1
Exhibit 2.01
AGREEMENT AND PLAN OF MERGER
AMONG
CARDINAL HEALTH, INC.
("Cardinal"),
FLOWER MERGER CORP.
a wholly owned direct subsidiary of Cardinal
("Subcorp"),
AUTOMATIC LIQUID PACKAGING, INC.
("ALP")
and the
STOCKHOLDERS OF ALP
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TABLE OF CONTENTS
ARTICLE I. THE MERGER............................................................................................2
SECTION 1.1 The Merger..................................................................................2
SECTION 1.2 Effective Time..............................................................................2
SECTION 1.3 Effects of the Merger.......................................................................2
SECTION 1.4 Articles of Incorporation and By-laws.......................................................2
SECTION 1.5 Directors and Officers......................................................................2
SECTION 1.6 Additional Actions..........................................................................2
ARTICLE II. CONVERSION OF SECURITIES.............................................................................3
SECTION 2.1 Conversion of Capital Stock.................................................................3
SECTION 2.2 Exchange Ratios; Fractional Shares..........................................................3
SECTION 2.3 Exchange of Certificates....................................................................4
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF RED AND SUBCORP...................................................7
SECTION 3.1 Organization and Standing...................................................................7
SECTION 3.2 Corporate Power and Authority...............................................................7
SECTION 3.3 Capitalization of Cardinal and Subcorp......................................................7
SECTION 3.4 Conflicts, Consents and Approval............................................................8
SECTION 3.5 Brokerage and Finder's Fees.................................................................9
SECTION 3.6 Cardinal SEC Documents......................................................................9
SECTION 3.7 Absence of Certain Events...................................................................9
SECTION 3.8 Accounting Matters..........................................................................9
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF ALP...............................................................10
SECTION 4.1 Organization and Standing..................................................................10
SECTION 4.2 Subsidiaries...............................................................................10
SECTION 4.3 Corporate Power and Authority..............................................................10
SECTION 4.4 Capitalization of ALP......................................................................10
SECTION 4.5 Conflicts; Consents and Approvals..........................................................11
SECTION 4.6 Absence of Certain Changes.................................................................12
SECTION 4.7 Officers, Employees and Compensation.......................................................13
SECTION 4.8 Financial Statements.......................................................................13
SECTION 4.9 Taxes......................................................................................14
SECTION 4.10 Compliance with Law; FDA Matters..........................................................16
SECTION 4.11 Intellectual Property.....................................................................17
SECTION 4.12 Title to and Condition of Properties......................................................19
SECTION 4.13 Environmental Matters.....................................................................20
SECTION 4.14 Litigation................................................................................21
SECTION 4.15 Brokerage and Finder's Fees...............................................................21
SECTION 4.16 Accounting Matters........................................................................21
SECTION 4.17 Employee Benefit Plans....................................................................22
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SECTION 4.18 Contracts.................................................................................24
SECTION 4.19 Accounts Receivable; Inventories..........................................................25
SECTION 4.20 Labor Matters.............................................................................25
SECTION 4.21 Undisclosed Liabilities...................................................................26
SECTION 4.22 Operation of ALP's Business; Relationships................................................26
SECTION 4.23 Product Warranties and Liabilities........................................................26
SECTION 4.24 Board Recommendation......................................................................27
SECTION 4.25 IBCA and State Takeover Laws..............................................................27
SECTION 4.26 Insurance.................................................................................27
SECTION 4.27 Books of Account; Records.................................................................27
SECTION 4.28 Investment Representation.................................................................27
SECTION 4.29 No Other Representations and Warranties...................................................28
ARTICLE V. COVENANTS OF THE PARTIES.............................................................................28
SECTION 5.1 Mutual Covenants...........................................................................28
SECTION 5.2 Covenants of Cardinal......................................................................29
SECTION 5.3 Covenants of ALP and the ALP Stockholders..................................................30
ARTICLE VI. CONDITIONS..........................................................................................35
SECTION 6.1 Mutual Conditions..........................................................................35
SECTION 6.2 Conditions to Obligations of ALP...........................................................36
SECTION 6.3 Conditions to Obligations of Cardinal and Subcorp..........................................36
ARTICLE VII. TERMINATION AND AMENDMENT..........................................................................39
SECTION 7.1 Termination................................................................................39
SECTION 7.2 Effect of Termination......................................................................39
SECTION 7.3 Amendment..................................................................................39
SECTION 7.4 Extension; Waiver..........................................................................40
ARTICLE VIII. INDEMNIFICATION...................................................................................40
SECTION 8.1 Survival of Representations, Warranties and Agreements.....................................40
SECTION 8.2 Indemnification............................................................................40
SECTION 8.3 Limitations on Indemnification.............................................................41
SECTION 8.4 Procedure for Indemnification with Respect to Third Party Claims...........................42
SECTION 8.5 Procedure For Indemnification with Respect to Non-Third Party Claims.......................43
SECTION 8.6 ALP Stockholders Representative............................................................44
SECTION 8.7 Valuation of Shares Released from Escrow...................................................44
SECTION 8.8 Termination of ALP's Warranties............................................................44
ARTICLE IX. MISCELLANEOUS.......................................................................................45
SECTION 9.1 Notices....................................................................................45
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SECTION 9.2 Interpretation.............................................................................45
SECTION 9.3 Counterparts...............................................................................46
SECTION 9.4 Entire Agreement...........................................................................46
SECTION 9.5 Third Party Beneficiaries..................................................................46
SECTION 9.6 Governing Law..............................................................................46
SECTION 9.7 Consent to Jurisdiction; Venue.............................................................46
SECTION 9.8 Specific Performance.......................................................................46
SECTION 9.9 Assignment.................................................................................47
SECTION 9.10 Expenses..................................................................................47
EXHIBITS
Exhibit A - Form of Escrow Agreement
Exhibit B - Form of Affiliate Letter
Exhibit C - Form of Consulting Agreement
Exhibit D - Form of Opinion of Xxxxx & Xxxxxxxxx LLP
Exhibit E - Form of Opinion of Xxxxxxxx & Xxxxxxx
Exhibit F - Form of Release
Exhibit G - Form of Agreement between ALP and
Xxxxxx Engineering, Inc.
Exhibit H-1 through H-5 - Forms of Other Ancillary Agreements
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AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this "Agreement") is made
and entered into as of August 4, 1999, by and among Cardinal Health, Inc., an
Ohio corporation ("Cardinal"), Flower Merger Corp., an Illinois corporation and
a wholly owned subsidiary of Cardinal ("Subcorp"), Automatic Liquid Packaging,
Inc., an Illinois corporation ("ALP"), and all of the Stockholders of ALP (the
"ALP Stockholders").
PRELIMINARY STATEMENTS:
A. Cardinal desires to acquire the liquid packaging business
and other businesses operated by ALP through the merger of Subcorp with and into
ALP, with ALP as the surviving corporation (the "Merger"), pursuant to which
each share of ALP Common Stock (as defined in Section 4.4) outstanding at the
Effective Time (as defined in Section 1.2) will be converted into the right to
receive Cardinal Common Shares (as defined in Section 3.3) as more fully
provided herein.
B. ALP desires to combine its packaging business and personal
care product businesses with the healthcare service businesses operated by
Cardinal and for the ALP Stockholders to have a continuing equity interest in
the combined businesses.
C. The ALP Stockholders own all of the outstanding capital
stock of ALP, and Cardinal is unwilling to enter into this Agreement without the
agreements of the ALP Stockholders set forth herein.
D. The parties intend that the Merger constitute a tax-free
"reorganization" within the meaning of Section 368(a)(1)(A) of the Internal
Revenue Code of 1986, as amended (the "Code"), by reason of Section 368(a)(2)(E)
thereof.
E. The parties intend that the Merger be accounted for as a
pooling-of-interests for financial reporting purposes.
F. The respective Boards of Directors of Cardinal, Subcorp and
ALP have determined the Merger, in the manner contemplated herein, to be
desirable and in the best interests of their respective shareholders and, by
resolutions duly adopted, have approved and adopted this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of these premises and the
mutual and dependent promises hereinafter set forth, the parties hereto,
intending to be legally bound, agree as follows:
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ARTICLE I. THE MERGER
SECTION 1.1 THE MERGER. Upon the terms and subject to the conditions
hereof and in accordance with the provisions of the Illinois Business
Corporation Act of 1983, as amended (the "IBCA"), Subcorp shall be merged with
and into ALP at the Effective Time (as defined in Section 1.2). As a result of
the Merger, the separate corporate existence of Subcorp shall cease and ALP
shall continue its existence under the laws of the State of Illinois. ALP, in
its capacity as the corporation surviving the Merger, is hereinafter sometimes
referred to as the "Surviving Corporation."
SECTION 1.2 EFFECTIVE TIME. The Merger shall be consummated by filing
with the Secretary of State of the State of Illinois (the "Illinois Secretary of
State") articles of merger (the "Certificate of Merger") in such form as is
required by and executed in accordance with the IBCA. The Merger shall become
effective (the "Effective Time") when the Certificate of Merger has been filed
with the Illinois Secretary of State or at such later time as shall be specified
in the Certificate of Merger. Prior to the filing referred to in this Section
1.2, a closing (the "Closing") shall be held at the offices of Cardinal, 0000
Xxxxxxxx Xxxxx, Xxxxxx, Xxxx 00000, or such other place as the parties may agree
on a date (the "Closing Date") specified by Cardinal, which date shall be within
ten business days following the date upon which all conditions set forth in
Article VI hereof have been satisfied or waived.
SECTION 1.3 EFFECTS OF THE MERGER. The Merger shall have the effects
set forth in Section 5/11.50 of the IBCA.
SECTION 1.4 ARTICLES OF INCORPORATION AND BY-LAWS. The Certificate of
Merger shall provide that at the Effective Time (i) the Articles of
Incorporation of the Surviving Corporation as in effect immediately prior to the
Effective Time shall be amended as of the Effective Time so as to contain the
provisions, and only the provisions, contained immediately prior thereto in the
Articles of Incorporation of Subcorp, except for Article FIRST thereof which
shall continue to read "The name of the corporation is Automatic Liquid
Packaging, Inc." and (ii) the By-laws of Subcorp in effect immediately prior to
the Effective Time shall be the By-laws of the Surviving Corporation; in each
case until amended in accordance with applicable law.
SECTION 1.5 DIRECTORS AND OFFICERS. From and after the Effective Time,
the officers of ALP shall be the officers of the Surviving Corporation and the
directors of Subcorp shall be the directors of the Surviving Corporation, in
each case until their respective successors are duly elected and qualified. On
the Closing Date, ALP shall deliver to Cardinal evidence satisfactory to
Cardinal of the resignations of the directors of ALP, such resignations to be
effective as of the Effective Time.
SECTION 1.6 ADDITIONAL ACTIONS. If, at any time after the Effective
Time, the Surviving Corporation shall consider or be advised that any further
deeds, assignments or assurances in law or any other acts are reasonably
necessary or desirable to (a) vest, perfect or confirm, of record or otherwise,
in the Surviving Corporation its right, title or interest in, to or under any of
the rights, properties or assets of ALP, or (b) otherwise carry out the
provisions of this Agreement, ALP shall execute and deliver all such deeds,
assignments or assurances in law
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and to take all acts necessary, proper or desirable to vest, perfect or confirm
title to and possession of such rights, properties or assets in the Surviving
Corporation and otherwise to carry out the provisions of this Agreement, and the
officers and directors of the Surviving Corporation are authorized in the name
of ALP or otherwise to take any and all such action.
ARTICLE II. CONVERSION OF SECURITIES
SECTION 2.1 CONVERSION OF CAPITAL STOCK. At the Effective Time, by
virtue of the Merger and without any action on the part of Cardinal, Subcorp or
ALP:
(a) Each share of common stock, $.01 par value, of Subcorp issued and
outstanding immediately prior to the Effective Time shall be converted into one
share of common stock, $0.01 par value, of the Surviving Corporation. Such newly
issued shares shall thereafter constitute all of the issued and outstanding
capital stock of the Surviving Corporation.
(b) Each share of ALP Common Stock issued and outstanding immediately prior
to the Effective Time shall be converted into and represent a number of Cardinal
Common Shares equal to the Exchange Ratio (as defined in Section 2.2).
(c) Each share of capital stock of ALP held in the treasury of ALP shall be
cancelled and retired and no payment shall be made in respect thereof.
(d) Notwithstanding anything in this Section 2.1 to the contrary, Cardinal
shall retain a number of Cardinal Common Shares otherwise issuable to the ALP
Stockholders in the Merger, from such ALP Stockholders on a proportionate basis
(based on the respective numbers of Cardinal Common Shares into which their ALP
Common Stock will be convertible upon the Effective Time), equal to 10% of the
aggregate number of Cardinal Common Shares which would be issuable to the ALP
Stockholders on the Closing Date if Cardinal Common Shares were not to be issued
into escrow pursuant to this Section 2.1(d) (the "Retained Shares"), by
withholding the Retained Shares from the Cardinal Common Shares issuable in the
Merger and depositing such Retained Shares in escrow pursuant to an escrow
agreement in substantially the form attached hereto as Exhibit A (the "Escrow
Agreement"). The escrow created by the Escrow Agreement shall be for the purpose
of providing for the payment of certain indemnification obligations pursuant to
Article VIII hereof, all in accordance with the terms and conditions contained
herein and in the Escrow Agreement.
SECTION 2.2 EXCHANGE RATIOS; FRACTIONAL SHARES.
(a) The "Exchange Ratio" (rounded to the nearest ten-thousandth of a share)
shall be equal to the quotient obtained by dividing (i) the quotient obtained by
dividing (A) the Aggregate Consideration (as defined below) by (B) the Average
Share Price (as defined below) by (ii) the number of shares of ALP Common Stock
issued and outstanding immediately prior to the Effective Time; provided,
however, that if the Average Share Price is less than $67.00, then the Average
Share Price shall be deemed to be equal to $67.00, and if the Average Share
Price is greater than $79.00, then the Average Share Price shall be deemed to be
equal to $79.00.
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For purposes of this Section 2.2(a), (x) "Average Share Price"
shall mean the average of the closing prices of Cardinal Common Shares as
reported on the New York Stock Exchange ("NYSE") Composite Tape on each of the
last ten (10) trading days ending on the third business day preceding the
Closing Date, and (y) "Aggregate Consideration" shall mean the sum of (I) $375
million and (II) the amount of cash and marketable securities in excess of $5
million on the balance sheet of ALP included in the July 31, 1999 Interim
Statements (net of unrealized gains or losses incurred as a result of the
liquidation of any security prior to the Closing or existing as of the Closing)
minus (III) the following amounts to be paid at or in connection with the
Closing: (1) the amount or amounts to be paid pursuant to the Xxxxxx Agreement
(as defined in Section 6.3(q)); (2) all bonuses, severance payments, transaction
fees and other compensation payable pursuant to Section 5.3(b)(vii) of the ALP
Disclosure Schedule; (3) any amounts paid or payable to Xxxxxx Engineering, Inc.
in connection with the settlement of deposit accounts; (4) any amounts paid by
ALP for any so-called "tail coverage" for its product liability insurance; and
(5) any other expenditures of cash between July 31, 1999 and the Closing that
are outside the usual and ordinary course of business; provided, however, that
if the Closing Date is after September 30, 1999, the date of the balance sheet
referred to in clause (II) and the date in clause (III)(5) shall be a date that
is the last day of the month that is two months prior to the month in which the
Closing Date occurs.
(b) No certificates for fractional Cardinal Common Shares shall be issued
as a result of the conversion provided for in Section 2.1. To the extent that an
outstanding share of ALP Common Stock would otherwise have become a fractional
Cardinal Common Share, the holder thereof, upon presentation of such fractional
interest represented by an appropriate certificate for ALP Common Stock to the
Exchange Agent pursuant to Section 2.3, shall be entitled to receive a cash
payment therefor in an amount equal to the value (determined with reference to
the closing price of Cardinal Common Shares as reported on the NYSE Composite
Tape on the last full trading day immediately prior to the Effective Time) of
such fractional interest. Such payment with respect to fractional shares is
merely intended to provide a mechanical rounding off of, and is not a separately
bargained for, consideration. If more than one certificate representing shares
of ALP Common Stock shall be surrendered for the account of the same holder, the
number of Cardinal Common Shares for which certificates have been surrendered
shall be computed on the basis of the aggregate number of shares represented by
the certificates so surrendered. In the event that prior to the Effective Time,
Cardinal shall declare a stock dividend or other distribution payable in
Cardinal Common Shares or securities convertible into Cardinal Common Shares, or
effect a stock split, reclassification, combination or other change with respect
to Cardinal Common Shares, the exchange ratios set forth in this Section 2.2
shall be adjusted to reflect such dividend, distribution, stock split,
reclassification, combination or other change.
SECTION 2.3 EXCHANGE OF CERTIFICATES.
(a) EXCHANGE AGENT. Promptly following the Effective Time, Cardinal shall
deposit with First Chicago Trust Company, a division of EquiServe, Limited
Partnership or such other exchange agent as may be designated by Cardinal (the
"Exchange Agent"), for the benefit of the ALP Stockholders, for exchange in
accordance with this Section 2.3, certificates representing Cardinal Common
Shares issuable pursuant to Section 2.1 in exchange for outstanding shares of
ALP Common Stock (other than Retained Shares) and shall from time to time
deposit cash in an amount reasonably expected to be paid pursuant to Section 2.2
(such Cardinal Common Shares
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and cash, together with any dividends or distributions with respect thereto,
being hereinafter referred to as the "Exchange Fund").
(b) EXCHANGE PROCEDURES. As soon as practicable after the Effective Time,
the Exchange Agent shall mail to each holder of record of a certificate or
certificates (the "Certificates") which immediately prior to the Effective Time
represented outstanding shares of ALP Common Stock whose shares were converted
into the right to receive Cardinal Common Shares pursuant to Section 2.1 a
letter of transmittal (which shall specify that delivery shall be effected, and
risk of loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent and shall be in such form and have such other
provisions as Cardinal may reasonably specify and (ii) instructions for
effecting the surrender of the Certificates in exchange for certificates
representing Cardinal Common Shares. Upon surrender of a Certificate for
cancellation to the Exchange Agent, together with a duly executed letter of
transmittal, the holder of such Certificate shall be entitled to receive in
exchange therefor (x) a certificate representing that number of Cardinal Common
Shares which such holder has the right to receive pursuant to Section 2.1 and
(y) a check representing the amount of cash in lieu of fractional shares, if
any, and unpaid dividends and distributions with respect to such Cardinal Common
Shares, if any, which such holder has the right to receive pursuant to the
provisions of this Article II, after giving effect to any required withholding
tax, and the shares represented by the Certificate so surrendered shall
forthwith be cancelled. Cardinal will use its reasonable efforts to cause the
Exchange Agent to send such certificate and check within three business days of
its receipt of a Certificate and a duly executed letter of transmittal. No
interest will be paid or accrued on the cash in lieu of fractional shares, if
any, and unpaid dividends and distributions with respect to such Cardinal Common
Shares, if any, payable to holders of shares of ALP Common Stock. In the event
of a transfer of ownership of shares of ALP Common Stock which is not registered
on the transfer records of ALP, a certificate representing the proper number of
Cardinal Common Shares, together with a check for the cash to be paid in lieu of
fractional shares, if any, and unpaid dividends and distributions with respect
to such Cardinal Common Shares, if any, may be issued to such transferee if the
Certificate representing such shares of ALP Common Stock held by such transferee
is presented to the Exchange Agent, accompanied by all documents required to
evidence and effect such transfer and to evidence that any applicable stock
transfer taxes have been paid. Until surrendered as contemplated by this Section
2.3, each Certificate shall be deemed at any time after the Effective Time to
represent only the right to receive upon surrender a certificate representing
Cardinal Common Shares and cash in lieu of fractional shares, if any, and unpaid
dividends and distributions with respect to such Cardinal Common Shares, if any,
as provided in this Article II. Notwithstanding the foregoing, Cardinal shall
make available at the Closing certificates for Cardinal Common Shares to be
issued in the Merger to any ALP Stockholder who delivers to Cardinal
certificates representing ALP Common Stock and a duly executed letter of
transmittal at least three business days before the Closing Date.
(c) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. Notwithstanding any
other provisions of this Agreement, no dividends or other distributions declared
or made after the Effective Time with respect to Cardinal Common Shares having a
record date after the Effective Time shall be paid to the holder of any
unsurrendered Certificate, and no cash payment in lieu of fractional shares
shall be paid to any such holder, until the holder shall surrender such
Certificate as provided in this Section 2.3. Until such Certificate has been
surrendered as provided in this
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Section 2.3, Cardinal shall deposit the amount of any dividends or other
distributions with the Exchange Agent. Subject to the effect of Applicable Laws
(as defined in Section 4.10), following surrender of any such Certificate, the
Exchange Agent shall pay to the holder of the certificates representing whole
Cardinal Common Shares issued in exchange therefor, without interest, (i) at the
time of such surrender, the amount of dividends or other distributions with a
record date after the Effective Time theretofore payable with respect to such
whole Cardinal Common Shares and not paid, less the amount of any withholding
taxes which may be required thereon, and (ii) at the appropriate payment date
subsequent to surrender, the amount of dividends or other distributions with a
record date after the Effective Time but prior to surrender and a payment date
subsequent to surrender payable with respect to such whole Cardinal Common
Shares, less the amount of any withholding taxes which may be required thereon.
(d) NO FURTHER OWNERSHIP RIGHTS IN ALP COMMON STOCK. All Cardinal Common
Shares issued upon surrender of Certificates in accordance with the terms hereof
(including any cash paid pursuant to this Article II) shall be deemed to have
been issued in full satisfaction of all rights pertaining to such shares of ALP
Common Stock represented thereby, and there shall be no further registration of
transfers on the stock transfer books of ALP of shares of ALP Common Stock
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Certificates are presented to the Surviving Corporation for any reason,
they shall be cancelled and exchanged as provided in this Section 2.3.
