AGREEMENTAND PLAN OF MERGER
by and among
PARK PHARMACY CORPORATION,
(a Colorado corporation)
MJN ACQUISITION CORP.,
(a Texas corporation)
MJN ENTERPRISES, INC.
(a Texas corporation)
and
XXXXXXX X. XXXXX
TABLE OF CONTENTS
Page
1. MERGER..................................................... 1
1.1 CERTAIN DEFINITIONS.................................. 1
1.2 THE MERGER............................................5
1.3 EFFECT OF THE MERGER................................. 5
1.4 CLOSING OF TRANSFER BOOKS............................ 6
1.5 FURTHER ASSURANCES................................... 6
2. THE SURVIVING CORPORATION.................................. 6
2.1 ARTICLES............................................. 6
2.2 BYLAWS............................................... 6
2.3 BOARD OF DIRECTORS................................... 6
2.4 OFFICERS............................................. 6
3. MERGER CONSIDERATION; CONVERSION........................... 7
3.1 MERGER............................................... 7
3.2 MERGER CONSIDERATION................................. 7
3.3 OTHER SHARES......................................... 7
3.4 CLOSING.............................................. 7
4. REPRESENTATIONS AND WARRANTIES OF STOCKHOLDER.............. 8
4.1 CORPORATE ORGANIZATION; CAPITALIZATION............... 8
4.2 OTHER BUSINESSES..................................... 8
4.3 OWNERSHIP OF COMPETING BUSINESSES.................... 8
4.4 FINANCIAL STATEMENTS................................. 8
4.5 CORPORATE ACTIONS, MANAGEMENT AND BANK ACCOUNTS ..... 9
4.6 TAXES AND TAX RETURNS................................ 9
4.7 RECENT OPERATIONS AND CHANGES....................... 10
4.8 RECENT CASUALTIES .................................. 10
4.9 OTHER RECENT EVENTS................................. 10
4.10 LIABILITIES........................................ 11
4.11 DISCLOSURES OF MATERIAL FACTS...................... 11
4.12 TITLE TO PERSONAL PROPERTY......................... 12
4.13 CONDITION AND EXTENT OF PROPERTY................... 12
4.14 REAL PROPERTY 12
4.15 REAL PROPERTY COMPLIANCE WITH ENVIRONMENTAL
AND OTHER LAWS..................................... 12
4.16 CUSTOMERS AND SUPPLIERS............................ 13
4.17 CONTRACTS AND COMMITMENTS.......................... 14
4.18 RELATED PARTY TRANSACTIONS......................... 14
4.19 COMPLIANCE WITH LAWS; LITIGATION....................15
4.20 LICENSES........................................... 15
4.21 PRODUCT DEFECTS; PRODUCT WARRANTIES................ 15
4.22 PRODUCT LIABILITY AND WORKING CONDITIONS............15
4.23 LABOR RELATIONS; EMPLOYEE BENEFIT PLANS.............15
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4.24 INVENTORIES.........................................16
4.25 ACCOUNTS RECEIVABLE................................ 16
4.26 TANGIBLE PERSONAL PROPERTY......................... 16
4.27 PATENTS, TRADEMARKS, LICENSES AND TRADE SECRETS ... 17
4.28 COMPENSATION AND OTHER BENEFITS.....................17
4.30 INSURANCE.......................................... 17
4.30 AUTHORITY.......................................... 18
4.31 NONCONTRAVENTION................................... 18
4.32 GOVERNMENTAL APPROVALS OF AGREEMENT................ 18
4.33 BROKER'S FEES.......................................18
4.34 COMPLIANCE WITH MEDICARE/MEDICAID PROGRAMS......... 18
4.35 FILING OF THIRD-PARTY PAYOR CLAIMS................. 19
4.36 FRAUD AND ABUSE.................................... 19
4.37 COMPLIANCE WITH XXXXX I AND II......................19
4.38 INVESTMENT INTENT AND SOPHISTICATION............... 20
4.39 ADVISORS........................................... 20
5. REPRESENTATIONS AND WARRANTIES OF PARENT.................. 20
5.1 ORGANIZATION........................................ 20
5.4 BROKER'S FEES ...................................... 21
5.5 SECURITIES TO BE ISSUED............................. 21
6. COVENANTS OF STOCKHOLDER.................................. 21
6.1 PRESERVATION OF BUSINESS............................ 21
6.2 PRESERVATION OF CORPORATE STATUS.................... 21
6.3 NO DIVIDENDS OR DISTRIBUTIONS....................... 21
6.4 RESTRICTIONS ON COMPENSATION AND BENEFITS........... 22
6.5 NO MODIFICATIONS OF OR NEW CONTRACTS AND
COMMITMENTS......................................... 22
6.6 RESTRICTIONS ON PAYMENT OF CERTAIN OBLIGATIONS...... 22
6.7 NO NEW SECURITY INTEREST............................ 22
6.8 NO CAPITAL OR OTHER MATERIAL TRANSACTIONS........... 22
6.9 NO MATERIAL CHANGE TO INVENTORIES................... 22
6.10 TAXES, TAX RETURNS AND BUSINESS INSURANCE.......... 22
6.11 COOPERATION WITH PARENT'S DUE DILIGENCE............ 23
6.12 REAL PROPERTY DELIVERIES........................... 23
6.13 GOOD STANDING CERTIFICATES......................... 23
6.14 MAINTENANCE OF STOCKHOLDER'S REPRESENTATIONS AND
WARRANTIES...........................................23
6.15 EXCLUSIVE NEGOTIATIONS............................. 23
6.16 COVENANT NOT TO COMPETE AND NON-SOLICITATION....... 23
6.17 [RESERVED]......................................... 24
7. TAX MATTERS .............................................. 24
7.1 TAX MATTERS AND POST-CLOSING COOPERATION............ 24
7.2 TRANSFER TAXES...................................... 24
7.3 ACCESS TO RECORDS FOLLOWING CLOSING................. 24
ii
8. STOCKHOLDER'S CONDITIONS PRECEDENT........................ 25
8.1 ACCURACY OF PARENT'S REPRESENTATIONS AND
WARRANTIES.......................................... 25
8.2 CORPORATE APPROVALS................................. 25
8.4 NO LEGAL RESTRAINTS ................................ 25
8.5 NO ADVERSE LEGAL ACTIONS............................ 25
9. PARENT'S CONDITIONS PRECEDENT.............................. 25
