returns and reports (hereinafter collectively referred to as "Tax
Returns") required to be filed by them on or before the Effective Time, taking
into account any extension of time to file granted to or obtained on behalf of
PharMerica and/or its Subsidiaries (copies of which Tax Returns for the past
three fiscal years have been delivered or made available to Bergen) and such Tax
Returns were (or in the case of Tax Returns to be filed subsequent to the date
hereof, will be) correct and complete in all material respects when filed; (ii)
all Taxes of PharMerica and its Subsidiaries have been paid in full to the
proper authorities or fully accrued or provided for with respect to fiscal
periods for which there are publicly available financial statements and
otherwise on the books of PharMerica, other than such Taxes as are adequately
reserved for in accordance with generally accepted accounting principles; (iii)
all deficiencies asserted in writing as a result of Tax examinations of federal,
state and foreign income, sales and franchise and all other Tax Returns filed by
PharMerica and its Subsidiaries have, in all material respects, either been paid
or adequately reserved for in accordance with generally accepted accounting
principles or are not material to PharMerica and its Subsidiaries taken as a
whole; (iv) to the knowledge of PharMerica, no unpaid deficiency has been
asserted or assessed against PharMerica or any of its Subsidiaries, and no
examination of PharMerica or any of its Subsidiaries is pending or threatened
for any material amount of Tax by any taxing authority (with respect to any such
action, Section 3.25 of the PharMerica Disclosure Statement sets forth the
periods at issue and the category of Tax, and the examining authority's and any
corresponding revenue agents' reports relating to the issue have been delivered
or made available to Bergen); (v) except as set forth in the PharMerica
Disclosure Statement, no extension of the period for assessment or collection of
any Tax of PharMerica or any of its Subsidiaries is currently in effect and no
extension of time within which to file any Tax Return of PharMerica or any of
its Subsidiaries has been requested, which Tax Return has not since been filed;
(vi) no Tax liens have been filed with respect to any Taxes of PharMerica or any
of its Subsidiaries except for property taxes which have accrued but with
respect to which penalty for nonpayment has not occurred; (vii) neither
PharMerica nor any of its Subsidiaries has agreed to make any adjustment by
reason of a change in its accounting methods that would affect the taxable
income or deductions of PharMerica or any of its Subsidiaries for any period
ending after the Effective Time; (viii) PharMerica and its Subsidiaries have
complied in all material respects with all laws requiring Taxes to be deducted
and withheld from the amounts paid or owing to their employees, independent
contractors, creditors, stockholders or other third parties; (ix) there are no
Tax sharing agreements or arrangements under which PharMerica or any Subsidiary
will have any obligation or liability on or after the Effective Time; (x)
PharMerica and its Subsidiaries have no foreign losses as defined in Section
904(f)(2) of the Internal Revenue Code of 1986, as amended; (xi) to the
knowledge of PharMerica, there are no transfer pricing agreements made by or on
behalf of PharMerica or any of its Subsidiaries with any taxation authority;
(xii) no asset of PharMerica or any of its Subsidiaries is held in an
arrangement for which partnership Tax Returns are being filed and neither
PharMerica nor any of its Subsidiaries is a partner in any partnership; (xiii)
neither PharMerica nor any of its Subsidiaries owns any interest in any
"controlled foreign corporation" (within the meaning of Section 957 of the
Code), "passive foreign investment company" (within the meaning of Section 1297
of the Code) or other entity the income of which is required to be included in
the income of PharMerica or such Subsidiary; (xiv) neither PharMerica nor any of
its Subsidiaries has made an election under Section 341(f) of the Code; (xv)
neither PharMerica nor any of its Subsidiaries is obligated to make any payments
that would constitute excess parachute payments within the meaning of Section
280G of the Code; (xvi) none of PharMerica and its Subsidiaries has been a
United States real property holding corporation within the meaning of Section
897(c)(2) of the Code during the applicable period specified in Section
897(c)(1)(A)(ii) of the Code; and (xvii) to PharMerica's knowledge, none of
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PharMerica and its Subsidiaries has any liability for the Taxes of any Person
(other than PharMerica and its Subsidiaries) under any statute or regulation, as
a transferee or successor, by contract, or otherwise. For purposes of this
Agreement, the term "Tax" means any of the following, and the term "Taxes" means
all of the following, imposed by or payable to any Governmental Authority any
income, gross receipts, license, payroll, employment, excise, severance, stamp,
business, occupation, premium, windfall profits, environmental (including
without limitation taxes under section 59A of the Code), capital stock,
franchise, profits, withholding, social security (or similar), unemployment,
disability, real property, personal property, sales, use, transfer,
registration, or value added tax, any alternative or add on minimum tax, any
estimated tax, and any levy, impost, duty, assessment, withholding or any other
governmental charge of any kind whatsoever, in each case including any interest,
penalty, or addition thereto, whether disputed or not. The agreement and plan of
merger, dated as of April 15, 1997, by and among Capstone Pharmacy Services,
Inc. and Beverly Enterprises, Inc. and the related distribution agreement
referenced therein (such agreement and plan of merger and such distribution
agreement, the "April 1997 Agreements") were binding (within the meaning of
Section 1012(d)(3)(A) of the Taxpayer Relief Act of 1997) on April 15, 1997 and
at all times thereafter. All of the information submitted and representations
made to the Internal Revenue Service in connection with the private letter
ruling request(s) regarding the transactions described in such agreements were
accurate and complete in all material respects at the time such ruling
request(s) were made. To the knowledge of PharMerica, there is no evidence that
would preclude PharMerica or Bergen from establishing, pursuant to Section
355(e)(2)(B) of the Code, that (i) the Merger and (ii) the transactions
consummated by Capstone Pharmacy Services, Inc. and Beverly Enterprises, Inc.
pursuant to the April 1997 Agreements are "not pursuant to a plan or series of
related transactions" (within the meaning of such Code Section).
3.26 Employee Benefit Plans; ERISA.
3.26.1 Except as set forth in Section 3.26 of the PharMerica
Disclosure Statement, there are no "employee pension benefit plans" as defined
in Section 3(2) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), maintained or contributed to by PharMerica or any of its
Subsidiaries or any of their ERISA Affiliates (as hereinafter defined), or to
which PharMerica or any of its Subsidiaries or any of their ERISA Affiliates
contributes or is obligated to make payments thereunder or otherwise may have
any liability ("PharMerica Pension Benefit Plans"). For purposes of this
Agreement, "ERISA Affiliate" shall mean any person (as defined in Section 3(9)
of ERISA) that is a member of any group of persons described in Section 414(b),
(c), (m) or (o) of the Code which includes PharMerica or any of its
Subsidiaries.
3.26.2 PharMerica has delivered or made available to Bergen
true and complete copies of, and Section 3.26 of the PharMerica Disclosure
Statement lists, all PharMerica Pension Benefit Plans, "welfare benefit plans"
(as defined in Section 3(1) of ERISA) covering employees (or former employees),
maintained or contributed to by PharMerica or any of its Subsidiaries or under
which PharMerica or any of its Subsidiaries otherwise may have any liability
("PharMerica Welfare Plans"), all multiemployer plans (as defined in Section
3(37) of ERISA) to which PharMerica or any of its Subsidiaries or any of their
ERISA Affiliates is required to make contributions or otherwise may have any
liability (which multiemployer plans are designated as such in such Section
3.26), and all stock bonus, stock option, restricted stock, stock appreciation
right, stock purchase, bonus, incentive, deferred compensation, severance,
change of control, executive compensation, "top hat," other equity-based
compensation, and vacation plans, agreements, or arrangements maintained or
contributed to by PharMerica or any of its Subsidiaries.
3.26.3 PharMerica and each of its Subsidiaries, and each of
the PharMerica Pension Benefit Plans, PharMerica Welfare Plans, and all other
plans or arrangement referenced in Section 3.26.2 (collectively, the "PharMerica
Employee Benefit Plans") are, and have been maintained, in compliance with the
applicable provisions of ERISA and other Applicable Laws except where the
failure to comply would not, singly or in the aggregate, reasonably be expected
to have a PharMerica Material Adverse Effect.
3.26.4 All material contributions to and all material payments
from the PharMerica Employee Benefit Plans which are required to have been made
in accordance with the PharMerica Employee Benefit Plans and, when applicable,
Section 302 of ERISA or Section 412 of the Code, have been timely made.
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3.26.5 The PharMerica Pension Benefit Plans intended to
qualify under Section 401(a) of the Code either (i) have a current favorable
determination letter from the IRS, or (ii) have been submitted on a timely basis
to obtain a favorable determination letter, and nothing has occurred with
respect to such PharMerica Pension Benefit Plans which is likely to cause the
loss of tax qualified status or exemption or the imposition of any material
liability, penalty, or tax under ERISA or the Code. Such plans have been amended
to the extent required to maintain the qualified status of the plans.
3.26.6 There are (i) no investigations or audits pending or,
to the knowledge of PharMerica, threatened by any governmental entity involving
any PharMerica Employee Benefit Plan, (ii) no termination proceedings involving
any PharMerica Pension Benefit Plan and (iii) no pending or, to the knowledge of
PharMerica, threatened claims (other than routine uncontested claims for
benefits), suits or proceedings relating to any PharMerica Employee Benefit
Plan, against the assets of any of the trusts under any PharMerica Employee
Benefit Plan or against any fiduciary of any PharMerica Employee Benefit Plan
who is PharMerica, any Subsidiary of PharMerica, any officer or employee of
PharMerica or its Subsidiaries or, to PharMerica's knowledge, any other
fiduciary, except for those which would not, singly or in the aggregate, give
rise to any liability which would reasonably be expected to have a PharMerica
Material Adverse Effect, nor, to the knowledge of PharMerica, are there any
facts which could give rise to any such liability except for those which would
not, singly or in the aggregate, reasonably be expected to have a PharMerica
Material Adverse Effect in the event of any such investigation, claim, suit or
proceeding.
3.26.7 No trustee, administrator, fiduciary or any "party in
interest" or "disqualified person" with respect to any PharMerica Employee
Benefit Plan who is PharMerica, any Subsidiary of PharMerica, any officer or
employee of PharMerica or its Subsidiaries or, to PharMerica's knowledge, any
other trustee, administrator, fiduciary, "party-in-interest" or disqualified
person, has engaged in a "prohibited transaction" (as such term is defined in
Section 4975 of the Code or Section 406 of ERISA) which could result in a tax or
penalty on PharMerica or any of its Subsidiaries under Section 4975 of the Code
or Section 502(i) of ERISA, except any such event which would not, singly or in
the aggregate, reasonably be expected to have a PharMerica Material Adverse
Effect.
3.26.8 None of the PharMerica Pension Benefit Plans is subject
to Title IV of ERISA.
3.26.9 Neither PharMerica nor any Subsidiary of PharMerica nor
any ERISA Affiliate has incurred any currently outstanding liability to the
Pension Benefit Guaranty Corporation (the "PBGC") or to a trustee appointed
under Section 4042(b) or (c) of ERISA (other than for the payment of premiums,
all of which have been paid when due) and PharMerica has no knowledge of any
events, facts or conditions which reasonably could be expected to give rise to
any such liability. No PharMerica Pension Benefit Plan has applied for,
received, or been the subject of, a waiver of the minimum funding standards
imposed by Section 412 of the Code.
3.26.10 Neither PharMerica, any of its Subsidiaries nor any of
their ERISA Affiliates has any liability (including without limitation any
contingent liability under Section 4204 of ERISA) with respect to any
multiemployer plan, within the meaning of Section 3(37) of ERISA.
3.26.11 With respect to each of the PharMerica Employee
Benefit Plans, true, correct and complete copies of the following documents have
been delivered or made available to Bergen: (i) the current plans and related
trust documents, including amendments thereto, (ii) any current summary plan
descriptions, (iii) the three most recent Forms 5500, financial statements and
actuarial reports, if applicable, and (iv) the most recent IRS determination
letter, if applicable.
3.26.12 Neither PharMerica, nor to PharMerica's knowledge, any
of its Subsidiaries, any organization to which PharMerica is a successor or
parent corporation, within the meaning of Section 4069(b) of ERISA, nor any of
their ERISA Affiliates has engaged in any transaction, within the meaning of
Section 4069(a)
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of ERISA, except where the liability therefor would not, singly or in the
aggregate, reasonably be expected to have a PharMerica Material Adverse Effect.
3.26.13 None of the PharMerica Welfare Plans maintained by
PharMerica or any of its Subsidiaries include retiree life or retiree health
benefits or provide for continuing benefits or coverage for any participant or
any beneficiary of a participant following termination of employment, except as
may be required under the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended ("COBRA"). PharMerica and each of its Subsidiaries which
maintain a "group health plan" within the meaning of Section 5000(b)(1) of the
Code have complied with the notice and continuation requirements of Section
4980B of the Code, COBRA, Part 6 of Subtitle B of Title I of ERISA and the
regulations thereunder, except where the failure to comply would not, singly or
in the aggregate, reasonably be expected to have a PharMerica Material Adverse
Effect.
3.26.14 No material liability under any PharMerica Employee
Benefit Plan has been funded or satisfied by or with the purchase of a contract
from an insurance company as to which PharMerica or any of its Subsidiaries has
received notice that such insurance company is in rehabilitation.
3.26.15 Except as set forth in Section 3.26 of the PharMerica
Disclosure Statement, the consummation of the transactions contemplated by this
Agreement will not result in an increase in the amount of compensation or
benefits, deemed satisfaction of goals or conditions, forgiveness or
modification of loans, or accelerate the vesting or timing of payment of any
benefits or compensation payable to or in respect of any employee or former
employee of PharMerica or any of its Subsidiaries.
3.26.16 Intentionally omitted.
3.26.17 With respect to each PharMerica Employee Benefit Plan
and any other similar arrangement or plan either currently or previously
terminated, maintained, or contributed to by any entity which either is
currently or was previously under common control with PharMerica or any of its
Subsidiaries as determined under Section 414 of the Code, no event has occurred
and no condition exists that after the Merger could subject PharMerica or
Bergen, directly or indirectly, to any material liability (including without
limitation liability under any indemnification agreement) under Section 412,
4971, 4975, or 4980B of the Code or Section 502, 601 or 606 of ERISA.
3.26.18 All material contributions and all material payments
to or with respect to each PharMerica Employee Benefit Plan have been timely
made and PharMerica has made adequate provision for reserves to satisfy
contributions and payments that have not been made because they are not yet due
under the terms of such plan or related arrangement, document, or applicable
law. No PharMerica Employee Benefit Plan has any material unfunded benefits that
are not fully reflected in the PharMerica Balance Sheet.
3.26.19 No agreement, commitment, or obligation exists to
increase, in any material respect, any benefits under any PharMerica Employee
Benefit Plan or to adopt any new PharMerica Employee Benefit Plan.
3.27 Environmental Matters.
3.27.1 Except as would not, singly or in the aggregate with
all other such instances of non-compliance, have a PharMerica Material Adverse
Effect, PharMerica and its Subsidiaries are, and within the period of all
applicable statutes of limitation have been, in compliance with all applicable
Environmental Laws (as hereinafter defined), which compliance includes, without
limitation, the possession of all licenses, permits, registrations and other
governmental authorizations (collectively, "Environmental Authorizations")
required under all applicable Environmental Laws, and compliance with the terms
and conditions thereof, and there are no circumstances of which PharMerica is
aware which may materially prevent or interfere with such compliance in the
future. To PharMerica's knowledge, all Environmental Authorizations currently
held by PharMerica and its Subsidiaries pursuant to Environmental Laws are
identified in Section 3.27.1 of the PharMerica Disclosure Statement and
represent all Environmental Authorizations necessary for the conduct of the
businesses of PharMerica and its Subsidiaries as currently conducted. Neither
PharMerica nor any of its Subsidiaries has been
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<PAGE> 25
notified, or has any reasonable basis to believe, that any such Environmental
Authorizations will be modified, suspended or revoked or cannot be renewed or
otherwise maintained in the ordinary course of business. To PharMerica's
knowledge, the execution and delivery of this Agreement and the consummation by
PharMerica of the transactions contemplated hereby will not affect the validity
or require the transfer of any Environmental Authorizations, and will not
require any notification, registration, reporting, filing, investigation or
remediation under any applicable Environmental Laws.
