EXHIBIT 99.2
EXECUTION COPY
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT ("Option Agreement") dated
August 23, 1997, between Cardinal Health, Inc., an Ohio
corporation ("Cardinal"), and Bergen Brunswig Corporation, a
New Jersey corporation ("Bergen").
W I T N E S S E T H:
WHEREAS, the Board of Directors of Cardinal and the
Board of Directors of Bergen have approved an Agreement and
Plan of Merger dated as of even date herewith (the "Merger
Agreement") providing for the merger of a wholly owned
subsidiary of Cardinal with and into Bergen;
WHEREAS, as a condition to Cardinal's entering into
the Merger Agreement, Cardinal has required that Bergen agree,
and Bergen has agreed, to grant to Cardinal the option set
forth herein to purchase authorized but unissued shares of
Bergen Common Stock;
NOW, THEREFORE, in consideration of the premises
herein contained, the parties agree as follows:
1. Definitions.
Capitalized terms used but not defined herein shall
have the same meanings as in the Merger Agreement.
2. Grant of Option.
Subject to the terms and conditions set forth herein,
Bergen hereby grants to Cardinal an option (the "Option") to
purchase up to 10,028,163 authorized and unissued shares of
Bergen Common Stock (the "Option Shares") at a price per share
equal to $48.29 (the "Purchase Price") payable in cash as
provided in Section 4 hereof.
3. Exercise of Option.
(a) Cardinal may exercise the Option, in whole or in part, at
any time or from time to time if a Purchase Event (as defined
below) shall have occurred and the Merger Agreement shall have
been terminated; provided, however, that to the extent the
Option shall not have been exercised, it shall terminate and be
of no further force and effect upon the earliest to occur of:
(i) the Effective Time of the Merger,
(ii) 5:00 p.m. New York City time, on the date which
is 180 days following the occurrence of a Purchase Event
and
(iii) (x) the termination of the Merger Agreement in
accordance with its terms (other than (A) pursuant to
Section 7.1(g) thereof or (B) pursuant to Section 7.1(e)
thereof if at the Bergen Shareholders Meeting (including
any adjournment or postponement thereof) the requisite
vote of the Bergen Shareholders to approve the Merger and
the transactions contemplated hereby shall not have been
obtained, and at the time of such failure by Bergen
Shareholders to so approve the Merger there is a publicly
announced or disclosed Competing Transaction with respect
to Bergen) prior to the occurrence of a Purchase Event, or
(y) 5:00 p.m. New York City time, on the date which is
one year following the termination of the Merger Agreement
pursuant to Section 7.1(e) thereof if no Purchase Event
has occurred pursuant to clause (b)(ii) below;
and provided, further, that if the Option cannot be exercised
before its date of termination as a result of any injunction,
order or similar restraint issued by a court of competent
jurisdiction, the Option shall expire on the 10th business day
after such injunction, order or restraint shall have been
dissolved or when such injunction, order or restraint shall
have become permanent and no longer subject to appeal, as the
case may be but in no event later than 18 months after the
occurrence of a Purchase Event.
(b) As used herein, a "Purchase Event" shall mean any of the
following events:
(i) the Board of Directors of Bergen shall have
withdrawn, modified or changed the Bergen Board
Recommendation in a manner adverse to Cardinal, or if the
Board of Directors of Bergen shall have refused to affirm
the Bergen Board Recommendation as promptly as practicable
(but in any case within 10 business days) after receipt of
any written request from Cardinal which request was made
on a reasonable basis;
(ii) if at the Bergen Shareholders Meeting
(including any adjournment or postponement thereof) the
requisite vote of the Bergen Shareholders to approve the
Merger and the transactions contemplated hereby shall not
have been obtained, and at the time of such failure by
Bergen Shareholders to so approve the Merger there is a
publicly announced or disclosed Competing Transaction with
respect to Bergen involving a third party and within
twelve months after termination of the Merger Agreement,
Bergen shall enter into a letter of intent, agreement-in-
principle, business combination or merger agreement or
other similar agreement for a Competing Transaction or a
Competing Transaction is consummated in each case with
such third party or a national or international wholesale
pharmaceutical distributor or any of their respective
affiliates;
(iii) if Bergen shall have breached in any material
respect any of its obligations under this Agreement; or
(iv) the Merger Agreement shall have been terminated
by Bergen pursuant to Sections 5.3(e) and 7.1(g) of the
Merger Agreement.
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(c) As used herein, the terms "Beneficial Ownership",
"Beneficial Owner" and "Beneficially Own" shall have the
meanings ascribed to them in Rule 13d-3 under the Exchange Act.