9.1 ACCURACY OF STOCKHOLDER'S REPRESENTATIONS AND
WARRANTIES.......................................... 25
9.2 OPINION OF STOCKHOLDER'S COUNSEL.................... 26
9.3 CORPORATE APPROVALS ................................ 26
9.4 NO LEGAL RESTRAINTS ................................ 26
9.5 NO ADVERSE LEGAL ACTIONS............................ 26
9.6 ACCURACY OF DOCUMENTS............................... 26
9.7 NO MATERIAL ADVERSE CHANGE.......................... 26
9.8 ANCILLARY AGREEMENTS................................ 26
9.9 [RESERVED].......................................... 26
9.10 [RESERVED]........................................ 26
9.11 CLOSING CERTIFICATE................................ 27
10. EXAMINATION PERIOD AND TERMINATION ...................... 27
10.1 EXAMINATION AND CONTINGENCY PERIOD ................ 27
10.2 TERMINATION OF AGREEMENT BY MUTUAL AGREEMENT....... 27
10.3 TERMINATION OF AGREEMENT FOR OTHER REASONS ........ 27
10.4 WAIVER OF CONDITIONS............................... 28
10.5 EFFECT OF CERTAIN TERMINATIONS .................... 28
10.6 PAYMENT OF EXPENSES; TRANSFER TAXES................ 28
11. INDEMNIFICATION.......................................... 28
11.1 STOCKHOLDER INDEMNITIES............................ 28
11.2 PARENT'S OFFSET RIGHTS AGAINST HOLDBACK SHARES .....29
11.4 NOTICE TO INDEMNIFYING PARTY....................... 30
12. GENERAL ................................................. 31
12.1 CONSTRUCTION; GOVERNING LAW....................... 31
12.2 SURVIVAL OF REPRESENTATIONS, WARRANTIES
AND ANCILLARY DOCUMENTS............................ 31
12.3 ENTIRE AGREEMENT, WAIVER .......................... 32
12.4 BINDING EFFECT; SUCCESSORS; ASSIGNMENT ........... 32
12.5 EXHIBITS AND SCHEDULES............................. 32
12.6 VALIDITY; BREACH; DEFINITION OF KNOWLEDGE.......... 32
12.7 INJUNCTIVE RELIEF...................................33
12.8 NOTICES............................................ 33
12.9 COUNTERPARTS....................................... 34
12.10 EFFECT OF HEADINGS................................ 34
12.12 PUBLIC ANNOUNCEMENT............................... 34
iii
LIST OF SCHEDULES*
Schedule 4.1(a) Foreign Qualifications
Schedule 4.4(a) Annual Financial Statements (3 years)
Schedule 4.4(b) Financial Statements as of September 30, 2000
Schedule 4.4(c) Exceptions to Financial Statement
Representations
Schedule 4.5 Copies of Articles of Incorporation and
Bylaws; Bank Account Information
Schedule 4.6(a) Tax Returns (3 years)
Schedule 4.6(b) Exceptions to Tax Representations
Schedule 4.12 Security Interests
Schedule 4.14(a) Real Property
Schedule 4.14(b) Title Exceptions
Schedule 4.14(d) Prior Properties
Schedule 4.15 Hazardous Waste
Schedule 4.16(a) Customers and Suppliers
Schedule 4.16(b) Contracts and Plans
Schedule 4.16 (c) Exceptions to Purchase Order and Commitments
Schedule 4.17 Approvals and Consents
Schedule 4.18(a) Related Party Transactions
Schedule 4.18(b) Obligations to or From Management;
Memberships
Schedule 4.18(c) Former Management Personnel
Schedule 4.20 Licenses
Schedule 4.22 Product and Employer Liability Matters
Schedule 4.23(a) Actuarial and Trustee Reports for Plans
Schedule 4.23(b) Terminated Plans
Schedule 4.23 (c) IRS Determination Letters
Schedule 4.25(a) Accounts Receivable Write-Offs
Schedule 4.25(b) Aged Accounts Receivable Balances
Schedule 4.26(a) Tangible Personal Property
Schedule 4.26(b) Tangible Personal Property located other than
Target Business Premises
Schedule 4.26(c) Tangible Personal Property owned by Others
Schedule 4.27 Intellectual Property Matters
Schedule 4.28 Salary and Benefit Information
Schedule 4.29 Insurance Policies
Schedule 4.31 Noncontravention
Schedule 4.34 Exceptions to Medicare/Medicaid Compliance
Schedule 4.35 Third Party Payor Claims
Schedule 6.16 Persons to Execute Employment Agreements
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* All schedules have been omitted in reliance on Item 601(b)(2)
of Regulation S-K. The Company will provide the Commission
a copy of any omitted schedule upon request.
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT (this "Agreement") dated as of November ___,
2000 is by and among PARK PHARMACY CORPORATION, a Colorado
corporation ("Parent"), MJN ACQUISITION CORP., a Texas
corporation and a wholly owned subsidiary of Parent ("Merger
Sub"), MJN ENTERPRISES, INC., a Texas corporation ("Target", and
XXXXXXX X. XXXXX, the sole shareholder of Target ("Stockholder").
RECITALS:
A. The respective Boards of Directors of Parent, Merger
Sub and Target deem it advisable and in their respective best
interests to effect the merger (the "Merger") of Target with and
into Merger Sub in accordance with the laws of the State of Texas
and the provisions of this Agreement.
B. Stockholder is the sole shareholder of Target.
C. Parent, Merger Sub, Target and Stockholder desire to
make certain representations, warranties and agreements in
connection with, and to establish various conditions precedent
to, the Merger.
D. Parent and Stockholder intend that this Agreement be
approved and adopted by all relevant parties as a plan of
reorganization within the provisions of Sections 368(a)(1)(A) and
368(a)(2)(D) of the Internal Revenue Code of 1986, as amended.
NOW, THEREFORE, in consideration of the representations,
warranties, covenants and agreements contained herein, the
parties agree as follows:
1. MERGER
1.1 Certain Definitions. The following definitions of terms
used in this Agreement are in addition to any other terms which
are defined in this Agreement.
"Acquired Business" means the business of Target engaged
within one (1) year prior to and as of the Closing Date.