3.27.2 There are no Environmental Notices (as hereinafter
defined) that, singularly or in the aggregate, reasonably could be expected to
have a PharMerica Material Adverse Effect (i) pending or, to the knowledge of
PharMerica, threatened against PharMerica or any of its Subsidiaries, (ii) to
the knowledge of PharMerica, pending or threatened against any person or entity
whose liability for such Environmental Notice could reasonably be expected to be
imputed or attributed by law or contract to PharMerica or any of its
Subsidiaries, (iii) that to the knowledge of PharMerica could subject PharMerica
to any material risk of liability, loss or damages, or (iv) that to the
knowledge of PharMerica could reasonably be expected to require any material
investigation, removal or remedial or corrective action by PharMerica or any of
its Subsidiaries. Since December 31, 1997 neither PharMerica nor any of its
Subsidiaries has received any Environmental Notice alleging that PharMerica or
any of its Subsidiaries is subject to liability under any Environmental Law or
that PharMerica or any of its Subsidiaries is not in full compliance with all
applicable Environmental Laws.
3.27.3 There is no civil, criminal or administrative action,
suit, demand, claim, hearing, notice of violation, notice or demand letter or
request for information or, to the knowledge of PharMerica, investigation
pending or, to the knowledge of PharMerica, threatened under any Environmental
Law (i) against PharMerica or any of its Subsidiaries, or (ii) to the knowledge
of PharMerica against any person or entity in connection with which liability
could reasonably be expected to be imputed or attributed by law or contract to
PharMerica or any of its Subsidiaries, except, with respect to each of clauses
(i) and (ii), for such demands, claims, notices of violation, notice or demand
letters or requests for information which singly or in the aggregate could not
reasonably be expected to have a PharMerica Material Adverse Effect.
3.27.4 To the knowledge of PharMerica, no property or facility
presently or formerly owned, operated or leased by PharMerica or any of its
present Subsidiaries, or to the knowledge of PharMerica any of its former
Subsidiaries, or any of their respective predecessors in interest, is listed or
proposed for listing on the National Priorities List or the Comprehensive
Environmental Response, Compensation and Liability Information System, pursuant
to the Comprehensive Environmental Response, Compensation and Liability Act, as
amended ("CERCLA"), or on any comparable list established under any
Environmental Law, nor has PharMerica or any of its Subsidiaries received any
written notification of potential or actual liability or any request for
information under CERCLA or any comparable foreign, state or local law.
3.27.5 Other than in material compliance with applicable
Environmental Laws, there has been no disposal, spill, discharge or release of
any Hazardous Materials (as hereinafter defined) generated, used, owned, stored
or controlled by PharMerica, or, to the knowledge of PharMerica, any of its
Subsidiaries or any of their respective predecessors in interest on, at or under
any property presently or formerly owned, leased or operated by PharMerica, or,
to the knowledge of PharMerica, its Subsidiaries, or any predecessors in
interest, and to the knowledge of PharMerica there are no Hazardous Materials
located in, at, on or under, or in the vicinity of, any such facility or
property, or at any other location, that (i) could reasonably be expected to
subject PharMerica to a material risk of liability, loss or damages, or result
in PharMerica's incurring material costs under any Environmental Law, (ii) could
reasonably be expected to form the basis of any material Environmental Notice
against or with respect to PharMerica or any of its Subsidiaries, or against any
person or entity whose liability for any Environmental Notice could reasonably
be expected to be imputed or attributed by law or contract to PharMerica or any
of its Subsidiaries or (iii) could reasonably be expected to require material
investigation, removal or remedial or corrective action by PharMerica or any of
its Subsidiaries, that in any case singularly or in the aggregate reasonably
could be expected to have a PharMerica Material Adverse Effect.
3.27.6 Other than in material compliance with applicable
Environmental Laws, without in any way limiting the generality of the foregoing,
to the knowledge of PharMerica (i) there are and have been no
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<PAGE> 26
underground or aboveground storage tanks or other storage receptacles or related
piping or other disposal areas containing Hazardous Materials located on, at or
under property owned, operated or leased by PharMerica, any of its Subsidiaries
or any of their respective predecessors in interest, (ii) there are and have
been no polychlorinated biphenyls located on any properties owned, operated or
leased by PharMerica or any of its Subsidiaries, and (iii) there is no asbestos
contained in or forming part of any building, building component, structure or
office space owned, operated or leased by PharMerica or any of its Subsidiaries.
3.27.7 To the knowledge of PharMerica, no lien has been
recorded under any Environmental Law with respect to any properties, assets or
facilities owned, operated or leased by PharMerica or any of its Subsidiaries.
3.27.8 PharMerica has given Bergen and its authorized
representatives access to all records and files in its possession or control
relating to actual or potential compliance or liability issues of PharMerica or
its Subsidiaries and any of their respective predecessors in interest under any
Environmental Laws, including, without limitation, all reports, studies,
analyses, tests or monitoring results pertaining to the existence of Hazardous
Material or any other environmental concern relating to properties, assets or
facilities currently or formerly owned, operated, managed, leased, used or
controlled by PharMerica or any of its Subsidiaries, or otherwise concerning
compliance with or liability under any Environmental Laws.
3.27.9 For purposes of this Agreement:
3.27.9.1 "Environment" shall mean any surface water,
groundwater or drinking water supply, land surface or subsurface strata or
ambient air and includes, without limitation, any indoor location.
3.27.9.2 "Environmental Laws" shall mean CERCLA, the
Solid Waste Disposal Act, the Resource Conservation and Recovery Act of 1976, as
amended, and any other federal, state, local or foreign statute, rule,
regulation, order, judgment, directive, decree or common law, as now or
previously in effect and regulating, relating to or imposing liability or
standards of conduct concerning air emissions, water discharges, noise
emissions, the release or threatened release or discharge of any Hazardous
Material into the Environment, the generation, handling, treatment, storage,
transport or disposal of any Hazardous Material or otherwise concerning
pollution or the protection of the outdoor or indoor Environment, or employee
health or safety. The term "Environmental Laws" shall also include laws
governing the transfer of real property or a business that require notification,
registration, reporting, filing, investigation or remediation prior to,
concurrent with or following sale or transfer of control of any property,
facility or establishment in connection with the actual or threatened presence
or release of Hazardous Materials at such property, facility or establishment.
3.27.9.3 "Environmental Notice" shall mean any
written communication, notice or claim by any Governmental Authority or other
third party alleging civil or criminal liability (including, without limitation,
liability for investigatory costs, cleanup costs, governmental costs, compliance
costs or harm, injuries or damages to any person, property, natural resources,
or any fines or penalties) or alleging noncompliance arising out of, based upon,
resulting from or relating to any Environmental Law.
3.27.9.4 "Hazardous Material" shall mean any
pollutant, contaminant or hazardous, toxic or dangerous waste, substance,
constituent or material defined or regulated as such in, or for purposes of, any
Environmental Law, including, without limitation, any medical waste, any
biochemical waste, any asbestos, radon, any petroleum or petroleum product, any
radioactive substance, any polychlorinated biphenyls, any toxin, chemical,
virus, infectious disease agent and any other substance that can give rise to
liability under any Environmental Law.
3.28 Intentionally omitted.
3.29 Institutional Pharmacy Business.
3.29.1 Section 3.29 of the PharMerica Disclosure Statement
lists each pharmacy utilized by
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PharMerica and its Subsidiaries in connection with their pharmacy business and
indicates (i) the location of each such pharmacy and (ii) whether such pharmacy
premises are owned or held pursuant to a leasehold interest, management
agreement or otherwise. No other person or entity has any beneficial ownership
or interest in or to any such pharmacy nor does any other person or entity have
any right or option to acquire any beneficial ownership or interest in or to any
such pharmacy.
3.29.2 Section 3.29 of the PharMerica Disclosure Statement
lists all of the customers to which PharMerica and its Subsidiaries provided
pharmacy services pursuant to oral or written contracts which generated revenues
in excess of $10,000,000 for the year ended December 31, 1997 ("PharMerica
Pharmacy Contracts"). Except as set forth in such Section 3.29, PharMerica has
not been informed, and has no reason to believe, that any PharMerica Pharmacy
Contract will be terminated for or without cause.
3.29.3 To PharMerica's knowledge, none of PharMerica nor any
of its Subsidiaries has violated or is in violation of any law or order of any
court or governmental authority that is applicable to any of them, their
businesses or their properties, including but not limited to the Medicare and
Medicaid fraud and abuse provisions of the Social Security Act, the Civil
Monetary Penalties Law of the Social Security Act, the so called "Stark" law, 42
USC Section 1395nn, or any other federal or state law, statute, rule or
regulation prohibiting rebates, kickbacks, fee-splitting or other financial
incentives or inducements, including but not limited to providing products or
services below cost for the referral or continuation of business, except for any
past or present violations which could not, singly or in the aggregate,
reasonably be expected to result in a PharMerica Material Adverse Effect. None
of PharMerica or its Subsidiaries is, to the knowledge of PharMerica, under
investigation by the Office of Inspector General of the Department of Health and
Human Services or any other federal or state investigatory or regulatory body or
agency relating to their business activities, nor is PharMerica aware of any
state of facts which could reasonably be likely to subject PharMerica or its
Subsidiaries to a claim for civil penalties (other than penalties which would be
immaterial to PharMerica and its Subsidiaries, taken as a whole), criminal fines
or other sanctions (other than criminal fines or other sanctions which would be
immaterial to PharMerica and its Subsidiaries, taken as a whole) with respect to
a violation or claimed violation of any such laws or regulations relating to the
conduct of their business.
3.29.4 Intentionally omitted.
3.29.5 To PharMerica's knowledge, PharMerica and its
Subsidiaries have delivered or made available true and correct billing requests
for reimbursement and underlying information to all governmental programs,
including but not limited to the Medicare and Medicaid programs, in substantial
compliance with all rules, regulations, policies and procedures of such
governmental programs and of the fiscal intermediaries of such programs, except
for any failures to be true and correct or any failures to be in compliance
which could not, singly or in the aggregate, reasonably be expected to result in
a PharMerica Material Adverse Effect. To the knowledge of PharMerica, all such
billings were for goods and/or services actually provided, and at charges or
costs that were lawful in all material respects, and PharMerica and its
Subsidiaries have appropriate documentation to support such billing requests,
except for any charges or costs (if deemed to be unlawful) or lack of
documentation that could not, singly or in the aggregate, reasonably be expected
to result in a PharMerica Material Adverse Effect. To the knowledge of
PharMerica, all accounts receivable of PharMerica and its Subsidiaries reflected
in the PharMerica Balance Sheet represent, in all material respects, valid
claims against debtors for sales of products or services or other charges on or
before the date of the PharMerica Balance Sheet, are not subject to discount to
any material extent except for normal cash discounts and have been appropriately
reduced, in all material respects, to their estimated net realizable value.
3.30 Fairness Opinion. PharMerica has received the opinion of Donaldson
Lufkin & Jenrette Securities Corporation to the effect that as of the date
hereof the Merger Consideration is fair to PharMerica's stockholders from a
financial point of view.
3.31 Year 2000. Subject to the completion schedule set forth in the
most recent PharMerica SEC Report heretofore filed by PharMerica with the SEC,
PharMerica and its Subsidiaries have taken, in all material respects, the steps
described in the PharMerica SEC Reports with respect to the computer systems and
software of
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PharMerica and its Subsidiaries relating to the specification of dates in, into
and between the 20th and 21st centuries.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF BLUEJAY AND
SUBCORP
Except as set forth in the disclosure statement delivered by Bergen to
PharMerica at or prior to the execution of this Agreement (the "Bergen
Disclosure Statement") (each section of which qualifies the correspondingly
numbered representation and warranty, regardless of whether such representation
or warranty expressly refers to or is qualified by reference to such Bergen
Disclosure Statement), Bergen and Subcorp jointly and severally represent and
warrant to PharMerica as follows:
4.1 Organization and Qualification. Each of Bergen and its Subsidiaries
(as defined in this Section 4.1) is an entity duly incorporated, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has the corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the Bergen
SEC Reports (as defined in Section 4.9.1). Each of Bergen and each of Bergen's
Subsidiaries is duly qualified to transact business as a foreign corporation or
other foreign entity and is in good standing in each jurisdiction in which the
conduct of its business or the ownership, leasing or operation of its property
requires such qualification, except for failures to be so qualified or in good
standing which would not, singly or in the aggregate with all such other
failures, have a Bergen Material Adverse Effect. "Bergen Material Adverse
Effect" means, with respect to any event, occurrence, matter, failure of event
or occurrence, change, effect, state of affairs, breach, default, violation,
fine, penalty or failure to comply (each, a "Circumstance"), individually or
taken together with all other Circumstances contemplated by or in connection
with any or all of the representations and warranties made in this Agreement, a
material adverse effect on the business, assets (including without limitation
intangible assets), liabilities (contingent or otherwise), financial condition
or results of operations of Bergen and its Subsidiaries, taken as a whole;
provided, however, that Bergen Material Adverse Effect shall not be deemed to
include the impact of: (A) any decline in the share price of either Bergen
Common Stock or PharMerica Common Stock, except that any effect underlying such
decline shall be considered in determining whether a Bergen Material Adverse
Effect has occurred to the extent that such effect would otherwise be so
considered; (B) the implementation of changes in generally accepted accounting
principles; (C) actions and omissions of Bergen or its Subsidiaries taken or
permitted with the prior written consent of PharMerica after the date hereof;
(D) expenses reasonably incurred by Bergen or its Subsidiaries in consummating
the transactions contemplated by this Agreement; and (E) the impact of the
implementation of the prospective payment system for skilled nursing facilities
and other long term care providers, except to the extent that such
implementation would render consummation of the transactions contemplated by
this Agreement illegal. Neither Bergen nor any of its Subsidiaries is in
violation of any of the provisions of its certificate of incorporation (or other
applicable charter document) or By-laws or, if it is a limited liability company
or partnership, its operating agreement, partnership agreement or other
comparable agreement. True and complete copies of the certificate of
incorporation and By-laws, as currently in effect, of Bergen have been
previously delivered or made available to PharMerica. Except for amendments
reflected in the Restated Certificate of Incorporation and by-laws of Bergen
heretofore delivered to PharMerica and amendments described in Section 4.1 of
the Bergen Disclosure Statement, no amendments to the Restated Certificate of
Incorporation, as amended, and By-laws, as amended, of Bergen have been
authorized from September 30, 1998 through the date hereof. For purposes of this
Agreement, all references to the "Subsidiaries" of Bergen shall constitute
references to any entity (i) the accounts of which would be consolidated with
those of Bergen in Bergen's consolidated financial statements if such financial
statements were prepared in accordance with generally accepted accounting
principles or (ii) of which securities or other ownership interests representing
more than 50% of the equity or more than 50% of the ordinary voting power or, in
the case of a partnership, more than 50% of the general partnership interests or
more than 50% of the profits or losses are owned by Bergen and/or one or more
subsidiaries of Bergen.