Certificates surrendered for exchange by any ALP Affiliate (as defined in
Section 5.3(e)) shall not be exchanged until Cardinal has received written
undertakings from such person in the form attached hereto as EXHIBIT B (an
"Affiliate Letter").
(e) TERMINATION OF EXCHANGE FUND. Any portion of the Exchange Fund which
remains undistributed to the ALP Stockholders for one year after the Effective
Time shall be delivered to Cardinal, upon demand thereby, and holders of shares
of ALP Common Stock who have not theretofore complied with this Section 2.3
shall thereafter look only to Cardinal for payment of any claim to Cardinal
Common Shares, cash in lieu of fractional shares thereof, or dividends or
distributions, if any, in respect thereof.
(f) NO LIABILITY. None of Cardinal, the Surviving Corporation or the
Exchange Agent shall be liable to any person in respect of any shares of ALP
Common Stock (or dividends or distributions with respect thereto) or cash from
the Exchange Fund delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law. If any Certificates shall not have
been surrendered prior to seven years after the Effective Time of the Merger (or
immediately prior to such earlier date on which any cash, any cash in lieu of
fractional shares or any dividends or distributions with respect to whole shares
of ALP Common Stock in respect of such Certificate would otherwise escheat to or
become the property of any Governmental Authority (as defined in Section 3.4)),
any such cash, dividends or distributions in respect of such Certificate shall,
to the extent permitted by Applicable Laws, become the property of Cardinal,
free and clear of all claims or interest of any person previously entitled
thereto.
(g) INVESTMENT OF EXCHANGE FUND. The Exchange Agent shall invest any cash
included in the Exchange Fund, as directed by Cardinal, on a daily basis. Any
interest and other
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income resulting from such investments shall be paid to Cardinal upon
termination of the Exchange Fund pursuant to Section 2.3(e).
ARTICLE III. REPRESENTATIONS AND WARRANTIES
OF RED AND SUBCORP
In order to induce ALP to enter into this Agreement, Cardinal and
Subcorp hereby represent and warrant to ALP that the statements contained in
this Article III are true, correct and complete as of the date hereof and shall
be true, correct and complete as of the Closing Date.
SECTION 3.1 ORGANIZATION AND STANDING. Each of Cardinal and Subcorp is
a corporation duly organized, validly existing and in good standing under the
laws of its state of incorporation with full power and authority (corporate and
other) to own, lease, use and operate its properties and to conduct its business
as and where now owned, leased, used, operated and conducted. Each of Cardinal
and Subcorp is duly qualified to do business and in good standing in each
jurisdiction in which the nature of the business conducted by it or the property
it owns, leases or operates, makes such qualification necessary, except where
the failure to be so qualified or in good standing in such jurisdiction would
not have a Material Adverse Effect (as defined in Section 9.2) on Cardinal.
Cardinal is not in default in the performance, observance or fulfillment of any
provision of its Articles of Incorporation, as amended and restated (the
"Cardinal Articles"), or Code of Regulations, as amended and restated (the
"Cardinal Code of Regulations"), and Subcorp is not in default in the
performance, observance or fulfillment of any provisions of its Articles of
Incorporation or By-laws. Subcorp is a new corporation formed solely for the
purpose of effectuating this transaction.
SECTION 3.2 CORPORATE POWER AND AUTHORITY. Each of Cardinal and Subcorp
has all requisite corporate power and authority to enter into this Agreement and
to consummate the transactions contemplated by this Agreement. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on the part
of each of Cardinal and Subcorp. This Agreement has been duly executed and
delivered by each of Cardinal and Subcorp, and constitutes the legal, valid and
binding obligation of each of Subcorp and Cardinal enforceable against each of
them in accordance with its terms.
SECTION 3.3 CAPITALIZATION OF CARDINAL AND SUBCORP.
(a) As of June 30, 1999, Cardinal's authorized capital stock consisted
solely of (a) 500,000,000 common shares, without par value ("Cardinal Common
Shares"), of which (i) 273,925,971 shares were issued and outstanding, (ii)
332,863 shares were issued and held in treasury (which does not include the
shares reserved for issuance as set forth in clause (a)(iii) below) and (iii)
20,168,653 shares were reserved for issuance upon the exercise or conversion of
options, warrants or convertible securities granted or issuable by Cardinal, (b)
5,000,000 Class B common shares, without par value, none of which was issued and
outstanding or reserved for issuance, and (c) 500,000 Non-Voting Preferred
Shares, without par value, none of which was issued and outstanding or reserved
for issuance. Each outstanding Cardinal Common Share is, and all Cardinal Common
Shares to be issued in connection with the Merger will be, duly
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authorized and validly issued, fully paid and nonassessable, and each
outstanding share of Cardinal capital stock has not been, and all Cardinal
Common Shares to be issued in connection with the Merger will not be, issued in
violation of any preemptive or similar rights. As of June 30, 1999, other than
as set forth in the first sentence hereof or in Section 3.3, there are no
outstanding subscriptions, options, warrants, puts, calls, agreements, claims or
other commitments or rights of any type relating to the issuance, sale or
transfer by Cardinal of any equity securities of Cardinal, nor are there
outstanding any securities which are convertible into or exchangeable for any
shares of capital stock of Cardinal.
(b) Subcorp's authorized capital stock consists solely of 1,000 shares of
Common Stock, .01 par value ("Subcorp Common Stock"), of which, as of the date
hereof, 100 were issued and outstanding and none were reserved for issuance. As
of the date hereof, all of the outstanding shares of Subcorp Common Stock are
owned free and clear of any liens, claims or encumbrances by Cardinal.
SECTION 3.4 CONFLICTS, CONSENTS AND APPROVAL. Neither the execution and
delivery of this Agreement by Cardinal or Subcorp nor the consummation of the
transactions contemplated hereby will:
(a) conflict with, or result in a breach of any provision of, the Cardinal
Articles or Cardinal Code of Regulations or the Articles of Incorporation or
By-laws of Subcorp;
(b) violate, or conflict with, or result in a breach of any provision of,
or constitute a default (or an event which, with the giving of notice, the
passage of time or otherwise, would constitute a default) under, or entitle any
party (with the giving of notice, the passage of time or otherwise) to
terminate, accelerate, modify or call a default under, or result in the creation
of any lien, security interest, charge or encumbrance upon any of the properties
or assets of Cardinal or any of its subsidiaries under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, deed of trust,
license, contract, undertaking, agreement, lease or other instrument or
obligation to which Cardinal or any of its subsidiaries is a party;
(c) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to Cardinal or any of its subsidiaries or their respective
properties or assets; or
(d) require any action or consent or approval of, or review by, or
registration or filing by Cardinal or any of its affiliates with, any third
party or any local, domestic, foreign or multi-national court, arbitral
tribunal, administrative agency or commission or other governmental or
regulatory body, agency, instrumentality or authority (a "Governmental
Authority"), other than (i) authorization for inclusion of the Cardinal Common
Shares to be issued in the Merger and the transactions contemplated hereby on
the NYSE, subject to official notice of issuance, (ii) actions required by the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended, and the rules
and regulations promulgated thereunder (the "HSR Act"), or (iii) registrations
or other actions required under federal and state securities laws as are
contemplated by this Agreement;
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except in the case of (b), (c) and (d) for any of the foregoing that would not,
individually or in the aggregate, have a Material Adverse Effect on Cardinal or
upon the ability of Cardinal or Subcorp to consummate the transactions
contemplated hereby.
SECTION 3.5 BROKERAGE AND FINDER'S FEES. Neither Cardinal nor any of
its shareholders, directors, officers or employees has incurred, or will incur,
on behalf of Cardinal, any brokerage, finder's or similar fee in connection with
the transactions contemplated by this Agreement.
SECTION 3.6 CARDINAL SEC DOCUMENTS. Cardinal has timely filed with the
Commission all forms, reports, schedules, statements and other documents
required to be filed by it since July 1, 1998 under the Securities Exchange Act
of 1934, as amended (the "Exchange Act") or the Securities Act of 1933, as
amended (the "Securities Act") (such documents, as supplemented and amended
since the time of filing, collectively, the "Cardinal SEC Documents"). The
Cardinal SEC Documents, including, without limitation, any financial statements
or schedules included therein, at the time filed (and, in the case of
registration statements and proxy statements, on the dates of effectiveness and
the dates of mailing, respectively) (a) did not contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, and (b) complied in
all material respects with the applicable requirements of the Exchange Act and
the Securities Act, as the case may be. The financial statements of Cardinal
included in the Cardinal SEC Documents at the time filed (and, in the case of
registration statements and proxy statements on the dates of effectiveness and
the dates of mailing, respectively) complied as to form in all material respects
with applicable accounting requirements and with the published rules and
regulations of the Commission with respect thereto, were prepared in accordance
with generally accepted accounting principles applied on a consistent basis
during the periods involved (except as may be indicated in the notes thereto or,
in the case of unaudited statements, as permitted by Form 10-Q of the
Commission), and fairly present (subject in the case of unaudited statements to
normal, recurring audit adjustments) the consolidated financial position of
Cardinal and its consolidated subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the periods then
ended.
SECTION 3.7 ABSENCE OF CERTAIN EVENTS. Except as otherwise disclosed in
the Cardinal SEC Documents, since March 31, 1999 there has not been any event,
circumstance or condition that has had or is reasonably likely to have a
Material Adverse Effect on Cardinal and its Subsidiaries taken as one
enterprise.
SECTION 3.8 ACCOUNTING MATTERS. Neither Cardinal nor any of its
affiliates has taken or agreed to take any action that (without giving effect to
any actions taken or agreed to be taken by ALP or any of its affiliates) would
(a) prevent Cardinal from accounting for the business combination to be effected
by the Merger as a pooling-of-interests for financial reporting purposes or (b)
prevent the Merger from constituting a reorganization qualifying under the
provisions of Section 368(a) of the Code.
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ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF ALP
In order to induce Subcorp and Cardinal to enter into this Agreement,
ALP hereby represents and warrants to Cardinal and Subcorp that the statements
contained in this Article IV are true, correct and complete as of the date
hereof and shall be true, correct and complete as of the Closing Date.
SECTION 4.1 ORGANIZATION AND STANDING. ALP is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Illinois with full power and authority (corporate and other) to own, lease, use
and operate its properties and to conduct its business as and where now owned,
leased, used, operated and conducted. ALP is duly qualified to do business and
in good standing in each jurisdiction listed in Section 4.1 of the disclosure
schedule delivered by ALP to Cardinal and dated the date hereof (the "ALP
Disclosure Schedule"), is not qualified to do business in any other jurisdiction
and neither the nature of the business conducted by it nor the property it owns,
leases or operates requires it to qualify to do business as a foreign
corporation in any other jurisdiction, except where the failure to be so
qualified or in good standing in such jurisdiction would not have a Material
Adverse Effect on ALP. ALP is not in default in the performance, observance or
fulfillment of any provision of its Articles of Incorporation (the "ALP
Articles"), or its By-laws, as in effect on the date hereof (the "ALP By-laws").
ALP has heretofore furnished to Cardinal a complete and correct copy of the ALP
Articles and the ALP By-laws.
SECTION 4.2 SUBSIDIARIES. ALP does not own, directly or indirectly, any
equity or other ownership interest in any corporation, partnership, joint
venture or other entity or enterprise. ALP is not subject to any obligation or
requirement to provide funds to or make any investment (in the form of a loan,
capital contribution or otherwise) in any such entity.
SECTION 4.3 CORPORATE POWER AND AUTHORITY. ALP has all requisite
corporate power and authority to enter into this Agreement and to consummate the
transactions contemplated by this Agreement. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have been
duly authorized by all necessary corporate action on the part of ALP, including
the authorization and adoption of the Merger and the transactions contemplated
hereby by ALP's Board of Directors and the ALP Stockholders. This Agreement has
been duly executed and delivered by ALP and the ALP Stockholders and constitutes
the legal, valid and binding obligation of ALP and the ALP Stockholders,
enforceable against ALP and the ALP Stockholders in accordance with its terms.
The Employment Agreements (as defined in Section 6.3(j)) have been duly executed
and delivered by the parties thereto and constitute the legal, valid and binding
obligations of the parties thereto, enforceable against such parties in
accordance with their respective terms. The Ancillary Agreements (as defined in
Section 5.3(h)), when duly executed by the parties thereto, will constitute the
legal, valid and binding obligations of the parties thereto, enforceable against
such parties in accordance with their respective terms.
SECTION 4.4 CAPITALIZATION OF ALP. As of June 30, 1999, ALP's
authorized capital stock consisted solely of 5,000,000 shares of common stock,
no par value ("ALP Common Stock"), of which (i) 1,519,835 shares were issued and
outstanding and (ii) no shares were issued and held in treasury. Each
outstanding share of ALP Common Stock is duly
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authorized and validly issued, fully paid and nonassessable, and has not been
issued in violation of any preemptive or similar rights. Except as set forth in
Section 4.4 of the ALP Disclosure Schedule, there are no outstanding
subscriptions, options, warrants, puts, calls, agreements, understandings,
claims or other commitments or rights of any type relating to the issuance, sale
or transfer of any securities of ALP by ALP or, to the knowledge of ALP, any
other person or entity, nor are there outstanding any securities which are
convertible into or exchangeable for any shares of ALP Common Stock, and ALP has
no obligation of any kind to issue any additional securities or to pay for
securities of ALP or any predecessor. The issuance and sale of all of the shares
of ALP Common Stock have been in compliance with federal and state securities
laws. Section 4.4 of the ALP Disclosure Schedule contains a correct and complete
list of the names and addresses of (x) the holders of all the outstanding ALP
Common Stock, (y) the spouses of each married ALP Stockholder and (z) any other
person having a beneficial or other interest in any ALP Common Stock. Such
Section 4.4 also states the number of shares of ALP Common stock owned
beneficially and of record by each ALP Stockholder. Except as set forth in
Section 4.4 of the ALP Disclosure Schedule, ALP has not agreed to register any
securities under the Securities Act or under any state securities law or granted
registration rights to any person or entity.
SECTION 4.5 CONFLICTS; CONSENTS AND APPROVALS. Neither the execution
and delivery of this Agreement by ALP nor the consummation of the transactions
contemplated hereby will:
(a) conflict with, or result in a breach of any provision of, the ALP
Articles or the ALP By-laws;
(b) violate, or conflict with, or result in a breach of any provision of,
or constitute a default (or an event which, with the giving of notice, the
passage of time or otherwise, would constitute a default) under, or entitle any
party (with the giving of notice, the passage of time or otherwise) to
terminate, accelerate, modify or call a default under, or result in the creation
of any material lien, security interest, charge or encumbrance upon any of the
properties or assets of ALP under, any of the terms, conditions or provisions of
any note, bond, mortgage, indenture, deed of trust, license, contract,
undertaking, agreement, lease or other instrument or obligation to which ALP or
any ALP Stockholder is a party;
(c) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to ALP or any ALP Stockholder; or
(d) require any action or consent or approval of, or review by, or
registration or filing by ALP, any ALP Stockholder or any of their respective
affiliates with, any third party or any Governmental Authority, other than (i)
actions required by the HSR Act, (ii) registrations or other actions required
under federal and state securities laws, (iii) consents or approvals of any
Governmental Authority set forth in Section 4.5 of the ALP Disclosure Schedule,
and (iv) filing of the Certificate of Merger with the Illinois Secretary of
State;
except in the case of clause (b) or (d) for any of the foregoing that are set
forth in Section 4.5 of the ALP Disclosure Schedule, and in the case of clauses
(b) through (d) for any of the foregoing that would not, individually or in the
aggregate, have a Material Adverse Effect on ALP.
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SECTION 4.6 ABSENCE OF CERTAIN CHANGES. Except as expressly provided
for or permitted under Section 5.3(b) of this Agreement, except as provided in
any agreement to be executed in connection with the Closing, or as set forth in
Section 4.6 of the ALP Disclosure Schedule, since March 31, 1999 there has not
been:
(a) Any material adverse change in the business, operations, assets,
properties, customer base, prospects, rights or condition (financial or
otherwise) of ALP or any occurrence, circumstance, or combination thereof which
reasonably could be expected to result in any such material adverse change,
including, without limitation, any material adverse change relating to ALP's
relationship with any material customer.
(b) Any declaration, setting aside or payment of any dividend or any
distribution (in cash or in kind) to any stockholder of ALP, or any direct or
indirect redemption, purchase or other acquisition by ALP of any of its capital
stock or any options, warrants, rights or agreements to purchase or acquire such
stock;
(c) Any increase in amounts payable by ALP to or for the benefit of, or
committed to be paid by ALP to or for the benefit of, any stockholder, director,
officer or other consultant, agent or employee of ALP whose total annual
compensation exceeds $100,000 or any relatives of such person, or any increase
in any benefits granted under any bonus, stock option, profit-sharing, pension,
retirement, severance, deferred compensation, group health, insurance, or other
direct or indirect benefit plan, payment or arrangement made to, with or for the
benefit of any such person;
(d) Any material transaction entered into or carried out by ALP other than
in the ordinary and usual course of business consistent with past practices;
(e) Any material borrowing or agreement to borrow funds by ALP, any
incurring by ALP of any other obligation or liability (contingent or otherwise),
except liabilities incurred in the usual and ordinary course of ALP's business
(consistent with past practices), or any endorsement, assumption or guarantee of
payment or performance of any loan or obligation of any other person by ALP;
(f) Any material change in ALP's method of doing business or any change in
its accounting principles or practices or its method of application of such
principles or practices;
(g) Any material mortgage, pledge, lien, security interest, hypothecation,
charge or other encumbrance imposed or agreed to be imposed on or with respect
to the property or assets of ALP;
(h) Any sale, lease or other disposition of, or any agreement to sell,
lease or otherwise dispose of any of the properties or assets of ALP, other than
sales, leases or other dispositions in the usual and ordinary course of business
for fair equivalent value to persons other than directors, officers,
stockholders, or other affiliates of ALP;
(i) Any purchase of or any agreement to purchase assets (other than
purchases (including purchases of inventory) in the ordinary course of business
consistent with past practices) for an amount in excess of $150,000 for any one
purchase or $400,000 for all such
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purchases made by ALP or any lease or any agreement to lease, as lessee, any
capital assets with payments over the term thereof to be made by ALP exceeding
an aggregate of $400,000;
(j) Any loan or advance made by ALP to any person other than loans made to
ALP's customers in the ordinary course of business consistent with past
practices not exceeding $50,000, in the aggregate, to any customer;
(k) Any modification, waiver, change, amendment, release, rescission or
termination of, or accord and satisfaction with respect to, any material term,
condition or provision of any contract, agreement, license or other instrument
to which ALP is a party, other than any satisfaction by performance in
accordance with the terms thereof in the usual and ordinary course of business;
or
(l) Any labor dispute or disturbance adversely affecting the business
operations, prospects or condition (financial or otherwise) of ALP, including,
without limitation, the filing of any petition or charge of unfair labor
practice with any governmental or regulatory authority, efforts to effect a
union representation election, actual or threatened employee strike, work
stoppage or slow down.
SECTION 4.7 OFFICERS, EMPLOYEES AND COMPENSATION. Section 4.7 of the
ALP Disclosure Schedule sets forth the names of all directors and officers of
ALP, the total salary, bonus, fringe benefits and perquisites each received from
ALP in the year ended December 31, 1998, and any changes to the foregoing which
have occurred subsequent to December 31, 1998. Section 4.7 of the ALP Disclosure
Schedule also lists and describes the current compensation of the ten most
highly compensated managers of ALP and any other employee of ALP whose total
current salary and bonus exceeds $100,000. Except as disclosed in Section 4.7 of
the ALP Disclosure Schedule, there are no other forms of compensation paid to
any such director, officer or employee of ALP. Except as disclosed in Section
4.7 of the ALP Disclosure Schedule, the amounts accrued on the books and records
of ALP for vacation pay, sick pay, and all commissions and other fees payable to
agents, salesmen and representatives will be adequate to cover ALP's liabilities
for all such items. Except as set forth in Section 4.7 of the ALP Disclosure
Schedule, ALP has not become obligated, directly or indirectly, to any
stockholder, director or officer of ALP or any person related to such person by
blood or marriage, except for current liability for such compensation. Except as
set forth in Section 4.7 of the ALP Disclosure Schedule, to the Knowledge of
ALP, no stockholder, director, officer, agent or employee of ALP or any person
related to such person by blood or marriage holds any position or office with or
has any material financial interest, direct or indirect, in any supplier,
customer or account of, or other outside business which has material
transactions with, ALP. ALP has no agreement or understanding with any
stockholder, director, officer, employee or representative of ALP which would
influence any such person not to become associated with Cardinal from and after
the Closing or from serving ALP after the Closing in a capacity similar to the
capacity presently held.
SECTION 4.8 FINANCIAL STATEMENTS.
(a) ALP has furnished to Cardinal the balance sheet of ALP as of December
31, 1998, and the related statements of income, changes in stockholders' equity,
and cash flows for
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the nine-month period then ended, including, in each case, the related notes
(collectively, the "Compilation Statements"), which are accompanied by the
compilation report of Xxxxxxxxxx, Melvoin and Xxxxxxx LLP. ALP has also
furnished to Cardinal the balance sheet of ALP as of March 31, 1999 and the
related statements of income, changes in stockholders' equity, and cash flows
for the three-month period then ended (the "March 31 Statements"). The
Compilation Statements and the March 31 Statements, which have been initialed
for identification by the president of ALP, have been prepared from and are in
accordance with the books and records of ALP, and have been prepared in
conformity with generally accepted accounting principles applied on a consistent
basis (except for the absence of footnotes and except for normal year-end
adjustments in the case of the March 31 Statements), and fairly present the
financial condition of ALP as of the date stated and the results of operations
of ALP for the period then ended in accordance with such practices except as
described in Section 4.8 of the ALP Disclosure Schedule.