"Ailiated Entities"means, with respect to a party, all of
its stockholders, corporate officers, directors, employees,
advisors, representatives, attorneys, agents, accountants and
potential and actual sources of financing or investment and
financial advisors.
"Affiliated Parties" means, with respect to a party, all
entities in which a party or any of its Affiliated Parties has a
five percent (5%) or more ownership interest or any entities
which have five percent or more ownership interest in a party or
any of the Affiliated Parties of such party.
"Affiliates" shall mean, with respect to a party, its
Affiliated Parties and Affiliated Entities.
"Agreed Share Value" means $1.00 per share of Parent Common
Stock, adjusted for any stock splits or other reclassifications
during the applicable time period.
"Ancillary Agreements" means the Certificate of Merger to be
filed with the Secretary of State of Texas and any other
agreements to be executed in connection with this Agreement.
"Basis" means any past or present fact, situation,
circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act or
transaction that forms or could form the basis for any specified
consequence.
"Business Day" means a day other than a Saturday, Sunday or
other day on which commercial banks in Dallas, Texas are
authorized or required to close.
"Cash" means cash and cash equivalents (including marketable
securities and short-term investments) calculated in accordance
with GAAP applied on a basis consistent /with the preparation of
the Financial Statements.
"Cash Amount" has the meaning set forth in Section 3.2.
"Closing" has the meaning set forth in Section 2.1.
"Closing Date" means the date on which the Effective Time
occurs.
"Closing Shares" has the meaning set forth in Section 3.2.
"Code" means the Internal Revenue Code of 1986, as amended.
"Contracts" means agreements, contracts, engagements,
commitments, Licenses, franchises, real and personal property
leases and other similar documents, whether written or unwritten.
"Corporate Laws" has the meaning set forth in Section 1.2.
"Effective Time" means the date and time at which the filing
of the Articles of Merger in the State of Texas has occurred in a
manner required to cause the Merger to become effective under the
laws of the State of Texas.
"Employee Benefit Plan" means any (a) nonqualified deferred
compensation or retirement plan or arrangement which is an
Employee Pension Benefit Plan, (b) qualified defined contribution
retirement plan or arrangement which is an Employee Pension
Benefit Plan, (c) qualified defined benefit retirement plan or
arrangement which is an Employee Pension Benefit Plan (including
any Multiemployer Plan), or (d) Employee Welfare Benefit Plan.
"Employee Pension Benefit Plan" has the meaning set forth in
ERISA Section 3(2).
"Employee Welfare Benefit Plan" has the meaning set forth in
ERISA Section 3(1).
"Environmental, Health and Safety Requirements" shall mean
any federal, state, local or foreign, statute, regulation,
ordinance or other provision having the force or effect of law,
the
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common law, and any judicial or administrative order or
determination concerning public health and safety, worker health
and safety, and pollution or protection of the environment,
including all those relating to the presence, use, production,
generation, handling, transportation, treatment, storage,
disposal, distribution, labeling, testing, processing, discharge,
release, threatened release, control or cleanup of any hazardous
materials, substances or wastes, chemical substances or mixtures,
pesticides, pollutants, contaminants, toxic chemicals, petroleum
products or byproducts, asbestos, polychlorinated biphenyls,
noise or radiation.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Financial Statements" has the meaning set forth in Section
4.4.
"GAAP" means United States generally accepted accounting
principles as in effect from time to time.
"Governmental Entity" means any government or any agency,
bureau, commission, court, authority, department, official,
political subdivision, administrative body, tribunal or other
instrumentality of any government, whether federal, state or
local, domestic or foreign.
"Holdback Period" means the period ending one year from the
Closing Date.
"Holdback Shares" has the meaning set forth in Section 3.2.
"including" has the meaning set forth in Section 12.6.
"Indemnitee" has the meaning set forth in Section 11.4.
'Indemnifying Party"has the meaning set forth in Section
11.4.
"Key Employees" means any employee of Target who receives
compensation at an annual rate of $40,000 or more.
"Knowledge" has the meaning set forth in Section 12.6.
"Legal Requirement" shall mean any law, rule, regulation,
order or ordinance of any Governmental Entity, including
Environmental, Health and Safety Requirements.
"Liability" or "Liabilities" means any commitments, debts,
liabilities, obligations (including Contract and capitalized
lease obligations), indebtedness, accounts payable and accrued
expenses (whether any of the foregoing are known or unknown,
unasserted, absolute or contingent, accrued or unaccrued,
liquidated or unliquidated and/or asserted or due or to become
due), including any liability or obligation for Taxes.
"Licenses" has the meaning set forth in Section 4.20.
"Loss" or "Losses" has the meaning set forth in Section
11.1.
"Merger" has the meaning set forth in the recitals above.
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"Merger Sub" has the meaning set forth in the preface above.
"Merger Consideration" has the meaning set forth in Section
3.2.
"Most Recent Balance Sheet" means the balance sheet
contained within the Most Recent Financial Statements.
"Most Recent Financial Statements" has the meaning set forth
in Section 4.4.
"ost Recent Fiscal Month End" has the meaning set forth in
Section 4.4.
"Most Recent Fiscal Year End" has the meaning set forth in
Section 4.4.
"Multiemployer Plan" has the meaning set forth in ERISA
Section 3(37).
"Notices" has the meaning set forth in Section 12.8.
"Ordinary Course of Business" means the usual and ordinary
course of business consistent with past custom and practice.
"Parent" has the meaning set forth in the preface above.
"Parent Common Stock" means shares of common stock, $.0001
par value per share, of Parent.
"Parent Preferred Stock" means shares of Series A Preferred
Stock, $.001 par value per share, of Parent.
"Person" means an individual, a partnership, a limited
liability company or partnership, a corporation, an association,
a joint stock company, a trust, a joint venture, an
unincorporated organization, a Governmental Entity or any other
form of entity or company.
"Prior Properties" has the meaning set forth in Section
4.14(e).
"Properties" has the meaning set forth in Section 4.14(a).
"Reportable Event' has the meaning set forth in ERISA
Section 4043.
"Returns" means all returns, declarations, reports,
statements, schedules, notices, forms or other documents or
information required to be filed in respect of the determination,
assessment, collection or payment of any Tax or in connection
with the administration, implementation or enforcement of any
legal requirement relating to any Tax, and the term "Return"
means any one of the foregoing Returns.
"Review" has the meaning set forth in Section 10.1.
"Rights" has the meaning set forth in Section 4.27.