4.2 Authority Relative to This Agreement. Bergen and Subcorp each have
the corporate power and authority to execute and deliver this Agreement and,
upon obtaining the requisite approval of the holders of Bergen
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Common Stock at the Bergen Annual Meeting or any adjournment thereof with
respect to the issuance of shares of Bergen Common Stock pursuant to the Merger,
to consummate the Merger and the other transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the Merger and
the other transactions contemplated hereby have been duly and validly authorized
by the Boards of Directors of Bergen and Subcorp and by Bergen as the sole
stockholder of Subcorp, and except as stated in the preceding sentence, no other
corporate proceedings on the part of Bergen or Subcorp are necessary to
authorize this Agreement or to consummate the Merger and the other transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by Bergen and Subcorp and, assuming the due authorization, execution
and delivery hereof by PharMerica and subject to stockholder approval as
aforesaid, constitutes a valid and binding agreement of Bergen and Subcorp,
enforceable against Bergen and Subcorp in accordance with its terms, except to
the extent that its enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws affecting the enforcement
of creditors' rights generally or by general equitable principles.
4.3 Consents; No Conflicts.
4.3.1 Except for actions to be taken in connection with (a)
the filing of the Certificate of Merger, (b) the filing and effectiveness of the
Registration Statement, (c) the filings required under and in connection with
the applicable requirements of the HSR Act, (d) any filings required under the
New Jersey Industrial Site Recovery Act, (e) filings required pursuant to any
state securities or "blue sky" laws, (f) filings and other matters relating to
the listing on the NYSE of the share of Bergen Common Stock required to be
issued pursuant to this Agreement, (g) any filings, notices, disclosures or
registrations set forth in Section 4.3.1 of the PharMerica Disclosure Statement,
(h) such reports under Section 13 of the Exchange Act as may be required in
connection with this Agreement, the Merger and the other transactions
contemplated hereby and (i) other consents, filings or notifications which, if
not obtained or made, are not reasonably likely to have, individually or in the
aggregate, a Bergen Material Adverse Effect, no filing or registration with,
notification or disclosure to, or permit, authorization, consent or approval of,
(x) any court, (y) any government agency or body or (z) any third party, whether
acting in an individual, fiduciary or other capacity, is required for the
consummation by Bergen or Subcorp of the Merger or the other transactions
contemplated hereby.
4.3.2 Except as set forth in Section 4.3.2 of the Bergen
Disclosure Statement, the execution, delivery and performance of this Agreement
and the consummation of the Merger and the other transactions contemplated
hereby and compliance by Bergen and Subcorp with any of the provisions hereof do
not and will not: (i) subject to obtaining the requisite approval of the
issuance of Bergen Common Stock pursuant to the Merger by the holders of Bergen
Common Stock, conflict with or result in any breach or violation of any
provision of the certificate of incorporation (or other comparable charter
documents) or by-laws of Bergen or any of its Subsidiaries or, with respect to a
Subsidiary of Bergen that is a limited liability company or partnership, its
operating agreement, partnership agreement or other comparable agreement or (ii)
result in (1) a breach or violation of, a default under or an event triggering
any payment, obligation or acceleration of any obligation pursuant to any
existing pension plans, welfare plans, multiemployer plans, employee benefit
plans, benefit arrangements or similar plans, arrangements or policies,
including without limitation bonus, incentive, deferred compensation, stock
purchase, stock option, stock appreciation right, health or group insurance,
severance pay, retirement or other benefit plans, and all similar arrangements
or policies of Bergen and its Subsidiaries (the "Bergen Compensation and Benefit
Plans") or any grant or award made under any of the foregoing, (2) a breach or
violation of, a default under or an event triggering a right of termination of,
a default under, or the acceleration of any obligation or the creation of a
lien, pledge, security interest or other encumbrance on assets (with or without
the giving of notice or the lapse of time or both) pursuant to any provision of,
any agreement, lease of real or personal property, marketing agreement,
contract, note, mortgage, indenture or other obligation of Bergen or any of its
Subsidiaries ("Bergen Contracts") or, subject to making all filings,
notifications and disclosures and receipt of all permits, authorizations,
consents and approvals referred to in clauses "a" through "i" of Section 4.3.1
or in Section 4.3.1 of the Bergen Disclosure Statement, any law, rule, ordinance
or regulation or judgment, decree, order or award to which Bergen or any of its
Subsidiaries is subject or any governmental or non-governmental authorization,
consent, approval, registration, franchise, license or permit under which Bergen
or any of its Subsidiaries conducts any of its business, or (3) any other change
in the rights or obligations of any party under any of the Bergen Contracts,
except, with respect to this clause (ii), for breaches, violations, defaults,
triggering events, creations of liens, pledges, security
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interests or other encumbrances on assets, or changes in rights or obligations
which would not, singly or in the aggregate with all other such matters, have a
Bergen Material Adverse Effect.
4.4 Board Recommendation. The Board of Directors of Bergen has, by a
unanimous vote at a meeting of such Board duly held on January 8, 1999, approved
and adopted this Agreement, the Merger and the other transactions contemplated
hereby. At such meeting, the Board of Directors of Bergen recommended that the
holders of Bergen Common Stock approve the issuance of Bergen Common Stock
pursuant to this Agreement.
4.5 No Existing Violation, Default, Etc. None of Bergen or its
Subsidiaries is in violation (except for any violations which would not, singly
or in the aggregate with all such other violations, have a Bergen Material
Adverse Effect) of (A) any Applicable Law or (B) any order, decree or judgment
of any Governmental Authority having jurisdiction over Bergen or any of its
Subsidiaries. No event of default or event that, but for the giving of notice or
the lapse of time or both, would constitute an event of default, exists under
any Bergen Contract or any lease, permit, license or other agreement or
instrument to which Bergen or any of its Subsidiaries is a party or by which any
of them is bound or to which any of the properties, assets or operations of
Bergen or any of its Subsidiaries is subject (except for any events of default
or other defaults which would not, singly or in the aggregate with all such
other defaults, have a Bergen Material Adverse Effect).
4.6 Licenses and Permits. Each of Bergen and its Subsidiaries has such
certificates, permits, licenses, franchises, consents, approvals, orders,
authorizations and clearances from appropriate governmental agencies and bodies
("Bergen Licenses") as are necessary to own, lease or operate its properties and
to conduct its business in the manner described in the Bergen SEC Reports and as
presently conducted and all such Bergen Licenses are valid and in full force and
effect, other than any failure to have any such Bergen License or any failure of
any such Bergen License to be valid and in full force and effect as would not,
singly or in the aggregate with all such other failures, have a Bergen Material
Adverse Effect. Each of Bergen and its Subsidiaries is and, within the period of
all applicable statutes of limitations, has been in compliance with its
obligations under such Bergen Licenses and no event has occurred that allows, or
after notice or lapse of time would allow, revocation or termination of such
Bergen Licenses, other than any such failure to be in compliance with such
obligations or any such revocation or termination as would not, singly or in the
aggregate with all such other failures, revocations or terminations, have a
Bergen Material Adverse Effect. Bergen has no knowledge of any facts or
circumstances that could reasonably be expected to result in an inability of
Bergen or any of its Subsidiaries to renew any Bergen License, other than any
such non-renewal as would not, singly or in the aggregate with all such
non-renewals, have a Bergen Material Adverse Effect. Subject to making all
filings, notifications and disclosures and receipt of all permits,
authorizations, consents and approvals referred to in Section 4.3.1 of the
Bergen Disclosure Statement, neither the execution and delivery by Bergen or
Subcorp of this Agreement nor the consummation of any of the transactions
contemplated herein will result in any revocation or termination of any material
Bergen License.
4.7 Registration Statement; Prospectus/Joint Proxy Statement. None of
the information supplied by Bergen for inclusion in, and none of the information
regarding Bergen and its Subsidiaries incorporated by reference in, the
Registration Statement or the Prospectus/Joint Proxy Statement, including all
amendments and supplements thereto, shall, in the case of the Registration
Statement, at the time the Registration Statement becomes effective, and, in the
case of the Prospectus/Joint Proxy Statement, on the date or dates the
Prospectus/Joint Proxy Statement is first mailed to Bergen and PharMerica
stockholders and on the date or dates of the Bergen Annual Meeting and the
PharMerica Special Meeting, contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading. The Registration Statement and the
Prospectus/Joint Proxy Statement will comply as to form in all material respects
with the applicable provisions of the Securities Act and the Exchange Act, as
the case may be.
4.8 Finders or Brokers; Compensation Arrangements. Except as set forth
in Section 4.8 of the Bergen Disclosure Statement, neither Bergen nor any
Subsidiary of Bergen has employed any investment banker, broker, finder or
intermediary in connection with the transactions contemplated hereby who might
be entitled to a fee or any commission the receipt of which is conditioned in
whole or part upon consummation of the Merger. The compensation payable by or on
behalf of Bergen and its Subsidiaries (with respect to the transactions
contemplated
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hereby) to any investment banker, broker, finder or intermediary identified in
Section 4.8 of the Bergen Disclosure Statement is set forth in one or more
engagement letters delivered to PharMerica prior to the execution of this
Agreement.
4.9 SEC Filings.
4.9.1 Bergen has, in all material respects, filed with the SEC
all required forms, reports and documents required to be filed by it with the
SEC since December 31, 1994 (collectively, the "Bergen SEC Reports"), all of
which, when filed (in the case of forms, reports and documents filed pursuant to
the Exchange Act) or when declared effective (in the case of registration
statements filed pursuant to the Securities Act), complied as to form in all
material respects with the applicable provisions of the Securities Act and the
Exchange Act, as the case may be. As of their respective dates, the Bergen SEC
Reports (including documents included as exhibits thereto or incorporated by
reference therein) did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading.
4.9.2 Bergen will deliver to PharMerica as soon as they become
available true and complete copies of any report or statement mailed by Bergen
to its security holders generally or filed by it with the SEC, in each case
subsequent to the date hereof and prior to the Effective Time. As of their
respective dates, such reports and statements (excluding any information therein
provided by PharMerica, as to which Bergen makes no representation) will comply
as to form in all material respects with the applicable provisions of the
Securities Act and the Exchange Act, will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they are made, not misleading, and will further comply in all material
respects with all applicable requirements of law, except for such failures to
comply as to form, untrue statements or omissions or further failures to comply
which would not be reasonably likely to have, individually or in the aggregate,
a Bergen Material Adverse Effect. The audited consolidated financial statements
and unaudited consolidated interim financial statements of Bergen and its
Subsidiaries to be included or incorporated by reference in such reports and
statements will be prepared in accordance with generally accepted accounting
principles applied on a consistent basis throughout the periods involved (except
as may be indicated in the notes to such financial statements), and in
accordance with all applicable published accounting requirements under the
Securities Act and the Exchange Act, and will fairly present in all material
respects the consolidated financial position of Bergen and its Subsidiaries as
of the dates thereof and the consolidated results of operations and consolidated
cash flows of Bergen and its Subsidiaries for the periods then ended (subject,
in the case of any unaudited interim financial statements, to normal year-end
adjustments and to the extent that they may not include footnotes or may be
condensed or summary statements); provided, however, that any pro forma
financial statements will not necessarily be indicative of the consolidated
financial position of Bergen as of the respective dates thereof and the
consolidated results of operations and cash flows of Bergen for the periods
indicated.
4.10 Financial Statements. Bergen's audited consolidated year-end
financial statements and Bergen's unaudited consolidated interim financial
statements included or incorporated by reference in the Bergen SEC Reports have
been prepared in accordance with generally accepted accounting principles
applied on a consistent basis during the periods involved (except as may be
indicated in the notes to such financial statements), and in accordance with all
applicable published accounting requirements under the Securities Act and the
Exchange Act, and fairly present in all material respects the consolidated
financial position of the entities described therein as of the dates thereof and
the consolidated results of operations and consolidated cash flows of such
entities for the periods then ended (subject, in the case of any unaudited
interim financial statements, to normal year-end adjustments and to the extent
they may not include footnotes or may be condensed or summary statements);
provided, however, that any pro forma financial statements will not necessarily
be indicative of the consolidated financial position of Bergen as of the
respective dates thereof and the consolidated results of operations and cash
flows of Bergen for the periods indicated.
4.11 Absence of Changes. Since September 30, 1998, except for (a)
matters publicly disclosed by Bergen prior to the date hereof (including without
limitation matters disclosed in Bergen SEC Reports filed prior
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to the date hereof) and (b) matters disclosed in Section 4.13 of the Bergen
Disclosure Statement, there has been no event or condition which has caused a
Bergen Material Adverse Effect, nor any development, occurrence or state of
facts or circumstances known to Bergen that could, singly or in the aggregate,
reasonably be expected to result in a Bergen Material Adverse Effect.
4.12 Capitalization.
4.12.1 Subject to Section 4.12.1 of the Bergen Disclosure
Statement, the authorized capital stock of Bergen consists solely of 200,000,000
shares of Bergen's Class A common stock, par value $1.50 per share (the "Bergen
Common Stock"), and 3,000,000 shares of preferred stock, without par value (the
"Bergen Preferred Stock"). As of December 1, 1998, there were 103,269,500 shares
of Bergen Common Stock and no shares of Bergen Preferred Stock outstanding,
8,952,812 shares of Bergen Common Stock were held in Bergen's treasury and no
shares of Bergen Preferred Stock were held in Bergen's treasury. As of December
1, 1998, 6,658,024 shares of Bergen Common Stock were reserved for issuance upon
the exercise or conversion of outstanding options, warrants or convertible
securities granted or issuable by Bergen. Section 4.12.1 of the Bergen
Disclosure Statement describes Bergen's obligations as of the date hereof to
issue its Class A Common Stock pursuant to previously executed business
combination agreements. Each outstanding share of Bergen Common Stock is, and
all shares of Bergen Common Stock to be issued in connection with the
transactions contemplated hereby will be, duly authorized and validly issued,
fully paid and nonassessable, with no personal liability attaching to the
ownership thereof, and each outstanding share of Bergen Common Stock has not
been, and all shares of Bergen Common Stock to be issued in connection with the
transactions contemplated hereby will not be, subject to or issued in violation
of any preemptive or similar rights. As of the date hereof, except for (a) stock
options issuable pursuant to stock option plans adopted or assumed by Bergen,
(b) shares of Bergen Common Stock issuable pursuant to other employee benefit
plans disclosed in Bergen SEC Reports, (c) securities issuable in connection
with business combinations disclosed in Bergen SEC Reports, (d) securities
issuable pursuant to the Rights Agreement, dated as of February 8, 1994, between
Bergen and Chemical Trust Company of California (the "Bergen Shareowners' Rights
Plan"), and (e) matters described in Section 4.12 of the Bergen Disclosure
Statement, Bergen is not bound by any outstanding subscriptions, options,
warrants, calls, commitments or agreements of any character calling for the
purchase or issuance of any shares of Bergen Common Stock or Bergen Preferred
Stock or any other equity securities of Bergen or any securities representing
the right to purchase or otherwise receive any shares of Bergen Common Stock or
Bergen Preferred Stock or any other equity securities of Bergen.
4.12.2 Bergen has delivered or made available to PharMerica
complete and correct copies of each stock option plan adopted or assumed by
Bergen as of the date hereof.
4.13 Litigation. Except for legal proceedings described in Section 4.13
of the Bergen Disclosure Statement or in the Bergen SEC Reports, there are no
material pending actions, suits, proceedings or, to the knowledge of Bergen,
investigations by, against or affecting Bergen, any of its Subsidiaries or any
of their properties, assets or operations, or with respect to which Bergen or
any of its Subsidiaries is responsible by way of indemnity or otherwise, which
would, singly or in the aggregate with all such other actions, suits,
investigations or proceedings, reasonably be expected to have a Bergen Material
Adverse Effect.