(b) When delivered in accordance with Section 5.3(f), the balance sheet for
ALP as of the end of each calendar month after the date hereof, and the related
statements of income, changes in stockholders' equity, and cash flows for the
period beginning January 1, 1999 and then ended, including the related notes
(the "Interim Statements"), shall have been prepared from and in accordance with
the books and records of ALP and in accordance with generally accepted
accounting principles applied on a basis consistent with that used in the
Compilation Statements, and shall fairly present the financial condition of ALP
as of such date and the results of operations of ALP for such period in
accordance with such practices, subject to normal year-end adjustments.
SECTION 4.9 TAXES.
(a) ALP has duly filed all federal, state, local and foreign income,
franchise, excise, real and personal property and other Tax Returns (as defined
below in Section 4.9(f))and reports (including, but not limited to, those filed
on a consolidated, combined or unitary basis) required to have been filed by ALP
prior to the date hereof. All of the foregoing Tax Returns and reports are true
and correct, and ALP has paid or, prior to the Effective Time, will pay all
Taxes (as defined below in Section 4.9(f)), interest and penalties required to
be paid in respect of the periods covered by such returns or reports or
otherwise due to any federal, state, foreign, local or other taxing authority.
The unpaid Taxes of ALP do not, as of the date hereof and as of the Closing
Date, exceed the reserve for Tax liability (as distinguished from any reserve
for deferred Taxes established to reflect timing differences between book and
Tax income) set forth on the face of the balance sheet of ALP included in the
March 31 Statements (as distinguished from in any notes thereto). ALP will not
have any liability for any Taxes in excess of the amounts so paid or reserves so
established and ALP is not delinquent in the payment of any material Tax,
assessment or governmental charge and it has not requested or filed any document
having the effect of causing any extension of time within which to file any
returns in respect of any fiscal year which have not since been filed. Except as
disclosed in Section 4.9 of the ALP Disclosure Schedule, no deficiencies for any
Tax, assessment or governmental charge have been proposed in writing, asserted
or assessed (tentatively or definitely), in each case, by any taxing authority,
against ALP for which there are not adequate reserves. Except as set forth in
Section 4.9 of the ALP Disclosure Schedule, ALP is not the subject of any Tax
audit. As of the date of this Agreement, there are no pending requests for
waivers of the time to assess any such Tax, other
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than those made in the ordinary course and for which payment has been made or
there are adequate reserves. With respect to any taxable period ended prior to
March 31, 1996, all federal income Tax Returns including ALP have been audited
by the Internal Revenue Service or are closed by the applicable statute of
limitations. ALP has not waived any statute of limitations in respect of Taxes
or agreed to any extension of time with respect to a Tax assessment or
deficiency. There are no liens with respect to Taxes upon any of the properties
or assets, real or personal, tangible or intangible of ALP (other than liens for
Taxes not yet due). No claim has ever been made by an authority in a
jurisdiction where ALP does not file Tax Returns that ALP is or may be subject
to taxation by that jurisdiction. ALP has not filed an election under Section
341(f) of the Code to be treated as a consenting corporation. As of the date of
this Agreement, ALP has not previously undergone an "Ownership Change" as
defined by Section 382(g) of the Code which would limit the amount of pre-change
losses, credits and recognition of built-in losses to offset post change income.
(b) ALP is not obligated by any contract, agreement or other arrangement to
indemnify any other person with respect to Taxes. ALP is not now and has not
during the last four years been a party to or bound by any agreement or
arrangement (whether or not written and including, without limitation, any
arrangement required or permitted by law) binding ALP which (i) requires ALP to
make any Tax payment to or for the account of any other person, (ii) affords any
other person the benefit of any net operating loss, net capital loss, investment
Tax credit, foreign Tax credit, charitable deduction or any other credit or Tax
attribute which could reduce Taxes (including, without limitation, deductions
and credits related to alternative minimum Taxes) of ALP, (iii) requires or
permits the transfer or assignment of income, revenues, receipts or gains to
ALP, from any other person, or (iv) otherwise requires ALP to indemnify any
other person in respect of Taxes.
(c) Section 4.9(c) of the ALP Disclosure Schedule sets forth (i) a list of
all jurisdictions (whether foreign or domestic) to which any material Tax is or
has been properly payable by ALP, (ii) all sales for which gain has been
reported under the installment method of accounting for Tax purposes and for
which gain has to be recognized for Tax purposes by ALP subsequent to the
Closing Date, (iii) all rulings or determinations obtained by ALP from any
Governmental Authority responsible for the imposition of any Tax that may affect
ALP subsequent to the Closing Date, (iv) all ALP returns with respect to which
the applicable period for assessment under Applicable Law, after giving effect
to extensions or waivers, has not expired, (v) any material intercompany items
(as described in Treasury Regulations Section 1.1502-13(b)(2) or in similar
state or local income Tax provisions) resulting from any intercompany
transaction to which ALP is a party, (vi) a list of all pending Tax audits or
inquiries, and (vii) any Tax reserves included in the "Deferred Taxes" or
similar line item in ALP's financial statements included in the ALP Disclosure
Schedule, separately identified and itemized by dollar amount.
(d) Except as disclosed in Section 4.9(d) of the ALP Disclosure Schedule,
ALP has withheld and paid all Taxes required to have been withheld and paid in
connection with amounts paid or owing to any employee, independent contractor,
creditor, shareholder or other third party.
(e) ALP is now and has been at all times since April 1, 1998 an S
Corporation for federal income tax purposes within the meaning of Section
1361(a) of the Code pursuant to a
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valid election to be an S Corporation filed by ALP prior to June 15, 1998.
Section 4.9(e) of the ALP Disclosure Schedule sets forth each jurisdiction in
which a valid S corporation election for ALP is in effect or ALP is otherwise
treated as an S corporation for state or local tax purposes and the date
beginning with such election or treatment has been continuously in effect.
(f) For purposes of this Agreement, the following terms have the
definitions given below:
"Tax Returns" means returns, reports and forms required to be filed
with any Governmental Authority of the United States or any other jurisdiction
responsible for the imposition or collection of Taxes.
"Tax" or "Taxes" means (i) all taxes (whether federal, state, local or
foreign) based upon or measured by income and any other tax whatsoever,
including, without limitation, gross receipts, profits, sales, use, occupation,
value added, ad valorem, transfer, franchise, withholding, payroll, employment,
excise, or property taxes, together with any interest or penalties imposed with
respect thereto and (ii) any obligations under any agreements or arrangements
with respect to any taxes described in clause (i) above.
SECTION 4.10 COMPLIANCE WITH LAW; FDA MATTERS.
(a) Except as set forth in Section 4.10 of the ALP Disclosure Schedule, ALP
is in compliance with, and at all times since January 1, 1995 has been in
compliance with, all applicable laws, statutes, orders, rules, regulations,
policies or guidelines promulgated, or judgments, decisions or orders entered by
any Governmental Authority (collectively, "Applicable Laws") relating to ALP or
its business or properties, including, without limitation, the Food, Drug and
Cosmetic Act and similar state laws, any federal or state Pharmacy Practice
Acts, the Occupational Safety and Health Act and the regulations promulgated
thereunder ("OSHA"), the Securities Act, the Exchange Act, any state or federal
laws respecting rights of privacy and all rules of professional conduct
applicable to ALP or by which any of its properties are bound or subject. ALP
has heretofore made available to Cardinal copies of all material correspondence
from and to all Governmental Authority and inspectors.
(b) Except as set forth in Section 4.10 of the ALP Disclosure Schedule,
since January 1, 1998 ALP has not received any written communication (including,
any warning letter) or is otherwise aware of any action or proceeding pending
or, to ALP's Knowledge, threatened, including, without limitation, warning
letter, prosecution, injunction, seizure, civil fine or recall, alleging that it
is not in compliance with any and all applicable laws, regulations or orders
implemented by the Food and Drug Administration, or implemented by the relevant
state, local or international agency responsible for regulating the
pharmaceutical industry, including but not limited to, allegations related to
(i) drug development establishments operated by ALP or (ii) drug or product
license applications submitted directly by ALP or, to ALP's Knowledge, by a
customer of ALP that includes data generated by ALP. To ALP's Knowledge, no
employee of ALP is or has been the subject of any similar pending or threatened
action or proceeding.
(c) To ALP's Knowledge, all consultants utilized by ALP to generate
information to be submitted to the Food and Drug Administration, or any
equivalent state, local or international
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agency, including, but not limited to, contract research organizations,
pre-clinical testing laboratories, clinical investigators and institutional
review boards, have complied with all applicable Food and Drug Administration
requirements, as well as the applicable requirements of relevant state, local
and international agencies with regard to the development of data to be utilized
by ALP as part of the relevant drug or product approval process.
(d) Neither ALP nor, to ALP's Knowledge, any employee of ALP, has received
any correspondence from the Food and Drug Administration or is aware of any
action or proceeding, pending or, to the best of ALP's knowledge, threatened,
against ALP or any such employee regarding any debarment action or investigation
undertaken pursuant to the Generic Drug Enforcement Act of 1992, 21 U.S.C.
Section 335a, or any other similar regulation of the Food and Drug
Administration.
(e) Neither ALP nor, to ALP's Knowledge, any employee of ALP, has been the
subject, officially or otherwise, of any investigation by the Food and Drug
Administration pursuant to its Fraud, Untrue, Statements of Material Facts,
Bribery, and Illegal Gratuities Final Policy (also known as the Application
Integrity Policy).
(f) To ALP's Knowledge, no data generated by ALP that has been provided to
customers of ALP is the subject, either pending or threatened, of any regulatory
or other action by the Food and Drug Administration or by any state, local or
international regulatory entity relating to the truthfulness or scientific
adequacy of such data.
(g) Except as set forth on Section 4.10(g) of the ALP Disclosure Schedule,
ALP has not made any drug or product license applications or related filings
with the Food and Drug Administration during the past five years.
SECTION 4.11 INTELLECTUAL PROPERTY.
(a) Set forth in Section 4.11 of the ALP Disclosure Schedule is a true and
complete list of (i) all of ALP's foreign and domestic patents, patent
applications, invention disclosures, trademarks, service marks, tradenames,
copyrights (and any registrations or applications for registration for any of
the foregoing) and all material design rights, and (ii) all material agreements
to which ALP is a party which concern any of the Intellectual Property
("Intellectual Property" shall mean all intellectual property or other
proprietary rights of every kind, including, without limitation, all domestic or
foreign patents, patent applications, inventions (whether or not patentable),
processes, products, technologies, discoveries, copyrightable and copyrighted
works, apparatus, trade secrets, trademarks and trademark applications and
registrations, service marks and service xxxx applications and registrations,
trade names, trade dress, copyright applications and registrations, design
rights, customer lists, marketing and customer information, mask works rights,
know-how, licenses, technical information (whether confidential or otherwise),
software, hardware, systems, databases, models, methodologies and all
documentation thereof owned, licensed or used by ALP). Other than the
Intellectual Property set forth in Section
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4.11 of the ALP Disclosure Schedule, no name, patent, invention, trade secret,
proprietary right, computer software, trademark, trade name, service xxxx, logo,
copyright, franchise, license, sublicense, or other such right is necessary for
the operation of the business of ALP in substantially the same manner as such
business is presently or proposed to be conducted. Except as set forth in
Section 4.11 of the ALP Disclosure Schedule, (A) ALP owns, free and clear of any
liens, claims or encumbrances, or has the right to use under valid licenses as
it is currently being used by ALP, the Intellectual Property and has the
exclusive right to bring actions for the infringement thereof; (B) all of the
patents, trademark registrations, service xxxx registrations, tradename
registrations, design right registrations, and copyright registrations included
in the Intellectual Property are valid; (C) the Intellectual Property does not
infringe and has not infringed any now existing or subsequently issued domestic
or foreign patent, trademark, service xxxx, tradename, copyright, design right
or other intellectual property or proprietary right; (D) no person or entity has
asserted in writing to ALP that, with respect to the Intellectual Property, ALP
or a licensee of ALP is infringing or has infringed any domestic or foreign
patent, trademark, service xxxx, tradename, copyright or design right, or has
misappropriated or improperly used or disclosed any trade secret, confidential
information or know-how; (E) the Intellectual Property, and its use or
operation, do not infringe, and have not infringed, any foreign or domestic
patent, trademark, service xxxx, tradename, copyright or contractual right of
any entity, and have not involved the misappropriation or improper use or
disclosure of any trade secrets, confidential information or know-how of any
entity; (F) all working requirements and all fees, annuities, and other payments
which are due from ALP on or before the Effective Time for any of the
Intellectual Property, including, without limitation, all foreign or domestic
patents, patent applications, trademark registrations, service xxxx
registrations, tradename registrations, copyright registrations and any
applications for any of the preceding, have been met or paid; (G) the claims
made in the foreign or domestic patents and patent applications that are a part
of the Intellectual Property are not dominated by claims of patents owned by
other persons or entities; (H) to ALP's Knowledge, the making, using, selling,
manufacturing, marketing, licensing, reproduction, distribution, or publishing
of any process, service, machine, manufacture, composition of matter, or
material pursuant to any part of the Intellectual Property, does not and will
not infringe any domestic or foreign patent, trademark, service xxxx, tradename,
copyright or other intellectual property right; (I) to ALP's Knowledge, no
unexpired foreign or domestic patents or patent applications exist that are
adverse to the material interests of ALP; (J) the Intellectual Property is not
the subject of any pending Action (as defined in Section 4.14); (K) no part of
the Intellectual Property was obtained through inequitable conduct or fraud in
the United States Patent and Trademark Office or any foreign governmental
entity; (L) to ALP's Knowledge, there has occurred no (1) prior act that would
adversely affect, void or invalidate any of the Intellectual Property or (2)
conduct or use by ALP or any third party that would adversely affect, void or
invalidate any of the Intellectual Property; (M) the execution, delivery and
performance of this Agreement by ALP, and the consummation of the transactions
contemplated thereby, will not breach, violate or conflict with any instrument
or agreement governing or contained within any of the Intellectual Property,
will not cause the forfeiture or termination or give rise to a right of
forfeiture or termination of any of the Intellectual Property or in any way
impair the right of Cardinal or Subcorp to use, sell, offer to sell, license or
dispose of, or to bring any action for the infringement of, any Intellectual
Property; (N) there are no royalties, honoraria, fees or other payments payable
to any third party by reason of the ownership, use, license, sale or disposition
of the Intellectual Property; (O) no part of the source or object code,
algorithms or structure included in any of the Intellectual Property is copied
from, based upon or derived from any source or object code, algorithm or
structure included in any computer software product owned by any third party nor
does any substantial similarity of any of such source or object code, algorithms
or structure to any computer software product owned by any third party result
from
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such source or object code, algorithms or structure being copied from, based
upon or derived from any computer software product owned by any third party; and
(P) to ALP's Knowledge, no software included in the Intellectual Property
contains any "Self-Help Code," i.e., any back door, time bomb, drop dead device,
or other software routine designed to disable a computer program automatically
with the passage of time or under the positive control of any unauthorized
person, or, to ALP's Knowledge, any "Unauthorized Code," i.e., any virus, Trojan
horse, worm, or other software routines or hardware components designed to
permit unauthorized access, disable, erase, or otherwise harm software,
hardware, or data or to perform any other such actions.
(b) ALP has taken all steps that are reasonably necessary and appropriate
to safeguard and maintain the secrecy and confidentiality of all trade secrets
contained in the Intellectual Property (including, without limitation, entering
into appropriate confidentiality, nondisclosure and non-competition agreements
with all officers, directors, employees and third-party consultants of ALP).
(c) ALP has taken all steps that are reasonably necessary and appropriate
to safeguard and maintain all copyrights and patents contained in the
Intellectual Property, including, without limitation, entering into appropriate
assignments with all current and former officers, directors, employees and third
party consultants of ALP.
SECTION 4.12 TITLE TO AND CONDITION OF PROPERTIES.
(a) Except as set forth in Section 4.12(a) of the ALP Disclosure Schedule,
ALP has good, valid and indefeasible title to all of its material assets and
properties of every kind, nature and description, tangible or intangible,
wherever located, which constitute all of the property now used in and necessary
for the conduct of its business as presently conducted (including, without
limitation, all material property and assets shown or reflected on the
Compilation Statements or the Interim Statements, when delivered, except assets
sold in the ordinary course of business). Except as set forth in Section 4.12(a)
of the ALP Disclosure Schedule, all such properties are owned free and clear of
all mortgages, pledges, liens, security interests, encumbrances and restrictions
of any nature whatsoever, including, without limitation, (a) rights or claims of
parties in possession; (b) easements or claims of easements; (c) encroachments,
overlaps, boundary line or water drainage disputes or any other matters; (d) any
lien or right to a lien for services, labor or material furnished; (e) special
tax or other assessments; (f) options to purchase, leases, tenancies, or land
contracts; (g) contracts, covenants, or reservations which restrict the use of
such properties and (h) violations of any Applicable Laws applicable to such
properties. All such properties are usable for their current uses without
violating any Applicable Laws, or any applicable private restriction, and such
uses are legal conforming uses. Except as set forth in Section 4.12(a) of the
ALP Disclosure Schedule, no financing statement under the Uniform Commercial
Code or similar law naming ALP or any of its predecessors is on file in any
jurisdiction in which ALP owns property or does business, and ALP is not a party
to or bound under any material agreement or legal obligation authorizing any
party to file any such financing statement. Section 4.12(a) of the ALP
Disclosure Schedule contains a complete and accurate list of the location of all
real property which is or has been owned, leased or operated by ALP during the
last five (5) years and describes the nature of ALP's interest or prior interest
in that real property. With respect to any real property leased by ALP, ALP has
an insurable leasehold interest in that real property.
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(b) Except as set forth in Section 4.12(b) of the ALP Disclosure Schedule,
all real property, plants and structures and all machinery and equipment and
tangible personal property owned, leased or used by ALP and material to the
operation of its business are suitable for the purpose or purposes for which
they are being used (including substantial compliance with all Applicable Laws)
and are in good condition and repair, ordinary wear and tear excepted. Section
4.12(b) of the ALP Disclosure Schedule lists, and ALP has furnished or made
available to Cardinal, copies of all engineering, geologic and environmental
reports prepared by or for ALP or with respect to the real property owned,
leased or used by ALP within the past five (5) years.
SECTION 4.13 ENVIRONMENTAL MATTERS.
(a) As used herein, the term "Environmental Laws" means all federal, state,
local or foreign laws relating to pollution or protection of human health or the
environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata), including, without limitation,
laws relating to emissions, discharges, releases or threatened releases of
chemicals, petroleum, pollutants, contaminants, or industrial, toxic or
hazardous substances or wastes (collectively, "Hazardous Materials") into the
environment, or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of Hazardous Materials,
as well as all authorizations, codes, decrees, demands or demand letters,
injunctions, judgments, licenses, notices or notice letters, orders, permits,
plans or regulations issued, entered, promulgated or approved thereunder.
(b) There are, with respect to ALP or its predecessor, no past or present
violations of Environmental Laws, releases of any material into the environment,
actions, activities, circumstances, conditions, events, incidents, or
contractual obligations which may give rise to any common law environmental
liability or any liability under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 or any other Environmental Law and ALP
has not received any written notice with respect to any of the foregoing, nor is
any Action pending or, to ALP's Knowledge, threatened in writing in connection
with any of the foregoing.
(c) No Hazardous Materials were or are contained on or about any real
property currently or previously owned or leased by ALP or predecessors and no
Hazardous Materials were released on or about any real property previously owned
or leased by ALP or its predecessors during the period the property was owned or
leased by ALP or its predecessors, except in the normal course of ALP's
business. To the extent ALP or its predecessors currently uses or previously
used real property which ALP or predecessors never owned or leased, no Hazardous
Materials were or are contained on or about the portion of such property
currently or previously used by ALP or its predecessors and no Hazardous
Materials were released on or about any such portion of property previously used
by ALP or its predecessors during the period the property was used by ALP or its
predecessors, except in the normal course of ALP's business which is otherwise
in compliance with all applicable Environmental Laws.
(d) Except as set forth in Section 4.13(d) of the ALP Disclosure Schedule,
there are no underground storage tanks on or under any real property currently
or previously owned, leased or used by ALP.
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(e) ALP has obtained all permits, licenses and other authorizations
("Environmental Permits") required under the Environmental Laws relating to the
real property owned, leased or used by ALP and ALP's use thereof. The
Environmental Permits are in full force and effect and ALP is and has been in
compliance with them since the dates of their issuance. Section 4.13 of the ALP
Disclosure Schedule lists, and ALP has furnished or made available to Cardinal,
copies of all Environmental Permits.
(f) Except as set forth in Section 4.13(f), no asbestos-containing
materials are located on the real property owned, leased or used by ALP.
(g) ALP has not received any written notice from any Governmental Authority
or private entity advising or asserting that (i) any real property owned, leased
or used by ALP, (ii) any real property previously owned, leased or used by ALP,
or (iii) ALP are the subject of any Action relating to the environmental
condition of such property or ALP. No such property is listed in CERCLAS, the
federal National Priorities List or any similar state or federal lists of
suspected contaminated property and no off-site disposal location currently or
formerly used by ALP or its predecessors is so listed.