As used herein, "person" shall have the meaning specified in
Sections 3(a)(9) and 13(d)(3) of the Exchange Act.
(d) In the event Cardinal wishes to exercise the Option, it
shall deliver to Bergen a written notice (the date of receipt
of which being herein referred to as the "Notice Date")
specifying (i) the total number of shares it intends to
purchase pursuant to such exercise and (ii) a place and date
not earlier than two business days nor later than 60 calendar
days from the Notice Date for the closing of such purchase (the
"Closing Date"); provided that if the closing of the purchase
and sale pursuant to the Option (the "Closing") cannot be
consummated by reason of any applicable judgment, decree,
order, law or regulation, the period of time that otherwise
would run pursuant to this sentence shall run instead from the
date on which such restriction on consummation has expired or
been terminated; and, provided further that, without limiting
the foregoing, if prior notification to or approval of any
regulatory authority is required in connection with such
purchase, Cardinal and, if applicable, Bergen shall promptly
file the required notice or application for approval and shall
expeditiously process the same (and Bergen shall cooperate with
Cardinal in the filing of any such notice or application and
the obtaining of any such approval), and the period of time
that otherwise would run pursuant to this sentence shall run
instead from the date on which, as the case may be, (i) any
required notification period has expired or been terminated or
(ii) such approval has been obtained, and in either event, any
requisite waiting period has passed.
(e) In the event (i) Cardinal receives official notice that an
approval of any regulatory authority required for the purchase
of Option Shares would not be issued or granted or (ii) a
Closing Date shall not have occurred within 18 months after the
related Notice Date due to the failure to obtain any such
required approval, Cardinal shall be entitled to exercise its
right as set forth in Section 7 or, to the extent legally
permitted, to exercise the Option in connection with the resale
of Bergen Common Stock or other securities pursuant to a
registration statement as provided in Section 9. The
provisions of this Section 3 and Section 6 shall apply with
appropriate adjustments to any such exercise.
4. Payment and Delivery of Certificates.
(a) At the closing, referred to in Section 3 hereof, on the
Closing Date, Cardinal shall pay to Bergen the aggregate
Purchase Price for the shares of Bergen Common Stock purchased
pursuant to the exercise of the Option in immediately available
funds by wire transfer to a bank account designated not later
than one business day prior to the Closing Date by Bergen.
(b) At such closing, simultaneously with the delivery of cash
as provided in Section 4(a), Bergen shall deliver to Cardinal a
certificate or certificates representing the number of shares
of Bergen Common Stock purchased by Cardinal, registered in the
name of Cardinal or a nominee designated in writing by
Cardinal, which shares shall be fully paid and non-assessable
and free and clear of all liens, claims, charges and
encumbrances of any kind whatsoever.
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(c) If at the time of issuance of any Bergen Common Stock
pursuant to any exercise of the Option, Bergen shall have
issued any share purchase rights or similar securities to
holders of Bergen Common Stock, then each such share of Bergen
Common Stock shall also represent rights with terms
substantially the same as and at least as favorable to Cardinal
as those issued to other holders of Bergen Common Stock.
(d) Certificates for Bergen Common Stock delivered at any
closing hereunder shall be endorsed with a restrictive legend
which shall read substantially as follows:
"The shares represented by this certificate are
subject to certain provisions of an agreement between
the registered holder hereof and Bergen Brunswig
Corporation, a copy of which is on file at the
principal office of Bergen Brunswig Corporation, and
to resale restrictions arising under the Securities
Act of 1933, as amended, and any applicable state
securities laws. A copy of such agreement will be
provided to the holder hereof without charge upon
receipt by Bergen Brunswig Corporation of a written
request therefor."
It is understood and agreed that the above legend shall be
removed by delivery of substitute certificate(s) without such
legend in connection with a transfer or sale if (i) Bergen has
been furnished with an opinion of counsel, reasonably
satisfactory to counsel for Bergen, that such transfer or sale
will not violate the Securities Act or applicable securities
laws of any state or (ii) such transfer or sale shall have been
registered and qualified pursuant to the Securities Act and any
applicable state securities laws.