"SEC' means the Securities and Exchange Commission.
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"Security Interest" means any mortgage, pledge, lien,
encumbrance, charge, conditional sales agreement, respecting
property of any Person, or other security interest, other than
(a) liens for Taxes not yet due and payable or for Taxes that the
taxpayer is contesting in good faith through appropriate
proceedings and (b) purchase money liens.
"Stock Amount" has the meaning set forth in Section 3.2.
"Stockholder Agreements"has the meaning set forth in
Section 11.1.
"Stockholder" has the meaning set forth in the preface
above.
"Subsidiary" means any corporation with respect to which a
specified Person (or a Subsidiary thereof) owns a majority of the
common stock or has the power to vote or direct the voting of
sufficient securities to elect a Majority of the directors.
"Surviving Corporation" has the meaning set forth in Section
1.2.
"Target" has the meaning set forth in the preface above.
"Target Shares" has the meaning set forth in Section 4.1(b).
"Tax" or "Taxes" means all federal, state, local, foreign
and other net income, gross income, gross receipts, profits,
goods and services, social security, sales, use, ad valorem,
single business, transfer, franchise, profit, license, lease,
service, service use, withholding, payroll, employment, excise,
franchise, business license, occupation, real property, gains,
severance, stamp, occupation, premium, property, windfall
profits, customs, duties or other taxes, fees, assessments,
environmental, alternative minimum, windfall and capital taxes,
obligations of the same or a similar nature to any of the
foregoing, together with any interest and any penalties,
additions to tax, or additional amounts with respect thereto.
"Wire Transfer" means a payment of money by wire transfer in
immediately available funds to an account or accounts designated
in writing by the recipient to the payor; provided, however, that
if the recipient fails to make such designation prior to the
payment due date, the term shall instead mean payment of money by
overnight delivery of a certified or cashier's check of a
federally insured financial institution.
1.2 The Merger. At the Effective Time, upon the terms and
subject to the conditions set forth herein, and in accordance
with the laws of the State of Texas (the "Corporate Laws"),
Target shall be merged with and into Merger Sub, the separate
existence of Target shall cease, and Merger Sub shall continue as
the surviving corporation. Merger Sub after the Merger is
sometimes hereafter referred to as the "Surviving Corporation."
1.3 Effect of the Merger. At the Effective Time, the Surviving
Corporation shall continue its corporate existence under the laws
of the State of Texas and shall succeed to all rights,
privileges, immunities, franchises and powers, and be subject to
all duties, liabilities, debts and obligations, of Target in
accordance with the provisions of the Corporate Laws.
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1.4 Closing of Transfer Books. At the Effective Time, the stock
transfer books of Target shall be closed and no transfer of
shares of Target Common Stock shall thereafter be made. If after
the Effective Time, certificates previously representing shares
of Target Common Stock are presented to the Surviving
Corporation, they shall be canceled and exchanged for the Merger
Consideration.
1.5 Further Assurances. If at any time after the Effective
Time, the Surviving Corporation shall reasonably determine that
any deeds, bills of sale, assignments or assurances or any other
acts or things are necessary, desirable or proper (i) to 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, privileges, powers, franchises, properties or assets
of Target or (ii) otherwise to carry out the purposes of this
Agreement, the Surviving Corporation and its proper officers and
directors or their designees shall be authorized to execute and
deliver, in the name and on behalf of each of such corporations,
all such deeds, bills of sale, assignments and assurances and do,
in the name and on behalf of each of such corporations, all such
other acts and things necessary, desirable or proper to vest,
perfect or confirm its right, title or interest in, to or under
any of the rights, privileges, powers, franchises, properties or
assets of such corporation and otherwise to carry out the
purposes of this Agreement and the transactions contemplated
hereby.
2. THE SURVIVING CORPORATION
2.1 Articles. The articles of incorporation of Merger Sub as in
effect immediately prior to the Effective Time shall be the
articles of incorporation of the Surviving Corporation until
thereafter amended in accordance with applicable Corporate Laws
and such articles of incorporation.
2.2 Bylaws. The bylaws of Merger Sub as in effect immediately
prior to the Effective Time shall be the bylaws of the Surviving
Corporation until thereafter amended in accordance with
applicable Corporate Laws, the articles of incorporation of
Surviving Corporation and such bylaws.
2.3 Board of Directors. The directors of Merger Sub immediately
prior to the Effective Time shall be the initial board of
directors of the Surviving Corporation, each of such persons to
serve until his or her successor is duly elected and qualified.
2.4 Officers. The officers of Merger Sub immediately prior to
the Effective Time shall be the initial officers of the Surviving
Corporation, each of such officers to serve until his or her
successor is duly qualified.
3. MERGER CONSIDERATION; CONVERSION
3.1 Merger.
(a) At the Effective Time, by virtue of the Merger, and without
any action on the part of Stockholder, all of the Target Shares
issued and outstanding immediately prior to the Effective Time
shall be canceled, retired and converted into and become the
right to receive the Merger Consideration described in this
Section 3.1.
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(b) At the Closing, Stockholder shall surrender the certificates
representing the Shares, accompanied by blank stock powers and
all necessary transfer taxes and other revenue stamps, to Parent,
and the Parent shall deliver the Cash Amount and Closing Shares
to Stockholder.
(c) Following the expiration of the Holdback Period, Parent
shall deliver the Holdback Shares to Stockholder, subject to the
provisions of Section 11.2.
3.2 Merger Consideration; Debt Repayment.
(a) The "Merger Consideration" consists of (a) the "Cash Amount"
of $1,150,000 payable by Wire Transfer, (b) 1,190,000 shares of
Parent Common Stock (the "Closing Shares"), and (c) right to
receive, upon the expiration of the Holdback Period and subject
to the provisions of Section 11.2, 260,000 shares of Parent
Common Stock (the "Holdback Shares"). No fractional shares shall
be issued, and an amount in cash (if any) shall be paid in lieu
thereof equal to such fractional part of a share multiplied by
the foregoing Agreed Share Value.
(b) Debt Repayment at Closing. At the Closing, Parent shall, or
shall cause the Surviving Corporation to repay in full the
following indebtedness:
(i) that certain loan from Summit Community Bank,
N.A. to Target, the principal balance of which, and
accrued but unpaid interest thereon, as of the date of
this Agreement is $232,613.96; and
(ii) that certain loan from Texas Drug to Target,
the principal balance of which, and accrued but unpaid
interest thereon, as of the date of this Agreement is
$77,777.76.