4.14 Title to and Condition of Properties. As of the date hereof,
Bergen and its Subsidiaries have good title to all of the real property and
personal property reflected on Bergen's September 30, 1998 audited consolidated
balance sheet contained in Bergen's Annual Report on Form 10-K for the year
ended September 30, 1998 filed with the SEC (the "Bergen Balance Sheet"), except
for property since sold or otherwise disposed of in the ordinary course of
business and consistent with past practice and except for defects of title which
are not material to Bergen and its Subsidiaries taken as a whole. Except as set
forth in Section 4.14 of the Bergen Disclosure Statement, as of the date hereof,
no such real or personal property is subject to claims, liens or other
encumbrances of any kind or character, including, without limitation, mortgages,
pledges, liens, conditional sale agreements, charges, security interests,
easements, restrictive covenants, rights of way or options, except for (i) liens
for taxes not yet delinquent or which are being contested in good faith by
appropriate proceedings and in respect of which Bergen or its appropriate
Subsidiary has set aside on its books adequate reserves in accordance
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with generally accepted accounting principles; (ii) mechanics', carriers',
workers', repairers', materialmen's, landlords' and other similar statutory or
common law liens incurred in the ordinary course of business for obligations not
yet delinquent or the validity of which is being contested in good faith by
appropriate proceedings and in respect of which Bergen or its appropriate
Subsidiary has set aside on its books adequate reserves in accordance with
generally accepted accounting principles; (iii) in the case of real property,
easements, rights of way, restrictions, minor defects or irregularities in title
that do not individually or in the aggregate have a material adverse effect on
the value or use of the real property encumbered thereby as currently used in
the operation of the business of Bergen or its Subsidiaries; (iv) those which
would not materially interfere with the conduct of the business of Bergen and
its Subsidiaries or impair Bergen's ability to perform its obligations under
this Agreement and to consummate the transactions contemplated hereby (the
encumbrances described in clauses (i) through (iv) of this sentence
collectively, the "Bergen Permitted Encumbrances"); (v) those securing
liabilities reflected in the Bergen Balance Sheet; or (vi) those described in
Section 4.14 of the Bergen Disclosure Statement.
4.15 Taxes. Except with respect to entities the acquisition of which is
consummated subsequent to the date hereof (as to which no representation is made
in this Section 4.15): (i) Bergen and its Subsidiaries have, in all material
respects, prepared and timely filed or will, in all material respects, timely
file with the appropriate governmental agencies all franchise, income and all
other Tax returns and reports (hereinafter collectively referred to as "Bergen
Tax Returns") required to be filed by them on or before the Effective Time,
taking into account any extension of time to file granted to or obtained on
behalf of Bergen and/or its Subsidiaries; (ii) all Taxes of Bergen and its
Subsidiaries have been paid in full to the proper authorities or fully accrued
or provided for with respect to fiscal periods for which there are publicly
available financial statements and otherwise on the books of Bergen, other than
such Taxes as are adequately reserved for in accordance with generally accepted
accounting principles or are not material to Bergen and its Subsidiaries taken
as a whole; (iii) all deficiencies asserted in writing as a result of Tax
examinations of federal, state and foreign income, sales and franchise and all
other Tax Returns filed by Bergen and its Subsidiaries have, in all material
respects, either been paid or adequately reserved for in accordance with
generally accepted accounting principles; and (iv) as of the date hereof, to the
knowledge of Bergen, no unpaid deficiency has been asserted or assessed against
Bergen or any of its Subsidiaries, and no examination of Bergen or any of its
Subsidiaries is pending or threatened, for any material amount of Tax by any
taxing authority.
4.16 Absence of Undisclosed Liabilities. As of the date hereof, neither
Bergen nor any of its Subsidiaries has any liabilities or obligations of any
nature, whether absolute, accrued, unmatured, contingent or otherwise, or any
unsatisfied judgments or any leases of personalty or realty or unusual or
extraordinary commitments, except for those liabilities or allowances recorded,
accrued or reserved against on the Bergen Balance Sheet (as defined in Section
4.14) or described in the notes thereto, except for liabilities or obligations
that would not, singly or in the aggregate, be reasonably expected to have a
Bergen Material Adverse Effect and except for those liabilities described in
Section 4.16 of the Bergen Disclosure Statement.
4.17 Year 2000. Subject to the completion schedule set forth in the
most recent Bergen SEC Report heretofore filed by Bergen with the SEC, Bergen
and its Subsidiaries have taken, in all material respects, the steps described
in the Bergen SEC Reports with respect to the computer systems and software of
Bergen and its Subsidiaries relating to the specification of dates in, into and
between the 20th and 21st centuries.
ARTICLE V.
COVENANTS OF THE PARTIES
5.1 Access and Information. Prior to the Closing, and except for
disclosures which would cause PharMerica or any of its Subsidiaries to waive the
attorney-client privilege or otherwise violate Applicable Law or any material
confidentiality agreement, Bergen shall be entitled to make or cause to be made
such investigation of PharMerica and its Subsidiaries, and the financial and
legal condition thereof, as Bergen deems necessary or advisable, and PharMerica
shall cooperate with any such investigation. In furtherance of the foregoing,
but not in limitation thereof, PharMerica shall (a) permit Bergen and its agents
and representatives or cause them to be permitted to have full and complete
access to the premises, operating systems, computer systems (hardware and
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software) and books and records of PharMerica and its Subsidiaries upon
reasonable notice during regular business hours, (b) furnish or cause to be
furnished to Bergen such financial and operating data, projections, forecasts,
business plans, strategic plans and other data relating to PharMerica and its
Subsidiaries and their businesses as Bergen shall request from time to time and
(c) cause its accountants to furnish to Bergen and its accountants access to all
work papers relating to any of the periods covered by financial statements
provided by PharMerica to Bergen hereunder. Prior to the Closing, and except for
disclosures which would cause Bergen or any of its Subsidiaries to waive the
attorney-client privilege or otherwise violate Applicable Law or any material
confidentiality agreement, Bergen shall (a) provide complete and accurate
information to PharMerica and its representatives in response to reasonable
requests for information made in order to enable PharMerica to confirm the
accuracy of the representations set forth in Article IV (including the
continuing accuracy of those representations which are not made as of a
particular date) and the fulfillment of the covenants of this Article V and the
closing conditions in Sections 6.1 and 6.3 and (b) furnish to PharMerica's
financial advisor complete and accurate information comparable to the types of
information heretofore furnished by Bergen to PharMerica's financial advisor in
connection with the transactions contemplated hereby and such other information
as such financial advisor may reasonably request (in light of prevailing
circumstances) in order to perform its financial advisory role on behalf of
PharMerica. Prior to the Closing, Bergen shall not use any information provided
to it in confidence by PharMerica for any purposes unrelated to this Agreement.
PharMerica shall not use any information provided to it in confidence by Bergen
for any purposes unrelated to this Agreement. Except with respect to publicly
available documents, in the event that this Agreement is terminated, (a) Bergen
will return to PharMerica all documents obtained by it from PharMerica and its
Subsidiaries in confidence and any copies thereof in the possession of Bergen or
its agents and representatives or, at the option of Bergen, Bergen shall cause
all of such documents and all of such copies to be destroyed and shall certify
the destruction thereof to PharMerica and (b) PharMerica will return to Bergen
all documents obtained by it from Bergen and its Subsidiaries in confidence and
any copies thereof in the possession of PharMerica or its agents and
representatives or, at the option of PharMerica, PharMerica shall cause all of
such documents and all of such copies to be destroyed and shall certify the
destruction thereof to Bergen. No investigation by Bergen or PharMerica
heretofore or hereafter made shall modify or otherwise affect the conditions to
the obligation of Bergen and PharMerica to consummate the transactions
contemplated hereby.
5.2 PharMerica's Affirmative Covenants Prior to the Closing, except as
otherwise expressly provided herein, PharMerica shall (and PharMerica shall
cause each of its Subsidiaries to):
5.2.1 conduct its business only in the ordinary and regular
course of business consistent with past practices;
5.2.2 use commercially reasonable efforts to keep in full
force and effect its corporate existence and all material rights, franchises,
Intellectual Proprietary Rights and goodwill relating or pertaining to its
businesses;
5.2.3 endeavor to retain its employees and preserve its
present relationships with customers, suppliers, contractors, distributors and
employees, and continue to compensate its employees consistent with past
practices;
5.2.4 use commercially reasonable efforts to maintain the
Intellectual Property Rights so as not to affect adversely the validity or
enforcement thereof; maintain its other assets in customary repair, order and
condition and maintain insurance reasonably comparable to that in effect on the
date of this Agreement;
5.2.5 maintain its books, accounts and records in accordance
with generally accepted accounting principles;
5.2.6 use commercially reasonable efforts to obtain all
authorizations, consents, waivers, approvals or other actions and to make all
filings and applications necessary or desirable to consummate the transactions
contemplated hereby and to cause the other conditions to Bergen's obligation to
close to be satisfied; and
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5.2.7 promptly notify Bergen in writing if, prior to the
consummation of the Closing, to its knowledge (a) any of the representations and
warranties contained in Article III cease to be accurate and complete in all
material respects (except for any representation and warranty (i) which is
qualified hereunder as to materiality, as to which such notification shall be
given if PharMerica or its Subsidiaries obtain knowledge that such
representation and warranty is inaccurate in any respect, or (ii) that addresses
matters only as of a particular date, which need only be true and correct as of
such date) or 4(b) PharMerica fails to comply with or satisfy any material
covenant, condition or agreement to be complied with or satisfied by it
hereunder; provided, however, that the delivery of any notice pursuant to this
Section 5.2.7 shall not limit or otherwise affect the remedies available
hereunder to Bergen.
5.3 Bergen's Affirmative Covenants. Prior to the Closing, except as
otherwise expressly provided herein, Bergen shall (and Bergen shall cause each
of its Subsidiaries to):
5.3.1 use commercially reasonable efforts to keep in full
force and effect its corporate existence and all material rights, franchises,
intellectual proprietary rights and goodwill relating or obtaining to its
businesses;
5.3.2 endeavor to retain its employees and preserve its
present relationships with customers, suppliers, contractors, distributors and
employees;
5.3.3 maintain its books, accounts and records in accordance
with generally accepted accounting principles;
5.3.4 use commercially reasonable efforts to obtain all
authorizations, consents, waivers, approvals or other actions and to make all
filings and applications necessary or desirable to consummate the transactions
contemplated hereby and to cause the other conditions to PharMerica's obligation
to close to be satisfied; and
5.3.5 promptly notify PharMerica in writing if, prior to the
consummation of the Closing, to its knowledge (a) any of the representations and
warranties contained in Article IV cease to be accurate and complete in all
material respects (except for any representation and warranty (i) which is
qualified hereunder as to materiality, as to which such notification shall be
given if Bergen or its Subsidiaries obtain knowledge that such representation
and warranty is inaccurate in any respect, or (ii) that addresses matters only
as of a particular date, which need only be true and correct as of such date) or
(b) Bergen fails to comply with or satisfy any material covenant, condition or
agreement to be complied with or satisfied by it hereunder; provided, however,
that the delivery of any notice pursuant to this Section 5.3.5 shall not limit
or otherwise affect the remedies available hereunder to PharMerica.
5.4 PharMerica's Negative Covenants. Prior to the Closing, without the
prior written consent of Bergen or as otherwise expressly provided herein,
PharMerica will not and PharMerica will cause its Subsidiaries not to:
5.4.1 take any action or omit to take any action which would
result in PharMerica's or any of its Subsidiaries' (a) incurring any trade
accounts payable outside of the ordinary course of Business or making any
commitment to purchase quantities of any item of inventory in excess of
quantities normally purchased in the ordinary course of business; (b) increasing
any of its indebtedness for borrowed money except in the ordinary course of
business; (c) guaranteeing the obligations of any entity other than PharMerica's
Subsidiaries, (d) making any purchases of pharmaceuticals other than from the
manufacturers thereof or wholesalers or other distributors authorized by such
manufacturers to distribute their products; (e) merging or consolidating with,
purchasing substantially all of the assets of, or otherwise acquiring any
business or any proprietorship, firm, association, limited liability company,
corporation or other business organization; (f) increasing or decreasing the
rate or type of compensation payable to any officer, director, employee or
consultant of PharMerica or any of its Subsidiaries (other than regularly
scheduled increases in base salary and annual bonuses consistent with prior
practice); (g) entering into or amending any collective bargaining agreement, or
creating or modifying any pension or profit-
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sharing plan, bonus, deferred compensation, death benefit, or retirement plan,
or any other employee benefit plan, or increasing the level of benefits under
any such plan, or extending the exercisability of any outstanding stock option
or increasing or decreasing any severance or termination pay benefit or any
other fringe benefit; (h) making any representation to anyone indicating any
intention of Bergen or its Subsidiaries to retain, institute, or provide any
employee benefit plans; (i) declaring or paying any dividend or making any
distribution with respect to, or purchasing or redeeming, shares of the capital
stock of PharMerica; (j) selling or disposing of any assets otherwise than in
the ordinary course of business of PharMerica and its Subsidiaries; (k) making
any capital expenditures other than in the ordinary course of business
consistent with past practices and in no event in excess of $10,000,000 in the
aggregate; (l) except for PharMerica Common Stock issuable upon exercise of a
PharMerica Stock Option or PharMerica Warrant outstanding on December 31, 1998,
issuing any shares of the capital stock of any kind of PharMerica or its
Subsidiaries, transferring from the treasury of PharMerica or its Subsidiaries
any shares of the capital stock of PharMerica or its Subsidiaries or issuing or
granting any subscriptions, options, rights, warrants, convertible securities or
other agreements or commitments to issue, or contracts or any other agreements
obligating PharMerica or its Subsidiaries to issue, or to transfer from
treasury, any shares of capital stock of any class or kind, or securities
convertible into any such shares; (m) modifying, amending or terminating any
material PharMerica Contract other than in the ordinary course of business that
is consistent with past practices; or (n) entering into any other transaction
outside of the ordinary course of business;
5.4.2 change any method or principle of accounting in a manner
that is inconsistent with past practice, except to the extent required by
generally accepted accounting principles as advised by PharMerica's regular
independent accountants;
5.4.3 take any action that would likely result in the
representations and warranties set forth in Article III (other than
representations made as of a particular date) becoming false or inaccurate in
any material respect (or, as to representations and warranties, which, by their
terms, are qualified as to materiality, becoming false or inaccurate in any
respect);
5.4.4 incur or create any encumbrances, liens, pledges or
security interests on assets other than PharMerica Permitted Encumbrances;
5.4.5 except as contemplated herein, take any action or omit
to take any action which would materially interfere with Bergen's rights to
compel performance of each of the obligations of PharMerica under this
Agreement;
5.4.6 take or omit to be taken any action, or permit any of
its affiliates to take or to omit to take any action, which would reasonably be
expected to result in a PharMerica Material Adverse Effect;
5.4.7 amend or modify, or propose to amend or modify, the
PharMerica Rights Agreement, as amended as of the date hereof; or
5.4.8 agree or commit to take any action precluded by this
Section 5.4.
5.5 Bergen's Negative Covenants. Prior to the Closing, without the
prior written consent of PharMerica or as otherwise expressly provided herein,
Bergen will not and Bergen will cause its Subsidiaries not to:
5.5.1 change any method or principle of accounting in a manner
that is inconsistent with past practice, except to the extent required by
generally accepted accounting principles as advised by Bergen's regular
independent accountants;
5.5.2 take any action that would likely result in the
representations and warranties set forth in Article IV (other than
representations made as of a particular date) becoming false or inaccurate in
any material respect (or, as to representations and warranties, which, by their
terms, are qualified as to materiality, becoming false or inaccurate in any
respect);
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5.5.3 except as contemplated herein, take any action or omit
to take any action which would materially interfere with PharMerica's rights to
compel performance of each of the obligations of Bergen under this Agreement;
5.5.4 take or omit to be taken any action, or permit any of
its affiliates to take or to omit to take any action, which would reasonably be
expected to result in a Bergen Material Adverse Effect;
5.5.5 amend Bergen's Restated Certificate of Incorporation or
by-laws in any material manner that does not generally apply to all of Bergen's
stockholders; or
5.5.6 agree or commit to take any action precluded by this
Section 5.5.
