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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): November 8, 1996
McKESSON CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 1-13252 94-3207296
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
McKesson Plaza
One Post Street
San Francisco, California 94104
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(Address of principal executive offices) (Zip Code)
(415) 983-8300
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(Registrant's telephone number, including area code)
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Item 2. Acquisition or Disposition of Assets
- ----------------------------------------------
On November 8, 1996, pursuant to an asset purchase agreement dated as of
October 3, 1996, and amended by a first amendment and waiver agreement dated as
of November 7, 1996, the Registrant consummated its acquisition of the
healthcare distribution business of FoxMeyer Corporation ("FoxMeyer"), pursuant
to an expedited auction process in the FoxMeyer bankruptcy proceeding in
Wilmington, Delaware. The Registrant paid approximately $23 million in cash to
the debtors, paid off approximately $500 million in secured debt and assumed an
additional $75 million in other liabilities. The Registrant acquired assets
consisting primarily of accounts receivable and inventories of approximately
$650 million, customer contracts and fixed assets. The Registrant utilized
proceeds from commercial paper issuances and a note payable to a bank to fund
the transaction. The commercial paper issuances were backed by the Registrant's
revolving credit agreements that were recently increased to provide borrowing
availability of $500 million.
As part of the transaction, the Registrant acquired real property and
equipment used by FoxMeyer in the operation of distribution centers and a
headquarters office building. The Registrant is in the process of implementing
a plan to integrate the operations of the two companies.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
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(a) Financial Statements
As of the date of filing of this Current Report on Form 8-K, it is
impracticable for the Registrant to provide the financial statements required by
this Item 7(a). In accordance with Item 7(a)(4) of Form 8-K, such financial
statements shall be filed by amendment to this Form 8-K no later than 60 days
after November 23, 1996.
(b) Pro Forma Financial Information
As of the date of filing of this Current Report on Form 8-K, it is
impracticable for the Registrant to provide the pro forma financial information
required by this Item 7(b). In accordance with Item 7(b) of Form 8-K, such
financial statements shall be filed by amendment to this Form 8-K no later than
60 days after November 23, 1996.
(c) Exhibits
See Exhibit Index
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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.
McKESSON CORPORATION
(Registrant)
Dated: November 22, 1996 By /s/Richard H. Hawkins
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Richard H. Hawkins
Vice President and
Chief Financial Officer
By /s/Heidi E. Yodowitz
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Heidi E. Yodowitz
Controller
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EXHIBIT INDEX
Exhibit
Number Title
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2.1 Asset Purchase Agreement dated as of October 3, 1996 by and among
FoxMeyer Corporation, FoxMeyer Drug Company, Health Mart, Inc.,
FoxMeyer Software, Inc., FoxMeyer Funding, Inc., Healthcare
Transportation System, Inc. and Merchandise Coordinator Services
Corporation as Sellers, and the Registrant, as Purchaser and
FoxMeyer Health Corporation
2.2 First Amendment and Waiver to the Asset Purchase Agreement dated
as of November 7, 1996 by and among FoxMeyer Health Corporation,
FoxMeyer Corporation, FoxMeyer Drug Company, Healthcare
Transportation System, Inc., FoxMeyer Software, Inc., FoxMeyer
Funding, Inc., Health Mart, Inc., Merchandise Coordinator
Services Corporation d/b/a FoxMeyer Trading Company, and the
Registrant
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EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
BY and Among
FOXMEYER CORPORATION, FOXMEYER DRUG COMPANY, HEALTH MART,
INC., FOXMEYER SOFTWARE, INC., FOXMEYER FUNDING, INC.,
HEALTHCARE TRANSPORTATION SYSTEM, INC., AND MERCHANDISE
COORDINATOR SERVICES CORPORATION
as Sellers,
and
MCKESSON CORPORATION,
as Purchaser
and
FOXMEYER HEALTH CORPORATION
Dated as of October 3, 1996
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TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS.............................. 2
Section 1.1 Certain Definitions........................................... 2
Section 1.2 Other Defined Terms........................................... 10
ARTICLE II
PURCHASE AND SALE OF ASSETS AND
ASSUMPTION OF LIABILITIES........................ 12
Section 2.1 Assets to be Purchased and Sold............................ 12
Section 2.2 Purchase Price; Tax Allocation............................. 12
Section 2.3 Acquisition and Transfer of Assets......................... 14
Section 2.4 Excluded Assets............................................ 17
Section 2.5 Assumed Liabilities........................................ 17
Section 2.6 Excluded Liabilities....................................... 18
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF FOX HEALTH.............. 19
Section 3.1 Organization and Good Standing............................. 19
Section 3.2 Authorization of Agreement; No Conflicts................... 20
Section 3.3 No Other Representations................................... 21
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
FOX CORP AND THE SUBSIDIARIES...................... 21
Section 4.1 Organization and Good Standing............................. 21
Section 4.2 Authorization of Agreement; No Conflicts................... 21
Section 4.3 Consents................................................... 22
Section 4.4 Financial Statements....................................... 23
Section 4.5 Undisclosed Liabilities.................................... 24
Section 4.6 Absence of Certain Developments............................ 24
Section 4.7 Material Contracts......................................... 25
Section 4.8 Intangible Property........................................ 26
Section 4.9 Employees and Employee Benefits............................ 26
Section 4.10 Labor...................................................... 27
Section 4.11 Legal Proceedings.......................................... 28
Section 4.12 Compliance with Law........................................ 28
Section 4.13 Environmental Matters...................................... 29
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Section 4.14 Related Party Transactions................................. 29
Section 4.15 Insurance.................................................. 30
Section 4.16 Real Property.............................................. 30
Section 4.17 Accounts Receivable........................................ 30
Section 4.18 Employees; Officers........................................ 30
Section 4.19 Compliance with WARN Act................................... 31
Section 4.20 Taxes...................................................... 31
Section 4.21 Inventory.................................................. 33
Section 4.22 Necessary Assets........................................... 33
Section 4.23 No Other Representations or Warranties..................... 33
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER............... 33
Section 5.1 Organization and Good Standing............................. 33
Section 5.2 Authorization of Agreement; No Conflicts................... 34
Section 5.3 Consents................................................... 34
Section 5.4 Legal Proceedings.......................................... 35
Section 5.5 Financing.................................................. 35
Section 5.6 Representations and Warranties of Fox Corp
and the Subsidiaries....................................... 35
Section 5.7 Investment Company Act..................................... 35
Section 5.8 No Other Representations or Warranties..................... 35
ARTICLE VI
COVENANTS............................... 36
Section 6.1 Access to Information; Confidentiality..................... 36
Section 6.2 Conduct of the Business Pending the Closing................ 37
Section 6.3 Reasonable Best Efforts; Transfer of Assets................ 41
Section 6.4 Public Announcements....................................... 41
Section 6.5 Alternative Transaction Provisions......................... 42
Section 6.6 Bankruptcy Actions......................................... 43
Section 6.7 Ordinary Course Competition................................ 44
Section 6.8 Use of Certain Proceeds.................................... 44
Section 6.9 Employment Agreements...................................... 44
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ARTICLE VII
CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATIONS............. 44
Section 7.1 Representations, Warranties and Covenants.................. 44
Section 7.2 HSR Act.................................................... 45
Section 7.3 Litigation................................................. 45
Section 7.4 Additional Matters......................................... 46
Section 7.5 Material Adverse Change.................................... 46
Section 7.6 Bankruptcy Conditions...................................... 46
Section 7.7 Consents................................................... 47
Section 7.8 Vendor Assurances.......................................... 47
ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLERS............. 47
Section 8.1 Representations, Warranties and Covenants.................. 48
Section 8.2 HSR Act.................................................... 48
Section 8.3 Litigation................................................. 48
Section 8.4 Additional Matters......................................... 48
Section 8.5 Bankruptcy Condition....................................... 49
Section 8.6 Inventory Accommodation.................................... 49
Section 8.7 Consent of GECC............................................ 49
Section 8.8 Satisfaction of GECC Obligations........................... 50
ARTICLE IX
DOCUMENTS TO BE DELIVERED AT THE CLOSING................ 50
Section 9.1 Deliveries by Sellers to Purchaser......................... 50
Section 9.2 Deliveries by Purchaser to Sellers......................... 50
ARTICLE X
TAX MATTERS............................... 51
Section 10.1 Cooperation For Certain Tax Related Matters................ 51
Section 10.2 FIRPTA Affidavits.......................................... 51
Section 10.3 Transfer Taxes............................................. 52
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ARTCLE XI
CLOSING; TERMINATION.......................... 52
Section 11.1 Closing Date............................................... 52
Section 11.2 Proceedings at Closing..................................... 52
Section 11.3 Termination................................................ 53
Section 11.4 Termination Payment........................................ 54
Section 11.5 Effect of Termination...................................... 55
ARTICLE XII
ADDITIONAL POST-CLOSING COVENANTS.................... 55
Section 12.1 Further Assurances......................................... 55
Section 12.2 Joint Post-Closing Covenant of Sellers and Purchaser....... 56
Section 12.3 Books and Records; Personnel............................... 56
Section 12.4 Use of FoxMeyer Name....................................... 57
Section 12.5 Collective Bargaining and Other Agreements................. 58
Section 12.6 Welfare Plans.............................................. 58
Section 12.7 Union Plans................................................ 58
Section 12.8 Credited Service for Vacations............................. 58
Section 12.9 Termination Obligations.................................... 58
Section 12.10 Multiemployer Pension Plans................................ 58
Section 12.11 Third Party Rights......................................... 60
Section 12.12 Employee Withholding....................................... 60
Section 12.13 Indemnification............................................ 60
ARTICLE XIII
INDEMNIFICATION AND RELATED MATTERS................... 61
Section 13.1 Indemnification by Sellers and Fox Health................. 61
Section 13.2 Indemnification by Purchaser.............................. 62
Section 13.3 Determination of Damages and Related Matters............. 62
Section 13.4 Survival of Representations, Warranties and Covenants..... 62
Section 13.5 Notice of Indemnification................................. 63
Section 13.6 Indemnification Procedure for Third Party Claims.......... 63
Section 13.7 Exclusive Remedy.......................................... 64
Section 13.8 Entire Agreement; Exhibits/Schedules...................... 64
Section 13.9 GOVERNING LAW............................................. 65
Section 13.10 Specific Performance...................................... 65
Section 13.11 Expenses.................................................. 65
Section 13.12 Table of Contents and Headings............................ 65
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Section 13.13 Notices................................................... 66
Section 13.14 Severability.............................................. 67
Section 13.15 Binding Effect; No Assignment............................. 67
Section 13.16 Amendments................................................ 68
Section 13.17 Counterparts.............................................. 68
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ASSET PURCHASE AGREEMENT
------------------------
THIS ASSET PURCHASE AGREEMENT (this "Agreement"), dated as of October
---------
3, 1996, by and among FoxMeyer Health Corporation, a Delaware corporation ("Fox
---
Health"), FoxMeyer Corporation, a Delaware corporation ("Fox Corp"), FoxMeyer
- ------ --------
Drug Company, a Delaware corporation ("Fox Drug"), Healthcare Transportation
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System, Inc., a Delaware corporation ("Healthcare"), FoxMeyer Software, Inc., a
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Delaware corporation ("Fox Software"), FoxMeyer Funding, Inc., a Delaware
------------
corporation ("Fox Funding"), Health Mart, Inc., a Colorado corporation ("Health
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Mart"), and Merchandise Coordinator Services Corporation, a Delaware corporation
- ----
d/b/a FoxMeyer Trading Company ("MCSC" and together with Fox Drug, Healthcare,
----
Fox Software, Fox Funding, and Health Mart, the "Subsidiaries"), and McKesson
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Corporation, a Delaware corporation ("Purchaser"). The Subsidiaries and Fox
---------
Corp are hereinafter jointly and severally referred to as "Sellers." The
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Sellers and Fox Health are collectively referred to as the "Fox Parties."
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W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, Sellers are engaged in the business of the wholesale
distribution of prescription and over-the-counter pharmaceutical products,
health and beauty aids and general merchandise in the United States (the
"Business"); and
- ---------
WHEREAS, on August 27, 1996 (the "Petition Date"), Fox Corp and the
-------------
Debtor Subsidiaries filed with the United States Bankruptcy Court for the
District of Delaware (the "Bankruptcy Court") voluntary petitions for relief
-----------------
commencing cases under Chapter 11 of title 11 of the United States Code, 11
U.S.C. sections 101 et seq. (the "Bankruptcy Code") (the "Chapter 11 Cases");
-- ---- --------------- -----------------
and
WHEREAS, upon the terms and subject to the conditions set forth
herein, Sellers desire to sell and the Purchaser desires to purchase the assets
of Sellers comprising the Business and, as part of such sale and purchase,
Sellers desire to assume and to assign to Purchaser, and Purchaser desires to
assume, certain of the obligations and liabilities of Sellers, in accordance
with sections 105, 363 and 365 of the Bankruptcy Code and
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subject to the exceptions, terms and conditions set forth herein; and
WHEREAS, in order to induce Sellers and Purchaser to enter into this
Agreement, each of Sellers and Purchaser is willing to provide the
representations, warranties and covenants set forth herein; and
WHEREAS, after obtaining approval by the Bankruptcy Court of certain
provisions of this Agreement, Purchaser will purchase a participation under the
GECC Credit Agreement, thereby providing $30,000,000 of additional credit to
Sellers and facilitating the extension by GECC of an additional $70,000,000 of
credit to Sellers (the "Purchaser Participation");
-----------------------
NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties and covenants herein contained, it is hereby agreed:
ARTICLE I
DEFINITIONS
Section 1.1 Certain Definitions. As used in this Agreement, the
-------------------
following terms have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"Affiliate" means, with respect to a specified Person, a Person that,
---------
directly or indirectly, through one or more intermediaries, controls, or is
controlled by or is under common control with, the Person specified. As used
herein, the term "control" (including the terms "controlling," "controlled by,"
and "under common control with") means the possession, direct or indirect, of
the power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise.
"Acquisition Proposal" means a merger, consolidation, business
--------------------
combination, sale of substantial assets, sale of a substantial percentage of
shares of capital stock (including, without limitation, by way of a tender
offer) or similar transaction involving any Third Party and Fox Corp or any of
the Subsidiaries.
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"Alternative Transaction" means an Acquisition Proposal made in
-----------------------
writing by a Third Party, or a plan of reorganization of Fox Corp and/or any of
the Debtor Subsidiaries not involving Purchaser or any Third Party which, in
either case, in the exercise of its fiduciary duty, the Board of Directors of
Fox Corp and/or any of the Debtor Subsidiaries determines to endorse or accept
instead of the transaction contemplated by this Agreement.
"Business Day" means any weekday on which nationally chartered banks
------------
in the City of New York are open for business.
"Chargebacks" means all rights relating to chargebacks to, or
-----------
holdbacks or rebates from, trade vendors arising from sales of inventory to
Sellers under any Contracts (including rights as a Third Party beneficiary) or
pursuant to a course of dealing in accordance with industry practice.
"Closing" means the consummation of the transactions contemplated by
-------
this Agreement.
"Code" means the Internal Revenue Code of 1986, as amended.
----
"Contract" means any contract, agreement, indenture, note, bond, loan,
--------
instrument, lease, mortgage, license, franchise, obligation, commitment or other
arrangement or agreement to which Fox Corp or a Subsidiary is a party, obligor
or beneficiary or by which any of the assets of Fox Corp or a Subsidiary that
are employed in the Business is bound.
"Damages" means all claims, actions, losses, damages, costs
-------
(including, without limitation, costs of investigation) expenses and liabilities
(including reasonable attorneys' fees incident to the foregoing), whether or
not arising out of Third Party claims.
"Debt" means any amount, indemnity or other obligation payable by Fox
----
Corp or any Subsidiary under the GECC Credit Agreement, the GECC Receivables
Funding and Servicing Agreement, and the industrial revenue bonds, mortgages and
notes set forth in Schedule D-1 attached hereto, including, without limitation,
the
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aggregate principal amount of and accrued but unpaid interest on any outstanding
borrowings thereunder, and any penalties, fees and expenses (including
reasonable attorneys' fees and expenses) arising thereunder.
"Debtor Subsidiaries" means Fox Drug, Health Mart, Fox Software,
-------------------
Healthcare, and MCSC.
"EBTDA" means earnings before taxes, depreciation and amortization,
-----
including amortization of deferred loan costs and capitalized interest.
"Employees" means all persons employed by any Seller in the Business
---------
on the day immediately prior to the Closing Date or otherwise identified as an
Employee on Schedule 4.18 or otherwise identified under item C of Schedule 4.9
hereto, including without limitation, any person on disability (other than
Persons receiving benefits under the Sellers' Long Term Disability Plan), sick
leave, layoff (provided that such layoff is pursuant to the terms of a
collective bargaining agreement) or leave of absence from any Seller.
"Encumbrance" means any encumbrance, security interest, mortgage, deed
-----------
of trust, lien, charge, pledge, option, Third Party right, right of first
refusal, easement, restrictive covenant, adverse claim or restriction of any
kind, including, but not limited to, any restriction on the use, voting,
transfer, receipt of income or other exercise of any attributes of ownership
(other than a restriction on transfer arising under federal or state securities
laws).
"Environmental Law" means any Law pertaining to the environment,
-----------------
natural resources or public health or safety as in effect on the date of this
Agreement.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended.
"GECC" means General Electric Capital Corporation, a corporation
----
organized under the banking laws of the State of New York.
"GECC Credit Agreement" means the Debtor in Possession Credit
---------------------
Agreement, dated as of August 27, 1996, as amended, by and among Fox Corp, Fox
Drug, Health Mart,
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Fox Software, Healthcare and MCSC, each as Debtor and Debtor in Possession, as
Borrowers, and the Lenders party thereto, and General Electric Capital
Corporation, as Administrative Agent.
"GECC Receivables Funding and Servicing Agree ment" means the
-------------------------------------------------
Receivables Funding and Servicing Agreement, dated as of August 27, 1996, as
amended, by and among Fox Funding, as Borrower, Fox Drug, as Debtor and Debtor
in Possession and Servicer, the Lenders party thereto and General Electric
Capital Corporation, as Lenders' Agent, and the related Amended and Restated
Re ceivables Transfer Agreement, dated as of August 27, 1996, by and between,
Fox Drug, as Debtor and Debtor in Possession, and Fox Funding.
"GAAP" means generally accepted accounting principles in the United
----
States as in effect on the date of this Agreement.
"Governmental Body" means any government or governmental or regulatory
-----------------
body thereof, or political subdivision thereof, whether federal, state, local or
foreign, or any agency, department or instrumentality thereof, or any court
(public or private).
"Hazardous Material" means any substance, material or waste which is
------------------
regulated by any applicable Governmental Body, including, without limitation,
any material or substance which is defined as a "hazardous waste," "hazardous
material," "hazardous substance," "extremely hazardous waste" or "restricted
hazardous waste," "subject waste," "contaminant," "toxic waste" or "toxic
substance" under any provision of Environmental Law applicable to the operations
of the Business.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
-------
1976, as amended, and the rules and regulations thereunder.