3.3 Other Shares. Each share of common stock of the Merger Sub
issued and outstanding immediately prior to the Effective Time
shall be converted into and become one share of common stock of
the Surviving Corporation.
3.4 Closing. Subject to termination of this Agreement pursuant
to Article 11, the consummation of the transactions contemplated
in this Agreement (the "Closing") shall take place at the offices
of Xxxxx & Xxxxxx LLP, 0000 Xxxx Xxxxxx, Xxxxx 0000, Xxxxxx,
Xxxxx, at 10:00 a.m., Dallas time, on the fifth Business Day
after all the conditions set forth in Articles 8 and 9 hereof
have been satisfied or waived. On the date of the Closing, Target
and Merger Sub shall file the documents required by the Corporate
Laws to effect the Merger.
4. REPRESENTATIONS AND WARRANTIES OF STOCKHOLDER
Stockholder represents and warrants to Parent and Merger Sub
that the statements contained in this Article 4 are correct and
complete as of the date hereof, and will be correct and complete
as of the Effective Time:
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4.1 Corporate Organization; Capitalization.
4.2
(a) Target is a corporation duly organized, validly existing and
in good standing under the laws of the State of Texas, has full
corporate power and authority to own its properties and to carry
on its business as now conducted, and is in good standing and
duly qualified to conduct business as a foreign corporation in
each of the jurisdictions (which are be set forth in Schedule
4.1(a)) in which the ownership or leasing of its properties or
the conduct of its business requires such qualifications.
Stockholder is the only Person who owns, or has any right to own
or acquire, any capital stock or other securities of Target.
(b) Target's authorized capitalization consists of 1,000,000
shares of Common Stock, $1.00 par value, of which 1,000 shares
(the "Target Shares") are issued outstanding and owned by
Stockholder, free and clear of all Security Interests. No other
shares of capital stock of Target are authorized, issued or
outstanding. All of the outstanding shares of capital stock are
validly issued, fully paid and nonassessable. There are no
options, calls, warrants or other securities or rights
outstanding which are convertible into, exercisable or
exchangeable for or relate to any shares of capital stock of
Target.
4.2 Other Businesses. Except for the ownership of less than one
percent (1%) interests in securities of corporations the shares
of which are publicly traded, Target does not own, directly or
indirectly, any interest or have any investment in any
corporation or other business. Without limiting the generality
of the foregoing, Target does not have any Subsidiaries.
4.3 Ownership of Competing Businesses. Except for the ownership
of less than two percent (2%) interests in securities of
corporations the shares of which are publicly traded, neither
Target, Stockholder nor, to Stockholder's Knowledge, any of
Target's directors, officers or, other Key Employees (including
pharmacists, technicians and managers) owns, directly or
indirectly, any interest or has any investment or profit
participation in any Person that is a competitor or potential
competitor of, or which directly or indirectly does business
with, Target.
4.4 Financial Statements. Attached as Schedule 4.4(a) are
copies of Target's balance sheets as of June 30, 2000 (the "Most
Recent Fiscal Year End"), and the related statements of income,
stockholders' equity and changes in financial position for the
fiscal year then ended and will include the notes thereto, and
all additional or supplemental information supplied therewith.
Attached as Schedule 4.4(b) are copies of Target's balance sheet
as of September 30, 2000 (the "Most Recent Fiscal Month End") and
the related statements of income and stockholders' equity for the
three (3) months then ended (and as of the corresponding date and
for the corresponding period in the preceding fiscal year) and
will include the notes thereto and all additional or supplemental
information supplied therewith (the "Most Recent Financial
Statements"). Except as set forth in Schedule 4.4(c), the
financial statements attached as Schedules 4.4(a) and 4.4(b)
(hereinafter collectively referred to as the "Financial
Statements") are true, complete and correct in all material
respects as of the respective dates and for the respective
periods stated above; fairly present the properties, assets,
financial position and results of operations of Target as of the
respective dates and for the respective periods stated above; and
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have been prepared pursuant to and in accordance with GAAP
applied on a consistent basis (with regard to the statements
attached as Schedule 4.4(a)) or a modified cash basis (with
regard to the financial statements attached as Schedule 4.4(b)).
Without limiting the generality of the foregoing, all inventories
reflected in the Financial Statements will be valued at the lower
of cost or market, with cost determined using the first-in, first-
out method; adequate provision will have been timely made in the
Financial Statements for doubtful accounts and other receivables;
sales will be stated in the Financial Statements net of
discounts, returns and allowances; all Taxes assessable against
Target and due or paid will be timely and adequately reflected in
the Financial Statements and all Taxes assessable against Target
and not yet due and payable will be timely and fully accrued or
otherwise provided for therein; and Target has no Liability
arising out of transactions entered into or any facts existing on
or prior to the respective dates of the Financial Statements,
except for Liabilities that will be timely reflected therein and
except for contractual or other obligations of performance (other
than obligations arising by reason of a default in performance)
incurred in the Ordinary Course of Business and not required to
be reflected in the Financial Statements under GAAP consistently
applied. Any items of income or expense which are unusual or of
a nonrecurring nature will be separately disclosed in the
Financial Statements.
4.5 Corporate Actions, Management and Bank Accounts. All
corporate action of Target has been duly recorded in its
corporate minute books and duly authorized and adopted in
accordance with applicable law and its bylaws and charter
documents (such bylaws and charter documents as currently in
effect to be supplied to Parent in certified form as Schedule
4.5, which Exhibit shall also include a list identifying the
directors and officers of Target). Schedule 4.5 also sets forth a
complete list certified by Target's treasurer containing the
names of all banks or any other financial institutions which are
depositories of funds of Target, the names of all persons
authorized to draw or sign checks or drafts upon such accounts
established in said banks and financial institutions, and the
names and locations of any institutions in which Target has safe
deposit boxes and the names of the persons having access thereto.
4.6 Taxes and Tax Returns. Schedule 4.6(a) contains copies of
Target's federal income Tax Returns filed for fiscal years ended
on and after December 31, 1997 through the Most Recent Fiscal
Year End. Target has timely filed all Returns required to be
filed and paid in full all Taxes required to be paid by Target.
