1
EXHIBIT 2.3
BACK-UP OPTION AGREEMENT
This Back-up Option Agreement (the "Agreement") is made as of the ___
day of ___________, 199 ,
BY AND
AMONG: COUNSEL CORPORATION, an Ontario corporation, with an
address for the purposes hereof at 000 Xxxx Xxxxxx Xxxx,
Xxxxx 0000, Xxxxxxx, Xxxxxxx X0X 0X0 (the "Canadian
Seller");
AND: COUNSEL HEALTHCARE ASSETS, INC., a Delaware corporation
and an indirect subsidiary of the Canadian Seller, with an
address for the purposes hereof at 000 Xxxx Xxxxxx, 00xx
Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 (the "Subsidiary" and,
collectively with the Canadian Seller, the "PharMerica
Shareholders");
AND: BERGEN XXXXXXXX CORPORATION, a New Jersey corporation,
with an address for the purposes hereof at 0000
Xxxxxxxxxxxx Xxxxx, Xxxxxx, XX 00000 (the "Purchaser").
W I T N E S S E T H T H A T:
WHEREAS, the Canadian Seller, the Purchaser, Xxxxxxxxxxx Drug Co., Inc.,
a Pennsylvania corporation ("Xxxxxxxxxxx"), and Stadt Holdings, Inc., a Delaware
corporation and an indirect subsidiary of the Canadian Seller (the "U.S.
Seller") have entered into a certain Stock Purchase Agreement, dated as of
November 8, 1998 (the "Stock Purchase Agreement"), pursuant to which the
Purchaser has agreed to acquire all of the outstanding capital stock of
Xxxxxxxxxxx from each of the Canadian Seller and the U.S. Seller;
WHEREAS, on the date hereof, the Canadian Seller owns 6,994,315 shares
of the outstanding capital stock of PharMerica, Inc., a Delaware corporation
("PharMerica"), and the Subsidiary owns 825,000 shares of the outstanding
capital stock of PharMerica (collectively, the "PharMerica Stock");
WHEREAS, as a material inducement and condition to its willingness to
enter into and consummate the Stock Purchase Agreement, the Purchaser has
requested, and the Canadian Seller (on behalf of itself and its subsidiaries)
has agreed, under
2
Section 6.15 of the Stock Purchase Agreement, that the Canadian Seller and its
subsidiaries shall grant to the Purchaser an irrevocable option to purchase the
PharMerica Stock in accordance with the conditions set forth herein;
WHEREAS, all of the PharMerica Shareholders' shares of PharMerica Stock
have been delivered to and deposited with the Purchaser as the voting trustee
(the "Voting Trustee") under that certain Voting Trust Agreement, dated
__________, 199 , by and among the parties hereto (the "Voting Trust");
WHEREAS, each of the PharMerica Shareholders have granted to the Voting
Trustee an irrevocable proxy authorizing the Purchaser to vote the PharMerica
Stock in certain circumstances (the "Proxy");
WHEREAS, each of the parties hereto believes it to be in their
respective best interests to set forth the terms of their respective
understandings with respect to the option described herein and the matters
related thereto as hereinafter provided.
NOW, THEREFORE, in consideration of the foregoing premises, the mutual
covenants herein contained and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto,
intending to be legally bound, hereby agree as follows:
Section 1. Grant of Option. On and subject to the terms and conditions
in this Agreement, each of the PharMerica Shareholders hereby grants to the
Purchaser the irrevocable option to purchase (the "Option") all of the shares of
PharMerica Stock then owned by such PharMerica Shareholder at the time the
Purchaser gives an Exercise Notice (as defined below) to such Shareholder. The
Option shall expire at 11:59 p.m. Eastern Standard Time, on December 31, 2001
(the "Expiration Time") and, prior to the Expiration Time, shall cease to apply
(at the time of disposition) to any shares of PharMerica Stock that are disposed
of by the PharMerica Shareholders in accordance with Section 6.15 of the Stock
Purchase Agreement.