"Intellectual Property" means all United States (a) patents and patent
---------------------
applications (including reissues, divisions, continuations-in-part and
extensions thereof), invention disclosures, inventions, and improvements
thereto, (b) trademarks, trade names, service marks, trade dress and logos and
registrations and applications
5
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for registration thereof, (c) copyrights and registrations thereof and (d)
licenses of any of the foregoing.
"Knowledge" means insofar as it refers to Fox Corp or any of the
---------
Subsidiaries, only matters as to which Abbey Butler, Melvyn Estrin, Edward
Massman, Scott Peter son, Douglas Schwinn, William Estes, Kevin Rogan, Robert
Peiser or James Bonsall has actual knowledge, insofar as it refers to Fox
Health, only matters as to which Abbey Butler, Melvyn Estrin, Edward Massman or
Kevin Rogan has actual knowledge, and insofar as it refers to any other Person,
only matters as to which any executive officer of such Person has actual
knowledge, and, in all cases, shall not include matters which are not actually
known but should have been known by any such person.
"Law" means all applicable federal, foreign, state, local or other
---
governmental law, statute, code, ordinance, rule or regulation, or any Order.
"Legal Proceeding" means any judicial, administrative, regulatory or
----------------
arbitral proceeding, investigation or inquiry or administrative charge or
complaint pending at law or in equity before any Governmental Body.
"Material Adverse Change" means a material adverse change in the
-----------------------
financial condition, business, or operations of Fox Corp and the Subsidiaries,
taken as a whole, other than such changes that may result principally as a
result of the filing of the Chapter 11 Cases; provided, however, that
-------- -------
notwithstanding the foregoing the occurrence of any of the following shall be
deemed conclusively to have resulted in a Material Adverse Change:
(a) any decrease in the aggregate average daily net sales volume to
the customers identified on Schedule D-2 annexed hereto below $5,355,000 and any
decrease in the aggregate average daily net sales volume to all customers below
$14,500,000; it being understood that such average daily sales volume will be
calculated as of the end of the five Business Day week ending the Friday
preceding the Closing Date; it being further understood that any increase in the
average daily net sales volume of sales by Purchaser to customers of Fox Drug
following October 1, 1996 compared to the average daily net sales volume of such
sales by Purchaser in the one month prior to October 1, 1996 (including sales as
a
6
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secondary source) shall for purposes of this section be attributed to Sellers;
(b) any cumulative net loss in EBTDA at a rate which would result in a
loss greater than $8.0 million per month during (i) the period commencing the
Petition Date and ending on September 30, 1996 and (ii) the calendar monthly
periods commencing on October 1, 1996 and ending as of the Friday preceding the
Closing Date, in each case determined on a basis consistent with Sellers' prior
accounting practices but excluding for the purposes of such calculation the
administrative costs (not in excess of $3,000,000 plus any amount pursuant to
section 13.11 hereof) which Purchaser is agreeing to pay pursuant to Section
2.2, it being understood by all parties that the calculation set forth in clause
(ii) of this subsection will be able to be derived only on the basis of good
faith interpolation from information then available;
(c) the failure to collect on or prior to the Closing Date at least
$340 million of the accounts receivable reflected on the Petition Date Balance
Sheet, it being understood that any of such accounts receivable which are sold
or settled at a discount (other than normal discounts arising in the ordinary
course of business consistent with past practice) shall not be included for
purposes of the computation in this section; or if more than 10% of post
petition accounts receivable are more than 30 days past due measured as of the
end of the week ending the Friday preceding the Closing Date; and
(d) any decrease in the number of sales personnel employed by Fox
Corp or the Subsidiaries as of August 26, 1996, of more than 40 persons (not
including for purposes of this section any such sales personnel who are
subsequently hired by Purchaser).
"Material Adverse Effect" with respect to any Person shall mean a
-----------------------
material adverse effect on the financial condition, business or operations of
such Person.
"Merger Litigation" means the pending class action lawsuits filed
-----------------
against Fox Health and Fox Corp and certain of their respective officers and
directors in connection with the merger of Fox Corp into a wholly-owned
subsidiary of Fox Health, which merger was consummated on October 12, 1994.
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"Order" means any order, injunction, judgment, decree, ruling, writ,
-----
assessment or arbitration award by a Governmental Body of competent
jurisdiction.
"Permit" means any written approval, consent, exemption, franchise,
------
license, permit, waiver, certificate or other authorization required to carry
on the Business as currently conducted under applicable Law.
"Permitted Encumbrances" means (i) Encumbrances relating to the Debt;
----------------------
(ii) all defects, exceptions, restrictions, easements, rights of way and
encumbrances disclosed in policies of title insurance which have been made
available to Purchaser or otherwise disclosed to Purchaser in writing; (iii)
statutory liens for current taxes, assessments or other governmental charges not
yet delinquent or the amount or validity of which is being contested in good
faith by appropriate proceedings, provided an appropriate reserve is established
therefor; (iv) mechanics', carriers', workers', repairers', landlord's and
similar liens arising or incurred in the ordinary course of business that are
not material to the business, operations and financial condition of the Business
taken as a whole; (v) zoning, entitlement and other land use and environmental
regulations by Governmental Bodies; (vi) trade liens granted under any order
approved by the Bankruptcy Court in connection with the Chapter 11 Cases; and
(vii) such other imperfections in title, charges, easements, restrictions and
encumbrances which do not materially interfere with the present operation of
the Business.
"Person" means any natural person, corporation, partnership, firm,
------
joint venture, association, joint-stock company, trust, unincorporated
organization or Governmental Body or any other entity.
"Reasonable Best Efforts" means a Person's reasonable best efforts to
-----------------------
fulfill the condition, covenant or agreement referred to including, but not
limited to, securing as promptly as practicable the consents, approvals,
waivers and authorizations required in connection with the transactions
contemplated hereby, but does not require that a Person be required to (i)
divest any significant assets, (ii) make any material payments to Third Parties
except for those expenses each of the parties hereto may incur pursuant to
Sections 10.3 and 13.11, or
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(iii) take, or refrain from taking, any other action that in its reasonable
judgment would have a Material Adverse Effect on its business.
"Retirees" means former employees of Fox Corp or the Subsidiaries and
--------
their spouses and beneficiaries with a right to receive post-retirement welfare
benefits from Fox Corp or the Subsidiaries.
"Shareholder Litigation" means that certain action filed on August 12,
----------------------
1996 in the United States District Court for the Northern District of Texas
against Fox Health, Melvyn J. Estrin and Abbey J. Butler, and any other
shareholder lawsuits filed with respect to Fox Health.
"Third Party" means any Person other than Sellers, Purchaser or any
-----------
of their respective Affiliates.
"363 Order" means an order of the Bankruptcy Court, in form and
---------
substance reasonably satisfactory to the Purchaser and Sellers, approving the
sale of the Business by Fox Corp and the Subsidiaries to the Purchaser under
this Agreement pursuant to sections 105 and 363 of the Bankruptcy Code. The 363
Order shall provide that the transfer of the Assets by the Sellers to Purchaser
(a) is or will be legal, valid and effective transfer of the Assets; (b) subject
to the satisfaction in full of all Obligations (as such term is defined in the
GECC Credit Agreement) under the GECC Credit Agreement and all Borrower Secured
Obligations (as such term is defined in the GECC Receivables Funding and
Servicing Agreement) under the GECC Receivables Funding and Servicing Agreement,
vests or will vest Purchaser with good title to the Assets free and clear of all
claims and Encumbrances except for Permitted Encumbrances and those expressly
assumed by Purchaser hereunder; (c) constitutes reasonably equivalent value and
fair consideration under the Bankruptcy Code or under the laws of the United
States, any State, territory, possession, or the District of Columbia; (d) does
not and will not subject Purchaser to any liability by reason of such transfer
under the laws of the United States, any State, territory or possession thereof
or the District of Columbia based, in whole or in part, directly or indirectly,
on any theory of law, including, without limitation, any theory of successor or
transferee liability; (e) the Bankruptcy Court retains
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jurisdiction to enforce the provisions of this Agreement in all respects,
including retaining jurisdiction to protect Purchaser against any of the
Excluded Liabilities or otherwise in accordance with the provisions of this
Agreement; (f) the provisions of the 363 Order are nonseverable and mutually
dependent and (g) the transactions contemplated by this Agreement are undertaken
by the Purchaser in good faith, as that term is used in section 363(m) of the
Bankruptcy Code.
"365 Order" means an order or orders of the Bankruptcy Court, in form
---------
and substance reasonably satisfactory to the Purchaser and Sellers, approving
the assumption and assignment of all Contracts (other than Excluded Liabilities)
by the Sellers pursuant to section 365 of the Bankruptcy Code. The 365 Orders
shall provide that the Contracts (other than Excluded Liabilities) will be
transferred to, and remain in full force and effect for the benefit of
Purchaser, notwithstanding any provision sion in such Contracts (including those
described in sections 365(b)(2) and (f) of the Bankruptcy Code) that prohibits
such assignment or transfer.
Section 1.2 Other Defined Terms. Each of the following terms shall
-------------------
have the meaning ascribed such term in the respective section opposite it below:
<TABLE>
<CAPTION>
<S> <C>
Term Section
- ---- -------
Alternative Transaction Notice 6.5(b)
Alternative Procedure 12.12
Agreement Preamble
Assets 2.3
Assumed Liabilities 2.5
Assumed Tax Liabilities 2.6(d)
Audits 4.2(a)(iv)
Bankruptcy Court Recitals
Bankruptcy Code Recitals
Benefit Arrangement 4.9(a)
Business Recitals
Chapter 11 Cases Recitals
Chargeback Setoff 2.2(b)
Chargeback Settlement Agreements 2.2(b)
Closing Date 11.1
Confidentiality Letter 6.1(b)
Contribution Period 12.10
Conveyance Agreements 9.1
EBTDA Decrease 2.2(c)
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
EBTDA Increase 2.2(c)
Employee Benefit Plans 4.9(a)
Equipment 2.3(a)
Escrow Agreement 2.2(c)
Escrow Closing Date 2.2(b)
Excluded Assets 2.4
Excluded Liabilities 2.6
Excluded Tax Liabilities 2.6(d)
FIRPTA Affidavit 10.2
Fox Corp Preamble
Fox Corp Shares Recitals
Fox Drug Preamble
Fox Funding Preamble
Fox Health Preamble
Fox Representatives 12.2(b)
Fox Parties Preamble
Fox Software Preamble
Health Mart Preamble
Healthcare Preamble
Honored Chargebacks 2.2(b)
Indemnitee 13.5
Indemnitor 13.5
Interest 6.3
Inventory 2.3(b)
Investment Company 5.7
June 1996 Balance Sheet 4.4(b)
June 1996 Financial Statements 4.4(b)
June 1996 Statement of Operations 4.4(b)
June 1996 Statement of Cash Flow 4.4(b)
July 1996 Balance Sheet 4.4(b)
July 1996 Financial Statements 4.4(b)
July Statement of Operations 4.4(b)
Leased Real Property 2.3(e)
Liabilities 2.5
March 1996 Balance Sheet 4.4(a)
March 1996 Financial Statements 4.4(a)
March 1996 Statement of Cash Flow 4.4(a)
March 1996 Statement of Operations 4.4(a)
Material Contracts 4.7
McKesson Note 2.2(a)
MCSC Preamble
Multiemployer Plan 4.9(a)
Non-Assignable Assumed Contracts 12.1
Owned Real Property 2.3(e)
Participation Agreement 8.6(b)
Paying Party 11.4(d)
PBGC 12.10
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Petition Date Recitals
Petition Date Balance Sheet 4.4(c)
Post Petition Chargebacks 2.2(b)
Properties 4.16
Purchase Price 2.2
Purchaser Preamble
Purchaser Participation Recitals
Purchaser Representatives 6.1(a)
Purchaser Indemnified Parties 13.1
Receivables 2.3(d)
Second Amendment 8.6(a)
Sellers Indemnified Parties 13.2
Sellers Preamble
Subsidiaries Preamble
Tax or Taxes 4.20(b)
Tax Return 5.21(b)
Termination Payment 11.4
Termination Payment Order 6.6(a)
Topping Offer 6.5(b)
Topping Right 6.5(b)
Transfer Taxes 10.3
WARN Act 4.19
Welfare Plan 12.6
363 Hearing 6.5(a)
</TABLE>
ARTICLE II
PURCHASE AND SALE OF ASSETS AND ASSUMPTION OF LIABILITIES
Section 2.1 Assets to be Purchased and Sold. At the Closing, (i)
-------------------------------
Sellers shall unconditionally transfer, sell, convey, assign and deliver to
Purchaser, and Purchaser shall purchase from Sellers the Assets (as defined in
Section 2.3 hereof), and (ii) Sellers shall unconditiontionally transfer and
assign to Purchaser, and Purchaser shall assume from Sellers the Assumed
Liabilities (as defined in Section 2.5 hereof).
Sectin 2.2 Purchase Price; Tax Allocation.
------------------------------
(a) The aggregate consideration (the "Purchase Price") to be paid
--------------
at Closing by Purchaser to Sellers as consideration for the Assets and the
assumption of Assumed Liabilities shall be the sum of (i) Purchaser's non-
interest bearing note maturing in 45 days in an aggregate principal amount equal
to the outstanding principal and accrued interest under the GECC Credit
12
<PAGE>
Agreement and having such other terms as are mutually agreed upon among
Purchaser, Sellers and GECC (the "McKesson Note"), (ii) an amount in cash
-------------
necessary to pay all other Obligations (as such term is defined therein)
outstanding under the GECC Credit Agreement and all Secured Purchaser
Obligations (as such term is defined therein) outstanding under the GECC
Receivables Funding and Servicing Agreement on the Closing Date, (iii) an amount
in cash equal to the Bankruptcy Court approved fees and expenses charged by
Persons rendering professional services to any of the Sellers or to any
committee appointed by the United States Trustee in connection with the Chapter
11 Cases from the Petition Date through the Closing which amount shall not
exceed $3,000,000 except as provided in Section 13.11 hereof less any amounts
al ready paid on account of such services on or subsequent to the Petition Date
which were reflected on the Petition Date Balance Sheet, and (iv) $80 million in
cash, which may be increased or decreased, as the case may be, as provided in
paragraphs (b), (c) and (d) of this Section.
(b) As promptly as practicable following the execution of this
Agreement, Sellers will use their Reasonable Best Efforts to enter into
agreements with trade vendors satisfactory in form and substance to Purchaser
with respect to Chargebacks ("Chargeback Settlement Agreements"). The
---------------------------------
Chargeback Settlement Agreements shall quantify the amount, if any, by which
Chargebacks arising after the Petition Date ("Post Petition Chargebacks") may
--------------------------
be taken as a setoff to reduce the pre-petition claim of such trade vendor (a
"Chargeback Setoff"), and shall provide that the trade vendor agrees to honor
- ------------------
all other Post Petition Chargebacks relating to sales of inventory to Sellers
(including inventory purchased by Purchaser from the Sellers pursuant to this
Agreement) whether sought to be asserted by Sellers or Purchaser ("Honored
-------
Chargebacks"). The $80 million of the Purchase Price set forth in paragraph (a)
- -----------
above shall be reduced by the aggregate amount of Chargeback Setoffs and other
Post Petition Chargebacks which are neither Honored Chargebacks nor actually
collected by Sellers prior to the Closing Date or by Purchaser during a period
ending six months after the Closing Date (the "Escrow Closing Date").
-------------------
(c) The $80 million portion of the Purchase Price described in
clause (a)(iv) above, shall be
13
<PAGE>
increased by an amount equal to the EBTDA Increase and decreased by an amount
equal to the EBTDA Decrease. For purposes of this section, EBTDA Increase shall
mean the amount by which the actual cumulative EBTDA for the period beginning on
the Petition Date and ending on the Friday before the Closing Date is greater
than, and EBTDA Decrease shall mean the amount by which the actual EBTDA for the
same period is less than, the amount that would be calculated by multiplying
negative $6.0 million per month by the number of months and partial months
(assuming a 30 day month) contained in such period.
(d) To implement the foregoing provisions, on the Closing Date
the Purchaser shall pay into escrow pursuant to an escrow agreement in form and
substance mutually satisfactory to Purchaser and Sellers (the "Escrow
------
Agreement") an amount equal to the amount of Post Petition Chargebacks (less the
- ---------
amount of Chargeback Setoffs existing on the Closing Date) which are neither
Honored Chargebacks nor previously collected by Sellers provided, however, that
the amount so deposited shall not exceed (i) $80 million increased or decreased
as the case may be pursuant to paragraph (c) of this Section, less (ii) the
amount of Chargeback Setoffs existing on Closing Date. The Escrow Agreement
shall provide that at the end of each calendar month the escrow agent under the
Escrow Agreement shall pay to the Sellers the interest accrued on the amount in
Escrow. At the Escrow Closing Date the escrow agent under the Escrow Agreement
shall pay to the Sellers an amount equal to Post Petition Chargebacks which were
actually collected by Purchaser between the Closing Date and the Escrow Closing
Date and shall repay the balance to Purchaser.
(e) Purchaser and Sellers hereby agree that the Purchase Price
for the Assets and the Assumed Liabilities will be allocated in a mutually
acceptable manner not later than the Closing Date. Subject to the requirements
of any applicable Tax law, all Tax Returns filed by Purchaser and Sellers shall
be prepared consistently with such allocation.