As of the time of filing, all such Returns correctly reflected
(and all Returns required to be filed by Target pursuant to
Article 7 hereof will correctly reflect at the time of filing)
the facts regarding the income, business, assets, operations,
activities, status, or other matters of Target or any other
information required to be shown thereon. Target 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, stockholder or other third
party. Except as set forth on Schedule 4.6(b), (a) Target has no
deficiency with respect to any tax period on account of Taxes,
(b) no Tax or related audit of Target is proposed or pending,
(c) no federal income Tax Returns of Target have been audited and
reported upon by the Internal Revenue Service, (d) there are not
in effect any waivers or extensions of statutes of limitations by
Target respecting any Returns of Target, (e) Target has not filed
any consent under Section 341(f) of the Code concerning
collapsible corporations, (f) Target has not made any payments,
nor is it obligated to make any payments, that will not be
deductible under Code Section 280G, and (g) Target is not a party
to any Tax allocation or Tax sharing agreement, and it does not
have any Liability under Treasury Regulation Section 1.1502-6 or
otherwise for the Taxes of any other Person. Target (and any
predecessor of Target) has been a validly electing S corporation,
within
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the meaning of Code Sections 1361 and 1362, from its
inception and Target will continue to be an S corporation up to
and including the Closing Date. Target has not, within the past
ten (10) years, acquired assets from another Person in a
transaction in which Target's Tax basis for the acquired assets
was determined, in whole or in part, by reference to the Tax
basis of the acquired assets (or any other property) in the hands
of the transferor.
4.7 Recent Operations and Changes. Except as set forth in
Schedule 4.7, since the Most Recent Fiscal Year End, (a) there
have not been any material adverse changes, either individually
or in the aggregate, in the general affairs, business, prospects,
properties, financial position, results of operations or net
worth of Target, (b) the business affairs of Target have been
conducted in the same manner as theretofore conducted and in the
Ordinary Course of Business and specifically, without limiting
the generality of the foregoing, since such date there have been
no material adverse changes to the customers, sales, products,
prices and/or the terms of sales of Target, (c) no transaction
has taken place, and no material Contract has been entered into
by Target, other than in the Ordinary Course of Business, and
(d) specifically, without limiting the generality of the
foregoing, there have been no material sales, removals or
transfers of inventory (other than shipments of inventory in the
Ordinary Course of Business), machinery, fixtures or other
tangible or intangible assets of any nature from Target.
4.8 Recent Casualties. Since the Most Recent Fiscal Year End,
there has not been any material casualty affecting Target or
loss, damage or destruction to any of its assets or properties,
whether or not covered by or compensated under any insurance
policy of Target.
4.9 Other Recent Events. Since the Most Recent Fiscal Year End,
Target has not:
(a) except for $195,000 distributed to Stockholder, issued
capital stock or declared or paid any dividend or made any other
payment from capital or surplus or other distribution of any
nature or directly or indirectly redeemed, purchased or otherwise
acquired or recapitalized or reclassified any of its capital
stock or liquidated in whole or in part;
(b) acquired all or substantially all of the stock or assets of
any other Person, including any such acquisition structured as a
merger or consolidation, or made any loan of money to or
investment in any other Person;
(c) created, incurred or assumed, or committed to create, incur
or assume, any Liabilities, except for accounts payable, accrued
expenses and other current Liabilities which (i) are not for
borrowed money, (ii) were incurred in the Ordinary Course of
Business, and (iii) have not been and will not be materially
adverse to the general affairs, business, prospects, properties,
financial position, results of operations or net worth of Target;
(d) granted, suffered or permitted any Security Interest on any
asset or property of Target, whether voluntarily or by operation
of law other than in the Ordinary Course of Business;
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(e) raised salaries, hourly rates or the rate of bonuses or
commissions or other compensation of its personnel or agents
outside of the Ordinary Course of Business;
(f) adopted or amended any bonus, profit sharing, compensation,
stock option, stock purchase, pension, retirement, deferred
compensation or other plan, agreement, trust, fund or arrangement
for the benefit of employees or others;
(g) varied insurance coverage;
(h) altered or amended its charter documents or bylaws; or
(i) entered into, materially amended or terminated or waived any
right with respect to any material Contract or License other than
in the Ordinary Course of Business.
4.10 Liabilities. There are no Liabilities of Target (including
Liabilities for unused vacation time), nor is there any Basis for
such a Liability to be asserted against Target, which are not
timely and adequately reflected, reserved for or specifically
disclosed in the Financial Statements, except for (a) contractual
or other obligations of performance (other than obligations
arising by reason of a default in performance) incurred in the
Ordinary Course of Business and not required to be reflected in
the Financial Statements under GAAP consistently applied,
(b) Liabilities (other than Liabilities arising by reason of
Target's default under any Contract or warranty, tort,
infringement of any third party Rights or violation of any Legal
Requirements) incurred in the Ordinary Course of Business since
the date of the Most Recent Fiscal Month End and (c) as otherwise
set forth in Schedule 4.10.
4.11 Disclosures of Material Facts. Neither this Agreement nor
any Exhibits or other documents furnished or to be furnished to
Parent pursuant to this Agreement contain or will contain any
untrue statement of a material fact or omit or will omit to state
a material fact necessary in order to make the factual statements
contained herein or therein, in light of the circumstances under
which they were made, not misleading. Neither Target nor
Stockholder has Knowledge of any events, transactions or other
facts which, either individually or in the aggregate, may give
rise to circumstances or conditions which could have a material
adverse effect on the general affairs, business, prospects,
properties, financial position, results of operations or net
worth of Target.
4.12 Title To Personal Property. Target has good and marketable
title to all personal property of any kind or nature owned by it,
and has a valid leasehold interest or other legal right to use
all other personal property used by it in its business, free and
clear of all Security Interests, except for (a) Security
Interests for nondelinquent ad valorem Taxes, and (b) such non-
monetary Security Interests as do not detract from or interfere
with the present or reasonably foreseeable use of the properties
subject thereto. All of the Security Interests referred to in
clause (b) are set forth in Schedule 4.12. At the Closing,
Target's assets and properties (including the Partnership
Equipment) will be free of all Security Interests, other than
those Security Interests referred to in clause (b) above and set
forth in Schedule 4.14(b).
4.13 Condition and Extent of Property. All buildings and
improvements and all of the machinery and equipment owned and/or
used by Target are in good repair and in good operating condition
and are adequate and sufficient to carry on Target's business as
presently conducted.