Section 2. Terms Governing Exercise of Option. (a) The Option may be
exercised, in whole or in part, from time to time, during the period commencing
simultaneously with the occurrence of a Triggering Event (as defined below) and
ending at the Expiration Time. In order to exercise the Option, the Purchaser
shall give written notice (an "Exercise Notice") to the PharMerica Shareholders
from whom it elects to acquire PharMerica Stock, specifying the number of shares
of PharMerica Stock it elects to purchase, the date on which such purchase shall
occur (which may be the date on which such notice is given) (the "Closing Date")
and the outcome of the vote at the Business Combination Meeting (as defined
below) that it desires to result. The parties hereto acknowledge that a
Triggering Event may occur as late as the day on which the Purchaser desires to
be the owner of some or all of the PharMerica Stock subject to this Agreement,
and therefore, an Exercise Notice given on the same date specified for Closing
by the Purchaser in such Exercise Notice shall be adequate for
-2-
3
purposes of giving an Exercise Notice, provided that such notice is actually
received by the PharMerica Shareholders. It is further understood and agreed
that the Closing Date specified in an Exercise Notice need not be a date
certain, but may be a day, date or number of days related to another date
certain. By way of example and not in limitation, an Exercise Notice may provide
that a Closing shall occur on the business day immediately before a specifically
scheduled meeting of the shareholders of PharMerica.
(b) Certain Definitions. The following terms shall have the meanings
ascribed thereto for the purposes of this Agreement:
(i) The "Purchase Price" for the purchase of PharMerica Stock pursuant
to this Agreement shall equal the product (rounded to the nearest xxxxx) of (x)
the number of shares of PharMerica Stock specified for purchase in an Exercise
Notice, multiplied by (y) 110% of the average closing price for one share of
PharMerica Stock (subject to appropriate adjustments for splits, dividends or
other subdivisions or combinations) for the last ten (10) Trading Days ending
three (3) Trading Days immediately prior to the Closing Date.
(ii) A "Trading Day" shall mean a day on which the PharMerica Stock is
traded in the NASDAQ National Market or other exchange or quotation service on
which the PharMerica Stock is traded.
(iii) The "Closing" shall be the closing of the purchase of the
PharMerica Stock specified in the Exercise Notice for which such Exercise Notice
is given.
(iv) A "Triggering Event" shall mean the occurrence of (x) and (y) in
any order:
(x) the announcement of, or the giving of notice for, a meeting
(a "Business Combination Meeting") of the PharMerica Shareholders to
vote on (exclusively or non-exclusively) a PharMerica Business
Combination (as defined in the Stock Purchase Agreement); and
(y) the first to occur of any one or more of the following
events: (1) the filing or commencement by any party other than the
Purchaser (or an "affiliate", as that term is defined in Rule 12b-2 of
the Rules and Regulations promulgated under the Securities Act of 1934,
as amended (the "'34 Act"), of the Purchaser) of an action, suit or
proceeding, to interpret, construe, overturn, invalidate, block, suspend
or otherwise impede the enforceability of, or the exercise of the
Purchaser's rights under, (A) any proxy relating to the PharMerica Stock
given at any time by any of the PharMerica Shareholders to the
Purchaser, including without limitation, the Proxy (a "Shareholder's
Proxy"), or (B) the Voting Trust; or (2) the revocation or attempted
revocation of any Shareholder's Proxy or the Voting Trust, including
without limitation, the delivery of any notice to the Purchaser in
respect of any such Shareholder's Proxy or the Voting Trust with
-3-
4
the intent or effect to revoke such Shareholder's Proxy or the Voting
Trust, or any other act (by any party other than the Purchaser) that has
the intended or unintended effect of revoking a Shareholder's Proxy or
the Voting Trust; or (3) the breach of, default of or other failure to
comply with or failure to perform any material term or condition by any
party other than the Purchaser of any Shareholder's Proxy, the Voting
Trust or Section 6.15 of the Stock Purchase Agreement.
(v) A "Prohibiting Event" shall mean (x) any judgment, order or ruling
prohibiting, enjoining or restraining the consummation of a Closing, a
PharMerica Business Combination or a Business Combination Meeting; or (y) the
receipt of an opinion of the Canadian Seller's counsel that the purchase of
PharMerica Stock contemplated by the applicable Exercise Notice cannot be
consummated unless further action is taken under or in connection with the HSR
Act (as defined herein).