5. Authorization, etc.
(a) Bergen hereby represents and warrants to Cardinal that:
(i) Bergen has full corporate authority to execute
and deliver this Option Agreement and to consummate the
transactions contemplated hereby;
(ii) such execution, delivery and consummation have
been authorized by the Board of Directors of Bergen, and
no other corporate proceedings are necessary therefor;
(iii) this Option Agreement has been duly and
validly executed and delivered by Bergen and represents a
valid and legally binding obligation of Bergen,
enforceable against Bergen in accordance with its terms;
(iv) Bergen has taken all necessary corporate action
to authorize and reserve and permit it to issue and, at
all times from the date hereof through the date of the
exercise in full or the expiration or termination of the
Option, shall have reserved for issuance upon exercise of
the Option, 10,028,163 shares of Bergen Common Stock
(subject to adjustment as provided herein), all of which,
upon issuance in accordance with the terms of this Option
Agreement, shall be duly authorized, validly issued, fully
paid and nonassessable, and shall be delivered free and
clear of all claims, liens, encumbrances
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and security interests and not subject to any preemptive
rights of any shareholder of Bergen; and
(v) The Bergen Rights Agreement has been amended,
and will remain amended (and no replacement plan will be
adopted), so as to provide that none of Cardinal and its
affiliates will become an "Acquiring Person" and that no
"Stock Acquisition Date" or "Distribution Date" (as such
terms are defined in the Rights Agreement) will occur as a
result of the execution of this Option Agreement, the
grant of the Option hereunder or the acquisition or
transfer of shares of Bergen Common Stock by Cardinal
pursuant to the exercise, in whole or in part, of the
Option.
(b) Bergen hereby agrees that, prior to the termination of the
Option pursuant to Section 3(a) hereof, Bergen shall not take,
or allow to be taken, any action that could result in the
representations and warranties set forth in Section 5(a)(v)
hereof becoming false or inaccurate.
(c) Cardinal hereby represents and warrants to Bergen that:
(i) Cardinal has full corporate authority to execute
and deliver this Option Agreement and to consummate the
transactions contemplated hereby;
(ii) such execution, delivery and consummation have
been authorized by all requisite corporate action by
Cardinal, and no other corporate proceedings are necessary
therefor;
(iii) this Option Agreement has been duly and
validly executed and delivered by Cardinal and represents
a valid and legally binding obligation of Cardinal,
enforceable against Cardinal in accordance with its terms;
and
(iv) any Bergen Common Stock acquired by Cardinal
upon exercise of the Option will be acquired for its own
account and not be taken with a view to the public
distribution thereof and will not be transferred or
otherwise disposed of except in compliance with the
Securities Act.
6. Adjustment upon Changes in Capitalization.
In the event of any change in Bergen Common Stock by
reason of stock dividends, split-ups, recapitalizations or the
like, the type and number of shares subject to the Option, and
the purchase price per share, as the case may be, shall be
adjusted appropriately. In the event that any additional
shares of Bergen Common Stock are issued after the date of this
Option Agreement (other than pursuant to an event described in
the preceding sentence or pursuant to this Option Agreement or
options granted under employee benefit plans), the number of
shares of Bergen Common Stock subject to the Option shall be
adjusted so that, after such issuance, it equals at least 19.9%
of the number of shares of Bergen Common Stock then issued and
outstanding (without considering any shares subject to or
issued pursuant to the Option).
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7. Repurchase.
(a) At the request of Cardinal, at any time from and after the
occurrence of a Purchase Event and ending 180 days immediately
thereafter (the "Cardinal Repurchase Period"), Bergen (or any
successor entity thereof) shall repurchase the Option from
Cardinal together with all (but not less than all) shares of
Bergen Common Stock purchased by Cardinal pursuant thereto with
respect to which Cardinal then has Beneficial Ownership, at a
price (when calculated on a per share basis, the "Per Share
Repurchase Price") equal to the sum of:
(i) The difference between (A) the "Market/Tender
Offer Price" for shares of Bergen Common Stock (defined as
the higher of (x) the highest price per share at which a
tender or exchange offer has been made for shares of
Bergen Common Stock or (y) the highest closing price per
share of Bergen Common Stock as reported by the NYSE
Composite Tape for any day within that portion of the
Cardinal Repurchase Period which precedes the date
Cardinal gives notice of the required repurchase under
this Section 7) and (B) the Purchase Price (subject to
adjustment as provided in Section 6), multiplied by the
number of shares of Bergen Common Stock with respect to
which the Option has not been exercised, but only if such
Market/Tender Offer Price is greater than such exercise
price;
(ii) The exercise price paid by Cardinal for any
shares of Bergen Common Stock acquired pursuant to the
Option; and
(iii) The difference between the Market/Tender Offer
Price and the exercise price paid by Cardinal for any
shares of Bergen Common Stock purchased pursuant to the
exercise of the Option, multiplied by the number of shares
so purchased, but only if such Market/Tender Offer Price
is greater than such exercise price.