Section 2.3 Acquisition and Transfer of Assets. Upon the terms and
subject to the conditions hereinafter set forth, Sellers agree to sell, assign,
transfer, convey and deliver to Purchaser, and Purchaser agrees to purchase,
acquire and accept from Sellers, all
14
<PAGE>
of Sellers' rights, title and interests in and to the Business, including,
without limitation, in and to all of the assets, properties, rights, contracts
and claims, employed in the Business (except as otherwise set forth in Section
2.4 hereof), wherever located, whether tangible or intangible, as the same
shall exist as of the Closing (such rights, title and interests in and to all
such assets, properties, rights, contracts and claims, being collectively
referred to herein as, the "Assets"). The Assets shall include, without
------
limitation, all of Sellers' rights, title and interests in and to the as sets,
properties, rights, contracts and claims described in the following paragraphs
(a) through (o) but in each case, only to the extent used in, held for use in or
related to the Business:
(a) all furnishings, furniture, fixtures, office supplies,
vehicles, spare parts, tools, dies, machinery, equipment, computers and other
tangible personal property (collectively, the "Equipment");
(b) all items of inventory held for resale, including, without
limitation, raw materials, work-in-process, finished goods, supplies, spare
parts, samples, and supply and packaging items (including any of the
aforementioned owned by Sellers but in the possession of manufacturers,
suppliers or dealers, or in transit or returned goods) (collectively, the
"Inventory");
- ----------
(c) cash, bank accounts, certificates of deposit, treasury
bills, treasury notes and marketable securities;
(d) all accounts receivable and all notes receivable (whether
short-term or long-term) and all deposits, together with any unpaid interest
accrued thereon from the respective obligors and any security or collateral
therefor, including recoverable deposits (collectively, the "Receivables");
-----------
(e) all of Sellers' rights, title and interests in the real
property (the "Owned Real Property") set forth on Schedule 2.3(e)(i) hereto and
-------------------- ------------------
the real property (the "Leased Real Property") set forth on Schedule 2.3(e)(ii)
-------------------- --------------------
hereto, including all buildings located thereon, any of the fixtures attached
thereto and any transferable Permits relating thereto;
15
<PAGE>
(f) the Intellectual Property related to the Assets, including the
Intellectual Property listed on Schedule 2.3(f) hereto, and the rights to sue
---------------
for, and remedies against, past, present and future infringements thereof, and
rights of priority and protection of interests therein under applicable Laws;
(g) all copies of marketing brochures and materials and other non-
proprietary printed or written materials in any form or medium relating to
Sellers' ownership of or operation of the Business that Sellers are not required
by Law to retain (of which Sellers may retain duplicates), and duplicates of any
such materials that Sellers are required by Law to retain;
(h) all rights under or pursuant to all warranties,
representations and guarantees made by suppliers, manufacturers and contractors
in connection with the operation of the Business or affecting the Equipment;
(i) all Permits held by Sellers (to the extent permitted by
applicable Law to be transferred);
(j) all Contracts;
(k) all books, records or other data relating to Sellers'
ownership or operation of the Business, including, without limitation, customer
and supplier lists;
(l) any claims or causes of action relating to the Assets and any
counterclaims, set-offs or defenses Sellers may have with respect to any Assumed
Liability;
(m) all goodwill relating to the foregoing Assets and the
Business;
(n) all Post Petition Chargebacks (excluding Chargeback Setoffs),
provided, however, that any Post Petition Chargebacks (other than Honored
- -------- -------
Chargebacks) which have not been collected on or before the Escrow Closing Date
shall be reconveyed at no cost to Sellers; and
(o) all computer software programs and databases used by any of
the Sellers whether owned, li-
16
<PAGE>
censed (subject to applicable restrictions), leased or internally developed.
Section 2.4 Excluded Assets. Notwithstanding anything to the contrary
--------------
contained in Section 2.3 hereof, Sellers and Purchaser expressly understand and
agree that Sellers are not hereunder selling, assigning, transferring, conveying
or delivering to Purchaser the following assets, properties, rights, contracts
and claims (collectively, the "Excluded Assets"):
---------------
(a) any books, records or other data relating to Sellers'
ownership or operation of the Business which are either part of the general
corporate books and records of Fox Health or required by applicable Law to be
retained by Sellers or Fox Health; provided, however, that copies of such
-------- -------
books, records or other data relating to the Business shall be furnished to
Purchaser promptly upon reasonable written request;
(b) all Chargebacks arising prior to the Petition Date and all
Chargeback Setoffs;
(c) the capital stock, the corporate minute books, seal, stock
record books and stock transfer records, stock certificates, treasury stock,
certificate of incorporation and by-laws of each Seller;
(d) all claims or causes of action of the Sellers' estates
arising under the provisions of sections 542 through 549, inclusive, of the
Bankruptcy Code.
(e) those assets listed on Schedule 2.4(e).
---------------
Section 2.5 Assumed Liabilities. Subject to Section 2.6, effective as
-------------------
of the Closing, Purchaser shall assume and pay, perform and discharge all debts,
claims, liabilities, obligations, damages and expenses (collectively, the
Liabilities") of Sellers of every kind and nature, whether contingent, absolute,
- -----------
determined, indeterminable or otherwise, reflected or reserved on the Petition
Date Balance Sheet or incurred in the ordinary course of business since such
date or with the approval of the Bankruptcy Court, including, without
limitation, all claims against, and liabilities and obligations of, Sellers with
respect to the Contracts being transferred
17
<PAGE>
to Purchaser hereunder (to the extent that such liabilities and obligations
remain unsatisfied or are required to be performed on or after the Closing
Date), all claims against, and liabilities and obligations of, the Debtor
Subsidiaries as a result of the rejection of any Contracts (other than
Contracts with Employees) in accordance with the 365 Order and, except as
otherwise specifically provided herein, all liabilities with respect to
Employees and Retirees (the "Assumed Liabilities").
-------------------
Section 2.6 Excluded Liabilities. Notwithstanding anything in Section
--------------------
2.5 hereof to the contrary, Sellers and Purchaser expressly understand and agree
that Purchaser shall not assume or become liable for any of the following
Liabilities of Sellers (collectively, the "Excluded Liabilities"):
--------------------
(a) any Liabilities or obligations in respect of any of the
Excluded Assets;
(b) the Merger Litigation, the Shareholder Litigation, all other
liabilities under the litigation matters set forth on Schedule 4.11, and
liabilities which arise out of the conduct of the business of Fox Health or any
former or current Affiliates of Fox Health other than the Sellers';
(c) any Liability whatsoever whether direct or indirect, pursuant
to a claim or potential claim for indemnification or otherwise, arising out of
or relating to (i) any of Fox Corp's or any Subsidiary's transactions with any
of its Affiliates not specifically reflected or reserved against on the Petition
Date Balance Sheet or incurred in the ordinary course of business since August
26, 1996, including but not limited to dividends or distributions made by Fox
Corp or any Subsidiary to any of its Affiliates, or (ii) violations or alleged
violations of any securities laws arising out of disclosures made or permitted
to be made by Fox Health;
(d) (i) all Taxes of Fox Health and its Affiliates (other than Fox
Corp and the Subsidiaries) and of any member of any affiliated group (within the
meaning of Section 1504 of the Code) or any similar state or local group of
which Fox Corp or the Subsidiaries is or has been a member for all taxable
periods, whenever incurred; and (ii) all Taxes (x) of Fox Corp and the
18
<PAGE>
Subsidiaries for all taxable periods, whenever incurred, and (y) attributable to
or incurred in connection with the Business or the Assets for all taxable
periods through and including the Closing Date (collectively, the amounts in (i)
and (ii) shall be referred to as the "Excluded Tax Liabilities"), provided,
------------------------ --------
however, that Excluded Tax Liabilities shall not include the amounts
- -------
specifically reflected or reserved against on the Petition Date Balance Sheet
as current liabilities in the following categories: accrued benefits and
employer taxes; real property taxes; sales taxes; and other accrued taxes
except income; attributable to the Business or the Assets for the period ending
on the Petition Date ("Assumed Tax Liabilities"), nor shall Excluded Tax
-----------------------
Liabilities include increases in the amount of such Assumed Tax Liabilities to
the extent that such increases are incurred in the ordinary course of business
for the period beginning on the day after the Petition Date through and
including the Closing Date, provided, further, that Assumed Tax Liabilities
-------- -------
shall in no event include any amounts incurred or accrued that represent
interest or penalties with respect to any Assumed Tax Liabilities;
(e) any Liabilities in respect of trade vendor claims arising
prior to the Petition Date; and
(f) any Liabilities with respect to the GECC Credit Agreement and
the GECC Receivables Funding and Servicing Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF FOX HEALTH
--------------------------------------------
Fox Health hereby represents and warrants to the Purchaser as follows:
Section 3.1 Organization and Good Standing. Fox Health is a
------------------------------
corporation, duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and has all requisite corporate
power and authority to own, lease and operate its respective properties and to
conduct its business as presently conducted. Fox Health is duly qualified or
authorized to do business as a foreign corporation and is in good standing under
the laws of each jurisdiction in
19
<PAGE>
which the conduct of its respective business or the ownership of its respective
properties requires such qualification or authorization, except where the
failure to so qualify would not result in a Material Adverse Effect on Fox
Health.
Section 3.2 Authorization of Agreement; No Conflicts.
----------------------------------------
(a) Fox Health has all requisite corporate power and authority to
execute and deliver this Agreement, and to perform its respective obligations
hereunder. The execution, delivery and performance by Fox Health of this
Agreement, have been duly authorized by all necessary corporate action on the
part of Fox Health. This Agreement has been duly and validly executed and
delivered by Fox Health (to the extent necessary) and (assuming the due
authorization, execution and delivery by the other parties hereto) this
Agreement constitutes a legal, valid and binding obligation of Fox Health,
enforceable against Fox Health in accordance with its respective terms, subject
to applicable bankruptcy, insolvency, reorganization, moratorium and similar
laws affecting creditors' rights and remedies generally and subject, as to
enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity).
(b) The execution, delivery and performance by Fox Health of this
Agreement and the consummation of the transactions contemplated hereby, do not
and will not (i) violate any provision of the certificate of incorporation or
by-laws of Fox Health; (ii) with the passage of time, the giving of notice or
otherwise, result in a violation or breach of, or conflict with or constitute a
default or result in the termination or cancellation of, or accelerate the
performance required by any material note, bond, mortgage, indenture, deed of
trust, license, franchise, permit, lease, contract, agreement or other
instrument or commitment or obligation to which Fox Health or any of its
respective properties is bound or to which Fox Health is a party or is bound or
result in the creation of any Encumbrance upon any of its properties, and (iii)
violate any Law, except for filings and approvals pursuant to the HSR Act, other
than in the
20
<PAGE>
cases of clauses (ii) and (iii), any violation, conflict, breach, termination,
default, cancellation, acceleration or Encumbrance which, individually or in the
aggregate, would not have a Material Adverse Effect on Fox Health.
Section 3.3 No Other Representations. Except for the representations
------------------------
and warranties contained in this Article III, neither Fox Health nor any other
Person makes any other express or implied representation or warranty on behalf
of Fox Health.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
FOX CORP AND THE SUBSIDIARIES
Each of Fox Corp and the Subsidiaries hereby jointly and severally
represents and warrants to the Purchaser as follows:
Section 4.1 Organization and Good Standing. Each of Fox Corp and the
------------------------------
Subsidiaries is a corporation, duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has all
requisite corporate power and authority to own, lease and operate its properties
and to conduct the Business as presently conducted. Each of Fox Corp and the
Subsidiaries is duly qualified or authorized to do business as a foreign
corporation and is in good standing under the laws of each jurisdiction in which
the conduct of its respective business or the ownership of its respective
properties requires such qualification or authorization, except where the
failure to so qualify would not result in a Material Adverse Effect on Fox Corp
and the Subsidiaries, taken as a whole.
Section 4.2 Authorization of Agreement; No Conflicts.
----------------------------------------
(a) Each of Fox Corp and the Subsidiaries has all requisite
corporate power and authority to execute and deliver this Agreement, and to
perform its respective obligations hereunder. The execution, delivery and
performance by each of Fox Corp and the Subsidiaries of this Agreement have been
duly authorized by all necessary corporate action on the part of each of Fox
Corp and the Subsidiaries, respectively. This Agreement has been
21
<PAGE>
duly and validly executed and delivered by each of Fox Corp and the Subsidiaries
and (assuming the due authorization, execution and delivery by the other
parties hereto and thereto) this Agreement constitutes a legal, valid and
binding obligation of each of Fox Corp and the Subsidiaries, enforceable in
accordance with its terms, subject to approval by the Bankruptcy Court.
(b) Except with respect to the Debt and except as set forth on
Schedule 4.2(b) hereto, the execution, delivery and performance by each of Fox
Corp and the Subsidiaries of this Agreement, and the consummation of the
transactions contemplated hereby, do not and will not (i) violate any provision
of the certificate of incorporation or by-laws of any of Fox Corp or the
Subsidiaries, (ii) with the passage of time, the giving of notice or otherwise,
result in a violation or breach of, or conflict with or constitute a default or
result in the termination or in a right of termination or cancellation of, or
accelerate the performance required by, or require notice under, any written
Contract or result in the creation of any Encumbrance upon any of its
properties, or (iii) violate any Law, except for filings and approvals pursuant
to the HSR Act and assuming compliance with the matters set forth in Section 4.3
hereof, other than in the cases of clauses (ii) and (iii), any violation,
conflict, breach, termination, default, cancellation, acceleration or
encumbrance which, individually or in the aggregate, would not have a Material
Adverse Effect on Fox Corp and the Subsidiaries, taken as a whole, or materially
impair or delay the ability of Seller to perform its obligations hereunder.
(c) Fox Corp owns directly or indirectly all the shares of capital
stock of each of the Subsidiaries free and clear of all Encumbrances other than
Permitted Encumbrances, except that, with respect to Fox Software, Fox Drug
owns directly 80% of all shares of capital stock of Fox Software free and clear
of all Encumbrances.
Section 4.3 Consents. No consent, waiver, approval or authorization
--------
of, or declaration or filing with, or notification to, any Governmental Body or
other Person which has not been previously made, obtained or filed is required
on the part of any of Fox Corp or the Subsidiaries in connection with the
execution, delivery and performance of this Agreement except (a) for con-
22
<PAGE>
sents approvals or authorizations of, or filings with, the Bankruptcy Court,
including, with respect to the Debt; (b) for compliance with the applicable
requirements of the HSR Act; (c) as set forth on Schedule 4.3 hereto; and (d)
with respect to the consents, waivers, approvals or authorizations which, if not
obtained, would not have a Material Adverse Effect on Fox Corp and the
Subsidiaries, taken as a whole, or delay the ability of Fox Corp to effect the
Closing.
Section 4.4 Financial Statements.
--------------------
(a) Fox Corp has delivered to Purchaser an audited consolidated
balance sheet of Fox Corp at March 31, 1996 (together with the notes and
schedules thereto, the "March 1996 Balance Sheet") and the related audited
------------------------
statement of operations and statement of cash flow for the fiscal year ended
March 31, 1996 (together with the notes and schedules thereto, respectively, the
"March 1996 Statement of Operations" and the "March 1996 Statement of Cash
---------------------------------- -----------------------------
Flow," and, together with the March 1996 Balance Sheet, the "March 1996
----------
Financial Statements"), copies of which are attached hereto as Schedule 4.4(a).
- --------------------
The March 1996 Financial Statements have been prepared in accordance with GAAP,
applied consistently with past practice (except as set forth in the notes
thereto), and present fairly, in all material respects, the consolidated
financial position and results of operations of Fox Corp at March 31, 1996 and
for the fiscal year ended March 31, 1996. The "pro forma" financial information
included as Note R to the March 1996 Financial Statements presents fairly, in
all material respects, the information purported to be shown therein at March
31, 1996 and for the fiscal year ended March 31, 1996.
(b) Each of (i) the unaudited interim consolidated balance sheet
of Fox Corp at June 30, 1996 (together with the notes and schedules thereto, the
"June 1996 Balance Sheet") and the related unaudited interim consolidated
-----------------------
statement of operations and statement of cash flow of Fox Corp for the three
months ended June 30, 1996 (together with the notes and schedules thereto,
respectively, the "June 1996 Statement of Operations," and "June 1996 Statement
--------------------------------- -------------------
of Cash Flow", and together with the June 1996 Balance Sheet, the "June 1996
- ------------ ---------
Financial Statements") delivered to Purchaser and attached hereto as Schedule
- --------------------
4.4(b)(i), and (ii) the unaudited interim consolidated balance sheet of Fox Corp
at July 31, 1996 (the "July 1996 Balance Sheet") and the related unaudited
-----------------------
interim consolidated statement of operations of Fox Corp for the four months
ended July 31, 1996 (the "July 1996 Statement of Operations," and together with
---------------------------------
the July 1996 Balance Sheet, the "July 1996 Financial Statements") delivered to
------------------------------
Purchaser and attached hereto
23
<PAGE>
as Schedule 4.4 (b) (i), and (ii) the unaudited interim consolidated balance
sheet of Fox Corp at July 31, 1996 (the "July 1996 Balance Sheet") and the
-----------------------------
related unaudited interim consolidated statement of operations of Fox Corp for
the four months ended July 31, 1996 (the "July 1996 statement of Operations,"
--------------------------------------
and together with the July 1996 Balance Sheet, the "July 1996 Financial
-------------------
Statements") delivered to purchaser and attached hereto as Schedule 4.4 (b) (ii)
- ----------
have been prepared consistent with past practice, and present fairly,in all
material respects, the consolidated financial position and results of operations
of Fox Corp at the date and for the period indicated, subject to normal year-end
audit adjustments.
(c) The unaudited consolidated interim balance Sheet of Fox Corp
at August 26, 1996 (the "Petition Date Balance Sheet"), a copy of which has
----------------------------
been provided to Purchaser and is attached hereto as Schedule 4.4(c), has been
prepared consistent with past practice.
Section 4.5 Undisclosed Liabilities. None of Fox Corp or any of the
-----------------------
Subsidiaries has any liabilities or obligations of any nature (absolute,
accrued, contingent or otherwise) except (a) as set forth or reflected on the
Petition Date Balance Sheet, (b) as disclosed in the schedules hereto, (c) for
liabilities incurred in the ordinary course of business since August 26, 1996 or
with the approval of the Bankruptcy Court through the date hereof, (d) for the
employee retention program of Fox Corp and the Debtor Subsidiaries (e) for
operating leases relating to the Business; and (f) costs incurred by Fox Corp
and the Debtor Subsidiaries in connection with the administration of the Chapter
11 Cases.
Section 4.6 Absence of Certain Developments. Since the Petition Date,
-------------------------------
each of Fox Corp and the Subsidiaries has operated the Business in the ordinary
course giving effect to circumstances attributable to the filing of the Chapter
11 Cases and, except as set forth on Schedule 4.6 hereto or as reflected in the
Petition Date Balance Sheet, there has not been:
(a) any grant of any severance or termination pay to any executive
officer or director of any of Fox Corp or the Subsidiaries or any increase in
compensation or benefits payable by any of Fox Corp or the Subsidiaries under
existing employment agreements or sever-
24
<PAGE>
ance or termination pay policies to any of its employees other than (i) normal
merit increases for salaried employees or (ii) increases or grants required by
Contracts disclosed pursuant hereto or by applicable Law;
(b) any declaration, setting aside or payment of any dividend or
other distribution in respect of any shares of capital stock of any of Fox Corp
or the Subsidiaries or any repurchase, redemption or other acquisition by any of
Fox Corp or the Subsidiaries of any outstanding shares of capital stock or other
securities of, or other ownership interest in, any of Fox Corp or the
Subsidiaries;
(c) any material change in the accounting methods or principles of
any of Fox Corp or the Subsidiaries not disclosed in the March 1996 Financial
Statements, the June 1996 Financial Statements, the July 1996 Financial
Statements or the Petition Date Balance Sheet; or
(d) consistent with being a debtor in possession under the
Bankruptcy Code, failure to use Reasonable Best Efforts to preserve the
Business, to keep available to Fox Corp and the Subsidiaries the services of the
key employees of Fox Corp and the Subsidiaries or to preserve for Fox Corp and
the Subsidiaries the goodwill of its suppliers, franchisees, customers and
others having business relations with any of Fox Corp or the Subsidiaries.