5.6 Closing Documents. PharMerica shall, prior to or on the Closing
Date, execute and deliver, or cause to be executed and delivered, to Bergen the
documents or instruments described in Section 6.2. Bergen shall, prior to or on
the Closing Date, execute and deliver, or cause to be executed and delivered, to
PharMerica the documents or instruments described in Section 6.3.
5.7 HSR Act.
5.7.1 Each of Bergen and PharMerica shall (A) make or cause to
be made the filings required of such party or any of its subsidiaries or
affiliates under the HSR Act with respect to the transactions contemplated
hereby as promptly as practicable and in any event within five business days
after the date of this Agreement, (B) comply at the earliest practicable date
with any request under the HSR Act for additional information, documents, or
other materials received by such party or any of its subsidiaries from the
Federal Trade Commission or the Department of Justice or any other Governmental
Authority in respect of such filings or such transactions, and (C) cooperate
with the other party in connection with any such filing (including without
limitation the exchange between the parties, or where prudent, between the
outside counsel of the parties, of relevant materials prior to the filing of
such materials, provided that nothing herein shall obligate a party hereto to
waive attorney-client protections or similar protections, and, if requested, to
accept all reasonable additions, deletions or changes suggested in connection
therewith) and in connection with resolving any investigation or other inquiry
of any such agency or other Governmental Authority under any Antitrust Laws (as
hereinafter defined) with respect to any such filing or any such transaction.
Each party shall use all reasonable efforts to furnish to each other all
information required for any application or other filing to be made pursuant to
any Applicable Law in connection with the Merger and the other transactions
contemplated by this Agreement. Each party shall promptly inform the other party
of any communication with, and any proposed understanding, undertaking, or
agreement with, any Governmental Authority regarding any such filings or any
such transaction. Neither party shall independently participate in any formal
meeting with any Governmental Authority in respect of any filing, investigation
or other inquiry relating to the Merger without giving the other party prior
notice of the meeting and, to the extent permitted by such Governmental
Authority, the opportunity to attend and/or participate. The parties hereto will
consult and cooperate with one another, in connection with any analyses,
appearances, presentations, memoranda, briefs, arguments, opinions and proposals
made or submitted by or on behalf of any party hereto in connection with
proceedings relating to the Merger under or relating to the HSR Act or other
Antitrust Laws.
5.7.2 Each of Bergen and PharMerica shall use all reasonable
efforts to resolve such objections, if any, as may be asserted by any
Governmental Authority with respect to the transactions contemplated by this
Agreement under the HSR Act, the Clayton Act, as amended, the Sherman Antitrust
Act, as amended, the Federal Trade Commission Act, as amended, and any other
federal, state or foreign statues, rules, regulations, orders, decrees,
guidelines, administrative or judicial doctrines or other laws that are designed
to prohibit, restrict or regulate actions having the purpose or effect of
monopolization or restraint of trade or competition (collectively, "Antitrust
Laws"). In connection therewith and subject to Section 5.7.3, if any
administrative or judicial action or proceeding is instituted (or threatened to
be instituted) challenging any transaction contemplated by this Agreement as
violative of any Antitrust Law, each of Bergen and PharMerica shall cooperate
and use all reasonable efforts vigorously to contest and resist any such action
or proceeding, including without limitation any
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legislative, administrative or judicial action, and to have vacated, lifted,
reversed, or overturned any decree, judgment, injunction or other order whether
temporary, preliminary or permanent (each an "Order"), that is in effect and
that prohibits, prevents, or restricts consummation of the Merger or any other
transactions contemplated by this Agreement, including, without limitation, by
vigorously pursuing all available avenues of administrative and judicial appeal
and all available legislative action, unless by mutual agreement Bergen and
PharMerica decide that any such action is not in their respective best
interests. Notwithstanding the foregoing or any other provision of this
Agreement, nothing in this Section 5.7 shall limit a party's right to terminate
this Agreement pursuant to Section 7.1, so long as such party has up to then
complied in all material respects with its obligations under this Section 5.7.
Each of Bergen and PharMerica shall use all reasonable efforts to take such
action as may be required to cause the early termination or expiration of the
waiting periods under the HSR Act or other Antitrust Laws with respect to such
transactions as promptly as possible after the execution of this Agreement.
5.7.3 If required to avoid a Governmental Authority
instituting an action challenging the transactions contemplated by this
Agreement under the Antitrust Laws and seeking to enjoin or prohibit the
consummation of any of the transactions contemplated by this Agreement (or if
required to settle any such action previously instituted by a Governmental
Authority), Bergen shall, and, at the direction of Bergen, PharMerica shall,
propose, negotiate, commit to and effect, by consent decree, hold separate
order, or otherwise, the sale, divestiture or disposition of any of their
respective businesses or assets, or take or agree to take any action or agree to
any limitation as may be required in order to avoid the entry of, or to effect
the dissolution of, any injunction, temporary restraining order or other order
in any suit or proceeding, which would otherwise have the effect of preventing
or delaying the Closing; provided, however, that this Section 5.7.3 shall not
require Bergen to take any action if such action, in the reasonable judgment of
Bergen's Board of Directors, would be reasonably likely to have a Bergen
Material Adverse Effect after the Effective Time giving effect to consummation
of the transactions contemplated by this Agreement.
5.8 Further Actions. Each of the parties hereto agrees to use all
reasonable efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, and to assist and cooperate with the other parties in doing,
all things necessary, proper or advisable to consummate and make effective, in
the most expeditious manner practicable in light of the circumstances, the
Merger and the other transactions contemplated by this Agreement, including
without limitation (A) the obtaining of all other necessary actions or
nonactions, waivers, consents, licenses, permits, authorizations, orders and
approvals from Governmental Authorities and the making of all other necessary
registrations and filings, (B) the obtaining of all consents, approvals or
waivers from third parties related to or required in connection with the Merger
that are necessary to consummate the Merger and the transactions contemplated by
this Agreement or required to prevent a Bergen Material Adverse Effect or a
PharMerica Material Adverse Effect from occurring prior to or after the
Effective Time, (C) the preparation of the Prospectus/Joint Proxy Statement and
the Registration Statement, the declaration of effectiveness of the Registration
Statement by the SEC and the mailing of the Prospectus/Joint Proxy Statement to
the stockholders of Bergen and PharMerica, (D) if necessary as a result of the
circumstances, the amendment of the Registration Statement and Prospectus/Joint
Proxy Statement as required by law, (E) the taking of all action necessary to
ensure that the Merger constitutes a tax-free reorganization within the meaning
of Section 368(a)(1)(A) of the Code, and (F) the execution and delivery of any
additional instruments necessary to consummate the transactions contemplated by,
and to fully carry out the purposes of, this Agreement.
5.9 Employment Agreement. Prior to execution of this Agreement, the
officer of PharMerica identified in Section 5.9 of the Bergen Disclosure
Statement has executed an employment agreement (the "New Employment Agreement").
PharMerica shall not amend or modify the New Employment Agreement at or before
the Effective Time.
5.10 Public Announcements. Unless otherwise required by Applicable Laws
or requirements of the NYSE or Nasdaq (and in that event only if time does not
permit), at all times prior to the earlier of the Effective Time or termination
of this Agreement pursuant to Section 7.1, Bergen and PharMerica shall consult
with each other before issuing any press release with respect to the Merger and
shall not issue any such press release prior to such consultation.
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5.11. Stockholders' Meetings.
5.11.1 Bergen Annual Meeting. Subject to Article VII, Bergen
shall take all action in accordance with the federal securities law,, the New
Jersey Business Corporations Act, Bergen's Restated Certificate of
Incorporation, as amended, and Bergen's by-laws, as amended, necessary to
convene the Bergen Annual Meeting to be held on the earliest practical date as
reasonably determined by Bergen in light of the circumstances, and to obtain the
consent and approval of Bergen's stockholders with respect to the issuance of
Bergen Common Stock pursuant to the Merger, including (in the absence of
conditions that would justify the termination of this Agreement) recommending
such approval to Bergen's stockholders.
5.11.2 PharMerica Special Meeting. Subject to Sections 5.17
and 5.18 and Article VII, PharMerica shall take all action in accordance with
the federal securities laws, the DGCL, PharMerica's Certificate of
Incorporation, as amended, and PharMerica's by-laws, as amended, necessary to
convene the PharMerica Special Meeting to be held on the earliest practical date
as reasonably determined by Bergen in light of the circumstances, and to obtain
the consent and approval of PharMerica's stockholders with respect to this
Agreement and the transactions contemplated hereby, including (in the absence of
conditions that would justify the termination of this Agreement) recommending
such approval to PharMerica's stockholders.
5.12 Preparation of the Joint/Proxy Statement and the Registration
Statement. Bergen shall, as soon as is reasonably practicable, prepare the
Prospectus/Joint Proxy Statement to be included in the Registration Statement.
Once both parties consent to the filing of the Prospectus/Joint Proxy Statement
with the SEC (which consent shall not be unreasonably withheld), Bergen shall
file the Prospectus/Joint Proxy Statement with the SEC, which filing shall be
made on a confidential basis to the extent permitted by the regulations of the
SEC with respect to such filings. Consistent with the timing for the Bergen
Annual Meeting and the PharMerica Special Meeting as determined by Bergen in
accordance with Section 5.11, Bergen shall, subject to the consent of PharMerica
(which shall not be unreasonably withheld), prepare and file the Registration
Statement with the SEC as soon as is reasonably practicable following clearance
of the Prospectus/Joint Proxy Statement by the SEC and reasonable approval of
the Prospectus/Joint Proxy Statement by PharMerica and Bergen and shall use all
reasonable efforts to have the Registration Statement declared effective by the
SEC as promptly as practicable thereafter and to maintain the effectiveness of
the Registration Statement through the Effective Time. If, at any time prior to
the Effective Time, Bergen or PharMerica shall obtain knowledge of any
information contained in or omitted from the Registration Statement that would
require an amendment or supplement to the Registration Statement or the
Prospectus/Joint Proxy Statement, the party obtaining such knowledge will
promptly so advise the other party in writing and both PharMerica and Bergen
will promptly take such action as shall be required to amend or supplement the
Registration Statement and/or the Prospectus/Joint Proxy Statement. PharMerica
shall promptly furnish to Bergen all financial and other information concerning
it as may be required for the Prospectus/Joint Proxy Statement and any
supplements or amendments thereto. Bergen and PharMerica shall cooperate in the
preparation of the Prospectus/Joint Proxy Statement in a timely fashion and
shall use all reasonable efforts to clear the Prospectus/Joint Proxy Statement
and the Registration Statement with the Staff of the SEC. Promptly after the
Registration Statement is declared effective by the SEC, each of PharMerica and
Bergen shall use all reasonable efforts to mail at the earliest practicable date
to its stockholders the Prospectus/Joint Proxy Statement, which shall include
all information required under Applicable Law to be furnished to PharMerica's
stockholders and Bergen's stockholders in connection with the Merger and the
transactions contemplated thereby and shall include the PharMerica Board
Recommendation to the extent not previously withdrawn in compliance with Section
5.17 and the written opinion of Donaldson Lufkin & Jenrette Securities
Corporation described in Section 7.1.8. Bergen also shall take such other
reasonable actions (other than qualifying to do business in any jurisdiction in
which it is not so qualified or submitting to taxation in any jurisdiction in
which it is not subject to taxation) required to be taken under any applicable
state securities laws in connection with the issuance of Bergen Common Stock in
the Merger. Notwithstanding any provision herein to the contrary, prior to the
time that the Registration Statement is declared effective, the Prospectus/Joint
Proxy Statement shall contain the audited consolidated financial statements
described in clause "a" of Section 5.22.1.
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5.13 Indemnification; Directors' and Officers' Insurance.
5.13.1 From and after the Effective Time, to the fullest
extent permitted by law, Bergen shall indemnify, defend and hold harmless the
present and former officers and directors of PharMerica in respect of acts or
omissions occurring prior to the Effective Time to the fullest extent provided
or permitted under PharMerica's Certificate of Incorporation, as amended and
restated through the date hereof, and PharMerica's By-laws, as amended and
restated through the date hereof. Notwithstanding the foregoing, Bergen shall
not be liable for any settlement relating to such acts or omissions effected
without Bergen's prior written consent, which consent shall not be unreasonably
withheld.
5.13.2 Bergen shall use all reasonable efforts to cause the
Surviving Corporation or Bergen to obtain and maintain in effect for a period of
six years after the Effective Time policies of directors' and officers'
liability insurance at no cost to the beneficiaries thereof with respect to acts
or omissions occurring prior to the Effective Time with substantially the same
coverage and containing substantially similar terms and conditions as currently
existing policies maintained by PharMerica; provided, however, that neither the
Surviving Corporation nor Bergen shall be required to pay an annual premium
during such six-year period for such insurance coverage in excess of 150% of the
annual premium currently paid for such insurance by PharMerica.
5.13.3 Bergen covenants and agrees from and after the
Effective Time to provide to the directors of PharMerica, if any, who become
directors of Bergen directors' and officers' liability insurance on the same
basis and to the same extent as that, if any, provided to other directors of
Bergen.
5.14 Merger Subsidiary. Prior to the Effective Time, Subcorp shall not
conduct any business or make any investments other than as specifically
contemplated by this Agreement and will not have any assets (other than a de
minimis amount of cash paid to Subcorp for the issuance of its stock to Bergen)
or any material liabilities.
5.15 NYSE Listing. Bergen shall use its reasonable efforts to cause the
Bergen Common Stock issuable pursuant to the Merger (including, without
limitation, the Bergen Common Stock issuable upon the exercise of the Bergen
Exchange Options) to be approved for listing on the NYSE, subject to official
notice of issuance, prior to the Effective Time.
5.16 Employees and Employee Benefits. Following the Effective Time,
Bergen shall provide generally to officers and employees of PharMerica and its
Subsidiaries employee benefits under employee benefit and welfare plans on terms
and conditions which are substantially similar to those provided by PharMerica
and its Subsidiaries on the date hereof. From and after the Effective Time,
Bergen shall treat all service by PharMerica Employees (as defined below) with
PharMerica and its Subsidiaries and their respective predecessors prior to the
Effective Time for all purposes as service with Bergen (except to the extent
such treatment would result in duplicative accrual on or after the Closing Date
of benefits for the same period of service), and, with respect to any medical or
dental benefit plan in which PharMerica Employees participate after the
Effective Time, Bergen shall waive or cause to be waived any pre-existing
condition exclusions and actively-at-work requirements (provided, however, that
no such waiver shall apply to a pre-existing condition of any PharMerica
Employee who was, as of the Effective Time, excluded from participation in a
PharMerica Benefit Plan by virtue of such pre-existing condition), and shall
provide that any covered expenses incurred on or before the Effective Time by a
PharMerica Employee or a PharMerica Employee's covered dependent shall be taken
into account for purposes of satisfying applicable deductible, coinsurance and
maximum out-of-pocket provisions after the Effective Time to the same extent as
such expenses are taken into account for the benefit of similarly situated
employees of Bergen and subsidiaries of Bergen. For purposes of this Section
5.16, "PharMerica Employees" shall mean persons who are, as of the Effective
Time, employees of PharMerica or its Subsidiaries. Bergen also shall cause the
Surviving Corporation and its Subsidiaries to honor in accordance with their
terms all employment, severance, consulting and other compensation contracts
disclosed in Section 3.23 of the PharMerica Disclosure Statement between
PharMerica or one of its Subsidiaries and any current of former director,
officer, or employee thereof, and all provisions for vested benefits or other
vested amounts earned or accrued through the Effective Time under the provisions
of the PharMerica Employee Benefit Plans listed in Section 3.26 of the
PharMerica Disclosure Statement as such provisions exist on the date hereof.