-11-
4.14 Real Property.
(a) Schedule 4.14(a) lists by street address all real property
and the ownership thereof which is owned, leased or used by
Target in its business or in which Target has an interest
(collectively, the "Properties"). Schedule 4.14(a) also includes
copies of all deeds and leases to all Properties, together with
all existing title insurance policies, legal opinions, title
reports, appraisals, surveys, building plans and such other
similar materials and instruments applicable to such Properties.
Target owns no interest in real property other than the
Properties.
(b) Target has good and marketable fee simple title to all
Properties owned by it and a valid leasehold interest in all
Properties leased by it, free and clear of all Security Interests
and other matters affecting title, use or occupancy, except for
(i) Security Interests for nondelinquent ad valorem Taxes and
(ii) such non-monetary Security Interests as do not detract from
or interfere with the present or reasonably foreseeable use of
the Properties subject thereto, (iii) landlord's liens and (iv)
liens arising under indebtedness for borrowed money reflected on
the Financial Statements. All of the Security Interests referred
to in clause (ii) above are set forth in Schedule 4.14(b).
(c) No Governmental Entity having jurisdiction over the
Properties has given any written notice of a possible future
imposition of assessments affecting the Properties or to exercise
the power of eminent domain, and neither Target nor Stockholder
has Knowledge of any such contemplated actions.
(d) Schedule 4.14(d) lists by street address all real property
previously owned, leased or used by Target or any predecessor or
in which Target or any predecessor had an interest (collectively,
the "Prior Properties").
4.15 Real Property Compliance with Environmental and Other Laws.
The Properties, the use of such Properties and the conduct of the
business of Target thereon have not violated, and based upon
present and foreseeable uses of such Properties will not violate,
any Legal Requirements. Target has utilized, handled, stored,
delivered for disposal, disposed of and transported all wastes,
whether hazardous or not, in full compliance with all Legal
Requirements and so as not to contaminate any of the Properties
or any other properties and so as not to give rise to any
reporting, remediation or clean-up obligation under any Legal
Requirement. The Properties, the other assets of Target and
Target's other property, including its buildings, fixtures,
machinery, equipment and inventory (whether now or previously
owned, leased or used by Target), have not been contaminated,
tainted or polluted, nor will such properties or assets become
contaminated, tainted or polluted, as a result of activities
conducted by Target or the migration of contaminants from any
adjacent property. None of the Properties appears on the
National Priority List or any federal, state, local or foreign
listing which identifies sites for remedial clean-up or
investigatory actions. No asbestos, PCB's, urea-formaldehyde,
underground storage tanks or plating operations are or were
located on the Properties, and none of the Properties has been
used to handle, treat, store or dispose of or has been
contaminated (including contamination of soils, subsurface
groundwater and surface waters located on, in or under such
premises) with or by pollutants, wastes or any other substances,
which contamination may give rise to a reporting, remediation or
clean-up obligation with respect to such Properties or
-12-
the property of others under any Legal Requirement. Schedule
4.15 lists all waste haulers used by Target since January 1,
1999. The provisions of this Section 4.15 shall also apply to
(a) the Prior Properties, with respect to actions, failures to
act and conditions existing while Target owned, leased, used or
had an interest in such Prior Properties, and (b) the real
property of, and actions taken by, each Person controlled by
Target during all periods in which Target controlled such Person.
4.16 Customers and Suppliers. Schedule 4.16(a) lists the
material customers of, and the material suppliers to, Target
during the twelve (12) months ended December 31, 1999 and the
nine (9) months ended September 30, 2000 (stating for each the
dollar volume of the sales or purchases, as the case may be).
Except as provided in the following sentence, Schedule 4.16(b)
lists all of the existing Contracts of Target, whether written or
unwritten, including all supply contracts, labor or employment
agreements, leases, notes or other evidences of indebtedness,
mortgages, guarantee agreements, pension, stock option, stock
purchase, bonus, profit sharing and other employee or executive
welfare or benefit plans or agreements, sales representation and
distribution agreements, purchase orders and commitments, product
warranties, and powers of attorney. Notwithstanding the
foregoing, Schedule 4.16(b) need not list:
(a) any purchase order or other similar Contract with a customer
made (i) in the Ordinary Course of Business on or after the date
hereof, or (ii) prior to the date hereof, in each case if Target
is obligated to deliver or provide less than $10,000 in invoice
value of goods or services (as applicable) in each transaction or
series of related transactions; or
(b) any purchase commitment or other similar Contract with a
vendor or supplier made (i) in the Ordinary Course of Business at
prevailing prices on or after the date hereof, or (ii) prior to
the date hereof, in each case if such commitment involves less
than $10,000 in each transaction or series of related
transactions.
(c) Stockholder has delivered to Parent copies of all written
instruments evidencing the items listed in Schedule 4.16(b) and
copies of the forms of written purchase and sales orders used by
Target. The aggregate purchase orders from customers and
purchase commitments from Target with vendors or suppliers
outstanding at September 30, 2000, do not exceed $10,000 and
$10,000, respectively. Such purchase orders and purchase
commitments may be canceled at any time without penalty, except
as described on Schedule 4.16(c).
4.17 Contracts and Commitments. All of the Contracts listed in
Schedule 4.16(b) and all of the Contracts not required to be
listed by reason of clause (a) or (b) of Section 4.16 above are
valid and binding obligations of the parties thereto in
accordance with their respective terms, and no event has occurred
under such Contracts that would constitute any breach of or
default in any provision of any such Contracts or which would
permit the acceleration or termination of any obligation of any
party thereto or the creation of a Security Interest upon any
asset or property of Target or which would give rise to any of
the foregoing upon the giving of notice or lapse of time or both.
Neither Target nor Stockholder has Knowledge of increased
competitive activities, or of plans for such increased
activities, in markets for Target's products or services as
compared to the level of competitive activities experienced by
Target in the past
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twelve (12) months. No information has been brought to the
attention of Target or Stockholder which might reasonably lead
any of them to believe that any customer or supplier of Target
intends to cease dealing with Target, or intends to alter in any
material adverse respect the amount of such customer's or
supplier's dealings with Target, or would alter in any material
adverse respect such dealings in the event of the consummation of
the transactions contemplated hereby.