Section 4.7 Material Contracts. Schedule 4.7 hereto sets forth a list,
------------------
as of the date hereof, of each written Contract that is material to the Business
(other than (a) purchase orders and sales contracts, (b) any written Contract
involving the payment of less than $2,000,000 in the aggregate or (c) any
written Contract with a term of less than one (1) year) (the "Material
--------
Contracts"). Except as set forth on Schedule 4.7 hereto and subject to section
- ----------
365 of the Bankruptcy Code, each Material Contract is a valid and binding
agreement of Fox Corp or the Subsidiaries that is a party thereto and is in full
force and effect. Except for defaults of the kind described in Section
365(b)(2) of the Bankruptcy Code, or as set forth on Schedule 4.7 hereto, none
of Fox Corp or the Subsidiaries has Knowledge of any material default under any
Material Contract which default has not
25
<PAGE>
been cured or waived and which default would have a Material Adverse Effect on
Fox Corp and the Subsidiaries, taken as a whole.
Section 4.8 Intangible Property. Schedule 4.8 hereto contains a
-------------------
complete and correct list of all of the Intellectual Property used by Fox Corp
and the Subsidiaries in connection with the Business. The Intellectual Property
is owned by the party shown on Schedule 4.8 hereto as owning the same, free and
clear of all Liens other than as set forth on Schedule 4.8 hereto and other than
Permitted Encumbrances. To the Knowledge of Fox Corp and the Subsidiaries, there
have been no claims asserted in writing, which are pending, that any of the
foregoing is invalid or conflicts with the asserted rights of others, which
would reasonably be likely to result in a Material Adverse Effect on Fox Corp
and the Subsidiaries, taken as a whole. Fox Corp and the Subsidiaries possess
all the Intellectual Property necessary for the conduct of the Business as
conducted on the date hereof, except for those the absence of which would not be
reasonably likely to result in a Material Adverse Effect on Fox Corp and the
Subsidiaries, taken as a whole. Sellers note that FoxMeyer Canada, Inc., an
Ontario, Canada corporation, has, and after the Closing will have, the right to
use the "FoxMeyer" name and logo in connection with its computer software
business.
Section 4.9 Employees and Employee Benefits.
-------------------------------
(a) Schedule 4.9 hereto sets forth all material, written "employee
benefit plans", as defined in Section 3(3) of ERISA, maintained by any of Fox
Corp or the Subsidiaries or to which any of Fox Corp or the Subsidiaries
contributed or is obligated to contribute thereunder for current or former
employees of any of Fox Corp or the Subsidiaries (the "Employee Benefit Plans").
----------------------
Schedule 4.9 hereto lists each employment or severance contract or arrangement,
each plan or arrangement providing for insurance coverage, severance,
termination or similar coverage and all written compensation policies and
practices maintained by Fox Corp and the Subsidiaries covering any Employee or
former employee of any of Fox Corp or the Subsidiaries that is not an Employee
Benefit Plan (a "Benefit Arrangement"). Schedule 4.9 sets forth each Employee
-------------------
Benefit Plan which is a multiemployer plan,
26
<PAGE>
as defined in Section 3(37) of ERISA ("Multiemployer Plan").
------------------
(b) True, correct and complete copies of the following documents,
with respect to each of the Employee Benefit Plans (other than the Multiemployer
Plans), have been made available or delivered to Purchaser by Fox Corp and the
Subsidiaries: (i) any plans and related trust documents, and amendments thereto;
(ii) the most recent Form 5500; (iii) the last Internal Revenue Service
determination letter, if applicable; (iv) summary plan descriptions; and (v) the
last actuarial valuation if the plan is a "defined benefit plan," as defined in
Section 3(35) of ERISA.
(c) The Employee Benefit Plans intended to qualify under Section
401 of the Code and the trusts maintained pursuant thereto are exempt from
federal income taxation under Section 501 of the Code, and nothing has occurred
with respect to the operation of the Employee Benefit Plans which could cause
the loss of such qualification or exemption or the imposition of any liability,
penalty or tax under ERISA or the Code which would reasonably be likely to
result in a Material Adverse Effect on Fox Corp and the Subsidiaries, taken as
a whole.
(d) The Employee Benefit Plans have been maintained in accordance
with their terms and with all provisions of the Code and ERISA (including rules
and regulations thereunder) and other applicable federal and state laws and
regulations, except where the failure to so maintain them would not be
reasonably likely to result in a Material Adverse Effect on Fox Corp and the
Subsidiaries, taken as a whole.
Section 4.10 Labor.
-----
(a) Except as set forth on Schedule 4.10 hereto, none of Fox Corp
or the Subsidiaries is party to any labor or collective bargaining agreement and
there are no labor or collective bargaining agreements which pertain to
Employees. Fox Corp and the Subsidiaries have delivered or otherwise made
available to Purchaser true, correct and complete copies of each of the labor or
collective bargaining agreements listed on Schedule 4.10 hereto.
27
<PAGE>
(b) Except as set forth on Schedule 4.10 hereto, to the Knowledge
of Fox Corp and the Subsidiaries there is no organizing activity (including any
demand for recognition or certification proceeding pending with the National
Labor Relations Board) involving Employees by any labor organization or group of
Employees.
(c) Except as set forth on Schedule 4.10 hereto or Schedule 4.11
hereto, there are no (i) strikes, work stoppages or lockouts or (ii) grievances
or other labor disputes pending or, as of the date of this Agreement and to the
Knowledge of Fox Corp or any Subsidiary, threatened against or involving any of
which, individually or in the aggregate, would reasonably be likely to result
in a Material Adverse Change.
Section 4.11 Legal Proceedings.
-----------------
(a) There are no Legal Proceedings pending or, to the Knowledge of
Fox Corp and the Subsidiaries, threatened that question the validity of this
Agreement or any action taken or to be taken by any of Fox Corp or the
Subsidiaries in connection with the consummation of the transactions
contemplated hereby or thereby. Schedule 4.11 hereto sets forth a true and
correct list of all Legal Proceedings pending or, as of the date of this
Agreement and to the Knowledge of Fox Corp and the Subsidiaries, threatened
against or affecting any of Fox Corp or the Subsidiaries or the Business, at law
or in equity, which, with respect to such Legal Proceedings, if adversely
determined, commenced or threatened after the date of this Agreement and prior
to the Closing Date would reasonably result in a Material Adverse Effect on Fox
Corp and the Subsidiaries, taken as a whole.
(b) Schedule 4.11 hereto sets forth a true and correct list of all
material Legal Proceedings relating to the Business pending or, as of the date
of this Agreement to the Knowledge of Sellers, threatened in which any of Fox or
the Subsidiaries is or would be the defendant.
Section 4.12 Compliance with Law. The conduct of the Business is and
-------------------
has been in compliance with all Laws, except where the failure to so comply,
individually or in the aggregate, would not have a Material Adverse Effect on
Fox Corp and the Subsidiaries, taken as a
28
<PAGE>
whole. The Business has all Permits necessary for the conduct of the Business as
currently conducted, other than those the absence of which would not have a
Material Adverse Effect on Fox Corp and the Subsidiaries, taken as a whole. It
is expressly understood that nothing in this Section 4.12 is intended to address
any compliance issue that is specifically addressed by any other representation
or warranty set forth herein.
Section 4.13 Environmental Matters. Except as set forth on Schedule
---------------------
4.13 hereto, to the Knowledge of Fox Corp and the Subsidiaries, (a) the
operations of Fox Corp and the Subsidiaries are now and since March 31, 1994
have been in compliance with applicable Environmental Laws, except for such
noncompliance which would not reasonably be likely to result in a Material
Adverse Effect on Fox Corp and the Subsidiaries, taken as a whole; (b) none of
Fox Corp or the Subsidiaries is subject to any pending or threatened Legal
Proceeding alleging the violation of any Environmental Law, which such Legal
Proceeding would reasonably be likely to result in a Material Adverse Effect on
Fox Corp and the Subsidiaries, taken as a whole; (c) none of Fox Corp or the
Subsidiaries has received any written notice from any Governmental Body that it
is a potentially responsible party at any Superfund site; and (d) since March
31, 1994, none of Fox Corp or the Subsidiaries has disposed of or released any
Hazardous Materials in or at any other real property in any quantity which would
reasonably be likely to result in a Material Adverse Effect on Fox Corp and the
Subsidiaries, taken as a whole.
Section 4.14 Related Party Transactions. Except as set forth on
--------------------------
Schedule 4.14 hereto and for transactions entered into the ordinary course of
business on an arm's length basis, none of Fox Corp or the Subsidiaries is
engaged in any transactions with any other one of Fox Corp or the Subsidiaries
or any Affiliate of any other one of Fox Corp or the Subsidiaries. Except as set
forth on Schedule 4.14 hereto, no Affiliate of any one of Fox Corp or the
Subsidiaries holds any assets that are material to the conduct of the Business.
There are no non-trade intercompany receivables or payables between any
Affiliate of any one of Fox Corp or the Subsidiaries, on the one hand, and any
one of Fox Corp or the Subsidiaries, on the other hand, except as set forth on
Schedule 4.14 hereto or as reflected in the June 1996 Finan-
29
<PAGE>
cial Statements, July 1996 Financial Statements or the Petition Date Balance
Sheet.
Section 4.15 Insurance. All of the material properties of each of
---------
Fox Corp and the Subsidiaries constituting any part of the Business are insured
for the benefit of Fox Corp and the Subsidiaries, and will be so insured through
the Closing Date, in amounts and against risks customary in similar businesses
for similar properties. Schedule 4.15 hereto contains a complete list of all
such insurance maintained by Fox Corp and the Subsidiaries, and all such
insurance is in full force and effect. Except as set forth on Schedule 4.15
hereto, none of Fox Corp and the Subsidiaries has self-insured any material
risks of the sort that are normally covered by insurance with respect to any of
Fox Corp or the Subsidiaries.
Section 4.16 Real Property. Schedule 4.16 sets forth a list of all
-------------
real property owned in fee simple title by, or subject to an option to purchase
held by, the Fox Corp and the Subsidiaries (the "Properties"). The Properties
----------
are not subject to any Encumbrances, except for Permitted Encumbrances or as
otherwise described in the schedules hereto. Good and valid fee simple title to
the Properties is held by Fox Corp or one of the Subsidiaries as applicable,
free and clear of all Encumbrances except Permitted Encumbrances. Valid policies
of title insurance have been issued insuring the Fox Corp's or any of the
Subsidiaries' fee simple title to the Properties in the case of owned
properties) in amounts at least equal to the purchase price thereof, and such
policies are, at the date hereof, in full force and effect and no claim has been
made against any such policy.
Section 4.17 Accounts Receivable. All accounts receivable of Fox
-------------------
Corp and the Subsidiaries reflected in the Petition Date Balance Sheet represent
receivables actually created in the ordinary course of business.
Section 4.18 Employees; Officers. Schedule 4.18 hereto lists the
-------------------
name and address of each officer and employee of Fox Corp or a Subsidiary and
consultant not terminable at will to Fox Corp or the Subsidiaries as of the date
of this Agreement whose current annual salary
30
<PAGE>
or aggregate annual cash compensation from Fox Corp or a Subsidiary equals
$100,000 or more, together with the current job title or relationship to Fox
Corp or a Subsidiary and the aggregate annual cash compensation paid by Fox Corp
or a Subsidiary to each such person, including a description of applicable bonus
or benefit plans (other than those described in Section 4.9 hereof) applicable
to such persons.
Section 4.19 Compliance with WARN Act. Except to the extent set
------------------------
forth on Schedule 4.19 hereto, since the enactment of the Worker Adjustment and
Retraining Notification Act of 1988 (the "WARN Act"), none of Fox Corp or the
--------
Subsidiaries has effectuated (i) a "plant closing" (as such term is defined in
the WARN Act) affecting any site of employment or one or more facilities or
operating units within any site of employment or facility of any of Fox Corp or
the Subsidiaries or the Business or (ii) a "mass layoff" (as such term is
defined in the WARN Act) affecting any site of employment or facility of any of
Fox Corp or the Subsidiaries or the Business; nor has any of Fox Corp or the
Subsidiaries been affected by any transaction or engaged in layoffs or
employment terminations sufficient in number to render or make applicable any
similar state or local law. Except to the extent set forth on Schedule 4.19
hereto, no employee of any of Fox Corp or the Subsidiaries has suffered an
"employment loss" (as such term is defined in the WARN Act) since June 30, 1996.
Section 4.20 Taxes.
-----
(a) Except as set forth in Schedule 4.20 hereto:
(i) Each of Fox Corp and the Subsidiaries has (x) duly and
timely filed (or there has been filed on its behalf) with the appropriate
taxing authorities all Tax Returns required to be filed by it except for
those Tax Returns the failure of which to file would not have a Material
Adverse Effect on Fox Corp and the Subsidiaries, taken as a whole, and (y)
timely paid or there has been paid on its behalf all Taxes due or claimed
to be due from it by any taxing authority except for those Taxes the
failure of which to pay would not have a
31
<PAGE>
Material Adverse Effect on Fox Corp and the Subsidiaries, taken as a whole;
(ii) Fox Corp and the Subsidiaries have complied in all
material respects with all applicable laws, rules and regulations relating
to the payment and withholding of Taxes (including, without limitation,
withholding of Taxes pursuant to Sections 1441 and 1442 of the Code or
similar provisions under any foreign laws) and have, within the time and
manner prescribed by law, withheld and paid over to the proper governmental
authorities all amounts required to be withheld and paid over under all
applicable laws;
(iii) There are no liens for Taxes upon the assets or
properties of Fox Corp or the Subsidiaries except for statutory liens for
current Taxes not yet due;
(iv) No federal, state, local or foreign audits or other
administrative proceedings or court proceedings ("Audits") exist or have
------
been initiated with regard to any Taxes or Tax Returns of Fox Corp or any
of the Subsidiaries, and none of Fox Corp or any of the Subsidiaries has
received any notice that such an Audit is pending or threatened with
respect to any Taxes due from or with respect to Fox Corp or any of the
Subsidiaries or any Tax Return filed by or with respect to Fox Corp or any
of the Subsidiaries;
(v) All tax deficiencies which have been finally determined
against Fox Corp or the Subsidiaries have been fully paid or finally
settled.
(b) For purposes of this Agreement, (i) "Taxes" (including, with
-----
correlative meaning, the term "Tax") shall mean all taxes, charges, fees,
levies, penalties or other assessments imposed by any federal, state, local or
foreign taxing authority, including, but not limited to, income, gross receipts,
excise, property, sales, transfer, franchise, payroll, withholding, social
security and other taxes, and shall include any interest,
32
<PAGE>
penalties or additions attributable thereto and (ii) "Tax Return" shall mean any
----------
return, report, information return or other document (including any related or
supporting information) required to be prepared with respect to Taxes.
Section 4.21 Inventory. All inventory of Fox Corp and the
---------
Subsidiaries, reflected in the Petition Date Balance Sheet consists of a quality
and quantity usable and salable in the ordinary course of business, except for
items of obsolete materials and materials of below-standard quality, all of
which have been appropriately considered on the basis of lower of cost or market
standards under GAAP.
Section 4.22 Necessary Assets. By acquiring the Assets, as
----------------
contemplated by this Agreement, Purchaser will be acquiring all assets necessary
to conduct the Business as presently conducted.
Section 4.23 No Other Representations or Warranties. Except for the
--------------------------------------
representations and warranties contained in this Article IV, none of Fox Corp or
any of the Subsidiaries or any other Person makes any other express or implied
representation or warranty on behalf of any of Fox Corp or the Subsidiaries.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Sellers that:
Section 5.1 Organization and Good Standing. Purchaser is a
------------------------------
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware, and has all requisite corporate power and authority to
carry on its business as it is now being conducted. Purchaser is duly qualified
or authorized to do business as a foreign corporation and in good standing under
the laws of each jurisdiction in which the conduct of its business or the
ownership of its properties requires such qualification or authorization, except
where the failure to so qualify would not have a Material Adverse Effect on
Purchaser.
33
<PAGE>
Section 5.2 Authorization of Agreement; No Conflicts.
----------------------------------------
(a) Purchaser has full corporate power and authority to execute
and deliver this Agreement and each Related Agreement and to perform fully its
obligations hereunder and thereunder. The execution, delivery and performance
by Purchaser of this Agreement have been duly authorized by all necessary
corporate action on the part of Purchaser. This Agreement has been duly
executed and delivered by Purchaser and (assuming the due authorization,
execution and delivery by the other parties hereto and thereto) this Agreement
constitutes legal, valid and binding obligations of Purchaser, enforceable
against Purchaser in accordance with their respective terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting creditors' rights and remedies generally and subject, as to enforce
ability, to general principles of equity (regardless of whether enforcement is
sought in a proceeding at law or in equity).
(b) Except as set forth in Schedule 5.2(b) hereto, the execution,
delivery and performance by Purchaser of this Agreement and the consummation of
the transactions contemplated hereby and thereby, does not and will not (i)
violate any provision of the certificate of incorporation or by-laws of
Purchaser; (ii) subject to obtaining the consents referred to in Section 5.3,
conflict with, or result in the breach of, or constitute a default under, or
result in the termination, cancellation or acceleration of any right or
obligation of Purchaser under, any material lease, agreement, commitment or
other instrument to which Purchaser is a party or by which Purchaser or any of
its properties is bound; or (iii) assuming compliance with the matters set forth
in Section 5.3 and 4.3 hereof, violate, or result in a breach of or constitute a
default under, any Law applicable to Purchaser, other than in the cases of
clauses (ii) and (iii) any violation, conflict, breach, termination, default,
cancellation or acceleration, which, individually or in the aggregate, would not
materially impair or delay the ability of Purchaser to perform its obligations
hereunder.
Section 5.3 Consents. Except as otherwise set forth herein, no
--------
consent, waiver, approval or authoriza-
34
<PAGE>
tion of, or declaration or filing with, or notification to, any Governmental
Body or other Person is required on the part of or with respect to Purchaser in
connection with the execution, delivery and performance of this Agreement except
(a) for compliance with the applicable requirements of the HSR Act; (b) as set
forth on Schedule 5.3 hereto; and (c) where the failure to obtain such consent,
waiver, approval or authorization would not delay the ability of Purchaser to
effect the Closing.
Section 5.4 Legal Proceedings. There are no Legal Proceedings
-----------------
pending or, to the Knowledge of Purchaser, threatened that question the validity
of this Agreement or any action taken or to be taken by Purchaser in connection
with the consummation of the transactions contemplated hereby or thereby.
Section 5.5 Financing. On the Closing Date, Purchaser will have
---------
sufficient funds to effect the Closing and all other transactions contemplated
by this Agreement.
Section 5.6 Representations and Warranties of Fox Corp and the
--------------------------------------------------
Subsidiaries. Purchaser acknowledges that none of Fox Corp, the Subsidiaries,
- ------------
or Fox Health has made any representation or warranty as to the condition or
prospects, financial or otherwise, of the Business except as expressly set
forth herein. Purchaser has no Knowledge of any facts contrary to any
representation or warranty made by any of Fox Corp, the Subsidiaries or Fox
Health including without limitation any Knowledge that there has occurred an
event which would constitute a Material Adverse Change.
Section 5.7 Investment Company Act. Purchaser is not, nor is
----------------------
Purchaser directly nor indirectly controlled by any Person that is, an
investment company within the meaning of the Investment Company Act of 1940, as
amended (an "Investment Company"), and, immediately following the consummation
------------------
of the transactions contemplated by this Agreement, Purchaser will not be, nor
will Purchaser be directly or indirectly controlled by any Person that will be,
an Investment Company.