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5.17 No Solicitation; Withdrawal of the PharMerica Board
Recommendation.
5.17.1 PharMerica agrees that, during the term of this
Agreement, it shall not, and shall not authorize or permit any of its
Subsidiaries or any of its or its Subsidiaries' directors, officers, employees,
agents or representatives, directly or indirectly, to solicit, initiate,
encourage or facilitate, or furnish or disclose non-public information in
furtherance of, any inquiries or the making of any proposal with respect to any
recapitalization, merger, consolidation or other business combination involving
PharMerica, or acquisition of any capital stock of PharMerica (other than upon
exercise of PharMerica Options or PharMerica Warrants which are outstanding as
of the date hereof) or 20% or more of the assets of PharMerica and its
Subsidiaries, taken as a whole, in a single transaction or a series of related
transactions, or any acquisition by PharMerica of any material assets or capital
stock of any other person, or any combination of the foregoing (a "Competing
Transaction"), or negotiate, explore or otherwise engage in discussions with any
person (other than Bergen, Subcorp or their respective directors, officers,
employees, agents and representatives) with respect to any Competing Transaction
or enter into any agreement, arrangement or understanding requiring it to
abandon, terminate or fail to consummate the Merger or any other transactions
contemplated by this Agreement; provided that, at any time prior to the approval
of the Merger by PharMerica's stockholders, PharMerica may furnish information
to, and negotiate or otherwise engage in discussions with, any party who
delivers a written proposal for a Competing Transaction which was not solicited
or encouraged after the date of this Agreement if and so long as the Board of
Directors of PharMerica determines, in good faith by a majority vote, after
consultation with its financial advisors and consultation and receipt of advice
from its outside legal counsel, that failing to take such action (i.e.,
furnishing information, negotiating and engaging in discussions, as aforesaid)
would be inconsistent with the fiduciary duties of the Board of Directors of
PharMerica under Applicable Law. PharMerica will immediately cease all existing
activities, discussions and negotiations with any parties conducted heretofore
with respect to any proposal for a Competing Transaction.
5 17.2 Notwithstanding any other provision of this Section
5.17, in the event that, prior to the approval of the Merger by PharMerica's
stockholders, the Board of Directors of PharMerica determines, in response to a
written proposal for a Competing Transaction which was not solicited or
encouraged after the date of this Agreement, such determination to be in good
faith by a majority vote after consultation with its financial advisors and
consultation and receipt of advice from its outside legal counsel, that its
failure to withdraw, modify or change the PharMerica Board Recommendation would
be inconsistent with the fiduciary duties of the PharMerica Board of Directors
under Applicable Law, the Board of Directors of PharMerica may (subject to the
provisions of this Section 5.17) withdraw, modify or change, in a manner adverse
to Bergen, the PharMerica Board Recommendation and, to the extent applicable,
comply with Rule 14e-2 promulgated under the Exchange Act with respect to a
Competing Transaction by disclosing such withdrawn, modified or changed
PharMerica Board Recommendation in connection with a tender or exchange offer
for PharMerica securities, provided that PharMerica (i) provides Bergen with
written notice of (A) its intention to withdraw, modify or change the PharMerica
Board Recommendation and (B) the terms and conditions of any Competing
Transaction at least 48 hours prior to any termination of this Agreement
pursuant to this Section 5.17 (it being understood that once 48 hours has
elapsed since PharMerica's first notice to Bergen of its intent to withdraw,
modify or change the PharMerica Board Recommendation, PharMerica may, in its
discretion, terminate this Agreement pursuant to this Section 5.17 regardless of
any response by Bergen to such notice if such termination is in accordance with
the provisions of this Section 5.17, and (ii) delivers to Bergen concurrent with
such withdrawal, modification or change (A) a written notice of termination of
this Agreement pursuant to this Section 5.17, (B) a payment in cash by wire
transfer in immediately available funds to an account designated by Bergen in
the amount of Bergen's Costs (as hereinafter defined) as the same may have been
estimated by Bergen in good faith prior to the date of such delivery (subject to
an adjustment payment between the parties upon Bergen's definitive determination
of such (costs), and a payment in cash by wire transfer in immediately available
funds to an account designated by Bergen in the amount of the termination fee as
provided in Section 7.2 and (C) a written acknowledgment from PharMerica that
upon termination of this Agreement pursuant to this Section 5.17, the amended
and restated Bergen Supply Agreement described in Section 7.2.2 shall be in
effect, shall be binding upon PharMerica and its successors and assigns and
shall be honored in accordance with its terms. The foregoing shall in no way
limit or otherwise affect Bergen's right to terminate this Agreement pursuant to
Section 7.1.4. The PharMerica Board of Directors shall not take any action to
change the approval of the Board of Directors of PharMerica for purposes of
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causing any state takeover statute or other state law to be applicable to the
transactions contemplated hereby, including the Merger, unless and until this
Agreement is terminated.
5.17.3 From and after the execution of this Agreement,
PharMerica shall, as promptly as possible and in any event within 24 hours of
receipt, advise Bergen in writing of the receipt, directly or indirectly, of any
inquiries, discussions, negotiations, or proposals relating to a Competing
Transaction (including the specific terms thereof and the identity of the other
party or parties involved) and furnish to Bergen within 24 hours of such receipt
an accurate description of all material terms (including any changes or
adjustments to such terms as a result of negotiations or otherwise) of any such
written proposal in addition to any information provided to any third party
relating thereto. In addition, PharMerica shall immediately advise Bergen, in
writing, if the Board of Directors of PharMerica shall make any determination as
to any Competing Transaction as contemplated by the proviso to the first
sentence of Section 5.17.1.
5.18 Termination Right. If, prior to the approval of the Merger by
PharMerica's stockholders, the Board of Directors of PharMerica determines, in
response to a written proposal for a Competing Transaction which was not
solicited or encouraged after the date of this Agreement, such determination to
be in good faith by a majority vote after consultation with its financial
advisors and consultation and receipt of advice from is outside legal counsel,
that it must withdraw, modify or change the PharMerica Board Recommendation (all
in accordance with and in compliance with Section 5.17) and that a failure to do
so would be inconsistent with the fiduciary duties of the Board of Directors of
PharMerica under Applicable Law, then if PharMerica has complied with each of
the provisions of Section 5.17 (including without limitation each of the
provisions of Section 5.17.2), it may terminate this Agreement and enter into a
letter of intent, agreement-in-principle, acquisition agreement or other similar
agreement (each, an "Acquisition Agreement") with respect to such Competing
Transaction.
5.19 Affiliates of PharMerica. PharMerica shall cause each person who
may be at the Effective Time or was on the date hereof an "affiliate" of
PharMerica for purposes of Rule 145 under the Securities Act, to execute and
deliver to Bergen no less than five days prior to the date of the Closing, the
written undertakings in the form attached hereto as Exhibit A-1 (the "PharMerica
Affiliate Letter"). No later than ten days prior to the date of the Closing,
PharMerica, after consultation with its outside counsel, shall provide Bergen
with a letter (reasonably satisfactory to Bergen's Chief Legal Officer)
specifying all of the persons or entities who, in PharMerica's opinion, may be
deemed to be "affiliates" of PharMerica under the preceding sentence. The
foregoing notwithstanding, Bergen shall be entitled to place legends as
specified in the PharMerica Affiliate Letter on the certificates evidencing any
shares of the Bergen Common Stock to be received by (i) any such "affiliate" of
PharMerica specified in such letter or (ii) any person Bergen reasonably
identifies (by written notice to PharMerica) as being a person who may be deemed
an "affiliate" for purposes of Rule 145 under the Securities Act, and to issue
appropriate stop transfer instructions to the transfer agent for the Bergen
Common Stock, consistent with the terms of the PharMerica Affiliate Letter,
regardless of whether such person has executed the PharMerica Affiliate Letter
and regardless of whether such person's name appears on the letter to be
delivered pursuant to the preceding sentence.
5.20 Subsequent Financial Statements. PharMerica shall consult with
Bergen prior to making publicly available its financial results for any period
after the date of this Agreement and prior to filing any PharMerica SEC Reports
after the date of this Agreement.
5.21 Environmental Matters. Prior to the Closing, Bergen shall have the
right, at its expense, to make such environmental studies of each of the
premises at which PharMerica and its Subsidiaries conduct business (the
"Premises"), including without limitation reviewing records, inspecting the
properties and testing the air, subsoil, groundwater and building materials at
the Premises, as it shall deem necessary to determine whether the Premises are
in compliance with all applicable Environmental Laws and whether any Regulated
Substances are present at the Premises, but shall indemnify and hold PharMerica
and its Subsidiaries harmless from any loss, cost or damage proximately caused
by such inspection. Such inspection shall be scheduled and performed so as not
to unreasonably interfere with the business of PharMerica and its Subsidiaries.
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5.22 Financial Statements for a Current Report on Form 8-K.
5.22.1 Prior to the Closing, PharMerica shall provide to
Bergen (a) regardless of when the Closing occurs, (i) audited consolidated
balance sheets of PharMerica and its Subsidiaries as of December 31, 1998 and
1997, (ii) audited consolidated statements of income, cash flows and changes in
shareholders' equity of PharMerica and its Subsidiaries for the years ended
December 31, 1998, 1997 and 1996, and (iii) an unqualified report with respect
to such audited financial statements by Arthur Andersen & Co. LLP, which report
shall be in form and substance reasonably satisfactory to Bergen, and (b) if the
Closing occurs on or after May 14, 1999, in addition to the items referred to in
clause "a" of this Section 5.22.1, (i) unaudited consolidated balance sheets of
PharMerica and its Subsidiaries as of March 31, 1999 and 1998 and (ii) unaudited
consolidated statements of income, cash flows and changes in shareholders'
equity of PharMerica and its Subsidiaries for the three months ended March 31,
1999 and 1998. Such financial statements shall be prepared in accordance with
generally accepted accounting principles, consistently applied, and shall
conform in all material respects to all provisions of the SEC's Regulation S-X,
so that such financial statements meet the requirements for filing by Bergen
with the SEC in response to Items 2 and 7 of the SEC's Current Report on Form
8-K.
5.22.2 At the Closing, PharMerica shall cause Arthur Andersen
& Co. LLP to deliver to Bergen an executed consent, in form and substance
reasonably satisfactory to Bergen and suitable for filing by Bergen with the
SEC, which consent shall authorize Bergen to file with the SEC the report
delivered pursuant to Section 5.22.1.
5.22.3 Upon Bergen's request, contemporaneous with the
delivery of the consolidated financial statements described in clause "a" of
Section 5.22.1, PharMerica shall cause Arthur Andersen & Co. LLP to make
available to Bergen and its representatives the work papers generated in
connection with such accounting firm's audit of the audited consolidated
financial statements delivered pursuant to Section 5.22.1.
5.22.4 Prior to the Closing, PharMerica shall cooperate with
Bergen in providing to Bergen such consolidated financial statements, financial
data and accountants' reports as Bergen shall reasonably request with respect to
any filing that Bergen shall make under the Securities Act or the Exchange Act.
5.23 Tax-Free Treatment. Each of the parties shall use its best efforts
to cause the Merger to constitute a tax-free "reorganization" under Section
368(a) of the Code and to cooperate with one another in obtaining an opinion
from Lowenstein Sandler PC ("Lowenstein Sandler"), counsel to Bergen, as
provided for in Section 6.1.6. In connection therewith, each of Bergen and
PharMerica shall deliver to Lowenstein Sandler representation letters and
PharMerica shall use all reasonable efforts to obtain representation letters
from appropriate stockholders of PharMerica and shall deliver any such letters
so obtained to Lowenstein Sandler, in each case in form and substance reasonably
satisfactory to Lowenstein Sandler. Each of Bergen and PharMerica represent one
to the other that they are aware of no matter that would cause the Merger not to
be treated as a tax free reorganization under Section 368(a) of the Code.
5.24 Employee Stock Purchase Plans. Consistent with the terms of
PharMerica's stock purchase plans, promptly following the date hereof,
PharMerica shall take such actions as are necessary to provide that (a) shares
sold to plan participants pursuant to such plans subsequent to the date hereof
shall be purchased by PharMerica or its agent in the market, (b) at or before
the Effective Time, the amount of all payroll deduction contributions then held
in each participant's plan account shall be returned to such participant and (c)
as of the Effective Time, such plans shall be terminated.
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ARTICLE VI.
CONDITIONS
6.1. Conditions to the Obligations of Each Party. The obligations of
PharMerica, Bergen and Subcorp to consummate the Merger shall be subject to the
satisfaction (or waiver by each party, to the extent permitted by law) of the
following conditions:
6.1.1(i) This Agreement, the Merger and the transactions
contemplated hereby shall have been approved and adopted by PharMerica's
stockholders in the manner required by any Applicable Law, and (ii) the issuance
of the shares of Bergen Common Stock to be issued in the Merger shall have been
approved by Bergen's stockholders in the manner required by any Applicable Law
and the applicable rules of the NYSE.
6.1.2 No Governmental Authority of competent jurisdiction
shall have enacted, issued, promulgated, enforced or entered any statute, rule,
regulation, judgment, decree, injunction or other order which is in effect,
which would prohibit consummation of the transactions contemplated by this
Agreement or which would have a Bergen Material Adverse Effect after the
Effective Time and after giving effect to consummation of the transactions
contemplated by this Agreement.
6.1.3 The waiting period required by the HSR Act, and any
extensions thereof obtained by request or other action of the Federal Trade
Commission (the "FTC") and/or the Antitrust Division of the United States
Department of Justice (the "Antitrust Division"), shall have expired or been
terminated by the FTC and the Antitrust Division.
6.1.4 The SEC shall have declared the Registration Statement
effective under the Securities Act, and no stop order or similar restraining
order suspending the effectiveness of the Registration Statement shall be in
effect and no proceedings for such purpose shall be pending before or threatened
by the SEC or any state securities administrator.
6.1.5 The shares of Bergen Common Stock required to be issued
pursuant to the Merger (including, without limitation, the Bergen Common Stock
issuable upon the exercise of the Bergen Exchange Options) shall have been
approved for listing on the NYSE, subject to official notice of issuance.
6.1.6 PharMerica shall have received the opinion of Lowenstein
Sandler, dated on or prior to the effective date of the Registration Statement
and on the Closing Date, based in part on the representations referred to in
Section 5.23, to the effect that (i) the Merger will constitute a reorganization
under section 368(a) of the Code, (ii) PharMerica, Bergen and Subcorp will each
be a party to that reorganization and (iii) no gain or loss will be recognized
by the stockholders of PharMerica upon the receipt of Bergen Common Stock in
exchange for shares of PharMerica Common Stock pursuant to the Merger except
with respect to cash received in lieu of fractional share interests in Bergen
Common Stock.