SECTION 4.14 LITIGATION. Except as set forth in Section 4.14 of the ALP
Disclosure Schedule, there is no suit, claim, action, or proceeding (an
"Action") pending or, to ALP's Knowledge, threatened against ALP or any officer
or director of ALP alleging damages in excess of $100,000. ALP is not subject to
any outstanding order, writ, injunction or decree which, individually or in the
aggregate, insofar as can be reasonably foreseen, could have a Material Adverse
Effect on ALP or a Material Adverse Effect on the ability of ALP to consummate
the transactions contemplated hereby. Except as set forth in Section 4.14 of the
ALP Disclosure Schedule, since December 31, 1996, (i) there has not been any
Action asserted, or to ALP's Knowledge, threatened against ALP relating to ALP's
method of doing business or its relationship with past, existing or future users
or purchasers of any goods or services of ALP and (ii) ALP has not been subject
to any outstanding order, writ, injunction or decree relating to ALP's method of
doing business or its relationship with past, existing or future customers,
lessees, users, purchasers or licensees of any Intellectual Property, goods or
services of ALP.
SECTION 4.15 BROKERAGE AND FINDER'S FEES. Neither ALP nor, to ALP's
Knowledge, any stockholder, director, officer or employee thereof, has incurred
or will incur on behalf of ALP, any brokerage, finder's or similar fee in
connection with the transactions contemplated by this Agreement.
SECTION 4.16 ACCOUNTING MATTERS. Neither ALP nor any of its affiliates
has taken or agreed to take any action that (without giving effect to any
actions taken or agreed to be taken by Cardinal or any of its affiliates) would
(a) prevent the Merger from constituting a reorganization qualifying under the
provisions of Section 368(a) of the Code or (b) to ALP's Knowledge, prevent
Cardinal from accounting for the business combination to be effected by the
Merger as a pooling-of-interests for financial reporting purposes.
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SECTION 4.17 EMPLOYEE BENEFIT PLANS.
(a) For purposes of this Section 4.17, the following terms have the
definitions given below:
"Controlled Group Liability" means any and all liabilities under (i)
Title IV of ERISA, (ii) Section 302 of ERISA, (iii) Sections 412 and 4971 of the
Code, (iv) the continuation coverage requirements of section 601 et seq. of
ERISA and Section 4980B of the Code and the portability and nondiscrimination
requirements of Section 701 ET SEQ. of ERISA and Section 9801 ET SEQ. of the
Code, (v) Section 4975 of the Code and (vi) corresponding or similar provisions
of foreign laws or regulations, in each case other than pursuant to the Plans.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the regulations thereunder.
"ERISA Affiliate" means, with respect to any entity, trade or business,
any other entity, trade or business that is or was a member of a group described
in Section 414(b), (c), (m) or (o) of the Code or Section 4001(b)(1) of ERISA
that includes the first entity, trade or business, or that is or was a member of
the same "controlled group" as the first entity, trade or business pursuant to
Section 4001(a)(14) of ERISA.
"Plans" means all employee benefit plans, programs, policies,
practices, and other arrangements providing benefits to any employee or former
employee or beneficiary or dependent thereof, whether or not written, and
whether covering one person or more than one person, sponsored or maintained by
ALP or any ERISA Affiliate or to which ALP or any ERISA Affiliate contributes or
is obligated to contribute. Without limiting the generality of the foregoing,
the term "Plans" includes all employee welfare benefit plans within the meaning
of Section 3(1) of ERISA and all employee pension benefit plans within the
meaning of Section 3(2) of ERISA.
"Withdrawal Liability" means liability to a Multiemployer Plan as a
result of a complete or partial withdrawal from such Multiemployer Plan, as
those terms are defined in Part I of Subtitle E of Title IV of ERISA.
(b) Section 4.17(b) of the ALP Disclosure Schedule lists all Plans
sponsored, maintained or contributed to, or required to be contributed to, by
ALP or by any ERISA Affiliate within the last six (6) years. With respect to
each Plan, ALP has made available to Cardinal a true, correct and complete copy
of: (i) each writing constituting a part of such Plan, including, without
limitation, all plan documents and amendments thereto, benefit schedules, trust
agreements, and insurance contracts and other funding vehicles; (ii) the three
(3) most recent Annual Reports (Form 5500 Series) and accompanying schedules, if
any; (iii) the current summary plan description, if any; (iv) the most recent
annual financial report, if any; (v) the most recent determination letter from
the Internal Revenue Service, if any; and (vi) the most recent
actuarial/valuation, if any. Neither ALP nor any ERISA Affiliate has any plan or
commitment to create any additional Plan or to modify or change any existing
Plan that would affect any employee or terminated employee of ALP or any ERISA
Affiliate.
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(c) The Internal Revenue Service has issued a favorable determination
letter with respect to each Plan that is intended to be a "qualified plan"
within the meaning of Section 401(a) of the Code (a "Qualified Plan"), and, to
ALP's Knowledge, except as set forth in Section 4.17(c) of the ALP Disclosure
Schedule, there are no existing circumstances nor any events that have occurred
that could adversely affect the qualified status of any Qualified Plan or the
related trust.
(d) Except as set forth in Section 4.17(d) of the ALP Disclosure Schedule,
all contributions required to be made to any Plan by Applicable Laws or by any
plan document or other contractual undertaking, and all premiums due or payable
with respect to insurance policies funding any Plan, for any period through the
date hereof have been timely made or paid in full and through the Closing Date
will be timely made or paid in full or, to the extent not required to be made or
paid on or before the date hereof or the Closing Date, as applicable, have been
or will be fully reflected in the Compilation Statements and the Interim
Statements.
(e) Except as set forth in Section 4.17(e) of the ALP Disclosure Schedule,
ALP and all ERISA Affiliates have complied and are in compliance with all
provisions of ERISA, the Code and all laws and regulations applicable to the
Plans. Each Plan has been operated in compliance with its terms and in
accordance with all Applicable Laws. There is not now, and there are no
existing, circumstances that could give rise to, any requirement for the posting
of security with respect to a Plan or the imposition of any lien on the assets
of ALP or any ERISA Affiliate under ERISA or the Code. Each Plan includes
provisions which effectively reserve the rights of the sponsor of the Plan to
amend or terminate the Plan.
(f) No Plan is subject to Title IV or Section 302 of ERISA or Section 412
or 4971 of the Code. No Plan is a "multiemployer plan" within the meaning of
Section 4001(a)(3) of ERISA (a "Multiemployer Plan") or a plan that has two or
more contributing sponsors at least two of whom are not under common control,
within the meaning of Section 4063 of ERISA (a "Multiple Employer Plan"), nor
has ALP or any of its respective ERISA Affiliates, at any time within five years
before the date hereof, contributed to or been obligated to contribute to any
Multiemployer Plan or Multiple Employer Plan.
(g) Except as set forth in Section 4.17(g) of the ALP Disclosure Schedule,
there does not now exist, and there are no existing, circumstances that could
result in, any Controlled Group Liability that would be a liability of ALP
following the Closing. Without limiting the generality of the foregoing, neither
ALP nor any of its ERISA Affiliates has engaged in any transaction described in
Section 4069 of ERISA or any transaction that constitutes a withdrawal under
Section 4201 ET SEQ. of ERISA.
(h) Except as set forth in Section 4.17(h) of the ALP Disclosure Schedule
and except for health continuation coverage as required by Section 4980B of the
Code or Part 6 of Title I of ERISA, ALP has no liability for life, health,
medical or other welfare benefits to former employees or beneficiaries or
dependents thereof.
(i) Except as set forth in Section 4.17(i) of the ALP Disclosure Schedule,
neither the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will result in, cause the accelerated vesting
or delivery of, or increase the
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amount or value of, any payment or benefit to any employee, officer, director or
consultant of ALP, and Section 4.17(i) of the ALP Disclosure Schedule specifies
the amount of any such payment or benefit. Without limiting the generality of
the foregoing and except as set forth in Section 4.17(i) of the ALP Disclosure
Schedule, no amount paid or payable by ALP in connection with the transactions
contemplated hereby either solely as a result thereof or as a result of such
transactions in conjunction with any other events will be an "excess parachute
payment" within the meaning of Section 280G of the Code.
(j) There are no pending or, to ALP's Knowledge, threatened claims (other
than claims for benefits in the ordinary course), lawsuits or arbitrations which
have been asserted or instituted against the Plans, any fiduciaries thereof with
respect to their duties to the Plans or the assets of any of the trusts under
any of the Plans which could reasonably be expected to result in any material
liability of ALP.
SECTION 4.18 CONTRACTS.
(a) Section 4.18(a) of the ALP Disclosure Schedule lists all written or
oral contracts, agreements, guarantees, leases and executory commitments (each a
"Contract") to which ALP is a party and which fall within any of the following
categories: (i) Contracts not entered into in the ordinary course of ALP's
business, (ii) joint venture, partnership and similar agreements, (iii)
Contracts which are service contracts or equipment leases involving payments by
ALP of more than $100,000 per year, (iv) Contracts containing covenants
purporting to limit the freedom of ALP to compete in any line of business in any
geographic area or to hire any individual or group of individuals, including,
without limitation, Contracts with any customers granting the customer any
exclusive rights, (v) Contracts which after the Effective Time would have the
effect of limiting the freedom of Cardinal or its subsidiaries (other than ALP)
to compete in any line of business in any geographic area or to hire any
individual or group of individuals, including any Contracts with distributors
granting any exclusive rights, (vi) Contracts which contain minimum purchase
conditions or requirements or other terms that restrict or limit the purchasing
relationships of ALP or its affiliates, or any customer, licensee or lessee
thereof, (vii) Contracts relating to any outstanding commitment for capital
expenditures in excess of $100,000, (viii) Contracts relating to the lease or
sublease of or sale or purchase of real or personal property involving any
annual expense or price in excess of $100,000 and not cancelable by ALP (without
premium or penalty) within ninety days, (ix) Contracts with any labor
organization, (x) indentures, mortgages, promissory notes, loan agreements,
guarantees of amounts in excess of $100,000, letters of credit or other
agreements or instruments of ALP or commitments for the borrowing or the lending
of amounts in excess of $100,000 by ALP or providing for the creation of any
charge, security interest, encumbrance or lien upon any of the assets of ALP,
(xi) Contracts which are fixed price, capitation or other risk sharing
agreements with customers not cancelable by ALP (without premium or penalty)
within one month; (xii) Contracts involving annual revenues or expenditures to
the business of ALP in excess of 3.0% of ALP's annual revenues, (xiii) Contracts
providing for "earn-outs" or other contingent payments involving more than
$100,000 over the term of the Contract and (xiv) Contracts with or for the
benefit of any affiliate (as such term is defined in Rule 12b-2 promulgated
under the Exchange Act) of ALP or immediate family member thereof. All such
Contracts are valid and binding obligations of ALP and, to ALP's Knowledge, the
valid and binding obligation of each other party thereto. Except as set forth in
Section 4.18(a) of the ALP Disclosure Schedule, neither ALP nor, to ALP's
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Knowledge, any other party thereto is in violation of or in default in respect
of, nor has there occurred an event or condition which with the passage of time
or giving of notice (or both) would constitute a default under or permit the
termination of, any Contract.
(b) Except as set forth in Section 4.18 of the ALP Disclosure Schedule or
as contemplated by the transactions contemplated hereby, there are no Contracts
or other transactions between ALP, on the one hand, and any (i) officer or
director of ALP, (ii) record or beneficial owner of any securities of ALP or
(iii) affiliate of any such officer, director or beneficial owner, on the other
hand.
(c) Except as set forth in Section 4.18 of the ALP Disclosure Schedule, no
consent, permission, waiver or approval is required to be obtained, and no
penalty, assessment or special payment is required to paid to, any third party
or governmental authority in order to preserve for ALP after the Merger the
benefits of the Contracts.
SECTION 4.19 ACCOUNTS RECEIVABLE; INVENTORIES.
(a) All accounts and notes receivable (including lease and finance notes
receivable) and accrued interest receivable of ALP have arisen in the ordinary
course of business and the accounts receivable reserves reflected on the balance
sheet included in the Compilation Statements and the Interim Statements (which
reserves shall not exceed $50,000) will be as of the date thereof established in
accordance with generally accepted accounting principles consistently applied.
All such accounts and notes receivable outstanding as of the Closing will be
collected in full (subject only to the aforementioned reserves) within 180 days
of the Closing.
(b) The inventories reflected on the balance sheet included in the
Compilation Statements and the Interim Statement have been (or will be) valued
in accordance with generally accepted accounting principles consistently
applied. Physical adjustments since the date of the Compilation Statements have
been correctly recorded in the ordinary course of business. Such inventories (i)
are carried at an amount not in excess of the lower of cost or net realizable
value, and (ii) do not include any inventory which is obsolete, surplus or not
usable or saleable in the lawful and ordinary course of business of ALP as
heretofore conducted, in each case net of reserves provided therefor. Such
inventories consist of items of quality and quantity that are adequate for the
conduct of the business of ALP and inventory levels are not in excess of normal
operating requirements of ALP.
SECTION 4.20 LABOR MATTERS. Except as set forth in Section 4.20 of the
ALP Disclosure Schedule, ALP does not have any labor contracts, collective
bargaining agreements or employment or consulting agreements (except for
employment or consulting agreements that provide for annual payments of not more
than $50,000) with any persons employed by ALP or any persons otherwise
performing services primarily for ALP (the "ALP Business Personnel"). ALP has
not engaged in any unfair labor practice with respect to ALP Business Personnel,
and there is no unfair labor practice complaint pending or, to the knowledge of
ALP, threatened, against ALP with respect to ALP Business Personnel. There is no
labor strike, dispute, slowdown or stoppage pending or, to ALP's Knowledge,
threatened against ALP, and ALP has not experienced any labor strike, dispute,
slowdown or stoppage or other labor difficulty involving its employees since
December 31, 1996.
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SECTION 4.21 UNDISCLOSED LIABILITIES. Except (i) as and to the extent
disclosed or reserved against on the balance sheet of ALP as of March 31, 1999
included in the Interim Statements, (ii) as incurred after the date thereof in
the ordinary course of business consistent with prior practice and not
prohibited by this Agreement and which in any event are not material, (iii) as
set forth in Section 4.21 of the ALP Disclosure Schedule, or (iv) as provided in
any Contract disclosed in Section 4.18(a) of the ALP Disclosure Schedule
(excluding any liability for a breach of any such Contract), ALP does not have
any liabilities or obligations of any nature, whether known or unknown,
absolute, accrued, contingent or otherwise and whether due or to become due,
that, individually or in the aggregate, could have a Material Adverse Effect on
ALP.
SECTION 4.22 OPERATION OF ALP'S BUSINESS; RELATIONSHIPS.
(a) Since January 1, 1999 through the date of this Agreement, ALP has not
engaged in any transaction which, if done after execution of this Agreement,
would violate Section 5.3(b) hereof except as set forth in Section 4.22 of the
ALP Disclosure Schedule. Section 4.22 of the ALP Disclosure Schedule describes
each termination or non-renewal that has occurred with respect to any Contract
with any customer or supplier from January 1, 1999 to the date of this
Agreement.
(b) The relationships of ALP with its customers and suppliers are
satisfactory, and, to ALP's Knowledge, the execution of this Agreement, the
consummation of the Merger and the other transactions contemplated hereby will
not materially adversely affect the relationships of ALP with such customers or
suppliers.
(c) No product produced by ALP or produced for ALP by a third party has
been recalled voluntarily or involuntarily since January 1, 1996, no such recall
is being considered by ALP, and, to ALP's Knowledge, no such recall is being
considered by or has been requested or ordered by any ALP customer, Governmental
Authority or consumer group.
(d) ALP is in possession of all material franchises, grants,
authorizations, licenses, permits, easements, variances, exemptions, consents,
certificates, approvals and orders necessary to own, lease and operate its
properties and to carry on its business as it is now being conducted
(collectively, the "ALP Permits"), and there is no Action pending or, to ALP's
Knowledge, threatened regarding any of the ALP Permits. ALP is not in conflict
with, or in default or violation of any of the ALP Permits, except for any such
conflicts, defaults or violations which, individually or in the aggregate, could
not reasonably be expected to have a Material Adverse Effect on ALP. Except as
set forth in Section 4.22(d) of the ALP Disclosure Schedule, during the period
commencing on January 1, 1997 and ending on the date hereof, ALP has not
received any written notification with respect to possible conflicts, defaults
or violations of Applicable Laws, except for notices relating to possible
conflicts, defaults or violations, which conflicts, defaults or violations could
not have a Material Adverse Effect on ALP. Except as set forth in Section
4.22(d) of the ALP Disclosure Schedule, no consent, approval, registration or
filing with any third party or Governmental Authority pursuant to any ALP
Permits is required as a result of the transactions contemplated by this
Agreement.
SECTION 4.23 PRODUCT WARRANTIES AND LIABILITIES. Section 4.23 of the
ALP Disclosure Schedule lists all forms of warranties, guarantees or assurances
of its products and
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services that are in effect or proposed to be used by it. Section 4.23 of the
ALP Disclosure Schedule sets forth a description of each pending or, to ALP's
Knowledge, threatened Action under any warranty or guaranty against ALP. ALP has
not incurred, nor, to ALP's Knowledge, is there any basis for alleging, any
liability, damage, loss, cost or expense as a result of any defect or other
deficiency (whether of design, materials, workmanship, labeling instructions or
otherwise) ("Product Liability") with respect to any product sold or services
rendered by or on behalf of ALP (including any licensee thereof) after December
31, 1995 and prior to the Effective Time which would have a Material Adverse
Effect on ALP, whether such Product Liability is incurred by reason of any
express or implied warranty (including, without limitation, any warranty of
merchantability or fitness), any doctrine of common law (tort, contract or
other), any statutory provision or otherwise and irrespective of whether such
Product Liability is covered by insurance.
SECTION 4.24 BOARD RECOMMENDATION. The Board of Directors of ALP, at a
meeting duly called and held, has by unanimous vote of those directors present
(who constituted 100% of the directors then in office) (i) determined that this
Agreement and the transactions contemplated hereby, including the Merger, are
fair to and in the best interests of the stockholders of ALP, and (ii)
recommended that the holders of the shares of ALP Common Stock approve this
Agreement and the transactions contemplated herein, including the Merger (the
"ALP Board Recommendation").
SECTION 4.25 IBCA AND STATE TAKEOVER LAWS. Prior to the date hereof,
the Board of Directors of ALP has taken all action necessary to exempt under or
make the following not subject to any state takeover law or other state law that
purports to limit or restrict business combinations or the ability to acquire or
vote shares: (i) the execution of this Agreement, (ii) the Merger and (iii) the
other transactions contemplated hereby.
SECTION 4.26 INSURANCE. ALP is presently insured, and during each of
the past five calendar years has been insured, against such risks as companies
engaged in a similar business would, in accordance with good business practice,
customarily be insured. Except as set forth in Section 4.26 of the ALP
Disclosure Schedule, the policies of fire, theft, liability, professional
practice and other insurance currently maintained with respect to the assets or
businesses of the Company may be continued by ALP without modification or
premium increase after the Effective Time and for the duration of their current
terms which terms expire as set forth in Section 4.26 of the ALP Disclosure
Schedule.
SECTION 4.27 BOOKS OF ACCOUNT; RECORDS. ALP's general ledgers, stock
record books, minute books and other material records relating to the assets,
properties, contracts and outstanding legal obligations of ALP are, in all
material respects, complete and correct, and have been maintained in accordance
with good business practices and the matters contained therein are appropriate
and accurately reflected in the Compilation Statements and the Interim
Statements.
SECTION 4.28 INVESTMENT REPRESENTATION. Each ALP Stockholder (a) is
either an "accredited investor" (as such term is defined in Regulation D of the
Securities Act) or, alone or with his or her purchaser representative(s), has
such knowledge and experience in financial and business matters that he or she
is capable of evaluating the merits and risks of an investment in
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Cardinal Common Shares and (b) received from ALP a copy of the Prospectus (as
defined in Section 5.2(a)) and each of the documents incorporated by reference
therein.
SECTION 4.29 NO OTHER REPRESENTATIONS AND WARRANTIES. Except as
expressly set forth in this Article IV, ALP makes no representations and
warranties, express or implied, at law or in equity, in respect of ALP or any of
its assets, liabilities or operations.
ARTICLE V. COVENANTS OF THE PARTIES
The parties hereto agree as follows with respect to the period from and
after the execution of this Agreement:
SECTION 5.1 MUTUAL COVENANTS.
(a) GENERAL. Each of the parties shall use its reasonable efforts to take
all action and to do all things necessary, proper or advisable to consummate the
Merger and the transactions contemplated by this Agreement (including, without
limitation, using its reasonable efforts to cause the conditions set forth in
Article VI for which they are responsible to be satisfied as soon as reasonably
practicable and to prepare, execute and deliver such further instruments and
take or cause to be taken such other and further action as any other party
hereto shall reasonably request).