Section 5.8 No Other Representations or Warranties. Except for the
--------------------------------------
representations and warranties contained in this Article V, neither Purchaser
nor any
35
<PAGE>
other Person makes any other express or implied representation or warranty on
behalf of Purchaser.
ARTICLE VI
COVENANTS
Section 6.1 Access to Information; Confidentiality.
--------------------------------------
(a) Each of Fox Corp and the Subsidiaries agrees that, prior to
the Closing Date, Purchaser shall be entitled, through its authorized officers,
employees and representatives (including, without limitation, its legal counsel
and accountants) (collectively, "Purchaser Representatives"), to make such
-------------------------
reasonable investigation of the properties, businesses and operations of each of
Fox Corp and the Subsidiaries relating to the Business and such examination of
the books, records and financial condition of each of Fox Corp and the
Subsidiaries relating to the Business as it reasonably requests and, at
Purchaser's expense, to make extracts and copies to the extent necessary of such
books and records; provided, however, none of Fox Corp or the Subsidiaries shall
-------- -------
be obligated to provide Purchaser or any Purchaser Representative with any
information the provision of which may be prohibited by Law or contractual
obligation; provided, further, that in the event that the provision of any
-------- -------
information is prohibited by contractual obligation, Fox Corp or any one of the
Subsidiaries, as appropriate, shall use its Reasonable Best Efforts to obtain
the requisite consent by the other party or parties to the contract for the
provision of such information. Any such investigation and examination shall be
conducted during regular business hours, under reasonable circumstances and upon
reasonable prior notice to Fox Corp. No disclosure by any of Fox Corp or the
Subsidiaries whatsoever during any investigation by Purchaser shall constitute
an enlargement of or additional warranty or representation of any of Fox Corp or
the Subsidiaries beyond those expressly set forth in this Agreement, nor shall
such disclosure any breach of any warranty or representation of the Fox
Parties set forth in this Agreement.
(b) Information obtained by Purchaser or Purchaser
Representatives pursuant to this Agreement, or otherwise in connection with the
execution of this Agree-
36
<PAGE>
ment and the consummation of the transactions contemplated hereby, shall be
subject to the provisions of the confidentiality letter, dated August 31, 1995,
from Fox Health to Purchaser, as amended (the "Confidentiality Letter").
---------------------------
Section 6.2 Conduct of the Business Pending the Closing. Subject to
-------------------------------------------
any obligations as debtors in possession under the Bankruptcy Code and except as
otherwise expressly contemplated by this Agreement, as set forth on Schedule 6.2
hereto or with the prior written consent of Purchaser, which consent shall not
be unreasonably withheld, from the date hereof until the Closing Date, each of
Fox Corp and the Subsidiaries shall:
(a) not amend or make any other change in its charter or bylaws;
(b) not declare, set aside, make or pay any dividend or other
distribution (whether in cash, stock or property) in respect of the capital
stock of any Seller or repurchase, redeem or otherwise acquire any outstanding
shares of the capital stock or other securities of, or other ownership interests
in, any of Fox Corp or the Subsidiaries or effect any recapitalization, split or
like change in the capitalization of any of Fox Corp or the Subsidiaries;
(c) not transfer, issue, sell or dispose of any shares of
capital stock or other securities of any of Fox Corp or the Subsidiaries or
grant options, warrants, calls or other rights to purchase or otherwise acquire
shares of capital stock or other securities of any of Fox Corp or the
Subsidiaries;
(d) not consolidate with, or merge with or into, any Person;
(e) use Reasonable Best Efforts to (i) preserve the present
business operations, organization (including, without limitation, management and
the sales force) and goodwill of the Business and (ii) preserve the present
relationships with Persons having business dealings with any of Fox Corp or the
Subsidiaries;
(f) not, other than in the ordinary course of business and
without materially increasing the
37
<PAGE>
benefits or the costs thereof, (i) increase above normal and usual merit or
cost-of-living increases the compensation payable or to become payable by any
of Fox Corp or the Subsidiaries to any of its respective directors, officers or
employees; (ii) increase the coverage or benefits available under (or create any
new or otherwise amend) any severance pay, termination pay, vacation pay,
company awards, salary continuation for disability, sick leave, deferred
compensation, bonus or other incentive compensation, insurance, pension or other
employee benefit plan, payment or arrangement made to, for, or with any of the
directors, officers or employees of any of Fox Corp or the Subsidiaries; or
(iii) enter into any employment, deferred compensation, severance, consulting,
non-competition, employee retention plan or similar agreement (or amend any such
existing plan or agreement) to which any of Fox Corp or the Subsidiaries is a
party or involving a director, officer or employee of any of Fox Corp or the
Subsidiaries in his or her capacity as a director, officer or employee of any of
Fox Corp or the Subsidiaries with an aggregate value in excess of $100,000 per
annum or with a value in excess of $1,000,000 in the aggregate (other than
employment terminable at will without penalty);
(g) not subject any of the Assets to any Encumbrance (other than
Encumbrances set forth in Schedule 6.2(g) hereto or other than Permitted
Encumbrances);
(h) not acquire (except for (i) capital expenditure commitments
existing on the date of this Agreement and set forth on Schedule 6.2(h) hereto,
(ii) purchases of Inventory in the ordinary course of business consistent with
past practice and (iii) renewals of leases in effect on the date of this
Agreement) any assets and not sell, assign, transfer, convey, lease or otherwise
dispose of any of the Assets, whether or not reflected on the books of Fox Corp
or any Subsidiary and whether real, personal or mixed, tangible or intangible
(except for fair consideration in the ordinary course of business consistent
with past practice);
(i) not enter into any Contract or commitment or engage in any
transactions not in the ordinary course of business and consistent with past
practice, except for commitments for capital expenditures of any of Fox Corp or
the Subsidiaries not in excess of amounts set
38
<PAGE>
forth in the Fiscal 1997 Capital Plan of Fox Corp or the Subsidiaries, a copy of
which has been made available to Purchaser prior to the date hereof;
(j) not enter into, modify or terminate (other than by reason of
the expiration thereof) any labor or collective bargaining agreement or, through
negotiation or otherwise, make any commitment or incur any material liability to
any labor organization with respect to any Seller;
(k) not incur or become subject to, or agree to incur or become
subject to, any material Liability (contingent or otherwise), except (i) under
the Debt; (ii) normal trade or business obligations (including Contracts)
incurred in the ordinary course of business; and (iii) obligations under
Contracts in effect on the date hereof;
(l) not make any loans, advances or capital contributions to, or
investments in, any other Person (other than a Subsidiary), except in the
ordinary course of business and consistent with past practice);
(m) not acquire (by merger, consolidation or acquisition of
stock or assets) any corporation, partnership or other business organization or
division thereof;
(n) not engage in any transactions with any Affiliate (other
than transactions among Fox Corp and the Subsidiaries) or existing arrangements
between Fox Health and Fox Corp or any Subsidiary set forth in Schedule 6.2(n)
or Schedule 4.14;
(o) keep all of the Assets of insurable character insured to the
extent set forth on Schedule 6.2(o), except where such failure could not
reasonably be expected to have a Material Adverse Effect on Fox Corp and the
Subsidiaries, taken as a whole;
(p) not cancel or compromise any material claim, waive or
release any material rights or change or terminate any Material Contract of Fox
Corp or any Subsidiary, except in the ordinary course of business and
consistent with past practice;
39
<PAGE>
(q) maintain in full force and effect all Permits that are
required in connection with the conduct of the businesses of Fox Corp or any
Subsidiary, except in cases where the failure to maintain such Permits could not
reasonably be expected to have a Material Adverse Effect on Fox Corp and the
Subsidiaries, taken as a whole; or sell, transfer, license or otherwise dispose
of any material rights or interests under any such Permits, except in the
ordinary course of business and consistent with past practice;
(r) not change the accounting principles or methods of Fox Corp
or any Subsidiary, except as required by law or as a result of any mandatory
change in accounting standards;
(s) maintain the books and records of Fox Corp or any Subsidiary
in the usual, regular and ordinary manner;
(t) not make any Tax elections or settle or compromise any
income tax liability, except in the ordinary course of business and, if
applicable, consistent with past practice;
(u) not take any action that would cause any representation or
warranty of the Fox Parties contained in this Agreement to be untrue or
incorrect as of the date when made or (except in the case of representations
and warranties made as of a specific date) as of any future date;
(v) promptly notify Purchaser of (i) any Extraordinary Loss or
Extraordinary Losses (as defined in Opinion No. 30 of the Accounting Principles
Board of the American Institute of Certified Public Accountants and any
amendments thereto) suffered by any of Fox Corp or the Subsidiaries; (ii) any
physical inventory discrepancies in excess of $1,000,000; (iii) any casualty
losses or damages suffered by any of Fox Corp or the Subsidiaries with respect
to the assets of Fox Corp or the Subsidiaries which could cause a Material
Adverse Effect on Fox Corp and the Subsidiaries, taken as a whole, whether or
not such losses or damages are covered by insurance; (iv) any material Legal
Proceeding commenced by or against any of Fox Corp or the Subsidiaries; and (v)
any Legal Proceeding commenced or, to the Knowledge
40
<PAGE>
of any of Fox Corp or the Subsidiaries threatened against any of Fox Corp or the
Subsidiaries relating to the transactions contemplated by this Agreement;
(w) consult with Purchaser regarding all material developments,
transactions and proposals relating to the Business or any Subsidiary; and
(x) not agree to do anything prohibited by this Section 6.2.
Section 6.3 Reasonable Best Efforts; Transfer of Assets. The
-------------------------------------------
Sellers and Purchaser will cooperate and use their Reasonable Best Efforts to
fulfill the conditions precedent to the other party's obligations hereunder,
including, but not limited to, securing as promptly as practicable all
consents, approvals, waivers and authorizations required in connection with the
transactions contemplated hereby and necessary to assign to Purchaser all of
Sellers' interests in the Assets (other than Excluded Assets) or any claim,
right or benefit arising thereunder or resulting therefrom (each, an
Interest"). Sellers and Purchaser will file as promptly as practicable
- --------
documentary materials required by the HSR Act and promptly file as promptly as
practicable any additional information requested as soon as practicable after
receipt of request therefor.
Section 6.4 Public Announcements. None of Sellers, Purchaser or
--------------------
their respective Affiliates shall issue any press release or public announcement
concerning this Agreement or the transactions contemplated hereby without
obtaining the prior written approval of the other parties hereto, which approval
will not be unreasonably withheld or delayed, unless otherwise required by
applicable Law or by the applicable rules of the New York Stock Exchange, with
respect to Fox Health and Purchaser. Prior to making any public disclosure
required by the rules and regulations of the New York Stock Exchange or of the
Securities and Exchange Commission, the disclosing parties shall give the other
parties a copy of the proposed disclosure and reasonable opportunity to comment
on the same.
41
<PAGE>
Section 6.5 Alternative Transaction Provisions.
----------------------------------
(a) Upon receipt of an Acquisition Proposal, Sellers will
promptly notify Purchaser and indicate in such notice the identity of the
offeror and a complete and accurate description of the material terms thereof,
and thereafter keep the Purchaser informed on a current basis, of the status and
terms of such Acquisition Proposal. Upon the Board of Directors of Fox Corp or
Fox Drug determining in good faith that it prefers to endorse or accept an
Alternative Transaction, the Fox Parties shall deliver a written notice to
Purchaser (an "Alternative Transaction Notice") advising it of the foregoing
------------------------------
determination, which notice shall be accompanied by copies of the form of
definitive agreement, if any, or other documentation proposed to be entered into
in connection with such Acquisition Proposal. Upon delivery of an Alternative
Transaction Notice, Purchaser shall have the right (a "Topping Right") to
-------------
deliver to the Sellers, within five calendar days following the receipt by
Purchaser of such Alternative Transaction Notice, a written offer (a "Topping
-------
Offer") to amend the terms of this Agreement in order to provide for terms and
- -----
conditions which (including amount and value of consideration thereunder) are
reasonably determined by the Board of Directors of Fox Corp or Fox Drug to be,
when taken in their entirety, more favorable to Fox Corp or Fox Drug than the
Alternative Transaction. In the event that Purchaser exercises such Topping
Right, (i) the Sellers may disclose such Topping Offer to the Third Party and
(ii) within three calendar days following receipt by the Sellers of Purchaser's
notice of Topping Offer, Purchaser and the Fox Parties shall enter into an
amendment to this Agreement to reflect Sellers' acceptance of Purchaser's
Topping Offer (unless Sellers have received an additional Acquisition Proposal
constituting an Alternative Transaction, in which event Purchaser may exercise
its Topping Right). If within the time period specified Purchaser has failed to
make a Topping Offer or has notified the Sellers in writing that it does not
intend to make a Topping Offer, the Fox Parties shall deliver to Purchaser the
Termination Payment described in Section 11.4 and thereafter may enter into a
definitive agreement with the Third Party described in the Alternative
Transaction Notice or pursue a stand-alone plan. Any Acquisition Proposal must
comply with the Termination Payment Order,
42
<PAGE>
which shall provide, among other things, that any Acquisition Proposal must be
submitted not less than five days prior to the hearing to approve this Agreement
(the "363 Hearing"). Notwithstanding anything in this Section 6.5(a) to the
-----------
contrary, if any Acquisition Proposal is received within five days prior to the
363 Hearing, the Purchaser may exercise its Topping Right prior to (or, if
necessary during) the 363 Hearing. The bidding procedures shall be set forth
in, and the provisions of this section 6.5 shall be implemented by, the
Termination Payment Order.
(b) Following the execution of any amendment to this Agreement
pursuant to subsection (a) above, unless specifically amended in such
amendments, the provisions of this Section 6.5 shall remain in effect and the
receipt by the Sellers of any other offers, proposals or inquiries relating to
any Acquisition Proposal shall be subject to the provisions of this Section 6.5.
Section 6.6 Bankruptcy Actions.
------------------
(a) As promptly as practicable after the date hereof, Fox Corp
and the Debtor Subsidiaries will file with the Bankruptcy Court a motion,
supporting papers and a form of Order, in form reasonably acceptable to
Purchaser (the "Termination Payment Order"), seeking the Bankruptcy Court's
--------------------------
approval of the terms of Sections 6.5 and 11.4 of this Agreement and the Fox
Parties' and Purchaser's observance and performance of such terms during the
pendency of the Chapter 11 Cases.
(b) As promptly as practicable after the date hereof, Fox Corp
and the Debtor Subsidiaries will file with the Bankruptcy Court a motion,
supporting papers and a form of 363 Order and 365 Order, seeking the Bankruptcy
Court's approval of this Agreement, the Sellers' performance under this
Agreement and the assumption and assignment of the Contracts related to the
Business.
(c) As promptly as practicable Fox Corp and the Debtor
Subsidiaries will provide Purchaser with copies of all motions, applications,
and supporting papers prepared by Fox Corp or the Subsidiaries (including forms
of Orders and notices to interested parties) prior to the filing thereof in the
Chapter 11 Cases.
43
<PAGE>
Section 6.7 Ordinary Course Competition. Subject to the provisions
---------------------------
of the Confidentiality Letter, Sellers acknowledge that Purchaser in the
ordinary course of its business will continue to compete against Fox Corp and
the Subsidiaries for customers; provided, however, that any increase in the
-------- -------
average daily net sales volume of sales by Purchaser to customers of Fox Drug
following October 1, 1996 compared to the average daily net sales volume of such
sales by Purchaser in the one month prior to October 1, 1996 (including sales as
a secondary source) shall not be counted against Sellers when determining
whether a Material Adverse Change or a Material Adverse Effect on Fox Corp and
the Subsidiaries has occurred or exists, as the case may be.
Section 6.8 Use of Certain Proceeds. Sellers will use the
-----------------------
$30,000,000 of proceeds from the Purchaser Participation solely to acquire
"eligible inventory" as defined in the GECC Credit Agreement.
Section 6.9 Employment Agreements. Notwithstanding anything to the contrary
---------------------
contained in Sections 2.5 or 12.9 hereof, Purchaser shall not be required to
assume the obligations of any Seller under the existing employment agreements
with each of Edward Massman, William Estes, Douglas Schwinn and Kevin Rogan
unless such individual shall have entered into an amendment to their respective
employment agreement satisfactory to the Purchaser.
ARTICLE VII
CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATIONS
The obligation of Purchaser to consummate the purchase of the Assets
and the assumption of the Assumed Liabilities on the Closing Date is, at the
option of Purchaser, subject to the satisfaction of the following conditions
(any or all of which may be waived by Purchaser at or prior to the Closing):
Section 7.1 Representations, Warranties and Covenants.
-----------------------------------------
(a) All representations and warranties of each of Fox Corp and
the Subsidiaries to Purchaser contained herein shall be true and correct in all
material
44
<PAGE>
respects at and as of the Closing Date with the same effect as though those
representations and warranties had been made again at and as of the Closing
Date, except (i) to the extent that certain of such representations and
warranties have been made as of or through a specified date (which
representations and warranties shall continue on the Closing Date to have been
true and correct in all material respects as of or through the specified date);
and (ii) for changes in representations and warranties contemplated by this
Agreement; provided, however, that for the purposes of this Section 7.1 only,
-------- -------
such representations and warranties shall be deemed to be true and correct
unless the failure or failures of such representations and warranties to be so
true and correct (without regard to materiality qualifiers contained therein),
individually or in the aggregate, results or would reasonably be expected to
result in a Material Adverse Effect on Fox Corp and the Subsidiaries.
(b) Fox Corp and the Subsidiaries shall have performed and
complied, in all material respects, with all material obligations and covenants
required by this Agreement to be performed or complied with by Fox Corp and the
Subsidiaries on or prior to the Closing Date.
(c) Purchaser shall have been furnished a certificate (dated the
Closing Date and in form and substance reasonably satisfactory to Purchaser)
executed, on behalf of Sellers, by the Chief Executive Officer of Fox Corp and
the Subsidiaries certifying as to the fulfillment of the conditions set forth
in this Section 7.1.
Section 7.2 HSR Act. All required waiting periods in respect of
-------
this Agreement and the transactions contemplated y this Agreement under the HSR
Act shall have expired or been earlier terminated.
Section 7.3 Litigation. No action, suit or proceeding before any
----------
federal or state court or other Governmental Body shall have been instituted by
any Person or threatened by any Governmental Body which shall have the effect
of making illegal, impeding or otherwise restraining or prohibiting any of the
transactions contemplated by this Agreement and which in the reasonable judgment
of Purchaser could have a Material Adverse
45
<PAGE>
Effect on Purchaser, Sellers or the transactions contemplated by this
Agreement.
Section 7.4 Additional Matters. Purchaser shall have received
------------------
such additional documents, instruments or items of information reasonably
requested by it in respect of any aspect or consequence of the transactions
contemplated hereby. All corporate and other proceedings, and all documents,
instruments and other legal matters in connection with the transactions
contemplated by this Agreement or by the other agreements referred to herein
shall be reasonably satisfactory in form and substance to Purchaser and its
counsel.
Section 7.5 Material Adverse Change. There shall not have been a
-----------------------
Material Adverse Change since August 26, 1996.