6.2 Conditions to Bergen's and Subcorp's Obligations. The obligations
of Bergen and Subcorp to consummate the transactions contemplated by this
Agreement shall be subject to the fulfillment (or waiver by Bergen) prior to or
at Closing of each of the following conditions:
6.2.1 The representations and warranties of PharMerica set
forth in Article III shall be true and correct in all material respects (other
than representations and warranties which are qualified as to materiality, which
representations and warranties shall be true in all respects) on the date hereof
and on and as of the Closing Date as though made on and as of the Closing Date
(except for representations and warranties made as of a specified date, which
shall be measured only as of such specified date), except where the failure of
such representations and warranties to be so true and correct (without giving
effect to any limitations as to "materiality" or a PharMerica Material Adverse
Effect set forth therein) does not have, and is not reasonably likely to have,
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individually or in the aggregate, a PharMerica Material Adverse Effect, provided
that the representations and warranties set forth in Sections 3.1, 3.2, 3.5 and
3.14 shall be true and correct in all material respects (other than
representations and warranties which are qualified as to materiality, which
representations and warranties shall be true in all respects) on the date hereof
and on and as of the Closing Date as though made on and as of the Closing Date
(except for representations and warranties made as of a specified date, which
shall be measured as of such specified date).
6.2.2 PharMerica shall have performed in all material respects
each of its obligations under this Agreement and shall have complied in all
material respects with each covenant to be performed and complied with by it
under this Agreement at or prior to the Closing.
6.2.3 Since the date of this Agreement, there shall not have
occurred any act, event or omission having or reasonably likely to have a
PharMerica Material Adverse Effect.
6.2.4 PharMerica shall have obtained all authorizations,
consents, waivers, approvals or other actions described in Section 6.2.4 of the
PharMerica Disclosure Statement required in connection with the execution,
delivery and performance of this Agreement by PharMerica and its Subsidiaries
(the "PharMerica Approvals") and the PharMerica Approvals shall be in full force
and effect as of the Closing Date. Bergen shall have obtained all
authorizations, consents, waivers, approvals or other actions described in
Section 6.2.4 of the Bergen Disclosure Statement (the "Bergen Approvals") and
the Bergen Approvals shall be in full force and effect as of the Closing Date.
6.2.5 There shall not be pending any legal proceeding by any
Governmental Authority or other third party which (a) in the reasonable judgment
of Bergen's Board of Directors, is reasonably likely to cause a Bergen Material
Adverse Effect after the Effective Time giving effect to consummation of the
transactions contemplated by this Agreement and (b) either (i) challenges or
seeks to restrain or prohibit the consummation of the Merger or any of the other
transactions contemplated by this Agreement, (ii) except to the extent
consistent with the obligations of Bergen and PharMerica pursuant to Section
5.7.3, seeks to prohibit or limit the ownership or operation by Bergen,
PharMerica or any of their respective subsidiaries of, or to compel Bergen,
PharMerica or any of their respective subsidiaries to dispose of or hold
separate, any material portion of the business or assets of Bergen, PharMerica
or any of their respective subsidiaries, as a result of the Merger or any of the
other transactions contemplated by this Agreement, (iii) seeks to impose
limitations on the ability of Bergen to acquire or hold, or exercise full rights
of ownership of, any shares of capital stock of the Surviving Corporation,
including the right to vote such capital stock on all matters properly presented
to the stockholders of the Surviving Corporation or (iv) except to the extent
consistent with the obligations of Bergen and PharMerica pursuant to Section
5.7.3, seeks to prohibit Bergen or any subsidiary of Bergen from effectively
controlling in any material respect the business or operations of Bergen or the
subsidiaries of Bergen.
6.2.6 Prior to or at the Closing, PharMerica shall have
delivered to Bergen the following:
6.2.6.1 certificate of the President or a Vice
President of PharMerica (executed on behalf of PharMerica), dated the Closing
Date, to the effect that (1) the person signing such certificate is familiar
with this Agreement and (2) to such person's knowledge, the conditions specified
in Sections 6.2.1, 6.2.2 and 6.2.3 have been satisfied;
6.2.6.2 certificate of the Secretary or Assistant
Secretary of PharMerica, dated the Closing Date, as to the incumbency of any
officer of such entity executing this Agreement or any document related hereto;
and
6.2.6.3 a copy of (1) the Certificate of
Incorporation, as amended, of PharMerica, certified by the Secretary of State of
the State of Delaware and dated not earlier than fifteen days prior to the
Closing, (2) a certificate of the Secretary of State of the State of Delaware,
dated not earlier than fifteen days prior to the Closing and confirming that
PharMerica is in good standing in the State of Delaware, (3) the by-laws, as
amended, of PharMerica, certified by the Secretary or Assistant Secretary of
PharMerica as of the Closing Date,
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and (4) the resolutions of PharMerica's Board of Directors authorizing the
execution, delivery and consummation of this Agreement and the transactions
contemplated hereby, certified by the Secretary or Assistant Secretary of
PharMerica as of the Closing Date.
6.2.7 All reports of PharMerica's independent accountants
relating to PharMerica's audited consolidated financial statements filed with
(or incorporated by reference in any document filed with) the SEC subsequent to
the date hereof and prior to the Effective Time shall certify, without
qualification or exception, that such financial statements (a) have been
prepared in accordance with generally accepted accounting principles
consistently applied during the periods involved and (b) fairly present, in all
material respects, the consolidated financial position of the entities described
therein as of the dates thereof and the consolidated results of operations and
consolidated cash flows of such entities for the periods presented.
6.3 Conditions to PharMerica's Obligations. The obligations of
PharMerica to consummate the transactions contemplated by this Agreement shall
be subject to the fulfillment (or waiver by PharMerica) at or prior to the
Closing of each of the following conditions:
6.3.1 The representations and warranties of Bergen and Subcorp
set forth in Article IV shall be true and correct in all material respects
(other than representations and warranties which are qualified as to
materiality, which representations and warranties shall be true in all respects)
on the date hereof and on and as of the Closing Date as though made on and as of
the Closing Date (except for representations and warranties made as of a
specified date, which shall be measured only as of such specified date), except
where the failure of such representations and warranties to be so true and
correct (without giving effect to any limitations as to "materiality" or a
Bergen Material Adverse Effect set forth therein) does not have, and is not
reasonably likely to have, individually or in the aggregate, a Bergen Material
Adverse Effect, provided that the representations and warranties set forth in
Sections 4.1, 4.2 and 4.12 shall be true and correct in all material respects
(other than representations and warranties which are qualified as to
materiality, which representations and warranties shall be true in all respects)
on the date hereof and on and as of the Closing Date as though made on and as of
the Closing Date (except for representations and warranties made as of a
specified date, which shall be measured as of such specified date).
6.3.2 Bergen and Subcorp shall have performed in all material
respects each of its obligations under this Agreement and shall have complied in
all material respects with each covenant to be performed and complied with by
Bergen and Subcorp under this Agreement at or prior to the Closing.
6.3.3 Bergen shall have obtained all of the Bergen Approvals
and the Bergen Approvals shall be in full force and effect as of the Closing
Date.
6.3.4 Prior to or at the Closing, Bergen and Subcorp shall
have delivered to PharMerica the following:
6.3.4.1 a certificate of the President or a Vice
President of Bergen (executed on behalf of Bergen), dated the Closing Date, to
the effect that (1) the person signing such certificate is familiar with this
Agreement and (2) to such person's knowledge, the conditions specified in
Sections 6.3.1, 6.3.2 and 6.3.5 have been satisfied;
6.3.4.2 a certificate of the Secretary or Assistant
Secretary of each of Bergen and Subcorp, dated the Closing Date, as to the
incumbency of any officer of Bergen and Subcorp executing this Agreement or any
document related hereto;
6.3.4.3 a copy of (1) the Restated Certificate of
Incorporation, as amended, of Bergen, certified by the Secretary of State of the
State of New Jersey and dated not earlier than fifteen days prior to the
Closing, (2) a certificate of the Secretary of State of the State of New Jersey,
dated not earlier than fifteen days prior to the Closing and confirming that
Bergen is in good standing in the State of Delaware, (3) the by-laws, as
amended, of Bergen, certified by the Secretary or Assistant Secretary of Bergen
as of the Closing Date, and (4) the
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resolutions of Bergen's Board of Directors (or Executive (Committee thereof)
authorizing the execution, delivery and consummation of this Agreement and the
transactions contemplated hereby, certified by the Secretary or Assistant
Secretary of Bergen as of the Closing Date; and
6.3.4.4 a copy of (1) the Certificate of
Incorporation, as amended, of Subcorp, certified by the Secretary of State of
the State of Delaware and dated not earlier than fifteen days prior to the
Closing, (2) a certificate of the Secretary of State of the State of Delaware,
dated not earlier than fifteen days prior to the Closing and confirming that
Subcorp is in good standing in the State of Delaware, (3) the by-laws, as
amended, of Subcorp, certified by the Secretary or Assistant Secretary of
Subcorp as of the Closing Date, and (4) the resolutions of Subcorp's Board of
Directors authorizing the execution, delivery and consummation of this Agreement
and the transactions contemplated hereby, certified by the Secretary or
Assistant Secretary of Subcorp as of the Closing Date.
6.3.5 Since the date of this Agreement, there shall not have
occurred any act, event or omission having or reasonably likely to have a Bergen
Material Adverse Effect.
6.3.6 All reports of Bergen's independent accountants relating
to Bergen's audited consolidated financial statements filed with (or
incorporated by reference in any document filed with) the SEC subsequent to the
date hereof and prior to the Effective Time shall certify, without qualification
or exception, that such financial statements (a) have been prepared in
accordance with generally accepted accounting principles consistently applied
during the periods involved and (b) fairly present, in all material respects,
the consolidated financial position of the entities described therein as of the
dates thereof and the consolidated results of operations and consolidated cash
flows of such entities for the periods presented.
ARTICLE VII.
TERMINATION AND AMENDMENT
7.1. Termination. This Agreement may be terminated and the Merger may
be abandoned at any time prior to the Effective Time (notwithstanding any
approval of this Agreement by PharMerica's stockholders and/or Bergen's
stockholders):
7.1.1 by mutual written consent of Bergen and PharMerica;
7.1.2 by either Bergen or PharMerica if there shall be any law
or regulation that, as supported by the written opinion of outside legal
counsel, makes consummation of the Merger illegal or otherwise prohibited, or if
any judgment, injunction, order or decree of a court or other competent
Governmental Authority enjoining Bergen or PharMerica from consummating the
Merger shall have been entered and such judgment, injunction, order or decree
shall have become final and nonappealable;
7.1.3 by either Bergen or PharMerica if the Merger shall not
have been consummated before the Outside Date (as hereinafter defined),
provided, however, that the right to terminate this Agreement under this Section
7.1.3 shall not be available to any party whose failure or whose affiliate's
failure to perform any material covenant or obligation under this Agreement has
been the cause of or resulted in the failure of the Merger to occur on or before
such date;
7.1.4 by Bergen if the Board of Directors of PharMerica shall
withdraw, modify or change the PharMerica Board Recommendation in a manner
adverse to Bergen;
7.1.5 by either Bergen or PharMerica if at the PharMerica
Special Meeting (including any adjournment or postponement thereof) the
requisite vote (under all Applicable Laws) of PharMerica's stockholders to
approve the Merger and the transactions contemplated hereby shall not have been
obtained;
7.1.6 by either Bergen or PharMerica if at the Bergen Annual
Meeting (including any
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adjournment or postponement thereof) the requisite vote (under all Applicable
Laws and the rules and regulations of the NYSE) of Bergen's stockholders to
authorize the issuance of Bergen Common Stock in the Merger shall not have been
obtained;
7.1.7 by PharMerica, pursuant to Section 5.17 or Section 5.18;
7.1.8 by PharMerica if (a) Donaldson Lufkin & Jenrette
Securities Corporation, acting in good faith and in accordance with recognized
professional standards consistent with prior practices, declines to provide
PharMerica with an opinion, in substantially the form and substance of, and
based on substantially the same analyses as were utilized in preparing, the
opinion described in Section 3.30, to the effect that, as of the date of any
Prospectus/Joint Proxy Statement, the Merger Consideration is fair to
PharMerica's stockholders from a financial point of view and (b) an independent
investment banking firm, mutually acceptable to Bergen and PharMerica (a "Third
Party Firm"), after being given a reasonable opportunity to perform a
satisfactory inquiry, advises Bergen and PharMerica that, acting in good faith
and in accordance with recognized professional standards consistent with prior
practices, it is unable to provide PharMerica with an opinion, in form and
substance consistent with industry practice to the effect that, as of the date
of any Prospectus/Joint Proxy Statement, the Merger Consideration is fair to
PharMerica's stockholders from a financial point of view; or by Bergen, if (c)
Nationsbanc Montgomery Securities LLC, acting in good faith and in accordance
with recognized professional standards consistent with prior practices, declines
to provide Bergen with an opinion, in substantially the form and substance of,
and based on substantially the same analyses as were utilized in preparing, the
opinion delivered by such firm in connection with Bergen's execution of this
Agreement, to the effect that, as of the date of any Prospectus/Joint Proxy
Statement, the Merger Consideration is fair to Bergen from a financial point of
view, and (d) a Third Party Firm, after being given a reasonable opportunity to
perform a satisfactory inquiry, advises Bergen and PharMerica that, acting in
good faith and in accordance with recognized professional standards consistent
with prior practices, it is unable to provide Bergen with an opinion, in form
and substance consistent with industry practice to the effect that, as of the
date of any Prospectus/Joint Proxy Statement, the Merger Consideration is fair
to Bergen from a financial point of view.
7.1.9 by either Bergen or PharMerica if any representation or
warranty made in this Agreement (including without limitation the PharMerica
Disclosure Statement and the Bergen Disclosure Statement) for its benefit is
untrue in any material respect (other than representations and warranties which
are qualified as to materiality, which representations and warranties will give
rise to termination if untrue in any respect); provided that, in each case, (a)
the party seeking to terminate this Agreement is not then in material breach of
any material representation or warranty contained in this Agreement, (b) such
untrue representation or warranty cannot be or has not been cured within 30 days
after receipt of written notice of such breach and (c) in the case of
PharMerica, except for the representations and warranties contained in Sections
3.1, 3.2, 3.5 and 3.14, and in the case of Bergen, except for the
representations and warranties contained in Sections 4.1, 4.2 and 4.12, such
untrue representation and warranty has, or is reasonably likely to have, a
PharMerica Material Adverse Effect or a Bergen Material Adverse Effect, as the
case may be and in each case after the Effective Time and after giving effect to
consummation of the transactions contemplated by this Agreement;
7.1.10 by either Bergen or PharMerica if the other party shall
have defaulted in the performance of any material covenant or agreement under
this Agreement; provided that, in each case, (a) the party seeking to terminate
this Agreement has complied with its covenants and agreements under this
Agreement in all material respects and (b) such failure to comply cannot be or
has not been cured within 30 days after receipt of written notice of such
default;
7.1.11 by Bergen if any authorization, consent, waiver or
approval required for the consummation of the transactions contemplated hereby
shall require the divestiture or cessation of any of the present business or
operations conducted by Bergen or its Subsidiaries or PharMerica or its
Subsidiaries or shall impose any other material condition or requirement, which
divestiture, cessation, condition or requirement, in the reasonable judgment of
Bergen's Board of Directors, would be reasonably likely to have a Bergen
Material Adverse Effect after the Effective Time giving effect to consummation
of the transactions contemplated by this Agreement, except to the extent that
any such divestiture, cessation, condition or requirement is consistent with the
obligations
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of Bergen and PharMerica pursuant to Section 5.7.3;
7.1.12 by Bergen, in the event that the conditions to its
obligations set forth in Article VI have not been satisfied or waived by the
date set for the Closing or in the event that such conditions cannot possibly be
satisfied prior to the Outside Date, provided that Bergen is not then in
material breach of any material representation, warranty, covenant or other
agreement contained in this Agreement; or
7.1.13 by PharMerica, in the event that the conditions to its
obligations set forth in Article VI have not been satisfied or waived by the
date set for the Closing or in the event that such conditions cannot possibly be
satisfied prior to the Outside Date, provided that PharMerica is not then in
material breach of any material representation, warranty, covenant or other
agreement contained in this Agreement.