(b) In the event Cardinal exercises its rights under this
Section 7, Bergen shall, within 10 business days thereafter,
pay the required amount to Cardinal by wire transfer of
immediately available funds to an account designated by
Cardinal and Cardinal shall surrender to Bergen the Option and
the certificates evidencing the shares of Bergen Common Stock
purchased thereunder with respect to which Cardinal then has
Beneficial Ownership.
(c) In determining the Market/Tender Offer Price, the value of
any consideration other than cash shall be determined by an
independent nationally recognized investment banking firm
selected by Cardinal.
8. Repurchase at Option of Bergen.
Except to the extent that Cardinal shall have
previously exercised its rights under Section 7, at the request
of Bergen during the six-month period commencing 180 days
following the first occurrence of a Purchase Event, Bergen may
repurchase from Cardinal, and Cardinal shall sell to Bergen,
all (but not less than all) of the Bergen Common Stock acquired
by Cardinal pursuant to the Option and with respect to which
Cardinal has Beneficial Ownership at the time
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of such repurchase at a price per share equal to the greater of
(i) 110% of the Market/Tender Offer Price per share (calculated
in the manner set forth in Section 7(a)(i) hereof but utilizing
the period beginning on the occurrence of a Purchase Event and
ending on the date Bergen exercises its repurchase right
pursuant to this Section 8), (ii) the Per Share Repurchase
Price or (iii) the sum of (A) the aggregate Purchase Price of
the shares so repurchased plus (B) interest on the aggregate
Purchase Price paid for the shares so repurchased from the date
of purchase by Cardinal to the date of repurchase at the
highest rate of interest announced by Bank One, Columbus, NA as
its prime or base lending or reference rate during such period,
less any dividends received on the shares so repurchased, which
sum shall be divided by the number of shares of Bergen Common
Stock to be repurchased by Bergen. Any repurchase under this
Section 8 shall be consummated in accordance with Section 7(b).
9. Registration Rights.
At any time after a Closing, Bergen shall, if
requested by any holder or Beneficial Owner of shares of Bergen
Common Stock issued upon exercise of the Option (each a
"Holder"), as expeditiously as possible file a registration
statement on a form for general use under the Securities Act if
necessary in order to permit the sale or other disposition of
the shares of Bergen Common Stock that have been acquired upon
exercise of the Option in accordance with the intended method
of sale or other disposition requested by any such Holder.
Each such Holder shall provide all information reasonably
requested by Bergen for inclusion in any registration statement
to be filed hereunder. Bergen shall use its best efforts to
cause such registration statement first to become effective and
then to remain effective for such period not in excess of 180
days from the day such registration statement first becomes
effective as may be reasonably necessary to effect such sales
or other dispositions. The registration effected under this
Section 9 shall be at Bergen's expense except for underwriting
commissions and the fees and disbursements of such Holders'
counsel attributable to the registration of such Bergen Common
Stock. In no event shall Bergen be required to effect more
than one registration hereunder. The filing of any
registration statement required hereunder may be delayed for
such period of time (not to exceed 90 days) as may reasonably
be required to facilitate any public distribution by Bergen of
Bergen Common Stock, if a special audit of Bergen would
otherwise be required in connection therewith during which
Bergen is in possession of material information concerning it,
its business affairs or a material transaction in each case the
public disclosure of which could have a material adverse effect
on Bergen or significantly disrupt such material transaction.
If requested by any such Holder in connection with such
registration, Bergen shall become a party to any underwriting
agreement relating to the sale of such shares on terms and
including obligations and indemnities which are customary for
parties similarly situated. Upon receiving any request for
registration under this Section 9 from any Holder, Bergen
agrees to send a copy thereof to any other person known to
Bergen to be entitled to registration rights under this Section
9, in each case by promptly mailing the same, postage prepaid,
to the address of record of the persons entitled to receive
such copies.
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10. Listing.
If Bergen Common Stock or any other securities to be
acquired upon exercise of the Option are then listed on the
NYSE or any other national securities exchange, Bergen, upon
the request of Cardinal, will promptly file an application to
list the shares of Bergen Common Stock or other securities to
be acquired upon exercise of the Option on the NYSE or such
other exchange and will use its best efforts to obtain approval
of such listings as soon as practicable.
11. Severability.
Any term, provision, covenant or restriction
contained in this Option Agreement held by a court or other
Governmental Authority of competent jurisdiction to be invalid,
void or unenforceable, shall be ineffective to the extent of
such invalidity, voidness or unenforceability, but neither the
remaining terms, provisions, covenants or restrictions
contained in this Option Agreement nor the validity or
enforceability thereof in any other jurisdiction shall be
affected or impaired thereby. Any term, provision, covenant or
restriction contained in this Option Agreement that is so found
to be so broad as to be unenforceable shall be interpreted to
be as broad as is enforceable.