(b) HSR ACT. As soon as practicable, and in any event no later than fifteen
business days after the date hereof, each of the parties hereto will file any
Notification and Report Forms and related material required to be filed by it
with the Federal Trade Commission and the Antitrust Division of the United
States Department of Justice under the HSR Act with respect to the Merger, will
use its reasonable efforts to obtain an early termination of the applicable
waiting period, and shall promptly make any further filings pursuant thereto
that may be necessary, proper or advisable. Cardinal and ALP agree to cooperate
with respect to, and shall cause each of their respective subsidiaries to
cooperate with respect to, and agree to use all reasonable efforts to contest
and resist, any Action, including legislative, administrative or judicial
Action, and to have vacated, lifted, reversed or overturned any decree,
judgment, injunction or other order (whether temporary, preliminary or
permanent) (an "Order") of any Governmental Authority that is in effect and that
restricts, prevents or prohibits the consummation of the Merger or any other
transactions contemplated by this Agreement, including, without limitation, by
pursuing all available avenues of administrative and judicial appeal and all
available legislative action. Upon the terms and subject to the conditions set
forth in this Agreement, in connection with the HSR Act, each of ALP and
Cardinal agrees to take, or cause to be taken, all actions, and to do, or cause
to be done, and to assist and cooperate with the other parties in doing, all
things necessary, proper or advisable to consummate and make effective, in the
most expeditious manner practicable, the Merger and the other transactions
contemplated by this Agreement, including the obtaining of all necessary actions
or nonactions, waivers, consents and approvals from Governmental Authorities and
the making of all necessary registrations and filings (including filings with
Governmental Authorities, if any) and the taking of all reasonable steps as may
be necessary to obtain an approval or waiver from, or to avoid an action or
proceeding by, any Governmental Authority; provided, however, that a party shall
not be
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obligated to take any action pursuant to the foregoing if the taking of such
action or the obtaining of any waiver, consent, approval or exemption is
reasonably likely (x) to impact in a materially adverse manner the economic or
business benefits of the transactions contemplated by this Agreement so as to
render inadvisable the consummation of the Merger or (y) to result in an Order
(i) prohibiting or limiting the ownership or operation by Cardinal of any
material portion of the business or assets of ALP or compelling Cardinal to
dispose of or hold separate any of the business or assets of Cardinal or any
material portion of the business or assets of ALP as a result of the Merger or
any of the other transactions contemplated by this Agreement, (ii) imposing
limitations on the ability of Cardinal to acquire or hold, or exercise full
rights of ownership of, any shares of capital stock of ALP, including, without
limitation, the right to vote such capital stock on all matters properly
presented to the ALP Stockholders, or (iii) prohibiting Cardinal from
effectively controlling in any material respect the business or operations of
ALP.
(c) OTHER GOVERNMENTAL MATTERS. Each of the parties shall use its
reasonable efforts to take any additional action that may be necessary, proper
or advisable in connection with any other notices to, filings with, and
authorizations, consents and approvals of any Governmental Authority that it may
be required to give, make or obtain.
(d) POOLING-OF-INTERESTS. Each of the parties agrees that it shall not, and
shall not permit any of its subsidiaries to, take any actions (regardless of
whether such action would otherwise be permitted or not prohibited hereunder)
that would, or would be reasonably likely to, prevent Cardinal from accounting,
and shall use its reasonable best efforts (including, without limitation,
providing appropriate representation letters to Cardinal's accountants in
addition to the representation letter provided by ALP to Cardinal's accountants
on the date hereof) to allow Cardinal to account, for the Merger in accordance
with the pooling-of-interests method of accounting under the requirements of
Opinion No. 16 "Business Combinations" of the Accounting Principles Board of the
American Institute of Certified Public Accountants, as amended by applicable
pronouncements by the Financial Accounting Standards Board, and all related
published rules, regulations and policies of the Commission ("APB No. 16"), and
to obtain a letter, in form and substance reasonably satisfactory to Cardinal,
from Deloitte & Touche LLP dated the Closing Date stating that they concur with
management's conclusion that the Merger will qualify as a transaction to be
accounted for by Cardinal in accordance with the pooling-of-interests method of
accounting under the requirements of APB No. 16.
(e) TAX-FREE TREATMENT. Each of the parties shall use all reasonable
efforts to cause the Merger to constitute a tax-free "reorganization" under
Section 368(a) of the Code.
(f) PUBLIC ANNOUNCEMENTS. Unless otherwise required by Applicable Laws or
requirements of the NYSE (and in that event only if time does not permit), at
all times prior to the earlier of the Effective Time or termination of this
Agreement pursuant to Section 7.1, Cardinal and ALP shall consult with each
other before issuing any press release with respect to the Merger and shall not
issue any such press release prior to such consultation.
SECTION 5.2 COVENANTS OF CARDINAL.
(a) SECURITIES LAWS. Assuming the accuracy of the statements made in
Sections 4.28 and 5.3(a), (i) the issuance of Cardinal Common Shares to the ALP
Stockholders in the Xxxxxx
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xxxxx xx registered under the Securities Act pursuant to Cardinal's Registration
Statement on Form S-4 (Commission File No. 333-74761) and the Prospectus
included therein dated April 7, 1999 (the "Prospectus") and (ii) the Cardinal
Common Shares issued in the Merger will be freely transferable under the
Securities Act of 1933 by the ALP Stockholders to whom they are issued, subject
to the provisions of Rule 145 thereunder. Cardinal shall use all reasonable
efforts to keep the Registration Statement effective until the Closing.
(b) NOTIFICATION OF CERTAIN MATTERS. Cardinal shall give prompt notice to
ALP of (i) the occurrence or non-occurrence of any event the occurrence or
non-occurrence of which would cause any Cardinal or Subcorp representation or
warranty contained in this Agreement to be untrue or inaccurate at or prior to
the Effective Time and (ii) any material failure of Cardinal to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied by
it hereunder; provided, however, that the delivery of any notice pursuant to
this Section 5.2(b) shall not limit or otherwise affect the remedies available
hereunder to ALP.
(c) NYSE LISTING. Cardinal shall use its reasonable efforts to cause the
Cardinal Common Shares issuable pursuant to the Merger to be approved for
listing on the NYSE, subject to official notice of issuance, prior to the
Effective Time.
(d) CONTINUITY OF BUSINESS ENTERPRISE; CONTINUITY OF INTERESTS. It is the
present intention of Cardinal and Subcorp to continue at least one significant
historic business of ALP, or to use at least a significant portion of ALP's
historic business assets in a business, in each case within the meaning of Reg.
Section 1.368-1(d) promulgated pursuant to the Code. Neither Cardinal nor any
"related person" within the meaning of Reg. Section 1.368-1(e)(3) has any plan
or intent to redeem, in connection with the transactions contemplated by this
Agreement, any Cardinal Common Shares issued to the ALP Stockholders in the
Merger or take any other action which might violate the "continuity of interest"
provisions of Reg. Section 1.368-1(e), except any reacquisition of Cardinal
Common Shares pursuant to Article VIII of this Agreement or the Escrow
Agreement.
(e) DIRECTORS' AND OFFICERS' INDEMNIFICATION AND INSURANCE. For a period of
six years from and after the Effective Time, Cardinal shall cause the Surviving
Corporation to indemnify and hold harmless the former officers and directors of
ALP in respect of acts or omissions occurring prior to the Effective Time (so
long as such acts or omissions do not constitute Indemnifiable Claims of
Cardinal under Article VIII) to the fullest extent permitted or provided under
the ALP Articles and ALP By-laws. Cardinal shall, for a period of six years,
cause ALP to maintain the current policies of directors, and officers' liability
insurance and fiduciary liability insurance maintained by ALP (provided that
Cardinal may substitute therefor policies of at least the same coverage and
amounts containing terms and conditions which are, in the aggregate, no less
advantageous to the insured and provided that ALP shall not be required to spend
each year more than 125% of the current annual premium for such current
policies) with respect to claims arising from facts or events that occurred at
or before the Effective Time.
SECTION 5.3 COVENANTS OF ALP AND THE ALP STOCKHOLDERS.
(a) PROSPECTUS DELIVERY. ALP acknowledges receipt from Cardinal of 15
copies of the Prospectus and all of the documents incorporated by reference
therein. ALP sent or delivered
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the Prospectus and such incorporated documents to each of the ALP Stockholders
at least 20 business days prior to the date hereof.
(b) CONDUCT OF ALP'S OPERATIONS. During the period from the date of this
Agreement to the Effective Time, ALP shall, and the ALP Stockholders shall take
all actions as may be necessary to cause ALP to, conduct its operations only in
the ordinary course, except as expressly contemplated by this Agreement and the
transactions contemplated hereby, and to use all reasonable efforts to maintain
and preserve its business organization and its material rights and franchises
and to retain the services of its officers and key employees and maintain
relationships with customers, suppliers, lessees, licensees and other third
parties, and to maintain all of its operating assets in their current condition
(normal wear and tear excepted), to the end that their goodwill and ongoing
business shall not be impaired in any material respect. Without limiting the
generality of the foregoing, during the period from the date of this Agreement
to the Effective Time, ALP shall not, except as otherwise expressly contemplated
by this Agreement or as set forth in Section 5.3(b) of the ALP Disclosure
Schedule, without the prior written consent of Cardinal:
(i) do or effect any of the following actions with respect to its
securities: (A) adjust, split, combine or reclassify its capital stock, (B)
make, declare or pay any dividend or distribution on, or directly or
indirectly redeem, purchase or otherwise acquire, any shares of ALP Common
Stock or any securities or obligations convertible into or exchangeable for
any shares of ALP Common Stock, (C) grant any person any right or option to
acquire any shares of ALP Common Stock, (D) issue, deliver or sell or agree
to issue, deliver or sell any additional shares of ALP Common Stock or any
securities or obligations convertible into or exchangeable or exercisable
for any shares of ALP Common Stock or such securities, or (E) enter into
any agreement, understanding or arrangement with respect to the sale or
voting of ALP Common Stock;
(ii) directly or indirectly sell, transfer, lease, pledge, mortgage,
encumber or otherwise dispose of any of its material property or assets,
other than in the ordinary course of business;
(iii) make or propose any changes in the ALP Articles or the ALP
By-laws;
(iv) merge or consolidate with any other person or acquire the assets
(other than the acquisition of inventory, supplies and equipment in the
ordinary course of business) or capital stock of any other person, or enter
into any confidentiality agreement with any person in contemplation of any
of the foregoing;
(v) incur, create, assume or otherwise become liable for any
indebtedness for borrowed money or assume, guarantee, endorse or otherwise
as an accommodation become responsible or liable for the obligations of any
other individual, corporation or other entity, other than in the ordinary
course of business consistent with past practice not in excess of $100,000
in the aggregate;
(vi) create any subsidiaries;
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(vii) enter into or modify any employment, severance, termination or
similar agreements or arrangements with, or grant any bonuses, salary
increases, severance or termination pay to, any officer, director,
consultant or employee or otherwise increase the compensation or benefits
provided to any officer, director, consultant or employee other than salary
increases granted in the ordinary course of business consistent with past
practice to employees who are not officers or directors of ALP, and except
as may be required by Applicable Law or a binding written contract in
effect on the date of this Agreement;
(viii) enter into, adopt or amend any employee benefit or similar
plan;
(ix) change its method of doing business or change any method or
principle of accounting in a manner that is inconsistent with past
practice;
(x) settle any Actions, whether now pending or hereafter made or
brought involving an amount in excess of $100,000, or settle the Action
entitled Vital Pharma, Inc. v. Automatic Liquid Packaging, Inc., case no.
99-8163-CIV-XXXXXX (S.D. Xxxx. - West Palm Beach Division) without the
prior written consent of Cardinal, which will not be unreasonably withheld;
(xi) write up, write down or write off the book value of any assets,
individually or in the aggregate, in excess of $100,000, except for
depreciation and amortization in accordance with generally accepted
accounting principles consistently applied;
(xii) modify, amend or terminate, or waive, release or assign any
material rights or claims with respect to, any Contract set forth in
Section 4.18(a) of the ALP Disclosure Schedule, any other material Contract
to which ALP is a party or any confidentiality agreement to which ALP is a
party;
(xiii) incur or commit to any capital expenditures, obligations or
liabilities in respect thereof which in the aggregate exceed or would
exceed $100,000;
(xiv) make any material changes or modifications to any pricing policy
or investment policy or enter into any new management agreements or leases
on terms different from those in effect in the ordinary and usual course of
business, consistent with past practice;
(xv) pay (or agree to become obligated to pay) any professional fees
and expenses in excess of the amount set forth in Section 4.21 of the ALP
Disclosure Schedule;
(xvi) take any action to exempt or make not subject to any other state
takeover law or state law that purports to limit or restrict business
combinations or the ability to acquire or vote shares, any person or entity
(other than Cardinal or its subsidiaries) or any action taken thereby,
which person, entity or action would have otherwise been subject to the
restrictive provisions thereof and not exempt therefrom;
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(xvii) take any action that could result in the representations and
warranties set forth in Article IV becoming false or inaccurate in any
material respect;
(xviii) enter into or carry out any other material transaction other
than in the ordinary and usual course of business;
(xix) agree in writing or otherwise to take any of the foregoing
actions.
(c) INTELLECTUAL PROPERTY MATTERS. Except as provided in Section 5.3(c) of
the ALP Disclosure Schedule, ALP shall use all reasonable efforts to preserve
its ownership rights to the Intellectual Property free and clear of any liens,
claims or encumbrances and shall use its best efforts to assert, contest and
prosecute any infringement of any issued foreign or domestic patent, trademark,
service xxxx, tradename or copyright that forms a part of the Intellectual
Property or any misappropriation or disclosure of any trade secret, confidential
information or know-how that forms a part of the Intellectual Property.
(d) NO SOLICITATION. ALP and each of the ALP Stockholders agree that,
during the term of this Agreement, ALP and each ALP Stockholder shall not, and
shall not authorize or permit any of ALP's directors, officers, employees,
agents or representatives to, directly or indirectly, solicit, initiate,
encourage or facilitate, or furnish or disclose non-public information in
furtherance of, any inquiries or the making of any proposal with respect to any
recapitalization, merger, consolidation or other business combination involving
ALP, or acquisition of any capital stock of ALP or any material portion of the
assets of ALP, or any combination of the foregoing (a "Competing Transaction"),
or negotiate, explore or otherwise engage in discussions with any person (other
than Cardinal, Subcorp or their respective directors, officers, employees,
agents and representatives) with respect to any Competing Transaction or enter
into any agreement, arrangement or understanding requiring it to abandon,
terminate or fail to consummate the Merger or any other transactions
contemplated by this Agreement. Neither the Board of Directors of ALP nor any
committee thereof shall (i) withdraw or modify, or propose publicly to withdraw
or modify, in a manner adverse to Cardinal, the ALP Board Recommendation, (ii)
approve or recommend, or propose publicly to approve or recommend, any Competing
Transaction or (iii) cause ALP to enter into any letter of intent, agreement in
principle, acquisition agreement or other similar agreement (each, an
"Acquisition Agreement") related to any Competing Transaction or proposal for a
Competing Transaction. From and after the execution of this Agreement, ALP and
each ALP Stockholder shall immediately advise Cardinal in writing of the
receipt, directly or indirectly, of any inquiries, discussions, negotiations or
proposals relating to a Competing Transaction (including the specific terms
thereof and the identity of the other party or parties involved) and promptly
furnish to Cardinal a copy of any such proposal or inquiry in addition to any
information provided to or by any third party relating thereto.
(e) AFFILIATES OF ALP. ALP has obtained from each person who may be at the
Effective Time or was on the date hereof an "affiliate" of ALP for purposes of
Rule 145 under the Securities Act (each, an "ALP Affiliate") an Affiliate Letter
in the form of Exhibit B hereto. On the date hereof, ALP has (after consultation
with outside counsel for ALP) provided Cardinal with a letter specifying all of
the persons or entities who may be deemed to be "affiliates" of ALP under the
preceding sentence.
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(f) ACCESS; FINANCIAL STATEMENTS. ALP shall permit representatives of
Cardinal to have appropriate access at all reasonable times to ALP's premises,
properties, books, records, contracts, tax records, documents, customers and
suppliers. ALP shall deliver to Cardinal Interim Statements within 20 days
following the end of each calendar month, beginning with Interim Statements for
July 1999.
(g) NOTIFICATION OF CERTAIN MATTERS. ALP shall give prompt notice to
Cardinal of (i) the occurrence or non-occurrence of any event the occurrence or
non-occurrence of which would cause any ALP representation or warranty contained
in this Agreement to be untrue or inaccurate at or prior to the Effective Time
and (ii) any material failure of ALP to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it hereunder;
provided, however, that the delivery of any notice pursuant to this Section
5.3(g) shall not limit or otherwise affect the remedies available hereunder to
Cardinal.
(h) OTHER AGREEMENTS. ALP shall use all reasonable efforts to cause the
individual set forth in Section 5.3(h)(i) of the ALP Disclosure Schedule to
enter into a Consulting Agreement with ALP substantially in the form attached
hereto. The individuals set forth on Section 5.3(h)(ii) of the ALP Disclosure
Schedule shall enter into the agreements substantially in the form attached
hereto as Exhibits H-1 through H-5. (The agreements referred to in this Section
5.3(h) are hereinafter sometimes referred to collectively as the "Ancillary
Agreements.")
(i) TERMINATION OF AGREEMENTS. ALP shall cause prior to Closing the
termination of, and the waiver or satisfaction of all remaining obligations or
liabilities, contingent or otherwise, of ALP under, the agreements or plans
listed in Section 5.3(i) of the ALP Disclosure Schedule.
(j) CERTAIN TAX MATTERS.
(i) For each taxable period of ALP that ends before the Closing Date,
the ALP Stockholders shall cause to be timely prepared, submitted to
Cardinal for review and filed with the appropriate authorities (with copies
provided to Cardinal) all tax returns of ALP and shall cause to be paid by
the parties responsible therefor all taxes when due. Cardinal shall cause
to be prepared and filed all tax returns for ALP for tax periods not
described in the foregoing sentence of this Section 5.3(j)(i) and ALP shall
pay all taxes required to be paid for such periods.
(ii) The ALP Stockholders, ALP and Cardinal reasonably and in good
faith shall cooperate with each other in preparing and filing all tax
returns, including maintaining and making available to each other all
records necessary in connection with the preparation and filing of such tax
returns.
(iii) The ALP Stockholders shall be responsible for causing to be
filed any amended tax returns of ALP for taxable periods ending prior to
the Closing Date which are required as a result of an examination or
adjustments made by taxing authorities, and for causing to be paid by the
parties responsible therefor when due any taxes resulting therefrom. Any
such amended returns shall be furnished to Cardinal for approval (which
approval shall not be unreasonably withheld), signature and filing at least
ten (10) business days prior to the due date for the filing of such amended
returns.
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(iv) If a claim is made by any taxing authority:
(A) For any taxable period ending before the Closing Date, ALP
Stockholders shall control the proceedings taken in
connection with such claim; and
(B) For any taxable period ending on or after the Closing Date,
Cardinal shall control the proceedings taken in connection
with such claim.
Subject to the foregoing clauses (A) and (B), the parties
reasonably and in good faith shall cooperate with each other in the
contesting of any tax claim, and shall keep each other fully apprised
of the status of such claims. Notwithstanding any of the foregoing to
the contrary, Cardinal shall not without the prior written approval of
the ALP Stockholders Representative (as defined in Section 8.6) (1)
agree to an extension of the statute of limitations with respect to
any taxable period of ALP ending before the Closing Date or (2) amend
any tax return of ALP for any taxable period of ALP ending before the
Closing Date.
(v) Notwithstanding any other provision of this Agreement to the
contrary, as provided in Section 8.2(a), the ALP Stockholders shall
jointly and severally indemnify Cardinal and ALP, and hold them
harmless from and against, all liability of ALP for federal income
taxes and all interest, penalties and other costs and expenses related
thereto (including reasonable attorneys' fees) attributable to the
failure of ALP to be an "S" corporation within the meaning of Section
1361(a)(1) of the Code at all times during each taxable year included
in the period beginning April 1, 1998, and ending on the day before
the Closing Date, and for state, local and foreign income or franchise
taxes and all interest, penalties and other costs and expenses related
thereto (including reasonable attorneys' fees) attributable to any
such failure of ALP to be an S corporation under the comparable
provisions of the laws of such jurisdictions.
(k) INJUNCTIVE RELIEF. ALP acknowledges and agrees that Cardinal's and
Subcorp's remedies at law for any violation or attempted violation of any of
ALP's obligations under this Article V would be inadequate and incomplete, and
agree that in the event of any such violation or attempted violation, Cardinal
and Subcorp (or either of them) shall be entitled to a temporary restraining
order, temporary and permanent injunctions, and other equitable relief, without
the necessity of posting any bond or proving any actual damage, in addition to
all other rights and remedies which may be available to Cardinal and Subcorp
from time to time.
ARTICLE VI. CONDITIONS
SECTION 6.1 MUTUAL CONDITIONS. The obligations of the parties hereto to
consummate the Merger shall be subject to fulfillment of the following
conditions:
(a) NO ADVERSE PROCEEDING. No temporary restraining order, preliminary or
permanent injunction or other order or decree which prevents the consummation of
the Merger
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shall have been issued and remain in effect, and no statute, rule or regulation
shall have been enacted by any Governmental Authority which prevents the
consummation of the Merger.
(b) HSR ACT. Any applicable waiting periods applicable to the consummation
of the Merger under the HSR Act shall have expired or been terminated.
(c) SECURITIES AND EXCHANGE COMMISSION. On the Closing Date and at the
Effective Time, no stop order or similar restraining order shall have been
threatened by the Commission or entered by the Commission or any state
securities administrator prohibiting the Merger.
(d) NO GOVERNMENT ACTION. No Action shall be instituted by any Governmental
Authority which seeks to prevent consummation of the Merger or seeking material
damages in connection with the transactions contemplated hereby which continues
to be outstanding.
SECTION 6.2 CONDITIONS TO OBLIGATIONS OF ALP. The obligations of ALP to
consummate the Merger and the transactions contemplated hereby shall be subject
to the fulfillment of the following conditions unless waived by ALP:
(a) REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties of each of Cardinal and Subcorp set forth in Article III shall be
true and correct in all material respects on the date hereof and on and as of
the Closing Date as though made on and as of the Closing Date, except that
representations and warranties made as of a specified date need be true and
correct only as of the specified date and, except that representations and
warranties that are qualified by concepts of materiality or Material Adverse
Effect shall be true and correct in all respects on the date hereof and on and
as of the Closing Date.
(b) PERFORMANCE OF AGREEMENT. Each of Cardinal and Subcorp shall have
performed in all material respects each obligation and agreement and shall have
complied in all material respects with each covenant to be performed and
complied with by it hereunder at or prior to the Effective Time.