For purposes of this Agreement, the "Outside Date" shall mean (a) June 1, 1999,
or, (b) if a Third Party Firm (as defined herein) is retained pursuant to
Section 7.1.8, then July 1, 1999.
7.2. Effect of Termination.
7.2.1 In the event of the termination of this Agreement
pursuant to Section 7.1, this Agreement, except for any provisions relating to
the confidentiality obligations of the parties hereto to each other and the
provisions of this Section 7.2 and Section 8.11, shall become void and have no
effect, without any liability on the part of any party or its directors,
officers or stockholders. Notwithstanding the foregoing, nothing in this Section
7.2 shall relieve any party to this Agreement of liability for a material breach
of any material provision of this Agreement.
7.2.2 PharMerica agrees that, if:
7.2.2.1 PharMerica terminates this Agreement pursuant
to (a) either Section 5.17 or Section 5.18 and (b) Section 7.1.7;
7.2.2.2 Bergen terminates this Agreement pursuant to
Section 7.1.4;
7.2.2.3 (A) Bergen or PharMerica terminates this
Agreement pursuant to Section 7.1.5, (B) at the time of such failure by
PharMerica's stockholders to so approve this Agreement there is a publicly
announced or disclosed Competing Transaction with respect to PharMerica
involving a third party, and (C) within 12 months after such termination,
PharMerica shall enter into an Acquisition Agreement for a Business Combination
(as defined herein) or consummates a Business Combination; or
7.2.2.4 (A) PharMerica terminates this Agreement
pursuant to Section 7.1.8, (B) at the time of such termination, there has been
disclosed to PharMerica a proposal for a Competing Transaction with respect to
PharMerica involving a third party, and (C) within 12 months after such
termination, PharMerica shall enter into an Acquisition Agreement for a Business
Combination or consummates a Business Combination, then, (W) in the case of a
termination by Bergen as described in Section 7.2.2.2, within three business
days following such termination, (X) in the case of a termination by PharMerica
as described in Section 7.2.2.1, concurrently with such termination, (Y) in the
case of a termination by PharMerica or Bergen as described in Section 7.2.2.3
where a Competing Transaction has been publicly announced or publicly disclosed
prior to the PharMerica Special Meeting (including any adjournment or
postponement thereof), prior to the earlier of the consummation of a Business
Combination or execution of an Acquisition Agreement with respect thereto, or
(Z) in the case of a termination by PharMerica as described in Section 7.2.2.4
has been disclosed to PharMerica at the time of such termination, prior to the
earlier of the consummation of a Business Combination or execution of an
Acquisition Agreement with respect thereto, the following steps (the
"Contingency Steps") will occur: (1) PharMerica will pay to Bergen in cash by
wire transfer in immediately available funds to an account designated by Bergen
(i) in reimbursement for Bergen's expenses an amount in cash equal to the
aggregate amount of Bergen's Costs up to but not in excess of an amount equal to
$6.0 million in the aggregate and (ii) a termination fee in an
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amount equal to $38.0 million and (2) the Bergen Supply Agreement shall be
automatically amended and restated, without any further action of the parties
thereto, to contain only the terms and conditions set forth in the amended and
restated supply agreement exchanged by the parties on the date hereof For
purposes of this Section 7.2, "Business Combination" means (i) a merger,
consolidation, share exchange, business combination or similar transaction
involving PharMerica as a result of which PharMerica's stockholders prior to
such transaction in the aggregate cease to own at least 85% of the voting
securities of the entity surviving or resulting from such transaction (or the
ultimate parent entity thereof), (ii) a sale, lease, exchange, transfer or other
disposition of more than 20% of the assets of PharMerica and its Subsidiaries,
taken as a whole, in a single transaction or a series of related transactions,
or (iii) the acquisition, by a person (other than Bergen or any affiliate
thereof) or group (as such term is defined under Section 13(d) of the Exchange
Act and the rules and regulations thereunder) of beneficial ownership (as
defined in Rule 13d-3 under the Exchange Act) of more than 15% of the PharMerica
Common Stock whether by tender or exchange offer or otherwise. For purposes of
this Agreement, "Costs" means out-of-pocket costs, fees and expenses of Bergen's
counsel, accountants, financial advisors and other experts and advisors (but
with respect to financial advisors and such other experts and advisors, only if
and to the extent a signed engagement letter delivered to PharMerica prior to
execution of this Agreement provides for payment in such circumstances) as well
as fees and expenses incident to negotiation, preparation and execution of this
Agreement and related documentation. For purposes of this Agreement, the term
"Bergen Supply Agreement" shall mean the Prime Vendor Service Agreement between
PharMerica and Bergen, as amended.
7.3. Amendment. This Agreement may be amended by the parties hereto, by
action taken or authorized by their respective Boards of Directors (or Executive
Committees thereof, at any time before or after adoption of this Agreement by
PharMerica's stockholders, but after any such approval, no amendment shall be
made which by law requires further approval or authorization by PharMerica's
stockholders without such further approval or authorization. Notwithstanding the
foregoing, this Agreement may not be amended except by an instrument in writing
signed on behalf of each of the parties hereto.
7.4. Exclusive Remedy. In the event that the Contingency Steps are
taken pursuant to Section 7.2, notwithstanding any other provision of this
Agreement, it is understood and agreed that such Contingency Steps shall be the
exclusive remedy for any act or omission resulting in the termination of this
Agreement or other claim arising out of this Agreement or the transactions
contemplated hereby.
7.5. Extension; Waiver. At any time prior to the Effective Time, Bergen
(with respect to PharMerica) and PharMerica (with respect to Bergen and Subcorp)
by action taken or authorized by their respective Boards of Directors (or
Executive Committees thereof), may, to the extent legally allowed, (a) extend
the time for the performance of any of the obligations or other acts of such
party, (b) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto and (c) waive
compliance with any of the agreements or conditions contained herein. Any
agreement on the part of a party hereto to any such extension or waiver shall be
valid only if set forth in a written instrument signed on behalf of such party.
7.6 Standstill. In the event that PharMerica terminates this Agreement
pursuant to Section 7.1.8, the standstill provisions of the Confidentiality
Agreement (as defined herein) shall cease to apply, notwithstanding any
provision in the Confidentiality Agreement to the contrary.
ARTICLE VIII.
MISCELLANEOUS
8.1 No Survival of Representations and Warranties. The representations
and warranties made herein by the parties hereto shall not survive the Effective
Time. This Section 8.1 shall not limit any covenant or agreement of the parties
hereto which by its terms contemplates performance after the Effective Time or
after the termination of this Agreement.
8.2. Notices. All notices or other communications required or permitted
hereunder shall be in writing and shall be delivered personally, by facsimile,
by overnight courier or sent by certified or registered mail, postage
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prepaid, and shall be deemed given when so delivered personally, or when so
received by facsimile or courier, or if mailed, three calendar days after the
date of mailing, as follows (or at such other address for a party as shall be
specified by like notice):
8.2.1 if to Bergen or Subcorp:
Bergen Brunswig Corporation
4000 Metropolitan Drive
Orange, CA 92868
Milan A. Sawdei, Esq.
Executive Vice President and
Chief Legal Officer
with a copy (which shall not constitute notice) to:
Peter H. Ehrenberg
Lowenstein, Sandler PC
65 Livingston Avenue
Roseland, New Jersey 07068
Telecopy No.: (973) 597-2400
8.2.2 if to PharMerica:
PharMerica, Inc.
175 Kelsey Lane
Tampa, Florida
C. Arnold Renschler, M.D.
President and Chief Executive Officer
with a copy (which shall not constitute notice) to:
J. Vaughan Curtis
Alston & Bird LLP
One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309-3424
Telecopy No.: (404) 881-4777
8.3. Interpretation.
8.3.1 When a reference is made in this Agreement to an Article
or Section, such reference shall be to an Article or Section of this Agreement
unless otherwise indicated. The headings and the table of contents contained in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement.
8.3.2 For purposes of this Agreement, "knowledge" of a party
shall mean the actual knowledge of all officers of such party with a title of
executive vice president or higher.
8.4. Counterparts. This Agreement may be executed in counterparts,
which together shall constitute one and the same Agreement. The parties may
execute more than one copy of the Agreement, each of which shall constitute an
original.
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<PAGE> 52
8.5. Entire Agreement. This Agreement (including the documents and the
instruments referred to herein), the Bergen Supply Agreement and, subject to
Section 7.6, the Confidentiality Agreement between PharMerica and Bergen dated
September 28, 1998 ("Confidentiality Agreement") constitute the entire agreement
among the parties and supersede all prior agreements and understandings,
agreements or representations by or among the parties, written and oral, with
respect to the subject matter hereof and thereof.
8.6. Third-Party Beneficiaries. Except for the agreements set forth in
Sections 2.4.2 and 5.13, nothing in this Agreement, express or implied, is
intended or shall be construed to create any third-party beneficiaries.
8.7. Governing Law. Except to the extent that the laws of the
jurisdiction of organization of any party hereto, or any other jurisdiction, are
mandatorily applicable to the Merger or to matters arising under or in
connection with this Agreement, this Agreement shall be governed by the laws of
the State of Delaware. All actions and proceedings arising out of or relating to
this Agreement shall be heard and determined exclusively in any state or federal
court sitting in the State of Delaware.
8.8. Consent to Jurisdiction; Venue.
8.8.1 Each of the parties hereto irrevocably submits to the
exclusive jurisdiction of the state courts of Delaware and the United States
District Court for the District of Delaware, for the purpose of any action or
proceeding arising out of or relating to this Agreement and each of the parties
hereto irrevocably agrees that all claims in respect to such action or
proceeding shall be heard and determined exclusively in any Delaware state or
federal court. Each of the parties hereto agrees that a final judgment in any
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
8.8.2 Each of the parties hereto irrevocably consents to the
service of any summons and complaint and any other process in any other action
or proceeding relating to the Merger, on behalf of itself or its property, by
the delivery of copies of such process to such party in the same manner as
notice is to be provided pursuant to Section 8.2. Nothing in this Section 8.8
shall affect the right of any party hereto to serve legal process in any other
manner permitted by law.
8.9. Specific Performance. The transactions contemplated by this
Agreement are unique. Accordingly, each of the parties acknowledges and agrees
that, in addition to all other remedies to which it may be entitled, each of the
parties hereto is entitled to a decree of specific performance, provided such
party is not in material default hereunder.
8.10. Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties. Subject to the preceding sentence, this Agreement
shall be binding upon, inure to the benefit of and be enforceable by the parties
and their respective successors and assigns.
8.11. Expenses. Subject to the provisions of Section 7.2, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses, except
that those expenses incurred in connection with filing, printing and mailing the
Registration Statement and the Prospectus/Joint Proxy Statement (including
filing fees related thereto but excluding legal and accounting fees and
expenses) and the fees and disbursements of any Third Party Firm will be shared
equally by Bergen and PharMerica.
8.12 Severability. The invalidity of any portion hereof shall not
affect the validity, force or effect of the remaining portions hereof. If it is
ever held that any restriction hereunder is too broad to permit enforcement of
such restriction to its fullest extent, such restriction shall be enforced to
the maximum extent permitted by law.
8.13 No Strict Construction. Each of Bergen, Subcorp and PharMerica
acknowledges that this Agreement has been prepared jointly by the parties
hereto, and shall not be strictly construed against any party.
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<PAGE> 53
IN WITNESS WHEREOF, Bergen, Subcorp and PharMerica have signed this
Agreement as of the date first written above.
BERGEN BRUNSWIG CORPORATION
By: /s/ Donald R. Roden
-------------------------------------
Name: Donald R. Roden
Title: President and Chief
Executive Officer
PEACOCK MERGER CORP.
By: /s/ Donald R. Roden
-------------------------------------
Name: Donald R. Roden
Title: President and Chief
Executive Officer
PHARMERICA, INC.
By: /s/ C. Arnold Renschler
-------------------------------------
Name: C. Arnold Renschler, M.D.
Title: President and Chief
Executive Officer
[Agreement and Plan of Merger]
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<PAGE> 1
EXHIBIT 4.1
FIRST AMENDMENT TO STOCKHOLDER
PROTECTION RIGHTS AGREEMENT
THIS AGREEMENT ("Agreement"), dated as of the 11th day of January 1999,
by and between PharMerica, Inc., a Delaware corporation (the "Company"), and
Harris Trust and Saving Bank, as Rights Agent (the "Rights Agent"), constitutes
the First Amendment to the Stockholder Protection Rights Agreement dated August
13, 1998 by and between the Company and, at the direction of the Company, the
Rights Agent (the "Rights Agreement").
WITNESSETH:
WHEREAS, on or about the date hereof, the Board of Directors of the
Company determined to amend the Rights Agreement and directed the Rights Agent
to enter into this Agreement;
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto do hereby agree as follows:
1. The Rights Agreement is hereby amended by:
(a) Adding the following sentence at the end of the definition of
"Acquiring Person" in Section 1.1 of the Rights Agreement:
Notwithstanding any of the terms of the foregoing definition,
no Person shall become an "Acquiring Person" solely as the result of
the execution and delivery of, and/or the consummation of any of the
transactions contemplated by, the Agreement and Plan of Merger dated as
of January 11, 1999, by and among the Company, Bergen Brunswig
Corporation ("Bergen"), and PharMerica Merger Corp. ("Subcorp") (the
"Merger Agreement"), and any agreements, documents or instruments
executed or entered into in connection with the Merger Agreement
(collectively with the Merger Agreement, the "Transaction Documents").
(b) Adding the following sentence at the end of the definition of
"Flip-in Date" in Section 1.1 of the Rights Agreement:
Notwithstanding any of the terms of the foregoing definition,
no "Flip-in Date" will occur solely as the result of the execution and
delivery of, and/or the consummation of any of the transactions
contemplated by, the Transaction Documents.
(c) Adding the following sentence at the end of the definition of
"Separation Time" in Section 1.1 of the Rights Agreement:
Notwithstanding any of the terms of the foregoing definition,
no "Separation Time" will occur solely as the result of the execution
and delivery of, and/or the consummation of any of the transactions
contemplated by, the Transaction Documents.
<PAGE> 2
(d) Adding the following sentence at the end of the definition of
"Stock Acquisition Date" in Section 1.1 of the Rights Agreement:
Notwithstanding any of the terms of the foregoing definition,
no "Stock Acquisition Date" will occur solely as the result of the
execution and delivery of, and/or the consummation of any of the
transactions contemplated by, the Transaction Documents, or any public
announcement of any of the foregoing.
2. All terms defined in the Rights Agreement which are used herein
shall have the meanings defined in the Rights Agreement, unless specifically
defined otherwise herein.
3. The term "Agreement" as used in the Rights Agreement shall mean the
Rights Agreement, as amended by this Agreement, or as it may from time to time
be amended in the future by one or more other written amendment or modification
agreements entered into pursuant to the applicable provisions of the Rights
Agreement.
4. This Agreement shall be binding upon and shall inure to the benefit
of the parties hereto and their respective successors and assigns.
5. This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Delaware.
6. Except as expressly herein amended, the terms and conditions of the
Rights Agreement shall remain in full force and effect.
7. This Agreement is not intended to be, nor shall it be construed to
be, a novation.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
PHARMERICA, INC.
By: /s/ Arnold Renschler, M.D.
------------------------------------------
Arnold Renschler, M.D.
Chief Executive Officer
HARRIS TRUST AND SAVINGS BANK, AS RIGHTS AGENT
By: /s/ Laura Kress
------------------------------------------
Laura Kress
Vice President
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