Section 7.6 Bankruptcy Conditions.
---------------------
(a) The 363 Order and 365 Order shall have been entered by the
Bankruptcy Court. Any motion for rehearing or reconsideration of the 363 Order
or 365 Order shall have been denied or withdrawn. The time allowed for appeals
of the 363 Order or 365 Order shall have expired without any appeal having been
taken or, if the 363 Order or 365 Order shall have been appealed, no stay shall
be in effect.
(b) Nothing in this Section 7.6, or any other section of this
Agreement, shall preclude Sellers or Purchaser from consummating the
transactions contemplated herein if Purchaser, in its sole discretion, waives
the requirement that the 363 Order, 365 Order or any other order be final
orders. No notice of such waiver of this or any other condition to Closing need
be given except to Sellers or Purchaser, as explicitly required in this
Agreement, it being the intention of the parties hereto that Purchaser shall be
entitled to, and is not waiving, the protection of section 363(m) of the
Bankruptcy Code, the mootness doctrine and any similar statute or body of law if
the Closing occurs in the absence of final orders.
(c) The rejection of the Contracts (other than Contracts with
Employees) designated by Purchaser to Sellers within 15 days hereof shall have
been approved by
46
<PAGE>
the Bankruptcy Court pursuant to section 365 of the Bankruptcy Code and an order
approving such rejection in form and substance acceptable to Purchaser shall
have been entered. Any motion for rehearing or reconsideration of such order
shall have been denied or withdrawn. The time allowed for appeals of such order
shall have expired without any appeal having been taken or, if appealed, no stay
shall be in effect. It is hereby understood that the potential Liabilities
arising from any such rejection of any Contracts shall not be taken into account
when determining whether a Material Adverse Change or a Material Adverse Effect
on Fox Corp and the Subsidiaries has occurred or exists, as the case may be.
Section 7.7 Consents. All consents and approvals of Governmental Bodies
--------
necessary for consummation of the transactions contemplated hereby shall have
been obtained, other than those which, if not obtained, would not have a
Material Adverse Effect on Fox Corp and the Subsidiaries, taken as a whole.
Section 7.8 Vendor Assurances. Sellers shall have obtained Chargeback
-----------------
Settlement Agreements from vendors confirming that the aggregate amount of Post
Petition Chargebacks (including Chargebacks relating to inventory acquired by
Purchaser from Sellers pursuant to this Agreement) which are not Honored
Chargebacks or Chargeback Setoffs does not exceed $80,000,000 increased or
decreased as the case may be pursuant to Section 2.2(c) hereof, less the amount
of Chargeback Setoffs.
ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLERS
The obligations of Sellers to consummate the sale, transfer and
assignment to Purchaser of the Assets and the assignment of the Assumed
Liabilities on the Closing Date is, at the option of Sellers, subject to the
satisfaction of the following conditions (any or all of which may be waived by
Sellers at or prior to the Closing):
47
<PAGE>
Section 8.1 Representations, Warranties and Covenants.
-----------------------------------------
(a) All material representations and warranties of Purchaser to
Sellers contained herein shall be true and correct in all material respects at
and as of the Closing Date with the same effect as though those representations
and warranties had been made again and as of the Closing Date, except to the
extent that certain of such representations and warranties have been made as of
or through a specified date (which representations and warranties shall continue
on the Closing Date to have been true and correct in all material respects as of
or through the specified date).
(b) Purchaser shall have performed and complied, in all
material respects, with all obligations and covenants required by this Agreement
to be performed or complied with by Purchaser on or prior to the Closing Date.
(c) Sellers shall have been furnished a certificate (dated the
Closing Date and in form and substance reasonably satisfactory to Sellers)
executed, on behalf of Purchaser, by the Chief Executive Officer of Purchaser
certifying as to the fulfillment of the conditions set forth in this Section
9.1.
Section 8.2 HSR Act. All applicable waiting periods in respect of
-------
the transactions contemplated by this Agreement under the HSR Act shall have
expired or been earlier terminated.
Section 8.3 Litigation. No action, suit or proceeding before any
----------
federal or state court or other Governmental Body shall have been instituted by
any Person or threatened by any Governmental Body which shall have the effect
of making illegal, impeding or otherwise restraining or prohibiting any of the
transactions contemplated by this Agreement and which in the reasonable judgment
of Sellers could have a Material Adverse Effect on Sellers or the transactions
contemplated by this Agreement.
Section 8.4 Additional Matters. Sellers shall have received such
------------------
additional documents, instruments or items of information reasonably requested
by it in re-
48
<PAGE>
spect of any aspect or consequence of the transactions contemplated hereby. All
corporate and other proceedings, and all documents, instruments and other legal
matters in connection with the transactions contemplated by this Agreement or
by the other agreements referred to herein shall be reasonably satisfactory in
form and substance to Sellers and its counsel.
Section 8.5 Bankruptcy Condition. The 363 Order and 365 Order shall
--------------------
have been entered by the Bankruptcy Court. Any motion for rehearing or
reconsideration of the 363 Order or 365 Order shall have been denied or
withdrawn. The time allowed for appeals of the 363 Order or 365 Order shall have
expired without any appeal having been taken or, if the 363 Order or 365 Order
shall have been appealed, no stay of the 363 Order or 365 Order shall be in
effect.
Section 8.6 Inventory Accommodation.
-----------------------
(a) Fox Corp, the Debtor Subsidiaries and GECC shall have
entered into the Second Amendment to the GECC Credit Agreement (the "Second
------
Amendment") providing for, among other things, the funding to Fox Corp and the
- ---------
Debtor Subsidiaries of the Inventory Accommodation (as defined therein).
(b) Purchaser and GECC shall have entered into a participation
agreement in form and substance acceptable to the parties (the "Participation
-------------
Agreement") and pursuant to which GECC will sell, and Purchaser will purchase, a
- ---------
$30,000,000 participation in the GECC Credit Agreement subject to the terms and
conditions set forth therein.
(c) The Bankruptcy Court shall have entered an interim order
approving the Second Amendment and the Participation Agreement and authorizing
the Inventory Accommodation and no stay of such order shall be in effect.
Section 8.7 Consent of GECC. GECC shall have delivered to Fox Corp
---------------
and the Debtor Subsidiaries its written consent with respect to the transactions
contemplated by this Agreement, which consent is being delivered simultaneously
with the execution of this Agreement.
49
<PAGE>
Section 8.8 Satisfaction of GECC Obligations. As of the Closing or
--------------------------------
simultaneously with the Closing: (a) all Obligations (as defined in the GECC
Credit Agreement) shall have been satisfied in full by delivery to GECC of the
McKesson Note and (b) all of the Borrower Secured Obligations (as defined in the
GECC Receivables Funding and Servicing Agreement) shall have been satisfied by
payment in full to GECC in cash.
ARTICLE IX
DOCUMENTS TO BE DELIVERED AT THE CLOSING
Section 9.1 Deliveries by Sellers to Purchaser. At the Closing,
----------------------------------
Sellers shall deliver, or cause to be delivered, to Purchaser the following:
(a) such deeds, bills of sale, assignments, releases, consents
to assignments and other instruments of sale, conveyance, assignment, assumption
and transfer satisfactory in form and in substance to Sellers and Purchaser and
their respective counsel as may reasonably be required in order to convey to
Purchaser all of Sellers' rights, title and interests in and to the Assets and
to assign to Purchaser all of the Assumed Liabilities in the manner provided for
in this Agreement (collectively, the "Conveyance Agreements");
---------------------
(b) the certificate of Sellers referred to in Section 7.1(c)
hereof;
(c) a receipt for the Purchase Price paid to Sellers at the
Closing;
(d) the certificate of Sellers certifying that the 363 Order has
become a final, non-appealable Order;
(e) the FIRPTA Affidavits (as defined in Section 10.2 hereof);
and
(f) an executed copy of the Escrow Agreement.
Section 9.2 Deliveries by Purchaser to Sellers. At the Closing,
----------------------------------
Purchaser shall deliver, or cause to be delivered, to Sellers the following:
50
<PAGE>
(a) immediately available funds in the amount of the Purchase
Price by wire transfer, as provided in Section 2.2 hereof;
b) executed copies of the Conveyance Agreements to the extent
any such Agreements are required to be executed by Purchaser;
(c) the certificate of Purchaser referred to in Section 8.1
hereof; and
(d) an executed copy of the Escrow Agreement.
ARTICLE X
TAX MATTERS
Section 10.1 Cooperation For Certain Tax Related Matters. Purchaser,
-------------------------------------------
Fox Corp, the Subsidiaries, and Fox Health shall, and shall cause their
respective Affiliates to, provide any requesting party that is a party to this
Agreement with such assistance and documents, without charge, as may be
reasonably requested by such party in connection with (i) the preparation of any
Tax Return of or relating to Fox Corp or the Subsidiaries, (ii) the conduct of
any Audit relating to liability for or refunds or adjustments with respect to
Taxes, and (iii) any other Tax related matter that is a subject of this
Agreement. Such cooperation and assistance shall be provided to the requesting
party promptly upon its request.
Section 10.2 FIRPTA Affidavits. At the Closing, each of the Sellers
-----------------
shall provide an affidavit, in a form reasonably satisfactory to Purchaser,
stating under penalties of perjury such Seller's United States taxpayer
identification number and that such Seller is not a foreign person within the
meaning of Section 1445(b)(2) of the Code (the "FIRPTA Affidavit"), provided,
---------------- --------
however, that if any Seller fails to provide the FIRPTA Affidavit, the
- -------
transaction shall nonetheless close and Purchaser shall withhold and pay over to
the appropriate taxing authorities the amount required to be withheld under
Section 1445 of the Code as determined by Purchaser.
51
<PAGE>
Section 10.3 Transfer Taxes. Notwithstanding any other provision of
--------------
this Agreement to the contrary, Sellers and Purchaser shall be equally liable
for and shall each pay one-half of all transfer (including real property
transfer and documentary), sales, use, gains (including state and local transfer
gains taxes), excise and other transfer of similar Taxes incurred in connection
with the transfer of the Business or the Assets to Purchaser other than any
Taxes based upon or measured by net income (collectively, "Transfer Taxes").
--------------
Purchaser and Sellers shall mutually cooperate in perfecting any exemption from
Transfer Taxes available in connection with the transactions contemplated by
this Agreement and in timely preparing and filing any Tax Returns required in
connection with Transfer Taxes, provided, however, that in the case of any Tax
-------- -------
Return required to be filed by only one party, such party shall not file such
Tax-Return without the written consent of the other party, which consent shall
not unreasonably be withheld.
ARTICLE XI
CLOSING; TERMINATION
Section 11.1 Closing Date. The Closing shall take place at the
------------
offices of Weil, Gotshal & Manges LLP, 767 Fifth Avenue, New York, New York at
9:00 a.m. (New York City time) on the fifth Business Day after the conditions
set forth in Articles VII and VIII hereof have been satisfied or waived by the
party entitled to do so, or at such other place and at such other time and date
as may be mutually agreed upon by Purchaser and Sellers. The date on which the
Closing occurs is referred to in this Agreement as the "Closing Date."
Section 11.2 Proceedings at Closing. All proceedings to be taken and
----------------------
all documents to be executed and delivered by Fox Health, Fox Corp or the
Subsidiaries in connection with the consummation of the transactions
contemplated hereby shall be reasonably satisfactory in form and substance to
Purchaser and its counsel. All proceedings to be taken and all documents to be
executed and delivered by Purchaser in connection with the consummation of the
transactions contemplated hereby shall be reasonably satisfactory in form and
substance to Fox Health and Sellers and their respective counsel. All
proceedings to be taken and all documents to be executed
52
<PAGE>
and delivered by all parties at the Closing shall be deemed to have been taken,
executed and delivered simultaneously, and no proceedings shall be deemed taken
nor any documents executed or delivered until all have been taken, executed and
delivered.
Section 11.3 Termination. This Agreement may be terminated prior to
-----------
the Closing as follows:
(a) by the written agreement of Purchaser and Sellers;
(b) by either Purchaser or Sellers if there shall be in effect a
final nonappealable Order restraining, enjoining or otherwise prohibiting the
consummation of the transactions contemplated hereby;
(c) by either Purchaser or Sellers (provided that the
terminating party is not then in material breach of any representation,
warranty, covenant or other agreement contained herein) if there shall have been
a material breach of any of the representations or warranties set forth in this
Agreement on the part of the other party, which breach is not cured within
thirty (30) days following written notice to the party committing such breach or
which breach, by its nature, cannot be cured prior to the Closing, and which
breach, individually or together with all other such breaches, would have a
Material Adverse Effect on Fox Corp and the Subsidiaries, taken as a whole, in
the case of breaches by the Sellers, or a Material Adverse Effect on Purchaser's
ability to consummate the transactions contemplated hereby, in the case of
breaches by the Purchaser;
(d) by either Purchaser or the Sellers (provided that the
terminating party is not then in material breach of any representation,
warranty, covenant or other agreement contained herein) if there shall have been
a material breach of any of the covenants or agreements set forth in this
Agreement on the part of the other party, which breach shall not have been cured
within thirty (30) days following receipt by the breaching party of written
notice of such breach from the other party hereto;
(e) by either Purchaser or Sellers if either shall have
reasonably determined that one or more
53
<PAGE>
conditions set forth in Articles VII and VIII cannot be fulfilled or satisfied
within a reasonable period of time;
(f) by Purchaser or the Sellers, if five calendar days shall
have elapsed after the delivery by the Sellers of an Alternative Transaction
Notice to Purchaser and Purchaser has not delivered a Topping Offer to the
Sellers or if Purchaser has not delivered a Topping Offer prior to the 363
Hearing;
(g) by Purchaser, if the Bankruptcy Court has not entered the
Termination Payment Order within 10 days of the date hereof;
(h) by Purchaser, if the 363 Order has not been entered by
November 15, 1996;
(i) by Purchaser or Sellers, if the Closing Date shall not have
occurred on or prior to December 16, 1996, unless the failure of such occurrence
shall be due to the failure of Purchaser (if Purchaser is terminating) or
Sellers (if Sellers are terminating) to perform or observe their respective
agreements as set forth in this Agreement required to be performed or observed
by such party on or before the Closing Date; provided, however, that if
Purchaser exercises its option to terminate this Agreement pursuant to
subparagraphs (g) or (h) of this Section it must do so within 10 days of the
date specified for the event to have occurred and, if Purchaser agrees or
otherwise acquiesces to any extensions of a particular date, within 10 days of
such extended date.
Section 11.4 Termination Payment. In the event that this Agreement
-------------------
is terminated pursuant to Section 11.3(f), then Fox Corp and the Subsidiaries
shall pay to Purchaser promptly, but in no event more than two business days
following the date of the termination event, by wire transfer of immediately
available funds, to such account as Purchaser shall designate, the amount of
$6,500,000 (the "Termination Payment"). If within three months from the date of
-------------------
any termination of this Agreement pursuant to Section 11.3 hereof (other than as
a result of a material breach of Purchaser's obligations, representations or
warranties hereunder, and assuming Purchaser has not previously received the
Termination Payment), Fox Corp or any of the Subsidiaries endorse or
54
<PAGE>
accept an Alternative Transaction that is consummated within one year from the
date of termination of this Agreement, simultaneous with such consummation Fox
Corp and the Subsidiaries will pay to Purchaser the Termination Payment.
Section 11.5 Effect of Termination. If this Agreement is terminated
---------------------
in accordance with Section 11.3 hereof and the transactions contemplated hereby
are not consummated, this Agreement shall become null and void and of no further
force and effect, except (i) for this Section 11.5, (ii) for the provisions of
Sections 6.1(b), 11.4, 13.11 and 13.13 hereof and (iii) that the termination of
this Agreement for any cause shall not relieve any party hereto from any
liability which at the time of termination had already accrued to any other
party hereto or which thereafter may accrue in respect of any act or omission of
such party prior to such termination.
ARTICLE XII
ADDITIONAL POST-CLOSING COVENANTS
Section 12.1 Further Assurances. To the extent any of the approvals,
------------------
consents or waivers referred to in Section 4.3 have not been obtained by Sellers
as of the Closing, or in the case of any Contracts, which are not Excluded
Assets and are not assignable or transferable pursuant to section 365(c)(1) of
the Bankruptcy Code (such Contracts being the "Non-Assignable Assumed
----------------------
Contracts"), Sellers' only obligations with respect thereto shall be to do the
- ---------
following:
(a) use their respective Reasonable Best Efforts to cooperate
with Purchaser in any reasonable arrangements designed to provide the benefits
of such Interest (including, without limitation, the right to receive all
amounts owing to Sellers thereunder) to Purchaser as long as Purchaser fully
cooperates with Sellers in such arrangements and promptly reimburses Sellers for
all payments, charges or other liabilities made or suffered by Sellers in
connection therewith; and
(b) use their respective Reasonable Best Efforts to enforce, at
the request of Purchaser and at the expense and for the account of Purchaser,
any and all rights of Sellers arising from such interest against such
55
<PAGE>
issuer or grantor thereof or the other party or parties thereto (including the
right to elect to terminate such Interest in accordance with the terms thereof
upon the written advice of Purchaser).
Section 12.2 Joint Post-Closing Covenant of Sellers and Purchaser.
----------------------------------------------------
Fox Health, Fox Corp, the Subsidiaries and Purchaser jointly covenant and agree
that, from and after the Closing Date, Fox Health, Fox Corp, the Subsidiaries
and Purchaser will each use Reasonable Best Efforts to cooperate with each other
in connection with any action, suit, proceeding, investigation or audit of the
other relating to (a) the preparation and audit of any of Fox Health's, Fox
Corp's, or the Subsidiaries' or Purchaser's Tax Returns for all periods prior to
or including the Closing Date, and (b) any audit of Purchaser and/or any of Fox
Health, Fox Corp or the Subsidiaries with respect to the sales, transfer and
similar Taxes imposed by the Laws of any state or political subdivision thereof,
relating to the transactions contemplated by this Agreement. In furtherance
hereof, Purchaser, Fox Health, Fox Corp and the Subsidiaries further covenant
and agree to promptly respond to all reasonable inquiries related to such
matters and to provide, to the extent reasonably possible, substantiation of
transactions and to make available and furnish appropriate documents and
personnel in connection therewith.
Section 12.3 Books and Records; Personnel. For a period of seven (7)
----------------------------
years after the Closing Date (or such longer period as may be required by any
Governmental Body or ongoing Legal Proceeding):
(a) Purchaser shall not dispose of or destroy any of the
business records and files of the Business. If Purchaser wishes to dispose of or
destroy such records and files after that time, it shall first give 60 days'
prior written notice to Fox Health and Fox Corp and Fox Health or Fox Corp shall
have the right, at its option and expense, upon prior written notice to
Purchaser within such 60-day period, to take possession of the records and files
within 90 days after the date of Fox Health's or Fox Corp's notice.