12. Miscellaneous.
(a) Expenses. Each of the parties hereto shall pay all costs
and expenses incurred by it or on its behalf in connection with
the transactions contemplated hereunder, including fees and
expenses of its own financial consultants, investment bankers,
accountants and counsel, except as otherwise provided herein.
(b) Entire Agreement. This Option Agreement, the Support
Agreements, the Merger Agreement (including the documents and
the instruments referred to therein) and the Confidentiality
Agreement constitute the entire agreement among the parties and
supersede all prior agreements and understandings, agreements
or representations by or among the parties, written and oral,
with respect to the subject matter hereof and thereof.
(c) Successors; No Third Party Beneficiaries. The terms and
conditions of this Option Agreement shall inure to the benefit
of and be binding upon the parties hereto and their respective
successors and permitted assigns. Nothing in this Option
Agreement, expressed or implied, is intended to confer upon any
party, other than the parties hereto, and their respective
successors and assigns, any rights, remedies, obligations, or
liabilities under or by reason of this Option Agreement, except
as expressly provided herein.
(d) Notices. All notices or other communications which are
required or permitted hereunder shall be in writing and
sufficient if delivered in accordance with Section 8.2 of the
Merger Agreement (which is incorporated herein by reference).
(e) Counterparts. This Option Agreement may be executed in
counterparts, and each such counterpart shall be deemed to be
an original instrument, but both such counterparts together
shall constitute but one agreement.
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(f) Further Assurances. In the event of any exercise of the
Option by Cardinal, Bergen and Cardinal shall execute and
deliver all other documents and instruments and take all other
action that may be reasonably necessary in order to consummate
the transactions provided for by such exercise.
(g) Specific Performance. The parties hereto agree that if
for any reason Cardinal or Bergen shall have failed to perform
its obligations under this Option Agreement, then either party
hereto seeking to enforce this Option Agreement against such
non-performing party shall be entitled to specific performance
and injunctive and other equitable relief, and the parties
hereto further agree to waive any requirement for the securing
or posting of any bond in connection with the obtaining of any
such injunctive or other equitable relief. This provision is
without prejudice to any other rights that either party hereto
may have against the other party hereto for any failure to
perform its obligations under this Option Agreement.
(h) 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 matters arising
under or in connection with this Option Agreement, this Option
Agreement shall be governed by the laws of the State of New
York. All actions and proceedings arising out of or relating
to this Option Agreement shall be heard and determined in any
New York state or federal court sitting in the City of New
York.
(i) Consent to Jurisdiction; Venue.
(i) Each of the parties hereto irrevocably submits
to the exclusive jurisdiction of the state courts of New
York and to the jurisdiction of the United States District
Court for the Southern District of New York, for the
purpose of any action or proceeding arising out of or
relating to this Option 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 New York state or federal court sitting
in the City of New York. 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.
(ii) 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 hereto,
on behalf of itself or its property, by the personal
delivery of copies of such process to such party. Nothing
in this Section 11(i) shall affect the right of any party
hereto to serve legal process in any other manner
permitted by law.
(j) Regulatory Approvals; Section 16(b). If, in connection
with the exercise of the Option under Section 3, prior
notification to or approval of any Governmental Authority is
required, then the required notice or application for approval
shall be promptly filed and/or expeditiously processed by
Bergen and periods of time that otherwise would run pursuant
hereto (if any) shall run instead from the date on which any
such required notification period has expired or been
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terminated or such approval has been obtained, and in either
event, any requisite waiting period shall have passed. Periods
of time that otherwise would run pursuant to Sections 3, 7 or 8
shall also be extended to the extent necessary to avoid
liability under Section 16(b) of the Exchange Act.
(k) Waiver and Amendment. Any provision of this Option
Agreement may be waived at any time by the party that is
entitled to the benefits of such provision. This Option
Agreement may not be modified, amended, altered or supplemented
except upon the execution and delivery of a written agreement
executed by the parties hereto.
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IN WITNESS WHEREOF, each of the parties hereto has
executed this Option Agreement as of the date first written
above.
CARDINAL HEALTH, INC.
By:/s/ Robert D. Walter
Name: Robert D. Walter
Title: Chairman and Chief
Executive Officer
BERGEN BRUNSWIG CORPORATION
By:/s/ Robert E. Martini
Name: Robert E. Martini
Title: Chairman and Chief
Executive Officer
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