(c) Closing. On the Closing Date, unless there shall then be in effect a
Prohibiting Event, the Closing shall occur and (i) each PharMerica Shareholder
receiving an Exercise Notice (a "Selling Shareholder") shall sell, transfer,
convey, assign and deliver unto the Purchaser, all of such PharMerica
Shareholder's right, title and interest in and to the shares of PharMerica Stock
specified for purchase in such Exercise Notice together with an irrevocable
proxy appointing the Purchaser to vote such PharMerica Stock in the manner
determined by the Purchaser in its sole discretion, and (ii) the Purchaser shall
purchase and acquire all such right, title and interest in and to such shares of
PharMerica Stock. In consideration of the aforesaid sale, transfer, conveyance,
assignment and delivery, the Purchaser shall deliver or cause to be delivered to
each Selling Shareholder the Purchase Price for the PharMerica Stock acquired
from such Selling Shareholder in immediately available funds by wire transfer to
a bank account designated by such Selling Shareholder at or before the Closing,
or by certified check to such Selling Shareholder at the Closing. If a
Prohibiting Event shall occur and prevent the occurrence of a Closing under this
Section 2(c), then, subject to Section 3(b), at the Purchaser's election, the
Closing shall either (a) be postponed until such time as the Purchaser shall
determine in its sole discretion, but in no event sooner than the first date on
which there would no longer be a Prohibiting Event in effect and in no event
later than the Expiration Time, or (b) be canceled. No Closing shall occur with
respect to the PharMerica Stock that is disposed of prior to the Closing Date in
accordance with Section 6.15 of the Stock Purchase Agreement.
(d) Transfer Documents. The sale of the PharMerica Stock pursuant to
this Agreement shall be effected by the delivery at the Closing by each Selling
Shareholder to the Purchaser (i) as the Voting Trustee (or the current successor
thereto) under the Voting Trust, if it be such and if the Shares of PharMerica
Stock are held in the Voting Trust at that time, of written authorization to
release from the Voting Trust and deliver to the Purchaser in its corporate
capacity, and not as Voting Trustee, the shares of PharMerica Stock then
purchased hereunder by the Purchaser, (ii) of an irrevocable
-4-
5
proxy appointing the Purchaser to vote the PharMerica Stock, in the form of the
proxies set forth in Exhibits A-1 and A-2, as applicable, annexed hereto and
made a part hereof, and (iii) of such other appropriate instruments of sale,
transfer, conveyance, assignment and delivery, including without limitation,
stock powers duly endorsed in blank, powers of attorney, and instructions to any
applicable voting trustee then holding such shares in trust, and such other
documents and instruments as the Purchaser may reasonably require to effect the
sale, transfer, conveyance, assignment and delivery of such shares.
Section 3. Conditions and Covenants.
(a) HSR. The parties acknowledge that (i) depending upon the number of
shares of PharMerica Stock to be acquired pursuant to the terms of a particular
Election Notice, the consummation of a Closing may be precluded until such time
as the requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended (the "HSR Act"), are satisfied, (ii) Purchaser will pay any filing
fees associated with such HSR Act filing.
(b) Rescission. The sale, transfer, conveyance, assignment and delivery
to the Purchaser of the PharMerica Stock pursuant to Section 2(c) may be
rescinded by the PharMerica Shareholders or the Purchaser if either of the
following events occur: (i) the PharMerica Stock acquired pursuant to Section
2(c) is voted at the Business Combination Meeting in accordance with the last
written instructions delivered by the Purchaser to Canadian Seller at or before
the Business Combination Meeting; or (ii) the outcome of the vote at the
Business Combination Meeting is the intended outcome specified in the last
written instructions delivered by the Purchaser to Canadian Seller at or before
the Business Combination Meeting.
(c) Subsequent Purchases. If the Purchaser (or any of its wholly owned
or majority owned subsidiaries) acquires shares of PharMerica Stock pursuant to
Section 2(c) and, during the Operative Period, acquires any other shares of
PharMerica Stock at a price per share that is higher than the price per share
paid by the Purchaser pursuant to Section 2(c) (the "Exercise Price"), the
Purchaser shall pay to the PharMerica Shareholders an amount equal to the
Differential Price multiplied by the number of shares of PharMerica Stock
acquired by the Purchaser pursuant to Section 2(c), such amount to be allocated
between the PharMerica Shareholders in proportion to the relative number of
shares of PharMerica Stock sold by each such entity pursuant to Section 2(c).
For purposes of this Section 3(c), (w) the term "Highest Price" shall mean the
highest price (excluding assumed liabilities and valuing any non-cash asset at
its fair market value, it being understood that any dispute with respect to such
fair market value shall be resolved by a valuation firm mutually acceptable to
the Purchaser and the PharMerica Shareholders) per share paid by the Purchaser
(or any of its wholly owned or majority owned subsidiaries) for any shares of
PharMerica Stock during the Operative Period, (x) the term "Differential Price"
shall mean the amount by which the Highest Price exceeds the Exercise Price, (y)
the term "Operative Period" shall mean
-5-
6
the period commencing on the date hereof and expiring on the date that the
current term of the PharMerica/Purchaser Agreement terminates or expires and (z)
the term "PharMerica/Purchaser Agreement" shall mean the existing pharmaceutical
supply agreement between PharMerica and the Purchaser pursuant to which
PharMerica purchases pharmaceuticals on a wholesale basis from Purchaser.