(c) CERTIFICATES. Each of Cardinal and Subcorp shall have furnished ALP
with a certificate dated the Closing Date signed on behalf of it by the
Chairman, President or any Vice President to the effect that the conditions set
forth in Sections 6.2(a) and (b) have been satisfied.
(d) OPINION OF COUNSEL. ALP shall have received the legal opinion, dated
the Closing Date, of Xxxxx & Xxxxxxxxx LLP substantially in the form attached
hereto as EXHIBIT D.
(e) NYSE AUTHORIZATION. The Cardinal Common Shares to be issued in the
Merger and the transactions contemplated hereby shall have been authorized for
inclusion on the NYSE, subject to official notice of issuance.
SECTION 6.3 CONDITIONS TO OBLIGATIONS OF CARDINAL AND SUBCORP. The
obligations of Cardinal and Subcorp to consummate the Merger and the other
transactions contemplated hereby shall be subject to the fulfillment of the
following conditions unless waived by each of Cardinal and Subcorp:
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(a) REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties of ALP and the ALP Stockholders set forth in Article IV shall be true
and correct in all material respects on the date hereof and on and as of the
Closing Date as though made on and as of the Closing Date, except that
representations and warranties made as of a specified date need be true and
correct only as of the specified date and except that representations and
warranties qualified by concepts of materiality or Material Adverse Effect shall
be true and correct in all respects on the date hereof and on and as of the
Closing Date.
(b) PERFORMANCE OF AGREEMENT. ALP and the ALP Stockholders shall have
performed in all material respects each obligation and agreement and shall have
complied in all material respects with each covenant to be performed and
complied with by it hereunder at or prior to the Effective Time.
(c) CERTIFICATE. ALP shall have furnished Cardinal with a certificate dated
the Closing Date signed on its behalf by its Chairman, President or any Vice
President, and each ALP Stockholder shall have furnished Cardinal with a
certificate dated the Closing Date, to the effect that the conditions set forth
in Sections 6.3(a) and (b) have been satisfied.
(d) OPINION OF COUNSEL. Cardinal shall have received the legal opinion,
dated the Closing Date, of Xxxxxxxx & Xxxxxxx, substantially in the form
attached hereto as EXHIBIT E.
(e) POOLING LETTER. Cardinal shall have received a letter, in form and
substance reasonably satisfactory to Cardinal, from Deloitte & Touche LLP dated
the date of the Effective Time stating that they concur with management's
conclusion that the Merger will qualify as a transaction to be accounted for by
Cardinal in accordance with the pooling-of-interests method of accounting under
the requirements of XXX Xx. 00.
(f) AFFILIATE LETTERS. Each ALP Affiliate shall have executed and delivered
to Cardinal an Affiliate Letter in accordance with Section 5.3(e).
(g) CONSENTS AND APPROVALS. ALP shall have received all customer, vendor,
lessee, licensee, licensor and other third party consents and approvals listed
on Section 6.3(g) of the ALP Disclosure Schedule.
(h) ESCROW AGREEMENT. ALP, Cardinal, the Escrow Agent and all of the ALP
Stockholders shall have executed and delivered the Escrow Agreement.
(i) STOCKHOLDERS RELEASE. Each of the ALP Stockholders shall have executed
and delivered to Buyer a Release, dated as of the Effective Time, in the form of
EXHIBIT F attached hereto.
(j) CERTAIN AGREEMENTS. The Ancillary Agreements referenced in Section
5.3(h) of the Agreement shall have been executed and delivered by all the
parties thereto, and the Employment Agreements dated the date hereof between ALP
and each of Xxxxx X. Xxx and Xxxxxxx X. Xxxxxxx (the "Employment Agreements")
shall remain in full force and effect according to their terms as of the
Closing.
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(k) TERMINATION OF CERTAIN AGREEMENTS. As of or prior to the Closing, the
agreements and plans listed in Section 5.3(i) of the ALP Disclosure Schedule
shall have been effectively terminated and all of ALP's obligations and
liabilities, contingent or otherwise, thereunder shall have been satisfied or
irrevocably waived by the other parties thereto or the participants therein.
(l) PROSPECTUS. The Prospectus, including the documents incorporated by
reference therein, shall not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading.
(m) XXXXXX ENGINEERING AGREEMENT. The Agreement between ALP and Xxxxxx
Engineering, Inc. ("Xxxxxx Engineering") in the form attached hereto as EXHIBIT
G shall have been executed and delivered by the parties thereto on or prior to
the Effective Time.
(n) NO NOTICE FROM CUSTOMERS. Neither ALP nor any ALP Stockholder shall
have received notice from any of ALP's three largest customers (based on net
revenue for calendar year 1998) that it has terminated or intends to terminate
its relationship with ALP.
(o) NET WORTH. The shareholders' equity of ALP as reflected in the July 31,
1999 Interim Statements shall equal or exceed $110,000,000.
(p) REAL ESTATE MATTERS. With respect to each parcel of real property owned
by ALP, ALP shall have obtained and delivered to Cardinal (i) a title insurance
policy in an amount reasonably determined by Cardinal (the "Policy") based on a
title commitment for an ALTA Form B Owners Policy of Title Insurance issued by a
title insurance company selected by Cardinal, which Policy shall be in form and
content satisfactory to Cardinal and (ii) current surveys prepared by a surveyor
selected by Cardinal, which surveys (y) shall conform to Minimum Standard Detail
Requirements for ALTA/ACSM Title Surveys and (z) shall not disclose any survey
defect or encroachment from or onto any of such real property.
(q) TERMINATION AND RELEASE. The Termination and Release Agreement dated
August 3, 1999, among Xxxx Xxxxxx, individually and as trustee, Xxxxxxx Xxxxxx,
individually and as trustee (collectively, "Xxxxxx"), and ALP (the "Xxxxxx
Agreement") pursuant to which Xxxxxx releases all claims against ALP, except as
provided in Section 5(b) thereof, shall be in full force and effect, and ALP
shall have paid all amounts required to be paid thereunder.
(r) NO MATERIAL ADVERSE CHANGE. Since the date of this Agreement, there
shall not have been any change in the assets, liabilities, business, prospects,
results of operations or financial condition of ALP which would constitute a
Material Adverse Effect or any event, occurrence or development which would have
a material adverse effect on the ability of ALP to consummate the transactions
contemplated hereby.
(s) PLAN AMENDMENT. ALP shall have amended the Automatic Liquid Packaging,
Inc. Employees 401(k) Savings Plan (the "ALP Plan") to adopt a non-standardized
prototype plan document as an amendment and restatement effective as of January
1, 1997, of the ALP Plan.
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ARTICLE VII. TERMINATION AND AMENDMENT
SECTION 7.1 TERMINATION. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after approval and adoption of
this Agreement by the ALP Stockholders:
(a) by mutual consent of Cardinal and ALP;
(b) by either Cardinal or ALP if any permanent injunction or other order of
a court or other competent Governmental Authority preventing the consummation of
the Merger shall have become final and nonappealable;
(c) by either Cardinal or ALP if the Merger shall not have been consummated
before December 31, 1999, unless extended by the Boards of Directors of both
Cardinal and ALP (provided that the right to terminate this Agreement under this
Section 7.1(c) shall not be available to any party whose failure or whose
affiliate's failure to perform any material covenant or obligation under this
Agreement has been the cause of or resulted in the failure of the Merger to
occur on or before such date);
(d) by Cardinal if the Board of Directors of ALP shall withdraw, modify or
change the ALP Board Recommendation in a manner adverse to Cardinal, or if the
Board of Directors of ALP shall have refused to affirm the ALP Board
Recommendation within two business days of any written request from Cardinal;
(e) by ALP if the Board of Directors of Cardinal shall withdraw, modify or
change its approval of this Agreement and the transactions contemplated hereby
in a manner adverse to ALP, or if the Board of Directors of Cardinal shall have
refused to affirm such approval within two business days of any written request
from ALP;
(f) by Cardinal if at any time the representations and warranties of ALP
set forth in Section 4.16 shall not be true and correct or Cardinal shall have
been advised that the condition set forth in Section 6.3(e) cannot be satisfied.
SECTION 7.2 EFFECT OF TERMINATION. In the event of the termination of
this Agreement pursuant to Section 7.1, this Agreement, except for the
provisions of this Section 7.2 and Section 9.10, shall become void and have no
effect, without any liability on the part of any party or its directors,
officers or stockholders. Notwithstanding the foregoing, nothing in this Section
7.2 shall relieve any party to this Agreement of liability for a material breach
of any provision of this Agreement.
SECTION 7.3 AMENDMENT. This Agreement may be amended by the parties
hereto, by action taken or authorized by their respective Boards of Directors;
provided, however, that no amendment shall be made which by law requires further
approval or authorization by the ALP Stockholders without such further approval
or authorization. Notwithstanding the foregoing, this Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties hereto.
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SECTION 7.4 EXTENSION; WAIVER. At any time prior to the Effective Time,
Cardinal (with respect to ALP) and ALP (with respect to Cardinal and Subcorp) by
action taken or authorized by their respective Boards of Directors, may, to the
extent legally allowed, (a) extend the time for the performance of any of the
obligations or other acts of such party, (b) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto and (c) waive compliance with any of the agreements or
conditions contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in a written
instrument signed on behalf of such party.
ARTICLE VIII. INDEMNIFICATION
SECTION 8.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
(a) Subject to the limitations set forth in Section 8.3, below, and
notwithstanding any investigation conducted at any time with regard thereto by
or on behalf of Cardinal or ALP, all representations, warranties, covenants and
agreements of ALP or Cardinal in this Agreement and in any other documents
executed or delivered by ALP or Cardinal pursuant to this Agreement or in
connection with the transactions contemplated by this Agreement (the "Additional
Documents") shall survive the execution, delivery and performance of this
Agreement and the Additional Documents. All representations and warranties of
ALP or Cardinal set forth in this Agreement and in the Additional Documents
shall be deemed to have been made again by ALP or Cardinal, as the case may be,
at and as of the Effective Time (except for representations and warranties made
as of a specified date, which shall be deemed to have been made only as of the
specified date). This Section 8.1 shall not limit any covenant or agreement of
the parties hereto which by its terms contemplates performance after the
Effective Time or after the termination of this Agreement.
(b) As used in this Article VIII, any reference to a representation,
warranty or covenant contained in any section of this Agreement shall include
the section of the Disclosure Schedule relating to such section.
SECTION 8.2 INDEMNIFICATION.
(a) Subject to the limitations set forth in Sections 8.3 and 8.8 below, the
ALP Stockholders, jointly and severally, shall indemnify and hold harmless
Cardinal from and against any and all losses, liabilities, damages, demands,
claims, suits, actions, judgments or causes of action, assessments, costs and
expenses, including, without limitation, interest, penalties, attorneys' fees,
any and all expenses incurred in investigating, preparing or defending against
any litigation, commenced or threatened, or any claim whatsoever, and any and
all amounts paid in settlement of any claim or litigation (collectively,
"Damages"), asserted against, resulting to, imposed upon, or incurred or
suffered by Cardinal, directly or indirectly, as a result of or arising from (i)
any inaccuracy in or breach or nonfulfillment of, or any alleged inaccuracy in
or breach or nonfulfillment of, any of the representations, warranties,
covenants or agreements made by ALP or any ALP Stockholder in this Agreement or
the Additional Documents, whether or not arising out of a third-party claim, or
any claim or other occurrence or circumstance that is or was inconsistent with
any such representations, warranties, covenants or agreements, (ii) any product
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shipped or manufactured by, or any services provided by, ALP prior to the
Effective Time, (iii) the installation or operation of any machinery or
equipment sold by Xxxxxx Engineering to or through ALP (whether used and
operated by ALP or sold to third parties) or any engineering or technical
support services provided by Xxxxxx Engineering to ALP or any customers of ALP,
(iv) any liabilities to any party under the Xxxxxx Agreement (other than
liabilities for salary continuation payments expressly provided for therein), or
any other liability whatsoever to Xxxxxx (including, without limitation, under
the Founding Officers Agreement (as defined in the ALP Disclosure Schedule
(collectively, "Xxxxxx Liabilities"), (v) any inaccuracy in or breach of, or any
alleged inaccuracy in or breach of, the representation and warranty made by ALP
in Section 4.17(g), without regard to any disclosures regarding or limitations
on such representation or warranty in any Section of the ALP Disclosure Schedule
(collectively, "Controlled Group Liabilities"), and (vi) any liabilities of the
type described in Section 5.3(j)(v) (collectively, "Indemnifiable Claims" when
used in the context of Cardinal as the Indemnified Party as defined in Section
8.3(c)).
(b) Subject to the limitations set forth in Section 8.3 and 8.8, Cardinal
hereby covenants and agrees to indemnify and hold harmless the ALP Stockholders,
from and after the Effective Time, from and against any and all Damages,
asserted against, resulting to, imposed upon, or incurred or suffered by ALP or
the ALP Stockholders, directly or indirectly, as a result of or arising from any
inaccuracy in or breach or nonfulfillment of, or any alleged inaccuracy in or
breach or nonfulfillment of, any of the representations and warranties made by
Cardinal in this Agreement (collectively, "Indemnifiable Claims" when used in
the context of ALP or the ALP Stockholders as the Indemnified Party).
(c) For purposes of this Article VIII, all Damages shall be computed (i)
net of any insurance coverage which reduces the Damages that would otherwise be
sustained; provided that in all cases the timing of the receipt or realization
of insurance proceeds shall be taken into account in determining the amount of
reduction of Damages and (ii) net of the present value of the reasonably
expected tax savings to the Indemnified Party of the Damages paid or incurred
grossed-up by the reasonably expected tax cost of the amount that but for this
subparagraph would be received by the Indemnified Party in satisfaction of the
Indemnifiable Claim.
(d) Cardinal shall be deemed to have suffered Damages arising out of or
resulting from the matters referred to in Section 8.2(a) if the same shall be
suffered by any parent, subsidiary or affiliate of Cardinal, including, without
limitation, the Surviving Corporation after the Effective Time.
SECTION 8.3 LIMITATIONS ON INDEMNIFICATION. Rights to indemnification
under this Article VIII are subject to the following limitations:
(a) Neither Cardinal nor ALP nor the ALP Stockholders shall be entitled to
indemnification hereunder with respect to an Indemnifiable Claim (or, if more
than one such Indemnifiable Claim is asserted, with respect to all such
Indemnifiable Claims) unless the aggregate amount of Damages with respect to
such Indemnifiable Claim or Claims exceeds $750,000 (the "Threshold"), in which
event Cardinal shall be entitled to indemnification hereunder from the ALP
Stockholders and the ALP Stockholders shall be entitled to indemnification from
Cardinal for Damages with respect to all Indemnifiable Claims in excess of
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the Threshold up to the amount equal to fifteen percent (15%) of the Aggregate
Consideration (the "Cap"); provided, however, that any Damages with respect to
an Indemnifiable Claim arising from any Controlled Group Liability or any Xxxxxx
Liability shall not be subject to or applied toward the Threshold and Cardinal
shall be entitled to indemnification for the entire amount of said Damages up to
the amount of the Cap. In addition, Cardinal's right to indemnification and the
ALP Stockholders' responsibility for any Damages relating to any Xxxxxx
Liability shall not apply to the Cap until, and then only to the extent that,
the amount of Damages arising from the Xxxxxx Liability for which the ALP
Stockholders have indemnified Cardinal exceeds an amount equal to five percent
(5%) of the Aggregate Consideration.
(b) The obligation of indemnity with respect to the representations and
warranties set forth in Article III and in Article IV shall terminate on the
earlier of (i) the date on which Cardinal's audited financial statements for the
first fiscal year ending after the Effective Time are issued and (ii) the first
anniversary of the Effective Time.
(c) The foregoing provisions of this Section 8.3 notwithstanding, if, prior
to the termination of any obligation to indemnify, written notice of a claimed
breach or other occurrence or matter giving rise to a claim of indemnification
is given by the Party seeking indemnification (the "Indemnified Party") to the
Party from whom indemnification is sought (the "Indemnifying Party"), or a suit
or action based upon a claimed breach is commenced against the Indemnifying
Party, the Indemnified Party shall not be precluded from pursuing such claimed
breach, occurrence, other matter, or suit or action, or from recovering from the
Indemnifying Party (whether through the courts or otherwise) on the claim, suit
or action, by reason of the termination otherwise provided for above.
SECTION 8.4 PROCEDURE FOR INDEMNIFICATION WITH RESPECT TO THIRD PARTY
CLAIMS.
(a) If the Indemnified Party determines to seek indemnification under this
Article VIII with respect to Indemnifiable Claims resulting from the assertion
of liability by third parties, it shall give notice to the Indemnifying Party
within 60 days of the Indemnified Party's becoming aware of any such
Indemnifiable Claim, which notice shall set forth such material information with
respect to such Indemnifiable Claim as is then reasonably available to the
Indemnified Party. If any such liability is asserted against the Indemnified
Party and the Indemnified Party notifies the Indemnifying Party of such
liability, the Indemnifying Party shall be entitled, if it so elects by written
notice delivered to the Indemnified Party within 15 days after receiving the
Indemnified Party's notice, to assume the defense of such asserted liability
with counsel reasonably satisfactory to the Indemnified Party unless the
Indemnifying Party fails to provide reasonable assurance to the Indemnified
Party of its financial capacity to assume such defense. If the Indemnifying
Party elects to assume the defense of such asserted liability, the claims made
by such third party shall be conclusively established as being within the scope
of and subject to the indemnification provisions of this Agreement.
Notwithstanding the foregoing: (i) the Indemnified Party shall have the right to
employ its own counsel in any such case, but the fees and expenses of such
counsel shall be payable by the Indemnified Party; (ii) the Indemnified Party
shall not have any obligation to give any notice of any assertion of liability
by a third party unless such assertion is in writing; and (iii) the rights of
the Indemnified Party to be indemnified in respect of Indemnifiable Claims
resulting from the assertion of liability by third parties shall not be
adversely affected by its failure to give notice pursuant to the foregoing
provisions unless,
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and, if so, only to the extent that, the Indemnifying Party is materially
prejudiced by such failure. With respect to any assertion of liability by a
third party that results in an Indemnifiable Claim, the Parties shall make
available to each other all relevant information in their possession which is
material to any such assertion.
(b) In the event that the Indemnifying Party fails to assume the defense of
the Indemnified Party against any such Indemnifiable Claim, within 15 days after
receipt of the Indemnified Party's notice of such Indemnifiable Claim, the
Indemnified Party shall have the right to defend, compromise or settle such
Indemnifiable Claim on behalf, for the account, and at the risk of the
Indemnifying Party.
(c) Notwithstanding anything in this Section 8.4 to the contrary, (i) if
there is a reasonable probability that an Indemnifiable Claim may materially and
adversely affect the Indemnified Party, its corporate parent, if any, its
subsidiaries or affiliates, including, without limitation, the Surviving
Corporation after the Effective Time if Cardinal is the Indemnified Party, other
than as a result of money damages or other money payments, then the Indemnified
Party shall have the right, at the cost and expense of the Indemnifying Party,
to defend, compromise or settle such Indemnifiable Claim; and (ii) the
Indemnifying Party shall not, without the Indemnified Party's prior written
consent, settle or compromise any Indemnifiable Claim or consent to entry of any
judgment in respect of any Indemnifiable Claim unless such settlement,
compromise or consent (A) includes as an unconditional term the giving by the
claimant or the plaintiff to the Indemnified Party (and its corporate parent, if
any, its subsidiaries and affiliates including, without limitation, the
Surviving Corporation after the Effective Time if Cardinal is the Indemnified
Party) a release from all liability in respect of such Indemnifiable Claim and
(B) does not include a finding or admission by ALP or Cardinal of any violation
of Applicable Laws or any violation of the rights of any person.
SECTION 8.5 PROCEDURE FOR INDEMNIFICATION WITH RESPECT TO NON-THIRD
PARTY CLAIMS. In the event that the Indemnified Party asserts the existence of
an Indemnifiable Claim giving rise to Damages (but excluding Indemnifiable
Claims resulting from the assertion of liability by third parties, but including
a dispute among the parties as to whether a third-party claim is subject to
indemnification under this Article VIII), it shall give written notice to the
Indemnifying Party specifying the nature and amount of the Indemnifiable Claim
asserted. If the Indemnifying Party, within 20 business days after the mailing
of such notice by the Indemnified Party, has not given written notice to the
Indemnified Party announcing its intent to contest such assertion by the
Indemnified Party, such assertion shall be deemed accepted and the amount of
Indemnifiable Claim shall be deemed a valid Indemnifiable Claim. In the event,
however, that the Indemnifying Party contests the assertion of an Indemnifiable
Claim by giving such written notice to the Indemnified Party within such 20-day
period, then if the Parties, acting in good faith, cannot reach agreement with
respect to such Indemnifiable Claim within 30 business days after receipt by the
Indemnified Party of such notice, the contested assertion of the claim shall be
referred to arbitration in Columbus, Ohio, in accordance with the then-current
rules of the American Arbitration Association. The determination made in
accordance with such rules shall be delivered in writing to the Parties and
shall be final and binding and conclusive on the Parties and the amount of the
Indemnifiable Claim, if any, determined to exist shall be a valid Indemnifiable
Claim. Each Party shall pay its own legal, accounting and other fees in
connection with such a contest; provided that if the contested claim is referred
to and ultimately
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determined by arbitration, the legal, auditing and other fees of the prevailing
Party and the fees and expenses of any arbitrator shall be borne by the
nonprevailing Party.