(b) Purchaser shall allow Fox Health or Fox Corp and any of
their directors, officers, employees, counsel, representatives, accountants and
auditors (col-
56
<PAGE>
lectively, the "Fox Representatives") access to all business records and files
-------------------
of Sellers or the Business which are transferred to it in connection herewith,
which are reasonably required by such party in anticipation of, or preparation
for, any existing or future Legal Proceeding involving Fox Health, any Seller,
or any of their Affiliates (including any Legal Proceeding that is an Excluded
Asset) or Tax Return preparation, during regular business hours and upon
reasonable notice at Purchaser's principal place of business or at any location
where such records are stored, and Fox Health and Fox Corp shall have the right,
at its own expense, to make copies of any such records and files; provided,
--------
however, that any such access or copying shall be had or done in such a manner
- -------
so as not to interfere with the normal conduct of Purchaser's business or
operations.
(c) Purchaser shall make available to Fox Health, Fox Corp or
the Fox Representatives, upon written request and at Fox Health's or Fox Corp's
expense (i) personnel to assist Fox Health or Fox Corp in locating and obtaining
records and files maintained by Purchaser and (ii) any of the personnel
previously in Fox Corp's or in any Subsidiaries employ whose assistance or
participation is reasonably required by Fox Health or Fox Corp in anticipation
of, or preparation for, existing or future Legal Proceeding involving Fox
Health, any Seller or any Affiliate of Fox Health (including any Legal
Proceeding that is an Excluded Asset), Tax Return preparation or other matters
in which Fox Health, Fox Corp, the Subsidiaries or any of their Affiliates is
involved and which is related to the Business; provided, however, that any such
-------- -------
access to personnel shall be had in such a manner so as not to interfere with
the normal conduct of Purchaser's business or operations.
Section 12.4 Use of FoxMeyer Name. At Purchaser's request Fox Health
--------------------
will take reasonable steps to avoid confusing its continuing business with the
Business, including, but not limited to changing its corporate name.
57
<PAGE>
Section 12.5 Collective Bargaining and Other Agreements. Effective as
------------------------------------------
of the Closing, Purchaser shall assume and honor all of the rights and
obligations of Fox Corp and the Subsidiaries under all collective bargaining
agreements, employment agreements, consulting and change of control agreements
applicable to the Employees and the Retirees.
Section 12.6 Welfare Plans. Purchaser shall be responsible for all
-------------
claims made (regardless of when incurred) on or after the Closing Date whether
such claims are made before or after the Closing Date by any Employee, Retiree
or any of their beneficiaries under any Employee Benefit Plan that is an
"employee welfare bene fit plan" within the meaning of Section 3(1) of ERISA (a
"Welfare Plan").
------------
Section 12.7 Union Plans. Effective on the Closing Date, Purchaser
-----------
shall assume the sponsorship of each employee benefit plan and benefit
arrangement provided for under the collective bargaining agreements to the
Business.
Section 12.8 Credited Service for Vacations. From and after the
------------------------------
Closing, Purchaser shall credit to the Employees for previous service recognized
by Sellers for such Employees for purposes of vacation pay and Short Term
Disability Benefits.
Section 12.9 Termination Obligations. From and after the Closing
-----------------------
Date, Purchaser shall be liable for all payments that may be required to be made
under any termination, severance or similar plan, policy or arrangement of Fox
Corp or the Subsidiaries as a result of the transactions contemplated herein.
Section 12.10 Multiemployer Pension Plans. Purchaser shall assume
---------------------------
and be liable for any obligations or liabilities of Fox Corp and its
Subsidiaries with respect to the Multiemployer Plans. In addition, Purchaser
shall undertake a transaction covered by Section 4204 of ERISA with respect to
the Multiemployer Plans, and the following provisions shall apply to such
Multiemployer Plans:
(a) As of the Closing Date, Purchaser shall be obligated to
contribute to each
58
<PAGE>
Multiemployer Plan acquired hereunder for substantially the same number of
contribution base units for which Fox Corp or the Subsidiaries had an
obligation to contribute to such plans immediately prior to the Closing
with respect to such operations;
(b) Subject to paragraph (d) below, during the period commencing
on the first day of the first plan year following the Closing Date and
ending on the expiration of the fifth such Plan Year (the "Contribution
------------
Period"), Purchaser shall provide to each Multiemployer Plan either a bond,
------
letter of credit or an escrow, in an amount, form and manner meeting the
requirements of ERISA Section 4204. Notwithstanding anything contained in
this paragraph (b) to the contrary, Purchaser shall not be obligated to
provide any bond, letter of credit or an escrow provided herein in the
event and to the extent Purchaser obtains from the Pension Benefit Guaranty
Corporation ("PBGC"), or any other entity which is a successor to the
----
functions thereof, a proper variance or exemption under ERISA Section
4204(c). Fox Corp and its Subsidiaries agree to cooperate with Purchaser
in connection with any application for such variance or exemption made by
Purchaser to the PBGC. The cost of any bond, letter of credit or escrow
provided under this paragraph (b) shall be paid by Purchaser;
(c) If Purchaser withdraws from any Multiemployer Plan acquired
hereunder in a complete or partial withdrawal during the Contribution
Period, Fox Corp and the Subsidiaries shall be secondarily liable for any
withdrawal liability it would have had to such plan (but for Section 4204
of ERISA) if the liability of the Purchaser with respect to such plan is
not paid; and
(d) Purchaser shall not be required to provide a bond, letter of
credit, escrow or other security pursuant to (b) above or ERISA Section
4204 if no withdrawal liability (after giving effect to the de minimis
rules under ERISA Section 4209) would be assessed against Fox Corp or the
Subsidiaries with respect to any Multiemployer Plan as a result of the
transactions contemplated by this Agreement.
59
<PAGE>
Section 12.11 Third Party Rights. No provision of Sections 12.5
------------------
through 12.12 shall create any Third Party beneficiary rights in any Employee
or former Employee (including any beneficiary or dependent thereof) of Fox Corp
or the Subsidiaries or any of their Affiliates, in respect of continued
employment (or resumed employment) for any specified period of any nature or
kind whatsoever, and no provision of such Sections shall create such Third Party
beneficiary rights in any such persons in respect of any benefits that may be
provided, directly or indirectly, under any employee benefit plan or
arrangement except to the extent such obligations are specifically assumed.
Section 12.12 Employee Withholding. Fox Corp and the Subsidiaries
--------------------
agree that, pursuant to the "Alternative Procedure" provided in Section 5 of
---------------------
Revenue Procedure 84-77, 1984-2 C.B. 753, with respect to filing and furnishing
IRS Forms W-2, W-3 and 941, (a) Fox Corp and the Subsidiaries shall each report
on a "predecessor-successor" basis, as set forth therein, (b) Fox Corp and the
Subsidiaries shall be relieved from furnishing Forms W-2 to any of the Employees
who become employees of Purchaser of one of its Affiliates and (c) the Purchaser
or one of its Affiliates shall assume the obligations of Fox Corp or the
Subsidiaries to furnish such Forms W-2 to such employees for the full 1996
calendar year or such calendar year in which the Closing occurs.
Section 12.13 Indemnification. Purchaser shall indemnify Fox Corp
---------------
and the Subsidiaries from any Damages Fox Corp or the Subsidiaries may incur
(including reasonable attorneys' fees) with respect to any claims of Employees
and their beneficiaries (i) arising out of their employment with Purchaser, (ii)
under any Law relating to the termination of such Employee's employment arising
on or after the Closing Date and (iii) in connection with Liabilities assumed by
Purchaser under Sections 12.5 through 12.12.
60
<PAGE>
ARTICLE XIII
INDEMNIFICATION AND RELATED MATTERS
Section 13.1 Indemnification by Sellers and Fox Health.
-----------------------------------------
(a) Subject to the provisions of this Article XIII and if (but
only if) the Closing is consummated, Fox Health agrees to indemnify and hold
Purchaser and its officers, directors and Affiliates (collectively, the
"Purchaser Indemnified Parties") harmless from and against all Damages,
-----------------------------
including, without limitation, those arising from Third Party claims, resulting
from or arising out of:
(i) any claims by any Person purporting to have acted as a
broker, finder or financial advisor for Fox Health for any fees,
commissions or like payment based in any way on any agreement or
arrangement made by or on behalf of Fox Health except as set forth in
Section 13.11 hereof; and
(ii) the liabilities which arise out of the conduct of the
business of Fox Health or any Affiliate of Fox Health other than the
Sellers and other than with respect to the Business, including any claim
based upon, attributable to or resulting from the Merger Litigation or any
Shareholder Litigation.
(b) Subject to the provisions of this Article XIII and if (but
only if) the Closing is consummated, Sellers agree, jointly and severally, to
indemnify and hold the Purchaser Indemnified Parties harmless from and against
all Damages, including, without limitation, those arising from Third Party
claims, resulting from or arising out of:
(i) any claims by any Person purporting to have acted as a
broker, finder or financial advisor for Sellers for any fees, commissions
or like payment based in any way on any agreement or arrangement made by or
on behalf of Sellers; and
(ii) the Excluded Liabilities.
61
<PAGE>
Section 13.2 Indemnification by Purchaser. Subject to the
----------------------------
provisions of this Article XIII and if (but only if) the Closing is consummated,
Purchaser agrees to indemnify and hold Sellers and their respective officers,
directors and Affiliates (collectively, the "Sellers Indemnified Parties")
---------------------------
harmless from and against all Damages, including, without limitation, those
arising from Third Party claims, resulting from or arising out of:
(a) any claims by any Person purporting to have acted as a
broker, finder or financial advisor for Purchaser for any fees, commissions or
like payment based in any way on any arrangement or agreement made by or on
behalf of Purchaser; and
(b) the ownership of the Assets, the assumption of the Assumed
Liabilities or the operation of the Business on or after the Closing Date.
Section 13.3 Determination of Damages and Related Matters. In
--------------------------------------------
calculating any amounts payable pursuant to Sections 13.1 and 13.2 hereof, Fox
Health, Sellers or Purchaser, as the case may be, shall receive credit for (a)
any tax benefit allowable as a result of the facts giving rise to the claim for
indemnification, and (b) any insurance recoveries, and no amount shall be
included for Purchaser's, Fox Health's or Sellers', as the case may be, special,
consequential or punitive damages. Fox Health, Sellers and Purchaser agree that,
except as specifically set forth in this Agreement (including the Schedules and
Exhibits hereto), no party to this Agreement (including its respective
representatives) has made or shall have liability for any representation or
warranty, express or implied, in connection with the transactions contemplated
by this Agreement, including in the case of Fox Health, Sellers and their
respective representatives, any representation or warranty, express or implied
(written or oral), as to the accuracy or completeness of any information
regarding the Business.
Section 13.4 Survival of Representations, Warranties and Covenants.
-----------------------------------------------------
The parties hereto agree that the representations and warranties made in this
Agreement shall terminate immediately upon consummation of the Closing or upon
the termination of this Agreement pursuant to Section 11.3 hereof, as the case
may be.
62
<PAGE>
Section 13.5 Notice of Indemnification. In the event any Legal
-------------------------
Proceeding shall be threatened or instituted or any claim or demand shall be
asserted by any Purchaser Indemnified Party entitled to indemnification or
Sellers Indemnified Party entitled to indemnification in respect of which
payment may be sought under the provisions of this Article XIII or for breach of
any of the representations and warranties set forth herein, the Purchaser
Indemnified Party entitled to indemnification or Sellers Indemnified Party
entitled to indemnification seeking indemnification (the "Indemnitee") shall
----------
promptly cause written notice of the assertion of any such claim of which it has
knowledge which it reasonably believes to be covered by this indemnity to be
forwarded to Fox Health, Sellers or Purchaser, as the case may be (the
"Indemnitor"); provided, however, that the failure to give such notice shall not
---------- -------- -------
effect the indemnification provided hereunder except to the extent the
Indemnitor has actually been prejudiced as a result of such failure. Subject to
the foregoing, any notice of a claim by reason of any of the covenants contained
in this Agreement shall state specifically the covenant with respect to which
the claim is made, the facts giving rise to an alleged basis for the claim, and
the amount of the liability asserted against the Indemnitor by reason of the
claim.
Section 13.6 Indemnification Procedure for Third Party Claims.
------------------------------------------------
Except as otherwise provided herein, in the event of the initiation of any Legal
Proceeding against an Indemnitee by a Third Party, the Indemnitor shall have the
right after the receipt of notice, at its option and at its own expense, to be
represented by counsel (which counsel shall be reasonably satisfactory to the
Indemnitee) and to defend against, negotiate, settle or other wise deal with
any proceeding, claim, or demand which relates to any Damage indemnified against
hereunder; provided, however, (i) that the Indemnitor exercises such option in
-------- -------
writing within 30 days of receipt of notice; and (ii) that the Indemnitee may
participate in any such proceeding with counsel of its choice and at its
expense. The parties hereto agree to cooperate fully with each other in
connection with the defense, negotiation or settlement of any such legal
proceeding, claim or demand. To the extent the Indemnitor elects not to defend
such proceeding, claim or demand, and the Indemnitee defends against or
otherwise deals with any such proceeding, claim or demand, the Indemnitee may
63
<PAGE>
retain counsel (reasonably satisfactory to Indemnitor), at the expense of the
Indemnitor, the Indemnitor shall nevertheless indemnify the Indemnitee for the
full amount of the Damages relating to such proceeding, claim or demand and
control the defense of and settle such proceeding; provided that the Indemnitee
--------
shall give the Indemnitor twenty (20) days written notice prior to entering into
any such settlement and shall not settle any such claim without the consent of
the Indemnitor, which consent shall not be unreasonably withheld. If the
Indemnitee shall settle any such proceeding without the consent of the
Indemnitor, the Indemnitee shall thereafter have no claim against the Indemnitor
under this Article XIII with respect to any Damages occasioned by such
settlement.
Section 13.7 Exclusive Remedy. The exclusive remedy available to a
----------------
party hereto in respect of the matters covered by Section 13.1 or 13.2 hereof
shall be to proceed in the manner and subject to the limitations contained in
this Article XIII.
Section 13.8 Entire Agreement; Exhibits/Schedules.
------------------------------------
(a) This Agreement (including the Schedules and Exhibits hereto)
represents, and is intended to be, a complete statement of all of the terms and
the arrangements between the parties hereto with respect to the matters
provided for herein, supersedes any and all previous and contemporaneous
agreements, understandings, negotiations and discussions, whether oral or
written, between the parties hereto with respect to those matters; provided,
--------
however, that the Confidentiality Letter shall continue in full force and
- -------
effect, except as otherwise specifically provided in this Agreement, and except
that the provisions of Section 7 thereof shall not be deemed to interfere in any
way with Purchaser's Topping Right set forth in Section 6.5(a) hereof.
(b) The Exhibits and Schedules to this Agreement are hereby
incorporated and made a part hereof and are an integral part of this Agreement.
64
<PAGE>
Section 13.9 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY
-------------
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE WITHOUT
REFERENCE TO THE PRINCIPLES OF CONFLICTS OF LAWS.
Section 13.10 Specific Performance. Each of Purchaser, on the one
--------------------
hand, and the Fox Parties, on the other hand, acknowledge and agree that the
breach of this Agreement would cause irreparable damage to the other party and
that the other party will not have an adequate remedy at Law. Therefore, the
obligations of each of Purchaser and the Fox Parties under this Agreement shall
be enforceable by a decree of specific performance issued by any court of
competent jurisdiction, and appropriate injunctive relief may be applied for and
granted in connection therewith. Such remedies shall, however, be cumulative and
not exclusive and shall be in addition to any other remedies which any party may
have under this Agreement or otherwise.
Section 13.11 Expenses. Except as otherwise expressly provided in
--------
this Agreement and regardless of whether the transactions contemplated in this
Agreement are consummated, each of the parties hereto shall bear its own
expenses (including, without limitation, fees and disbursements of its counsel,
accountants, financial advisors and other experts), incurred by it in
connection with the preparation, negotiation, execution, delivery and
performance of this Agreement, each of the other documents and instruments
executed in connection with or contemplated by this Agreement and the
consummation of the transactions contemplated hereby and thereby, provided,
--------
however, that if the transactions contemplated by this Agreement are
- -------
consummated, promptly following the Closing Date the Purchaser shall reimburse
Fox Health for up to $1.6 million of documented expenses for its legal and
investment banking services incurred in connection with such transactions;
provided further, that, if the amount of such expenses reimbursed to Fox Health
- -------- -------
is less than $1.6 million, the difference between $1.6 million and such amount
actually reimbursed to Fox Health shall be added to the amount of administrative
costs that Purchaser is agreeing to pay pursuant to Section 2.2.
Section 13.12 Table of Contents and Headings. The table of contents
------------------------------
and article and section headings of this Agreement are for reference purposes
only and are to
65
<PAGE>
to be given no effect in the construction or interpretation of this Agreement.
Section 13.13 Notices. All notices and other communications under
-------
this Agreement shall be in writing and shall be deemed given (a) when delivered
personally, (b) on the fifth Business Day after being mailed by certified mail,
return receipt requested, (c) the next Business Day after delivery to a
recognized overnight courier, or (d) upon transmission and confirmation of
receipt by a facsimile operator if sent by facsimile (and shall also be
transmitted by facsimile to the Persons receiving copies thereof), to the
parties at the following addresses or facsimile numbers (or to such other
address or facsimile number as such party may have specified by notice given to
the other party pursuant to this provision):
If to Fox Corp or any Subsidiary, to:
FoxMeyer Corporation
1220 Senlac Drive
Carrollton, Texas 75006
Telephone: (972) 446-4800
Facsimile: (972) 446-4898
Attention: Mr. Robert A. Peiser
with a copy to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Telephone: (212) 310-8000
Facsimile: (212) 310-8007
Attention: Stephen E. Jacobs, Esq.
If to Fox Health, to:
FoxMeyer Health Corporation
1220 Senlac Drive
Carrollton, Texas 75006
Telephone: (972) 446-4800
Facsimile: (972) 446-4898
Attention: Mr. Abbey J. Butler
Mr. Melvyn J. Estrin
66
<PAGE>
with a copy to:
Cleary, Gottlieb, Steen & Hamilton
One Liberty Plaza
New York, New York 10006
Telephone: (212) 225-2000
Facsimile: (212) 225-3999
Attention: James E. Millstein, Esq.
If to Purchaser, to:
McKesson Corporation
McKesson Plaza
One Post Street
San Francisco, California 94104-5296
Telephone: (415) 983-8319
Facsimile: (415) 983-8826
Attention: Ivan D. Meyerson, Esq.
Vice President and General Counsel
with copies to:
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, New York 10022
Telephone: (212) 735-3000
Facsimile: (212) 735-2000
Attention: J. Gregory Milmoe, Esq.
Section 13.14 Severability. The invalidity or unenforce ability of
------------
any provision of this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement, each of which shall remain in full
force and effect, so long as the economic or legal substance of the transactions
contemplated hereby is not affected in a manner materially adverse to any party.
Section 13.15 Binding Effect; No Assignment. This Agreement shall be
-----------------------------
binding upon and inure to the benefit of the parties and their respective
successors and assigns. Nothing in this Agreement shall create or be deemed to
create any Third Party beneficiary rights in any Person not party to this
Agreement except to the extent such obligations are specifically assumed. No
assignment of this Agreement or of any rights or obligations hereunder may be
made by any party (by operation of
67
<PAGE>
Law or otherwise) without the prior written consent of each of the other parties
hereto and any attempted assignment without such required consents shall be
void; provided, however, that Purchaser may assign to one or more of its
-------- -------
Affiliates its rights under this Agreement without the prior written consent of
the Fox Parties; provided further, that no such assignment by Purchaser shall
-------- -------
release Purchaser from any of its obligations hereunder.
