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EXHIBIT 2.1
AGREEMENT AND PLAN OF CORPORATE SEPARATION
AND REORGANIZATION FOR QK HEALTHCARE, INC.
Agreement made as of , 1999 among Quality King Distributors,
Inc., a New York corporation (the "Company"), and each of Xxxxxxx Xxxxxxxx and
Xxxxxx Xxxxxxxx as Trustees U/D Xxxxx Xxxxxxxx Trusts dated November 1, 1998 and
November 2, 0000, Xxxxx Xxxxxxxx and Xxxxxx Xxxxxxxx, Trustees U/D Xxxxxxx
Xxxxxxxx Trusts dated November 1, 1998 and November 2, 1998 and Xxxxxxx Xxxxxxxx
and Xxxxx Xxxxxxxx, Trustees U/D Xxxxxx Xxxxxxxx Trusts dated November 1, 1998
and November 2, 1998 (collectively, the "Shareholders").
RECITALS
A. The Shareholders will be the owners of all of the issued and
outstanding stock of the Company on the Closing Date (as hereinafter defined).
B. The Company has been engaged for more than five years in the
business of distributing pharmaceutical products (the "Pharmaceutical Business")
and the business of distributing groceries, hair care products and health and
beauty products (the "Other Business").
C. A separation of the Pharmaceutical Business from the Other Business
is deemed advisable by the parties.
D. The Company has received a ruling by the Internal Revenue Service to
the effect that the transactions herein agreed upon will qualify as a tax-free
exchange and distribution under Section 355 of the Internal Revenue Code of
1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the premises and the obligations of
the parties pursuant hereto, the parties hereto agree as follows.
1. Separation of Businesses. The Company having received a ruling by
the Internal Revenue Service to the effect that the transactions herein agreed
upon will qualify as a tax-free exchange and distribution under Section 355 of
the Internal Revenue Code of 1986, as amended, the Company's Pharmaceutical
Business and Other Business will be separated in the manner provided for herein.
2. New Corporation. The Company has formed a corporation under the laws
of Delaware, QK Healthcare, Inc. (the "New Company"), with the powers and
capitalization set out in the Amended and Restated Certificate of Incorporation
attached hereto as Exhibit A.
3. Transfer of Pharmaceutical Business. In exchange for all of the
authorized shares of the New Company, the Company shall transfer the following
assets of the Pharmaceutical Business, as more fully described in Exhibit B,
subject to the liabilities allocable to the Pharmaceutical Business as listed in
Exhibit C:
a. All of the inventory of the Pharmaceutical Business;
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b. All equipment and leasehold improvements upon the site on which the
Pharmaceutical Business is operated;
c. All vehicles, trademarks, trade names, lists of customers and other
assets identified with the Pharmaceutical Business;
d. All the software used by the Company in the operation of the
Pharmaceutical Business;
e. Working capital equal to [ ].
4. Sublease. On the Closing Date the Company will deliver or cause to
be delivered to the New Company a sublease for the premises from which the
Pharmaceutical Business is conducted, substantially in the form of Exhibit D
attached hereto.
5. Credit Facility. On the Closing Date, the New Company will assume a
portion equal to $_______ of the Company's current revolving credit facility and
the New Company shall execute and deliver the appropriate documentation
evidencing its status as a co-borrower under such facility. The Company shall
negotiate a credit facility in the aggregate principal amount of at least $325
million for the New Company on similar or better terms than the Company's
existing Credit Facility (the "New Credit Facility"), such facility to be
effective as of the Closing Date.
6. Distribution. Promptly after the transfers, delivery and execution
of documents provided for in Sections 3, 4 and 5 herein, the Company shall
distribute all of its stock in the New Company to the Shareholders, in
proportion to their ownership of stock in the Company.
7. Further Instruments. Each party shall execute and deliver such
further instruments as may be reasonably requested by any other party to carry
out the purpose and intent of this Agreement, including but not limited to, the
following:
a. Indemnification, Noncompetition and Tax Cooperation Agreement among
the Company, the New Company and Pro's Choice Beauty Care, Inc., substantially
in the form of Exhibit E attached hereto.
b. Support Services Agreement between the Company and the New Company
substantially in the form attached hereto as Exhibit F.
8. Closing. The transfers contemplated by this Agreement shall take
place at the offices of Xxxxxxx & Xxxxxx, LLP, 000 Xxxxxxxxx Xxx., Xxx Xxxx, Xxx
Xxxx 00000 on or about _______________, 1999 (the "Closing Date").
9. Entire Agreement. This Agreement contains the entire agreement
between the parties hereto pertaining to the subject matter hereof and
supersedes all prior and contemporaneous agreements, except those contemplated
hereunder or not inconsistent herewith.
10. Governing Law. This Agreement has been executed in the State of New
York and shall be governed by the laws thereof.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
first written above.
QUALITY KING DISTRIBUTORS, INC.
By:______________________
Name:
Title:
U/D XXXXX XXXXXXXX TRUST DATED
NOVEMBER 1, 1998
By:_________________________
Xxxxxx Xxxxxxxx, Trustee
By: _________________________
Xxxxxxx Xxxxxxxx, Trustee
U/D XXXXX XXXXXXXX TRUST DATED
NOVEMBER 2, 1998
By:_________________________
Xxxxxx Xxxxxxxx, Trustee
By: _________________________
Xxxxxxx Xxxxxxxx, Trustee
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U/D XXXXXXX XXXXXXXX TRUST DATED
NOVEMBER 1, 1998
By:_________________________
Xxxxxx Xxxxxxxx, Trustee
By: _________________________
Xxxxx Xxxxxxxx, Trustee
U/D XXXXXXX XXXXXXXX TRUST DATED
NOVEMBER 2, 1998
By:_________________________
Xxxxxx Xxxxxxxx, Trustee
By: _________________________
Xxxxx Xxxxxxxx, Trustee
U/D XXXXXX XXXXXXXX TRUST DATED
NOVEMBER 1, 1998
By:_________________________
Xxxxx Xxxxxxxx, Trustee
By: _________________________
Xxxxxxx Xxxxxxxx, Trustee
U/D XXXXXX XXXXXXXX TRUST DATED
NOVEMBER 2, 1998
By:_________________________
Xxxxx Xxxxxxxx, Trustee
By: _________________________
Xxxxxxx Xxxxxxxx, Trustee