SECTION 8.6 ALP STOCKHOLDERS REPRESENTATIVE. The ALP Stockholders
hereby irrevocably appoint Xxxxxxx X. Xxxxxx (the "ALP Stockholders
Representative") to act on behalf of the ALP Stockholders with respect to all
matters relating to this Article VIII and the Escrow Agreement, including,
without limitation, in considering and certifying the amount of any
indemnification hereunder, in communicating with the ALP Stockholders, in
appointing a successor Escrow Agent under the Escrow Agreement, in considering
and acting with respect to any amendment or termination of this Agreement, and
generally in performing all acts expressly required or permitted to be performed
by the ALP Stockholders Representative pursuant hereto and pursuant to the
Escrow Agreement. Cardinal and the Escrow Agent shall have the right to deal
exclusively with the ALP Stockholders Representative with respect to all matters
under the Escrow Agreement and neither Cardinal nor the Escrow Agent shall have
any liability to any ALP Stockholder for any acts or omissions of the ALP
Stockholders Representative, or any acts or omissions taken or not taken by
Cardinal or the Escrow Agent at the direction of the ALP Stockholders
Representative, including, but not limited to (i) any acts or omissions relating
to the voting of any Retained Shares or (ii) the transferring or the failure to
transfer any shares or funds released from escrow. Upon any distribution of
Cardinal Common Shares or other funds to the ALP Stockholders Representative (or
to one or more of the ALP Stockholders upon written instruction of the ALP
Stockholders Representative) in accordance with the Agreement, the Escrow Agent
and Cardinal shall be deemed to have fully satisfied any and all obligations to
the ALP Stockholders under this Agreement and the Escrow Agreement with respect
to the amount of such distribution. The ALP Stockholders Representative will
have no liability to ALP or the ALP Stockholders with respect to actions taken
or omitted to be taken in his capacity as ALP Stockholders Representative,
except with respect to any liability resulting primarily from the ALP
Stockholders Representative's gross negligence or willful misconduct. The ALP
Stockholders Representative shall be entitled to rely upon any directions
received from holders (the "Majority Holders") of a majority of the ALP Common
Stock.
SECTION 8.7 VALUATION OF SHARES RELEASED FROM ESCROW. For purposes of
determining the number of Retained Shares which shall be necessary to satisfy an
Indemnifiable Claim against the ALP Stockholders, each Escrowed Share (as
defined in the Escrow Agreement) shall be deemed to have a value equal to the
last reported sale price of Cardinal Common Shares on the New York Stock
Exchange on the trading day immediately preceding the Closing Date (subject to
equitable adjustment for stock splits, reclassifications, combinations,
reorganizations or other similar changes). Indemnifiable Claims against the ALP
Stockholders shall be made first against the Retained Shares. After all of the
Retained Shares have been used to satisfy such Indemnifiable Claims, Cardinal
shall be entitled to make additional Indemnifiable Claims directly against the
ALP Stockholders.
SECTION 8.8 TERMINATION OF ALP'S WARRANTIES. Notwithstanding any
provisions of this Agreement to the contrary: (a) all representations,
warranties and covenants made by ALP in this Agreement or the Additional
Documents shall terminate as to ALP (but only as to ALP, and not as to the ALP
Stockholders) as of the Closing; and (b) after the Closing, ALP shall not have
any obligation or liability to any ALP Stockholder as a direct or indirect
result of any
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misrepresentation, breach of covenant or other occurrence or circumstance for
which the ALP Stockholders have or may have liability to Cardinal under this
Agreement.
ARTICLE IX. MISCELLANEOUS
SECTION 9.1 NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally,
telecopied (which is confirmed) or dispatched by a nationally recognized
overnight courier service to the parties at the following addresses (or at such
other address for a party as shall be specified by like notice):
(a) if to Cardinal or Subcorp:
Cardinal Health, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxxx, Xxxx 00000
Attention: General Counsel
Telecopy No.: (000) 000-0000
with a copy to:
Xxxx X. Xxxxxxxx, Esq.
Xxxxx & Xxxxxxxxx LLP
3200 National City Center
0000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000-0000
Telecopy No.: (000) 000-0000
(b) if to ALP:
Automatic Liquid Packaging, Inc.
0000 Xxxx Xxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Telecopy No.: (000) 000-0000
with a copy to
Xxxxxx Xxxx, Esq.
Xxxxxxxx & Xxxxxxx
000 Xxxxx Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Telecopy No.: (000) 000-0000
SECTION 9.2 INTERPRETATION. When a reference is made in this Agreement
to an Article or Section, such reference shall be to an Article or Section of
this Agreement unless otherwise indicated. The headings and the table of
contents contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement. For the
purposes of any provision of this Agreement, a "Material Adverse Effect" with
respect to any party shall mean a material adverse effect on the assets,
liabilities, results of operations, prospects or condition (financial or
otherwise) of such party and its subsidiaries taken
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as a whole. For purposes of this Agreement, a "subsidiary" of any person means
another person, an amount of the voting securities or other voting ownership or
voting partnership interests of which is sufficient to elect at least a majority
of its Board of Directors or other governing body (or, if there are no such
voting securities or interests, 50% or more of the equity interests of which) is
owned directly or indirectly by such first person. For the purposes of this
Agreement, the "Knowledge" of ALP shall mean the actual knowledge of facts,
matters or circumstances of the officers and directors of ALP, or in the absence
of such knowledge, the actual knowledge that such individuals would have had if
they had undertaken a reasonable investigation of the fact, matter or
circumstance in question.
SECTION 9.3 COUNTERPARTS. This Agreement may be executed in
counterparts, which together shall constitute one and the same Agreement. The
parties may execute more than one copy of the Agreement, each of which shall
constitute an original.
SECTION 9.4 ENTIRE AGREEMENT. This Agreement (including the documents
and the instruments referred to herein), constitutes the entire agreement among
the parties and supersede all prior agreements and understandings, agreements or
representations by or among the parties, written and oral, with respect to the
subject matter hereof and thereof.
SECTION 9.5 THIRD PARTY BENEFICIARIES. Nothing in this Agreement,
express or implied, is intended or shall be construed to create any third party
beneficiaries.
SECTION 9.6 GOVERNING LAW. Except to the extent that the laws of the
jurisdiction of organization of any party hereto, or any other jurisdiction, are
mandatorily applicable to the Merger or to matters arising under or in
connection with this Agreement, this Agreement shall be governed by the laws of
the State of Ohio, without regard to principles of conflicts of laws. All
actions and proceedings arising out of or relating to this Agreement shall be
heard and determined in any Ohio state or federal court sitting in the City of
Columbus.
SECTION 9.7 CONSENT TO JURISDICTION; VENUE.
(a) Each of the parties hereto irrevocably submits to the exclusive
jurisdiction of the state courts of Ohio and to the jurisdiction of the United
States District Court for the Southern District of Ohio, for the purpose of any
action or proceeding arising out of or relating to this Agreement and each of
the parties hereto irrevocably agrees that all claims in respect to such action
or proceeding may be heard and determined exclusively in any Ohio state or
federal court sitting in the City of Columbus. Each of the parties hereto agrees
that a final judgment in any action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law.
(b) Each of the parties hereto irrevocably consents to the service of any
summons and complaint and any other process in any other action or proceeding
relating to the Merger, on behalf of itself or its property, by the personal
delivery of copies of such process to such party. Nothing in this Section 9.7
shall affect the right of any party hereto to serve legal process in any other
manner permitted by law.
SECTION 9.8 SPECIFIC PERFORMANCE. The transactions contemplated by this
Agreement are unique. Accordingly, each of the parties acknowledges and agrees
that, in
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addition to all other remedies to which it may be entitled, each of the parties
hereto is entitled to a decree of specific performance, provided such party is
not in material default hereunder.
SECTION 9.9 ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties. Subject to the preceding sentence, this Agreement
shall be binding upon, inure to the benefit of and be enforceable by the parties
and their respective successors and assigns.
SECTION 9.10 EXPENSES. Subject to the provisions of Section 7.2,
Cardinal shall be responsible for all costs and expenses incurred by Cardinal
and Subcorp in connection with this Agreement and the transactions contemplated
hereby and ALP, both before and after the Effective Time, shall be responsible
for such reasonable costs and expenses incurred by the ALP Stockholders in
connection with this Agreement and the transactions contemplated hereby, subject
to Section 5.3(b)(xv).
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[Signature page to Agreement and Plan of Merger.]
IN WITNESS WHEREOF, Cardinal, Subcorp, ALP and the ALP
Stockholders have signed this Agreement as of the date first written above.
CARDINAL HEALTH, INC.
By: /s/ Xxxx X. Xxxx
-----------------------------------
Name: Xxxx X. Xxxx
---------------------------
Title: President and COO
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FLOWER MERGER CORP.
By: /s/ Xxxx X. Xxxx
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Name: Xxxx X. Xxxx
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Title: President
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AUTOMATIC LIQUID PACKAGING, INC.
By: /s/ Xxxxxxx X. Xxxxxx
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Name:
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Title:
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THE ALP STOCKHOLDERS
/s/ Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx, as the ALP Stockholders
Representative and as Trustee of the Xxxxxxx X.
Xxxxxx Dec. of Trust dated 9/3/93
/s/ Xxxxxxxx Xxxxxx
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Xxxxxxxx Xxxxxx
/s/ Xxxx Xxxxxxx
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Xxxx Xxxxxxx
53
[Signature page to Agreement and Plan of Merger.]
/s/ Xxx Xxxxxx
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Xxx Xxxxxx
/s/ Xxxxxxxxx Xxxxxx
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Xxxxxxxxx Xxxxxx
/s/ Xxxx Xxxxxx
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Xxxx Xxxxxx
/s/ Xxxx X. Xxxxxx
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Xxxx X. Xxxxxx, individually and as Trustee
of the Xxxx X. Xxxxxx Gift Trust
/s/ Xxxxx X. Xxxxxx
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Xxxxx X. Xxxxxx, individually and as
Trustee of the Xxxxx X. Xxxxxx Gift Trust
/s/ Xxxxx X. Xxxx
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Xxxxx X. Xxxx
/s/ Xxxx Brockrogge
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Xxxx Brockrogge
/s/ Xxxxx X. Xxx
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Xxxxx X. Xxx
/s/ Xxxxxxx Xxxxx
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Xxxxxxx Xxxxx
/s/ Arjun Xxxxxxxxxxx
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Arjun Xxxxxxxxxxx
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EXHIBIT A
ESCROW AGREEMENT
This Escrow Agreement is made and entered into as of
_____________ ___, 1999, by and among Cardinal Health, Inc., an Ohio corporation
("Cardinal"), Automatic Liquid Packaging, Inc., an Illinois corporation ("ALP"),
Xxxxxxx X. Xxxxxx (the "ALP Stockholders Representative"), Bank One Trust
Company, NA, a national banking association, as escrow agent (the "Escrow
Agent"), and the undersigned stockholders of ALP ("ALP Stockholders").
PRELIMINARY STATEMENTS:
A. Cardinal, ALP, Flower Merger Corp., an Illinois corporation
("Subcorp"), and the ALP Stockholders have entered into an Agreement and Plan of
Merger dated as of August ___, 1999 (the "Merger Agreement"), providing for,
among other things, Cardinal's acquisition of the businesses operated by ALP
through the merger of Subcorp with and into ALP, with ALP as the surviving
corporation, in accordance with the terms and conditions of the Merger
Agreement.
B. Capitalized terms used but not otherwise defined herein
shall have the respective meanings given them in the Merger Agreement.
C. Pursuant to the Merger Agreement, the ALP Stockholders are
obligated to indemnify Cardinal for certain damages.
D. To facilitate such indemnification, the Merger Agreement
provides for the deposit into escrow of a portion of the Cardinal Common Shares
otherwise to be issued to the ALP Stockholders in the Merger in order to secure
the indemnification obligations of the ALP Stockholders.
E. Cardinal and the ALP Stockholders desire to secure the
services of the Escrow Agent, and the Escrow Agent is willing to provide such
services, pursuant to the terms and conditions of this Agreement.
NOW, THEREFORE, the parties hereto, intending to be legally
bound, agree as follows:
SECTION I
APPOINTMENT OF ESCROW AGENT; RESIGNATION AND SUCCESSOR
1.1 Appointment of Escrow Agent. The Escrow Agent is hereby
appointed, and accepts its appointment and designation as, Escrow Agent pursuant
to the terms and conditions of this Agreement.
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1.2 Resignation of Escrow Agent; Appointment of Successor. The
Escrow Agent acting at any time hereunder may resign at any time by giving at
least 30 days' prior written notice of resignation to Cardinal and the ALP
Stockholders Representative, such resignation to be effective on the date
specified in such notice. Upon receipt of such notice, Cardinal shall, unless
otherwise agreed between Cardinal and the ALP Stockholders Representative,
appoint a bank or trust company with a combined capital and surplus of at least
$100 million as successor Escrow Agent, by a written instrument delivered to
such Escrow Agent and the ALP Stockholders Representative, whereupon such
successor Escrow Agent shall succeed to all the rights and obligations of the
retiring Escrow Agent as of the effective date of resignation as if originally
named herein. Upon such assignment of this Escrow Agreement, the retiring Escrow
Agent shall duly transfer and deliver the Escrow Deposit at the time held by the
retiring Escrow Agent, provided that, if no successor Escrow Agent shall have
been appointed on the effective date of resignation of the resigning Escrow
Agent hereunder, the resigning Escrow Agent may pay the Escrow Deposit into a
court of competent jurisdiction.
SECTION II
ESCROW ARRANGEMENTS
2.1 Liability Secured by the Escrow Deposit. This Escrow
Agreement has been executed and delivered and the Escrow Account (as defined in
Section 2.2(d)) is hereby established to facilitate any indemnification which
may be owed to Cardinal pursuant to Article VIII of the Merger Agreement. The
Escrow Deposit (as defined below), including any Additional Property (as defined
below), deposited into the Escrow Account in respect of such shares (hereinafter
referred to collectively as the "Escrowed Amount"), will be available to satisfy
claims of Cardinal in accordance with Section 3.1 hereof.
2.2 Delivery of the Escrowed Shares; etc. (a) On the Closing
Date, Cardinal shall issue instructions to its transfer agent directing it to
issue and deliver to the Escrow Agent certificates bearing any appropriate
legends registered in the name of the "Escrow Agent under Escrow Agreement,
dated ____________ __, 1999, by and among Cardinal Health, Inc., an Ohio
corporation, Automatic Liquid Packaging, Inc., an Illinois corporation, ALP
Stockholders Representative, Bank One Trust Company, NA, a national banking
association, and the ALP Stockholders," for the applicable number of Cardinal
Common Shares determined in accordance with Section 2.1(d) of the Merger
Agreement (such Shares, together with any additional Cardinal Common Shares
distributed in an extraordinary dividend with respect thereof pursuant to any
stock split (or deposited with respect to any such stock split shares), and any
cash deposited into the Escrow Account pursuant to Section 2.2(b), collectively,
the "Escrowed Shares"). From time to time, Cardinal shall also deliver to the
Escrow Agent for deposit into the Escrow Account all Cardinal Common Shares
distributed pursuant to any stock dividend, reclassification of shares or other
transaction to which such shares may be subject, and any other securities, cash
or other property distributed in an extraordinary dividend with respect of the
Escrowed Shares (whether by way of liquidation, merger, exchange, spin-off or
otherwise), any investments or securities permitted by this Agreement and any
interest received thereon (collectively, the "Additional Property"). (The
Escrowed Shares, together with the Additional Property, shall constitute the
"Escrow Deposit.") From time to time, Cardinal shall also deliver to the Escrow
Agent for
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prompt distribution to the ALP Stockholders all cash dividends on the Escrowed
Shares, such distributions to be made pro rata to the ALP Stockholders in
accordance with their respective ownership as reflected on the then current
ownership Certificate (as hereinafter defined). Notwithstanding any other
provision of this Agreement to the contrary, whenever Escrowed Shares are to be
distributed pursuant to this Agreement, except for distributions made pursuant
to Section 2.2(b), there shall be distributed to the party entitled to such
Escrowed Shares, concurrently with the delivery of such Escrowed Shares, the
Additional Property relating thereto. The parties agree that all such
distributions of Additional Property and cash dividends made to the ALP
Stockholders in respect of such Escrowed Shares, including, without limitation,
all such interest and all other income earned on such shares, shall be interest
and income of the ALP Stockholders and shall be reported for federal, state and
local tax purposes as for the accounts of the ALP Stockholders, pro rata in
accordance with their respective ownership as reflected on the then current
Ownership Certificate.
(b) Subject to applicable state and federal securities laws,
each ALP Stockholder, at any time and from time to time during the term of this
Agreement, shall have the right to require the ALP Stockholders Representative
to sell up to the number of Escrowed Shares owned by such ALP Stockholder as
reflected in the Ownership Certificate, and the proceeds of any such sale shall
be deposited in and become part of the Escrow Deposit. Upon any such sale, the
Escrow Agent shall open a separate subaccount for such ALP Stockholder and the
proceeds of such sale shall be reflected on the Ownership Certificate as owned
by and allocable to such ALP Stockholder and shall be treated as Escrowed Shares
for purposes of this Agreement. As provided in Section 8.7 of the Merger
Agreement, for purposes of determining the number of Escrowed Shares which shall
be necessary to satisfy an Indemnifiable Claim against the ALP Stockholders,
each Escrowed Share is deemed to have a value equal to the last reported sale
price of Cardinal Common Shares on the New York Stock Exchange on the trading
day immediately preceding the Closing Date. Accordingly, the proceeds from the
sale of an Escrowed Share sold pursuant to this Section 2.2(b) shall be deemed
to have a value equal to the last reported sale price of a Cardinal Common Share
on the New York Stock Exchange on the trading day immediately preceding the
Closing Date. For example, if such last reported sale price on the trading day
immediately preceding the Closing is $73.00 and an Escrowed Share is sold out of
escrow for $83.00, the $83.00 in cash proceeds shall be deemed to have a value
of $73.00 for purposes of satisfying an Indemnifiable Claim. Similarly, if
Escrowed Shares are sold for $63.00, the $63.00 proceeds shall be deemed to have
a value of $73.00 in satisfying any Indemnifiable Claim. Upon receipt of the
proceeds of the sale of Escrowed Shares as described above, together with a
certified Form W-9 and such other information as the Escrow Agent may reasonably
require, the Escrow Agent shall release such Substituted Shares to the ALP
Stockholders Representative on behalf of such ALP Stockholder.
(c) On the Closing Date, the ALP Stockholders Representative
shall deliver to the Escrow Agent a written certificate setting forth the
respective ownership interests of each ALP Stockholder with respect to the
Escrowed Shares (as the same may be amended from time to time in accordance with
the next sentence, the "Ownership Certificate"). The Ownership Certificate may
be amended from time to time by written certificate executed by the ALP
Stockholders Representative and delivered to the Escrow Agent.
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(d) The Escrow Agent shall hold the Escrow Deposit in an
escrow account (the "Escrow Account") for the benefit of the ALP Stockholders
and Cardinal. The Escrow Deposit shall not be subject to any lien or attachment
of any creditor or any party thereto, and shall be used solely for the purposes
and subject to the conditions set forth in this Agreement and the Merger
Agreement.
2.3 Investment of the Escrow Deposit. Except for the sale of
the Escrowed Shares pursuant to Section 2.2(b) and the release of the Escrow
Deposit pursuant to Section 3 hereof, the Escrow Agent shall not sell or
transfer any of the Escrowed Shares. The Escrow Agent is hereby authorized and
directed to invest any cash contained in the Escrow Deposit in the following
obligations (collectively, the "Permitted Investments"):
(a) obligations of, or fully guaranteed as to timely payment
of principal and interest by, the United States of America;
(b) such money market funds as are agreed to from time to time
by Cardinal and the ALP Stockholders Representative; and
(c) certificates of deposit with any bank or trust company
organized under the laws of the United States of America or any agency or
instrumentality thereof or under the laws of any state thereof which has a
combined capital and surplus of at least $100,000,000.
Subject to the foregoing limitations, the Escrow Agent shall
invest any such cash in accordance with written instructions delivered to it by
the ALP Stockholders Representative from time to time. Except as provided above,
the Escrow Agent shall have no power or duty to invest the Escrow Deposit or to
make substitutions therefor or to sell, transfer or otherwise dispose of
investments acquired hereunder.
2.4 Right to Vote the Escrowed Shares. The ALP Stockholders
Representative, on behalf of and at the direction of the ALP Stockholders, shall
have the right to direct the Escrow Agent in a writing signed by the ALP
Stockholders Representative to exercise the voting rights pertaining to all or a
portion of the Escrowed Shares that remain in the Escrow Account. The Escrow
Agent shall comply with any such directions. In the absence of direction from an
ALP Stockholder, the Escrowed Shares allocable to such ALP Stockholder shall not
be voted.
SECTION III
RELEASE OF THE ESCROW DEPOSIT
3.1 Distributions for Indemnification. (a) At any time prior
to the earlier of (x) the date on which Cardinal's audited financial statements
for the first fiscal year ending after the Effective Time are issued and (y) the
first anniversary of the Effective Time (the "Escrow Date"), Cardinal may
deliver to the Escrow Agent (with a copy to the ALP Stockholders Representative)
a certificate (a "Notice of Claim") (i) stating that Cardinal believes that it
may be entitled to indemnification pursuant to Article VIII of the Merger
Agreement (an "Indemnification Obligation"), (ii) stating the aggregate amount
(the "Claim Amount") of such
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Indemnification Obligation (or, in the case of an unliquidated or uncertain
Indemnification Obligation, a good faith and reasonable estimate thereof), and
(iii) specifying in reasonable detail the nature of such Indemnification
Obligation. Any Notice of Claim delivered pursuant to this Section 3.1 with
respect to any unliquidated Indemnification Obligation may be supplemented by a
later Notice of Claim specifying in greater detail the applicable Claim Amount
or any other items set forth therein. Upon delivery of any such Notice of Claim,
the Escrow Agent shall, within three business days of receipt thereof, deliver a
written notice together with a copy of such Notice of Claim to the ALP
Stockholders Representative.