Section 13.16 Amendments. This Agreement can be amended,
----------
supplemented or modified, and any provision hereof may be waived, only by
written instrument making specific reference to this Agreement signed by each
of the parties hereto. Except as otherwise provided herein, no action (other
than a waiver), taken pursuant to this Agreement, including, without limitation,
any investigation by or on behalf of any party, shall be deemed to constitute a
waiver by the party taking such action of compliance with any representation,
warranty, covenant or agreement contained herein. The waiver by any party hereto
of a breach of any provision of this Agreement shall not operate or be construed
as a further or continuing waiver of such breach or as a waiver of any other or
subsequent breach. Except as otherwise expressly provided herein, no failure on
the part of any party to exercise, and no delay in exercising, any right, power
or remedy hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of such right, power or remedy by such party preclude any other
or further exercise thereof or the exercise of any other right, power or remedy.
All remedies hereunder are cumulative and are not exclusive of any other
remedies provided by Law.
Section 13.17 Counterparts. This Agreement may be executed in any
------------
number of counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
68
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this instrument
as of the date and year first above written.
PURCHASER:
MCKESSON CORPORATION
By:
-------------------------
Name:
Title:
Sellers:
FOXMEYER CORPORATION
By:
-------------------------
Name:
Title:
FOXMEYER DRUG COMPANY
By:
-------------------------
Name:
Title:
HEALTH MART, INC.
By:
-------------------------
Name:
Title:
FOXMEYER SOFTWARE, INC.
By:
-------------------------
Name:
Title:
69-A
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this instrument
as of the date and year first above written.
PURCHASER:
MCKESSON CORPORATION
By: _____________________________
Name:
Title:
Sellers:
FOXMEYER CORPORATION
By:
-----------------------------
Name:
Title:
FOXMEYER DRUG COMPANY
By:
-----------------------------
Name:
Title:
HEALTH MART, INC.
By:
-----------------------------
Name:
Title:
FOXMEYER SOFTWARE, INC.
By:
-----------------------------
Name:
Title:
69 - B
<PAGE>
FOXMEYER FUNDING, INC.
By:
-----------------------------
Name:
Title:
HEALTHCARE TRANSPORTATION
SYSTEM, INC.
By:
-----------------------------
Name:
Title:
MERCHANDISE COORDINATOR
SERVICES CORPORATION
By:
-----------------------------
Name:
Title:
FOXMEYER HEALTH CORPORATION
By:
-----------------------------
Name:
Title:
70
<PAGE>
EXHIBIT 2.2
FIRST AMENDMENT AND WAIVER TO THE ASSET PURCHASE AGREEMENT
----------------------------------------------------------
THIS FIRST AMENDMENT AND WAIVER ("First Amendment"), dated as of November
7, 1996, by and among FoxMeyer Health Corporation, a Delaware corporation,
FoxMeyer Corporation, a Delaware corporation, FoxMeyer Drug Company, a Delaware
corporation, Healthcare Transportation System, Inc., a Delaware corporation,
FoxMeyer Software, Inc., a Delaware corporation, FoxMeyer Funding, Inc., a
Delaware corporation, Health Mart, Inc., a Colorado corporation, Merchandise
Coordinator Services Corporation, a Delaware corporation d/b/a FoxMeyer Trading
Company, and McKesson Corporation, a Delaware corporation.
RECITALS
--------
A. The Fox Parties and Purchaser have entered into an Asset Purchase
Agreement dated as of October 3, 1996 (the "Agreement").
B. Capitalized terms used herein and not defined shall have the
respective meanings ascribed to such terms in the Agreement.
C. The Fox Parties and Purchaser have agreed to amend the Agreement and
to waive compliance with certain provisions thereof as set forth below.
NOW THEREFORE, in consideration of the premises and the mutual covenants
and agreements hereinafter set forth and for other good and valuable
consideration the receipt and adequacy of which is hereby acknowledged,
the Fox Parties and Purchaser hereby agree as follows:
1. Section 1.1 of the Agreement shall be amended to include the following
defined terms where such defined terms would appear in correct alphabetical
order:
"Accommodation Fee" means the accommodation fee that Purchaser has
-----------------
agreed to pay to GECC, pursuant to the Participation Agreement, dated as of
October 8, 1996, between GECC and Purchaser, if GECC agreed to accept the
McKesson Note in partial satisfaction of the outstanding Obligations under
and as defined in the GECC Credit Agreement upon the Closing.
<PAGE>
"Chase" means The Chase Manhattan Bank.
-----
"Chase Commitment" means the commitment dated October 25, 1996 of
----------------
Chase to purchase GECC's right to receive the McKesson Note and the
Accommodation Fee contemporaneously with the Closing.
"CGSFC" means California Golden State Finance Company, a California
-----
corporation and a wholly owned subsidiary of Purchaser.
"First Amendment" means that certain First Amendment and Waiver to
---------------
Asset Purchase Agreement dated as of November 7, 1996, by and among
McKesson and the Fox Parties.
"Inventory Accommodation" has the meaning ascribed to such term in the
-----------------------
Second Amendment to the GECC Credit Agreement dated as of October 8, 1996.
"MCPI" means McKesson Corporate Properties, Inc., a California
----
corporation and a wholly owned subsidiary of Purchaser.
"Post Closing Chargeback Receipts" means any cash received by or
--------------------------------
credit memoranda or notes issued to the Debtor Subsidiaries or Purchaser
after the Closing Date in respect of Post Petition Chargebacks other than
Transferred Chargebacks.
"Post Petition Chargebacks" means all Chargebacks arising from sales
-------------------------
of inventory by the Sellers from and after the Petition Date through the
Closing Date.
"trade vendor claim" means any claim against the Debtor Subsidiaries
------------------
held or otherwise possessed by a trade vendor, including any claim
described on Schedule A to this First Amendment, but excluding any claim
relating to a Contract assumed and assigned to Purchaser pursuant to the
365 Order.
"trade vendors" means, collectively, all providers of goods and
-------------
services to the Debtor Subsidiaries, or any other Person that holds or
otherwise possesses a trade vendor claim.
"Transferred Chargebacks" means all Chargebacks arising from the sales
-----------------------
of Inventory acquired by Purchaser hereunder.
-2-
<PAGE>
2. Section 1.1 of the Agreement shall be further amended by deleting in
its entirety (i) the defined term "EBTDA" and (ii) clause (b) of the definition
of "Material Adverse Change".
3. Section 1.1 of the Agreement shall be further amended by amending the
definition of "Chargebacks" therein by deleting the word "to" appearing in the
third line of such definition and replacing it with the word "of".
4. Clause (a) (iv) of Section 2.2 of the Agreement shall be deleted in
its entirety.
5. Paragraph (b) of Section 2.2 of the Agreement shall be deleted and
replaced in its entirety as follows:
(b) In addition to the payments provided for in Section 2.2(a)
hereof, at the Closing Purchaser shall pay to Sellers $20 million in cash.
The first $20 million of cash or cash proceeds realized from Post Closing
Chargeback Receipts and 50% of cash or cash proceeds realized from the Post
Closing Chargeback Receipts in excess of $20 million and less than $30
million shall be paid promptly upon receipt by the Debtor Subsidiaries to
Purchaser. The remaining 50% of cash or cash proceeds realized from the
Post Closing Chargeback Receipts in excess of $20 million and less than $30
million and any Post Closing Chargeback Receipts in excess of $30 million
shall be retained by the Debtor Subsidiaries. For purposes of this
paragraph, Post Closing Chargeback Receipts which are able to be assigned
to Purchaser and used by Purchaser for the purchase of inventory in the
normal course without discount or impairment, shall be treated as cash and
Purchaser shall purchase all such Post Closing Chargeback Receipts from
Seller for cash at the full face amount thereof (it being understood that
any such Post Closing Chargeback Receipts which are able to be used by
Purchaser at a discount shall be purchased at such discounted value). The
Debtor subsidiaries shall use their Reasonable Best Efforts to collect Post
Closing Chargeback Receipts.
6. Paragraph (c) of Section 2.2 of the Agreement shall be deleted in its
entirety.
7. Paragraph (d) of Section 2.2 of the Agreement shall be deleted in its
entirety.
8. Paragraph (n) of Section 2.3 of the Agreement shall be deleted and
replaced in its entirety as follows:
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(n) all Transferred Chargebacks; and.
9. Paragraph (b) of Section 2.4 of the Agreement shall be deleted and
replaced in its entirety as follows:.
(b) all Chargebacks other than Transferred Chargebacks;
10. Section 2.4 of the Agreement shall be further amended by adding new
clauses (f) and (g) thereto as follows:
(f) all of Sellers' rights, title and interests in the real property
located at 950 Grand, Beaumont, Texas; and
(g) the OTC supply agreement between Fox Drug and Giant Eagle Inc.
11. Item 1.A of the Schedule 2.4(b) to the Agreement shall be deleted in
its entirety.
12. Section 2.5 of the Agreement shall be deleted and replaced in its
entirety as follows:
Section 2.5 Assumed Liabilities. Subject to Section 2.6, effective as
-------------------
of the Closing, Purchaser shall assume and pay, perform and discharge all
debts, claims, liabilities, obligations, damages and expenses
(collectively, the "Liabilities") of Sellers of every kind and nature,
-----------
whether contingent, absolute, determined, indeterminable or otherwise, (i)
incurred in the ordinary course of business or with the approval of the
Bankruptcy Court since the Petition Date or (ii) listed on Schedule B to
----------
this First Amendment (collectively, the "Assumed Liabilities").
-------------------
Notwithstanding the foregoing, the Assumed Liabilities shall include (x)
all Liabilities with respect to the Contracts being transferred to
Purchaser hereunder (to the extent such Liabilities remain unsatisfied or
are required to be performed on or after the Closing Date), including,
without limitation, all cure amounts required to be paid under section
365(b) of the Bankruptcy Code for Contracts assumed and assigned to
Purchaser, (y) subject to Section 12.14, all Liabilities excluding trade
vendor claims of the Debtor Subsidiaries resulting from the rejection of
any Contracts (other than Contracts with Employees), except as such claims
may be limited or disallowed pursuant to section 502(b)(6) of the
Bankruptcy Code, in accordance with the 365 Order or Section 12.14, and (z)
except as otherwise specifically provided herein, all Liabilities with
respect to Employees and Retirees.
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13. A new Section 2.7 will be added to the Agreement as follows:
Section 2.7 Assignment of Certain Obligations of Purchaser. Subject
----------------------------------------------
to Purchaser's continuing obligations set forth in Section 13.15,
Purchaser's right to purchase the Receivables of Sellers under Section
2.3(d) is assigned to and such Receivables shall be purchased by and
conveyed to CGSFC and Purchaser's right to purchase (i) the Equipment under
Section 2.3(a) and (ii) all of Sellers' rights, title and interests in the
Owned Real Property and certain Leased Real Property, including all
buildings located thereon, under Section 2.3(e) is assigned to and such
Assets shall be purchased by and conveyed to MCPI.
14. Paragraph (c) of Section 7.6 is hereby waived by Purchaser and shall
be deleted and replaced in its entirety as follows:
(c) An Administrative Agreement as described in the Motion of Debtors
Pursuant to Bankruptcy Code Section 363 and Bankruptcy Rule 6004,
Conditioned on Approval of Sale to McKesson Corporation, for Order
Approving Terms of Transition Arrangement and Sublease of Real Property
Thereunder, dated October 30, 1996 (the "Transition Arrangement Motion"),
shall have been executed containing terms substantially similar to those
described in the Transition Arrangement Motion.
15. Section 7.8 of the Agreement shall be deleted in its entirety.
16. Section 8.7 of the Agreement shall be deleted and replaced in its
entirety as follows:
Section 8.7 Consent of GECC. GECC shall have delivered to Fox Corp
---------------
and the Debtor Subsidiaries, its written consent with respect to the
transactions contemplated by this Agreement, as amended by the First
Amendment, which consent is being delivered simultaneously with the
execution of the First Amendment. Each Fox Party acknowledges that GECC has
expressly reserved its right to withhold its consent to any Alternative
Transaction to the extent that the terms of such Alternative Transaction do
not provide for the satisfaction in full in cash of the Obligations
outstanding under the GECC Credit Agreement upon Closing.
17. Section 8.8 of the Agreement shall be deleted and replaced in its
entirety as follows:
Section 8.8 Satisfaction of GECC Obligations. As of the Closing or
--------------------------------
simultaneously with the Closing: (a) all Obligations (as
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<PAGE>
defined in the GECC Credit Agreement) shall have been satisfied in
full by GECC's receipt of good funds by wire transfer (i) from Chase
in the amount of all outstanding principal and accrued interest under
the GECC Credit Agreement as of the Closing (or in the alternative,
the delivery of the McKesson Note), (ii) from Purchaser in an amount
necessary to satisfy all other outstanding Obligations under the GECC
Credit Agreement as of the Closing, and (b) all Borrower Secured
Obligations (as defined in the GECC Receivables Funding and Servicing
Agreement) outstanding as of the Closing shall have been satisfied in
full by GECC's receipt of good funds by wire transfer from Purchaser.
18. Section 9.1(f) of the Agreement shall be deleted in its entirety.
19. Section 9.2(d) of the Agreement shall be deleted in its entirety.
20. A new Section 10.4 of the Agreement shall be added as follows:
10.4 Certain Tax Audits. In the event of the commencement of
------------------
any Audit of Fox Corp or the Subsidiaries or any successor thereto
that could potentially result in liability for Taxes for which
Purchaser could be held liable as purchaser, transferee or otherwise,
Fox Corp, the Subsidiaries, or any successor thereto, as the case may
be, shall promptly provide written notification to Purchaser and shall
allow Purchaser, at Purchaser's sole cost and expense, exclusively to
control all matters relating to such Audit; provided, however, that
-------- -------
Purchaser may not settle such Audit or any contest relating thereto
without the prior written consent of Fox Corp and the Subsidiaries,
which consent shall not be unreasonably withheld. Fox Corp, the
Subsidiaries, and any successor thereto, as the case may be, shall
take all action necessary to permit Purchaser to control such Audits,
including, without limitation, executing any powers of attorney or
other documents necessary, in Purchaser's sole judgment, to permit
Purchaser to control such Audits. Fox Corp, the Subsidiaries, or any
successor thereto, as applicable, shall be permitted to participate,
at such corporations's own expense, in any such Audits.
21. Section 12.1 of the Agreement shall be amended to add a new
paragraph at the end of such section as follows:
Except as otherwise set forth in this Section 12.1, from
time to time after the Closing Date, each of the Sellers shall, at the
reasonable request of Purchaser, execute and deliver such other and
further instruments of sale, assignment, transfer and conveyance as
Purchaser may reasonably request in order to vest in Purchaser title
to and
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<PAGE>
to put Purchaser in possession of the Assets and to take all other
actions and do all other things to the full extent contemplated by the
363 Order.
22. A new Section 12.14 shall be added to the Agreement as follows:
Section 12.14 Rejection of Contracts Designated by
------------------------------------
Purchaser. Following the Closing, Sellers shall, upon written
---------
notification by Purchaser, seek approval of the rejection of the
Contracts (other than Contracts with Employees) designated by
Purchaser to Sellers, by the Bankruptcy Court, pursuant to section 365
of the Bankruptcy Code. The Debtor Subsidiaries will use their
Reasonable Best Efforts to assist Purchaser, if so reasonably
requested, in the liquidation of claims before the Bankruptcy Court
arising from the rejection of any Contracts (other than Contracts with
Employees), as such claims may be limited or disallowed pursuant to
section 502(b)(6) of the Bankruptcy Code, which liquidated amount
shall be paid by Purchaser to the Debtor Subsidiaries. If requested by
the Purchaser, the Debtor Subsidiaries shall then pay such liquidated
rejection claim to the non-debtor party to the rejected Contract.
23. A new Section 12.15 shall be added to the Agreement as follows:
Section 12.15 License of Intellectual Property. From and
--------------------------------
after the Closing, Purchaser grants to the Debtor Subsidiaries a
royalty-free license to use the Intellectual Property set forth on
Schedule C to this First Amendment for a reasonable period of time to
----------
wind-down their remaining affairs after the Closing, including with
respect to obtaining Post Closing Chargeback Receipts, and to close
the Chapter 11 Cases.
24. A new section 12.16 will be added as follows:
Section 12.16 Assignment and Assumption of Contracts. At
--------------------------------------
Purchaser's reasonable request after the Closing Date, the Debtor
Subsidiaries will use their Reasonable Best Efforts to seek approval
of the assumption and assignment of any Contract that was not
previously assumed by the Debtor Subsidiaries and assigned to
Purchaser, provided that Purchaser will pay any cure amount due upon
such assignment. The Debtor Subsidiaries will also use their
Reasonable Best Efforts to assist Purchaser, if so reasonably
requested, in the liquidation of disputed Contract cure amounts before
the Bankruptcy Court.
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<PAGE>
25. Miscellaneous.
-------------
(a) Counterparts. This First Amendment may be executed in
------------
identical counterpart copies, each of which shall be an original, but all of
which shall constitute one and the same agreement.
(b) Headings. Section headings used herein are for convenience
--------
of reference only, are not part of this First Amendment, and are not to be taken
into consideration in interpreting this Amendment.
(c) Recitals. The recitals set forth at the beginning of this
--------
First Amendment are true and correct, and such recitals are incorporated into
and are a part of this First Amendment.
(d) Governing Law. This First Amendment shall be governed by,
-------------
and construed and enforced in accordance with, the laws of the State of Delaware
applicable to contracts made and performed in such state, without regard to the
principles thereof regarding conflict of laws.
(e) Conflict of Terms. Except as specifically provided herein,
-----------------
the Agreement shall remain in full force and effect. In the event of any
inconsistency between the provisions of this First Amendment and any provision
of the Agreement, the terms and provisions of this First Amendment shall govern
and control.
IN WITNESS WHEREOF, this Amendment has been duly executed as of the
date first written above.
"Purchaser"
MCKESSON CORPORATION
By:________________________________
Name:
Title:
"Sellers"
FOXMEYER CORPORATION
By:________________________________
Name:
Title:
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<PAGE>
FOXMEYER DRUG COMPANY
By:________________________________
Name:
Title:
HEALTH MART, INC.
By:________________________________
Name:
Title:
FOXMEYER SOFTWARE, INC.
By:________________________________
Name:
Title:
FOXMEYER FUNDING, INC.
By:________________________________
Name:
Title:
HEALTHCARE TRANSPORTATION
SYSTEM, INC.
By:________________________________
Name:
Title:
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<PAGE>
MERCHANDISE COORDINATOR
SERVICES CORPORATION
By:________________________________
Name:
Title:
FOXMEYER HEALTH CORPORATION
By:________________________________
Name:
Title:
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