(d) Subsequent Sales. If the Purchaser (or any of its wholly owned or
majority owned subsidiaries) acquires shares of PharMerica Stock pursuant to
Section 2(c) and, during the Operative Period, sells any or all of such shares
(the "Sold Shares") to an individual or entity that is not affiliated with the
Purchaser at a price per share (excluding assumed liabilities and valuing any
non-cash asset at its fair market value, it being understood that any dispute
with respect to such fair market value shall be resolved by a valuation firm
mutually acceptable to the Purchaser and the PharMerica Shareholders) (such
price, the "Sale Price") that is greater than the Exercise Price, the Purchaser
shall pay to the PharMerica Shareholders (such payment to be allocated between
the PharMerica Shareholders in proportion to the relative number of shares of
PharMerica Stock sold by each such entity pursuant to Section 2(c)) an amount
equal to the amount, if any, by which the Stock Appreciation exceeds the Net
Carrying/Tax Costs. For purposes of this Agreement, (w) the term "Stock
Appreciation" shall mean the Profit multiplied by the number of Sold Shares, (x)
the term "Profit" shall mean the amount by which the Sale Price exceeds the
Exercise Price (or, if the Purchaser has paid to the PharMerica Shareholders any
amount pursuant to Section 3(c), the sum of the Exercise Price and the per share
amount paid by the Purchaser pursuant to Section 3(c)) and (y) the term
"Carrying/Tax Costs" shall mean the sum of (i) interest on the amount paid by
the Purchaser pursuant to Section 2(c), from the date of the Closing to the date
on which the Sold Shares are sold, at an implied interest rate equal to the
weighted average interest rate paid by the Purchaser on bank borrowings during
such period and (ii) all federal and state taxes payable by the Purchaser with
respect to the sale of the Sold Shares (provided that the Purchaser uses
commercially reasonable efforts to minimize its tax liability with respect to
such sale), and (z) the term "Net Carrying/Tax Costs" shall mean the difference
between the Carrying/Tax Costs and the amount of any dividends or distributions
paid by the Purchaser on the Sold Shares during the period from the date of the
Closing to the date they are sold.
(e) Further Assurances. If the Purchaser exercises the Option and such
exercise is not rescinded pursuant to Section 3(b), from time to time
thereafter, each of the PharMerica Shareholders shall execute and deliver all
such further documents and instruments and take all such further action as may
be necessary in order to consummate the transactions contemplated hereby.
Section 4. Specific Performance. Each of the PharMerica Shareholders
acknowledges and agrees that monetary damages are an inadequate remedy for
breach of this Agreement. Therefore, each PharMerica Shareholder agrees that the
Purchaser has the right and shall be entitled to, in addition to any other right
it may have, specific performance of this Agreement in the event of any such
breach.
-6-
7
Section 5. Expenses. Each party hereto shall pay its own expense
incurred in connection with the exercise of the Option and the enforcement of
its own rights under this Agreement.
Section 6. Counterparts. This Agreement may be executed in one more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute but one agreement.
Section 7. Headings. The descriptive headings contained herein are for
convenience of reference only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 8. Notices. Any notice given hereunder shall be in writing and
shall be addressed to the parties at their respective addresses set forth in the
Stock Purchase Agreement, or at such other address as any such party may
hereafter designate by notice as provided for in this Section 8. Notices given
in accordance with the preceding sentence shall be deemed to have been duly
given when personally delivered, when transmitted by facsimile, the next
delivery day after deposit with a nationally recognized overnight courier
service providing receipted delivery, or three (3) calendar days after being
mailed by registered or certified mail to the party entitled to receive the
same.
Section 9. Entire Agreement. This Agreement (as supplemented by the
Voting Trust, the Proxy and the Stock Purchase Agreement) constitutes the entire
agreement among the parties hereto pertaining to the subject matter hereof and
supersedes all other prior and contemporaneous agreements, understandings,
negotiations and discussions, whether oral or written, of the parties. There are
no other agreements between the parties in connection with the subject matter
hereof except as specifically set forth herein.
Section 10. Governing Law; Consent to Jurisdiction. This Agreement shall
be governed by, and construed in accordance with, the internal laws of the State
of Delaware, without reference to the choice of law principles thereof. Each of
the parties hereto irrevocably submits to the exclusive jurisdiction of the
courts of the State of Delaware and the United States District Courts for the
District of Delaware for the purpose of any suit, action, proceeding or judgment
relating to or arising out of this Agreement and the transactions contemplated
hereby, and each such party further agrees that such courts shall be the only
courts in which any suit, action or proceeding hereunder shall be brought.