(b) If the ALP Stockholders Representative shall object on
behalf of the ALP Stockholders to the Indemnification Obligation or the Claim
Amount specified in such Notice of Claim, the ALP Stockholders Representative
shall, within twenty business days after delivery of the written notice
containing a copy of any such Notice of Claim, deliver to the Escrow Agent a
certificate (a "Reply Certificate") (x) specifying each such objection, and (y)
specifying in reasonable detail the nature and basis for such objection. Within
three business days after delivery to the Escrow Agent of a Reply Certificate,
the Escrow Agent shall deliver a copy of such Reply Certificate to Cardinal.
Cardinal and the ALP Stockholders Representative shall negotiate in good faith
for a period of 30 business days after delivery of such Reply Certificate to
Cardinal to reach a written resolution of any objections raised in a Reply
Certificate.
(c) If no Reply Certificate is delivered with respect to any
Notice of Claim, then the ALP Stockholders Representative shall be deemed to
have delivered a Payment Authorization (as defined below) acknowledging
Cardinal's right to receive the Claim Amount specified in such Notice of Claim
with respect to the applicable Indemnification Obligation and the Escrow Agent
shall transfer to Cardinal a portion of the Escrowed Amount in an amount equal
to such Claim Amount, all in accordance with the procedures set forth in Section
3.1(e).
(d) If the Escrow Agent receives a Reply Certificate in a
timely manner with respect to any Notice of Claim, the Claim Amount referred to
in such Notice of Claim shall be held by the Escrow Agent and shall not be
released to Cardinal except upon Cardinal's delivery to the Escrow Agent of
either (i) joint written instructions signed by an authorized officer of
Cardinal and by the ALP Stockholders Representative directing the Escrow Agent
to release the Claim Amount (or any other amount mutually agreed upon by such
parties) or (ii) a final, non-appealable judgment of the arbitrators in the
arbitration proceeding referred to in Section 8.5 of the Merger Agreement
relating to the Indemnification Obligation referred to in such Notice of Claim
demonstrating that Cardinal is entitled to indemnification for such Claim Amount
from the ALP Stockholders pursuant to the Merger Agreement (either of (i) or
(ii) being a "Payment Authorization"), at which date the portion of the amount
due to Cardinal determined pursuant to (i) or (ii) above shall promptly be paid
to Cardinal in accordance with the procedures set forth herein.
(e) As soon as practicable following receipt by the Escrow
Agent of a Payment Authorization, the Escrow Agent shall pay from the Escrowed
Amount to Cardinal as follows, in the following order of priority, to the extent
required to make such payment:
First, the Escrow Agent shall transfer, deliver and assign to
Cardinal such number of Escrowed Shares (excluding cash
constituting Escrowed Shares
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pursuant to Section 2.2(b)) (rounded up or down to the nearest
whole share in the case of the Escrowed Shares that are not
cash) as shall have a value equal to the amount required to
make or complete such payment, it being understood and agreed
that such non-cash Escrowed Shares shall be valued for such
purpose as set forth in Section 8.7 of the Merger Agreement,
together with the Additional Property related thereto;
Second, to the extent of any insufficiency, the Escrow Agent
shall utilize any cash not part of the Escrowed Shares
included in the Escrowed Amount then held in the Escrow
Deposit; and
Third, to the extent of any insufficiency, the Escrow Agent
shall sell securities or investments included in the Escrowed
Amount, other than the Escrowed Shares, then held in the
Escrow Deposit for cash and utilize such cash to make up such
insufficiency.
To the extent the Escrowed Shares allocable to any ALP Stockholder consist of
Cardinal Common Shares and cash pursuant to Section 2.2(b), any delivery of
Escrowed Shares pursuant to this Section 3.1(e) shall consist first of Cardinal
Common Shares and then, if necessary, cash valued as provided in Section 2.2(b).
To the extent the Escrow Agent is required to transfer, deliver and assign to
Cardinal any Escrowed Shares included in the Escrowed Amount, Cardinal shall
assist and cooperate in a reasonable manner with the Escrow Agent to facilitate
such transfer, delivery and assignment. In the event the Escrowed Amount shall
be insufficient to pay the amount expressly set forth in such Payment
Authorization, the Escrow Agent shall deliver to Cardinal the entire remaining
Escrowed Amount and then deliver to Cardinal and to the ALP Stockholders
Representative a written notification setting forth the amount by which such
Payment Authorization exceeds the amount of the Escrowed Amount so paid.
(f) To the extent that any payment pursuant to Section 3.1(e)
hereof shall be made in cash, the Escrow Agent shall pay all such amount to
Cardinal by wire transfer to the bank account or accounts designated by Cardinal
to the Escrow Agent in writing not less than one business day prior to the date
of such payment.
(g) Notwithstanding anything to the contrary in this
Agreement, in no event shall Cardinal be entitled to receive any amounts from
the Escrow Deposit in excess of the amount of the Escrowed Amount.
3.2 Release upon the Escrow Date. (a) On the Escrow Date, the
Escrow Agent shall distribute the Escrow Deposit to the ALP Stockholders and
shall terminate the Escrow Account, unless (i) the Escrow Agent shall have
received a Notice of Claim from Cardinal prior to the Escrow Date with respect
to an indemnification claim (an "Unresolved Claim") for which the Escrow Agent
has not received a subsequent Payment Authorization or written notification
signed by Cardinal and the ALP Stockholder's Representative, informing the
Escrow Agent of the termination or other resolution of such claim or claims
(each, a "Claim Termination Notice"). If on the Escrow Date there shall exist
any Unresolved Claim, then (i) the Escrow Agent shall retain the Escrow Deposit
in the Escrow Account in an amount sufficient for the payment of all Claim
Amounts with respect to all such Unresolved Claims (but not in excess of the
remainder of
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the Escrowed Amount), and (ii) the Escrow Agent shall release to the ALP
Stockholders the portion of the Escrow Deposit in the Escrow Account not
otherwise retained in accordance with clause (i). For all purposes of this
Section 3.2(a), the Escrowed Shares (other than the cash which may be a part
thereof) shall be valued as set forth in Section 8.7 of the Merger Agreement.
(b) Upon the resolution of any Unresolved Claim, the Escrow
Agent shall (A) release any portion of the Escrow Deposit retained in respect of
such Unresolved Claim (x) to Cardinal in accordance with any Payment
Authorization received by the Escrow Agent in respect of such Unresolved Claim
or (y) to the ALP Stockholders in accordance with any Claim Termination Notice
received by the Escrow Agent in respect of such Unresolved Claim and, if no
other Unresolved Claims remain outstanding, (B) release the remainder of the
Escrow Deposit to the ALP Stockholders. For purposes of this Section 3.2(b), the
Escrowed Shares shall be valued as set forth in Section 8.7 of the Merger
Agreement.
(c) Any distribution to the ALP Stockholders pursuant to this
Section 3.2 shall be made by the Escrow Agent to the ALP Stockholders based on
their respective interests in the Escrowed Shares and the cash and other
investments constituting the Escrow Deposit (as reflected in the then most
recent version of the Ownership Certificate), subject to any written
instructions of the ALP Stockholders Representative (including, without
limitation, any instructions as to the liquidation of the Escrow Account
(including instructions to sell a number of Escrowed Shares necessary to permit
the payment of cash in lieu of fractional Cardinal Common Shares) and/or the
transfer of the Escrowed Shares to the transfer agent of Cardinal). No
certificate for fractional Cardinal Common Shares shall be distributed to ALP
Stockholders. The Escrow Agent shall sign such stock powers or other documents
of transfer as are necessary to transfer any remaining Escrowed Shares included
within the Escrow Deposit in accordance with such instructions (the "Released
Shares").
SECTION IV
ESCROW AGENT
4.1 Fees. For its services hereunder, the Escrow Agent shall
receive (i) $1,250 upon its receipt of the Escrow Deposit at the Closing (which
shall constitute the fee for initiating the transaction and the fee for the
first year of the Agreement), (ii) commencing on the first anniversary of the
date hereof and then annually thereafter, $2,500 for each calendar year until it
has delivered all of the Escrow Deposit pursuant to Section III (prorated for
partial years), and (iii) the transaction fees set forth on Schedule 1 attached
hereto. The Escrow Agent shall be reimbursed for all reasonable out-of-pocket
expenses incurred by the Escrow Agent necessary to perform such services (other
than taxes imposed in respect of the receipt of the fees referred to in the
preceding sentence). The fees, expenses and reimbursements referred to in the
foregoing two sentences shall be paid by Cardinal.
4.2 Responsibilities of Escrow Agent. The Escrow Agent's
acceptance of its duties under this Agreement is subject to the following terms
and conditions, which the parties hereto agree shall govern and control with
respect to its rights, duties, liabilities and immunities:
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(a) Except as to its due execution and delivery of the
Agreement, it makes no representation and has no responsibility as to the
validity of this Agreement or of any other instrument referred to herein, or as
to the correctness of any statement contained herein, and it shall not be
required to inquire as to the performance of any obligation under the Merger
Agreement.
(b) The Escrow Agent shall be protected in acting upon any
written notice, request, waiver, consent, receipt or other paper or document,
not only as to its due execution and the validity and effectiveness of its
provisions, but also as to the truth of any information therein contained, which
it in good faith believes to be genuine and what it purports to be.
(c) The Escrow Agent shall not be liable for any error of
judgment, or for any act done or step taken or omitted by it in good faith, or
for any mistake of fact or law, or for anything which it may do or refrain from
doing in connection therewith, except its own gross negligence or misconduct.
(d) The Escrow Agent may consult with competent and
responsible legal counsel selected by it, and it shall not be liable for any
action taken or omitted by it in good faith in accordance with the advice of
such counsel.
(e) The Escrow Agent shall have no discretion whatsoever with
respect to the management, disposition or investment of the Escrow Account and
is not a trustee or fiduciary to Cardinal or the ALP Stockholders. Cardinal and
the ALP Stockholders Representative acknowledge and agree that all investments
made pursuant to this section shall be for the account and risk of Cardinal and
the ALP Stockholders and any losses associated with investments shall be borne
solely by Cardinal and the ALP Stockholders.
(f) Cardinal and the ALP Stockholders agree to jointly and
severally indemnify and hold the Escrow Agent and its directors, employees,
officers, agents, successors and assigns (collectively, the "Indemnified
Parties") harmless from and against any and all losses, claims, damages,
liabilities and expenses (collectively, "Damages"), including, without
limitation, reasonable costs of investigation and counsel fees and expenses
which may be imposed on the Escrow Agent or incurred by it in connection with
its acceptance of this appointment as the Escrow Agent hereunder or the
performance of its duties hereunder. Such indemnity includes, without
limitation, Damages incurred in connection with any litigation (whether at the
trial or appellate levels) arising from this Escrow Agreement or involving the
subject matter hereof. The indemnification provisions contained in this
paragraph are in addition to any other rights any of the Indemnified Parties may
have by law or otherwise and shall survive the termination of this Agreement or
the resignation or removal of the Escrow Agent. Notwithstanding any provision to
the contrary in this Escrow Agreement, Cardinal and the ALP Stockholders shall
have no liability to the Indemnified Parties with respect to any Damages that
result, directly or indirectly, from the gross negligence or misconduct of the
Escrow Agent. Any obligation of the ALP Stockholders pursuant to this Section
shall be satisfied only by the deduction from the Escrow Deposit by the ALP
Stockholders Representative of the amount of such obligations.
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(g) The Escrow Agent shall have no duties or responsibilities
except those expressly set forth herein, and it shall not be bound by any
modification of this Agreement unless in writing and signed by all parties
hereto or their respective successors in interest.
(h) The Escrow Agent shall have no responsibility in respect
of the validity or sufficiency of this Escrow Agreement or of the terms hereof.
The recitals of facts in this Escrow Agreement shall be taken as the statements
of Cardinal and the ALP Stockholders, and the Escrow Agent assumes no
responsibility for the correctness of the same.
(i) The Escrow Agent shall be protected in acting upon any
notice, resolution, request, consent, order, certificate, report, opinion, bond
or other paper or document reasonably believed by it to be genuine and to have
been signed and presented by the proper party or parties. Whenever the Escrow
Agent shall deem it necessary or desirable that a matter be proved or
established prior to taking or suffering any action under this Escrow Agreement,
such matter may be deemed conclusively proved and established by a certificate
signed by Cardinal and the ALP Stockholders Representative (on behalf of the ALP
Stockholders), and such certificate shall be full warranty for any action taken
or suffered in good faith under the provisions of this Escrow Agreement.
(j) In the event of a dispute between the parties hereto
sufficient in the discretion of Escrow Agent to justify its doing so, Escrow
Agent shall be entitled at the expense of the Escrow Deposit to tender the
Escrow Deposit into the registry or custody of any court of competent
jurisdiction, to initiate such legal proceedings at the expense of the Escrow
Deposit as it deems appropriate, and thereupon to be discharged from all further
duties and liabilities under this Agreement. Any such legal action may be
brought in any such court as Escrow Agent shall determine to have jurisdiction
over the Escrow Deposit. The filing of any such legal proceedings shall not
deprive Escrow Agent of its compensation hereunder earned prior to such filing.
(k) Except as specifically set forth above, the Escrow Agent
does not have any interest in the Escrow Deposit but is serving as escrow agent
only and having only possession thereof. This Section 4.2(k) shall survive
notwithstanding any termination of this Agreement or the resignation of the
Escrow Agent.
SECTION V
CERTAIN TRANSACTIONS
5.1 Merger and Other Exchange Transactions. In the event of
any consolidation or merger of Cardinal with or into any other corporation or in
the event of any other transaction upon which the holders of Cardinal Common
Shares are entitled to receive cash, shares of stock, securities or other
property in exchange for their Cardinal Common Shares, the Escrow Agent, if and
to the extent directed to do so by Cardinal, shall present such Escrowed Shares
which are Cardinal Common Shares for such exchange, conversion or otherwise. Any
such cash, shares of stock, securities or other property received from such
exchange, conversion or otherwise shall be deposited in the Escrow Account and
shall be disbursed in accordance with the terms of this Escrow Agreement to
Cardinal and/or the ALP Stockholders entitled thereto.
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5.2 Merger, etc. of Cardinal. Nothing contained in this Escrow
Agreement shall prevent any merger, liquidation or consolidation of Cardinal
with or into another corporation or corporations, or successive consolidations
or mergers in which Cardinal or its successor or successors shall be a party or
parties, or any sale or other conveyance of all or substantially all of the
property of Cardinal to another corporation.
SECTION VI
MISCELLANEOUS
6.1 ALP Stockholders Representative. The ALP Stockholders, by
executing this Agreement, hereby irrevocably appoint the ALP Stockholders
Representative to act on behalf of the ALP Stockholders with respect to all
matters relating to this Agreement and Article VIII of the Merger Agreement,
including without limitation, in considering and certifying the amount of any
indemnification hereunder, in communicating with the ALP Stockholders, in
appointing a successor Escrow Agent hereunder, in considering and acting with
respect to any amendment or termination of this Agreement, and generally in
performing all acts expressly required or permitted to be performed by the ALP
Stockholders Representative pursuant hereto and pursuant to the Merger
Agreement. Cardinal and the Escrow Agent shall have the right to deal
exclusively with the ALP Stockholders Representative with respect to all matters
under this Agreement and neither Cardinal nor the Escrow Agent shall have any
liability to any ALP Stockholders for any acts or omissions of the ALP
Stockholders Representative, or any acts or omissions taken or not taken by
Cardinal or the Escrow Agent at the direction of the ALP Stockholders
Representative, including, but not limited to (i) any acts or omissions relating
to the voting of any Escrowed Shares or (ii) the transferring of or the failure
to transfer any shares or funds released from escrow. Upon any distribution of
Escrowed Shares or other funds to the ALP Stockholders Representative (or to one
or more of the ALP Stockholders upon written instruction of the ALP Stockholders
Representative) in accordance with this Agreement, the Escrow Agent and Cardinal
shall be deemed to have fully satisfied any and all obligations to the ALP
Stockholders under this Agreement and the Merger Agreement with respect to the
amount of such distribution. The ALP Stockholders Representative agrees to vote
the Escrowed Shares based on the directions or instructions of the ALP
Stockholders based on their respective ownership interests in the Escrowed
Shares reflected in the most recent Ownership Certificate.
6.2 Amendment and Termination. This Agreement may be amended
or terminated by the written agreement of the parties hereto, or shall terminate
automatically at such time as all securities and funds from the Escrow Deposit
have been paid or distributed in accordance with the terms of this Agreement and
the Escrow Agent has received all fees as described in Section 4.1 hereto.
Notwithstanding the foregoing, all provisions concerning the indemnification of
the Escrow Agent shall survive any termination of this Agreement.
6.3 Notices. All notices, requests, demands, letters, waivers
and other communications required or permitted to be given under this Agreement
shall be in writing and shall be deemed to have been duly given if (a) delivered
personally, (b) mailed, certified or registered mail with postage prepaid, (c)
sent by next-day or overnight mail or delivery or (d) sent by fax, as follows:
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64
FINAL
To ALP:
Automatic Liquid Packaging, Inc.
0000 Xxxx Xxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Telecopy No.:________________
With a copy to:
Xxxxxx Xxxx, Esq.
Xxxxxxxx & Xxxxxxx
000 Xxxxx Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Telecopy No.: (000) 000-0000
To Cardinal:
Cardinal Health, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxxx, Xxxx 00000
Attention: General Counsel
Telecopy No.: (000) 000-0000
With a copy to:
Xxxx X. Xxxxxxxx, Esq.
Xxxxx & Xxxxxxxxx LLP
3200 National City Center
0000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000-0000
Telecopy No.: (000) 000-0000
To the Escrow Agent:
Bank One Trust Company, NA
Corporate Trust Department
000 Xxxx Xxxxx Xxxxxx, XX0-0000
Xxxxxxxx, Xxxx 00000-0000
Attention: Xxxxxxx Xxxxxxx
Telecopy No.: (000) 000-0000
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FINAL
To the ALP Stockholders Representative:
___________________________________
___________________________________
___________________________________
Attention:_________________________
Telecopy No.:______________________
or to such other Person or address as any party shall specify by notice in
writing to the party entitled to notice. All such notices, requests, demands,
letters, waivers and other communications shall be deemed to have been received
(w) if by personal delivery on the day after such delivery, (x) if by certified
or registered mail, on the fifth Business Day after the mailing thereof, (y) if
by next-day or overnight mail or delivery, on the day delivered or (z) if by
fax, on the next day following the day on which such fax was sent, provided that
a copy is also sent by certified, registered or overnight mail.
6.4 Governing Law. This Agreement shall be construed,
performed and enforced in accordance with the laws of the State of Ohio.
6.5 Miscellaneous. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and assigns. The
headings in this Agreement are for convenience of reference only and shall not
define or limit the provisions hereof. This Agreement may be executed in several
counterparts, each of which is an original but all of which together shall
constitute one instrument.
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66
[Signature page to Escrow Agreement.]
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date first above written.
CARDINAL HEALTH, INC.
By: _____________________________________
Name: _______________________________
Title: ______________________________
FLOWER MERGER CORP.
By: _____________________________________
Name: _______________________________
Title: ______________________________
AUTOMATIC LIQUID PACKAGING, INC.
By: _____________________________________
Name: _______________________________
Title: ______________________________
BANK ONE TRUST COMPANY, NA
By: _____________________________________
Name: _______________________________
Title: ______________________________
THE ALP STOCKHOLDERS
__________________________________________
Xxxxxxx X. Xxxxxx, as the ALP Stockholders
Representative and as Trustee of the
Xxxxxxx X. Xxxxxx Dec. of Trust dated
9/3/93
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67
[Signature page to Escrow Agreement.]
__________________________________________
Xxxxxxxx Xxxxxx
__________________________________________
Xxxx Xxxxxxx
__________________________________________
Xxx Xxxxxx
__________________________________________
Xxxxxxxxx Xxxxxx
__________________________________________
Xxxx Xxxxxx
__________________________________________
Xxxx X. Xxxxxx, individually and as
Trustee of the Xxxx X. Xxxxxx Gift Trust
__________________________________________
Xxxxx X. Xxxxxx, individually and as
Trustee of the Xxxxx X. Xxxxxx Gift Trust
__________________________________________
Xxxxx X. Xxxx
__________________________________________
Xxxx Brockrogge
__________________________________________
Xxxxx X. Xxx
__________________________________________
Xxxxxxx Xxxxx
-14-
68
[Signature page to Escrow Agreement.]
__________________________________________
Arjun Ramrakhyan
-15-
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SCHEDULE 1
ESCROW AGENT FEES AND EXPENSES
Acceptance Fee: $1,250
Administrative Fee: $2,500 per year
Transaction Fees: $ 20 per deposit
$ 25 per wire transfer
$ 10 per check
Sub-Account: $ 250 per sub-account
(if applicable)
Tax Reporting fee: $ 250 per year (if applicable)
Extraordinary Fee: $ 150 per hour; minimum
increments of one hour.
Out-of-Pocket Expenses: Pass-through
The fees quoted in this schedule apply to services ordinarily rendered in
administering an escrow account and are subject to reasonable adjustment when
the Escrow Agent is called upon to undertake unusual duties or as changes in the
law, procedures or the cost of doing business demand. The extraordinary fee rate
in effect ($150/hour) will apply at the time services are provided.
Unless otherwise agreed upon, the Acceptance Fee and the first year
Administration Fee are payable upon the execution of the Agreement whether or
not the escrow account is funded. In the event the escrow is not funded, the
Acceptance Fee and all related expenses will not be refunded. Annual
Administration fees cover a full year in advance, or any part thereof, and thus
are nor pro-rated in the year of termination.