Section 11. Assignment; Successors and Assigns; No Third Party Rights.
This Agreement is personal to each PharMerica Shareholder and shall not be
assigned by any of the PharMerica Shareholders and any attempt at assignment by
any PharMerica Shareholder shall be null and void. This Agreement may be freely
assigned by the
-7-
8
Purchaser to any affiliate of the Purchaser. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors, permitted assigns and legal representatives, provided that it shall
not be binding upon the subsequent holders of PharMerica disposed of in
accordance with Section 6.15 of the Stock Purchase Agreement. This Agreement
shall be for the sole benefit of the parties hereto and their respective
successors, permitted assigns and legal representatives and is not intended, nor
shall it be construed, to give any person other than the parties hereto and
their respective successors, permitted assigns and legal representatives any
legal or equitable right, remedy or claim.
Section 12. Amendment and Modification; Waiver. This Agreement shall not
be amended or modified except by a writing signed by the party against whom
enforcement of such amendment or modification is sought. Any of the terms or
conditions of this Agreement shall not be waived at any time by the party
entitled to the benefit thereof, except by a writing signed by the party waiving
such terms or conditions.
[THIS SPACE INTENTIONALLY LEFT BLANK]
-8-
9
Section 13. No Strict Construction. Each of the parties hereto
acknowledges that this Agreement has been prepared and negotiated jointly by the
parties hereto and their respective counsel, and this Agreement shall not be
strictly construed against either party.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
COUNSEL CORPORATION
By:_________________________________
Name:
Title:
COUNSEL HEALTHCARE ASSETS, INC.
By:_________________________________
Name:
Title:
BERGEN XXXXXXXX CORPORATION
By:_________________________________
Name:
Title:
-9-
10
EXHIBIT A-1
IRREVOCABLE PROXY
The undersigned hereby appoints Bergen Xxxxxxxx Corporation (its
successors and assigns) ("BBC"), acting through one of its duly authorized
officers, as proxy, with full power of substitution, to vote all of the shares
of common stock, par value $.01 per share, of PharMerica, Inc. ("PharMerica
Stock") held of record in the name of the undersigned on the date of such vote
(either by vote at a meeting of the stockholders of PharMerica, and at any
adjournments or postponements thereof, solicitation of proxies, solicitation of
consents or otherwise), in all votes of the stockholders of PharMerica, Inc.
("PharMerica").
The undersigned expressly acknowledges that BBC may vote the PharMerica
Stock in the sole discretion of BBC, without regard to any instructions, written
or otherwise, that may be given by the undersigned or received by BBC in respect
of such vote. The undersigned further acknowledges that its attendance at any
such vote of the stockholders shall not affect the validity of this Proxy. This
Proxy is coupled with an interest in the PharMerica Stock that is the subject of
this Proxy by reason of the post-record date acquisition by BBC of such
PharMerica Stock and the pending transfer thereof on the books and records of
PharMerica into the name of BBC. This Proxy shall remain valid until 11:59 p.m.
Eastern Standard Time, December 31, 2001.
COUNSEL CORPORATION
By:
Name:
Title:
-10-
11
EXHIBIT A-2
IRREVOCABLE PROXY
The undersigned hereby appoints Bergen Xxxxxxxx Corporation (its
successors and assigns) ("BBC"), acting through one of its duly authorized
officers, as proxy, with full power of substitution, to vote all of the shares
of common stock, par value $.01 per share, of PharMerica, Inc. ("PharMerica
Stock") held of record in the name of the undersigned on the date of such vote
(either by vote at a meeting of the stockholders of PharMerica, and at any
adjournments or postponements thereof, solicitation of proxies, solicitation of
consents or otherwise), in all votes of the stockholders of PharMerica, Inc.
("PharMerica").
The undersigned expressly acknowledges that BBC may vote the PharMerica
Stock in the sole discretion of BBC, without regard to any instructions, written
or otherwise, that may be given by the undersigned or received by BBC in respect
of such vote. The undersigned further acknowledges that its attendance at any
such vote of the stockholders shall not affect the validity of this Proxy. This
Proxy is coupled with an interest in the PharMerica Stock that is the subject of
this Proxy by reason of the post-record date acquisition by BBC of such
PharMerica Stock and the pending transfer thereof on the books and records of
PharMerica into the name of BBC. This Proxy shall remain valid until 11:59 p.m.
Eastern Standard Time, December 31, 2001.
COUNSEL HEALTHCARE ASSETS, INC.
By:
Name:
Title:
-11-