4.18 Related Party Transactions. Except as set forth in Schedule
4.18(a), following the Closing, Target shall not have any future
obligation or liability arising from any contracts, arrangements
or other relationships between Target and any current or former
corporate officer, director or stockholder of Target or any
Person in which Target or any current or former corporate
officer, director or stockholder of Target had a direct or
indirect interest. No employee of Target has violated the
published business policies of any third party with respect to
gifts, services or corporate business practices. Except as
described in Schedule 4.18(b), (i) Target does not have
outstanding loans or other advances directly or indirectly to or
from Stockholder, corporate officer, director or employee of
Target or any Person in which Stockholder or Target has a direct
or indirect interest, other than travel and business expense
advances (not exceeding $1,000 per individual) in the Ordinary
Course of Business, and (ii) Target does not owe any indebtedness
to any of its officers, directors, shareholders or employees
(other than accrued salaries or benefits payable in the Ordinary
Course of Business), and does not have any indebtedness owed to
it from any of its officers, directors, shareholders or
employees, excluding indebtedness for travel advances or similar
expenses (not excluding $1,000 per individual) for expenses
incurred on or behalf of Target in the Ordinary Course of
Business. Schedule 4.18(b) also lists all memberships held in
social, country or other clubs or organizations, the fees or
charges for which are directly or indirectly paid by Target.
Schedule 4.18(c) lists any corporate officer or other Key
Employee of Target who terminated employment with Target since
January 1, 2000. Stockholder has no Knowledge that any current
officer or other Key Employee of Target intends to terminate his
or her employment. Neither Target nor any person acting on
behalf of Target has engaged in any business practice of the
nature referred to in the Report of the SEC dated May 12, 1976,
on Questionable and Illegal Corporate Payments & Practices.
Except for forgiveness of the $16,500 loan to Xxxxx Xxxxxxx and
X.X. Xxxxxx, since commencement of the period covered by the
Financial Statements, Target has not forgiven or canceled,
without receiving full consideration, any indebtedness owing to
it by any current or former stockholder, corporate officer,
director or other employee of Target, or any Person in which
Target or any current or former stockholder, corporate officer or
director of Target has or had a direct or indirect interest.
4.19 Compliance with Laws; Litigation.
(a) Target has complied with all applicable Legal Requirements
(including with respect to its business, assets, business
practices, products and services). Target is not subject to any
judicial, governmental or administrative order, judgment or
decree.
(b) Except as set forth on Schedule 4.19(b), no litigation of
any kind or nature or governmental or administrative
investigation or proceeding to which Target is or may be a party
is now pending or, to the Knowledge of Target or Stockholder,
threatened; no claim which has not ripened into litigation or
other such proceeding has been made or, to
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the Knowledge of Target or Stockholder, threatened against
Target; and there will be no such claim, investigation,
proceeding or litigation arising out of or relating to any facts,
circumstances or conditions existing at any time as of or prior
to the Closing, in each case whether or not covered by insurance.
4.20 Licenses. Target has obtained all governmental and third
party licenses, permits, approvals, authorizations, exemptions,
classifications and certificates necessary to the conduct of
Target's business or to the ownership of its properties
(collectively referred to herein as "Licenses"). Schedule 4.20
lists and includes copies of all Licenses.
4.21 Product Defects; Product Warranties. Except to the extent
reserved for on the Most Recent Financial Statements, Target has
no Liability, and will not have any Liability following the
Closing, on account of defective products or services, sold,
provided or performed by or on behalf of Target, including
Liabilities on account of product warranties.
4.22 Product Liability and Working Conditions. Except as
described in Schedule 4.22, Target does not have any Liability
arising out of (a) any injury to individuals or property as a
result of the ownership, possession or use of any product sold,
leased or delivered by Target at any time prior to the Closing or
(b) Target's working conditions as they existed at any time prior
to the Closing.
4.23 Labor Relations; Employee Benefit Plans. No employees of
Target are represented by a union or other labor organization and
no representation question exists respecting the employees of
Target. Target has complied with all applicable Legal
Requirements affecting employment and employment practices, terms
and conditions of employment and wages and hours (including the
Immigration Reform and Control Act of 1986, as amended), and has
not engaged in any unfair labor practice. There has been no
complaint alleging unfair labor practices against Target filed
with the National Labor Relations Board. There has been no labor
strike, dispute, slowdown or stoppage pending or, to the
Knowledge of Target or Stockholder, threatened against or
affecting Target. There has been no grievance or arbitration
proceeding against Target arising out of or under a collective
bargaining agreement and no Basis therefor exists. No agreement
which is binding on Target restricts it from relocating or
closing any of its operations. Target has not experienced any
work stoppage or other organized labor difficulty since July 1,
1995. There are no Employee Benefit Plans of Target that are
subject to the provisions of ERISA, other than those that are
listed and included as part of Schedule 4.16(b). Each of such
Plans complies in all respects with the Code and ERISA and the
regulations thereunder, no Reportable Event under ERISA or such
regulations has occurred with respect to any of such Plans, and
there exists no condition or set of circumstances which could
result in a Reportable Event. The value of all accrued benefits
under such Plans are fully funded by the assets of such Plans.
Schedule 4.23(a) consists of copies of the most recent actuarial
reports and trustee reports with respect to each of such Plans.
Target has not participated in any "multiemployer plan" as
defined in ERISA. Schedule 4.23(b) lists and describes all of
Target's Employee Welfare Benefit Plans and Employee Pension
Benefit Plans that have been terminated since January 1, 1995.
The terminations of all such Employee Welfare Benefit Plans and
Employee Pension Benefit Plans have been approved by the Internal
Revenue Service if required and, in the case of any defined
benefit pension plan, by the Pension Benefit Guaranty
Corporation. Schedule 4.23(c) consists of copies of all Internal
Revenue Service "determination
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letters" received by Target and all approvals of the Pension
Benefit Guaranty Corporation given in connection with any
existing or terminated plan of Target.
4.24 Inventories. Except (a) as reserved for on the Most Recent
Balance Sheet and (b) for up to $5,000 of inventory in addition
to any reserves established on the Most Recent Balance Sheet, all
inventories (including raw materials, work in process and
finished goods) of Target are, and on the Effective Time will be,
in good condition, not obsolete or defective, and useable or
saleable at Target's existing operating profit margins within one
month from the Effective Time hereof in the Ordinary Course of
Business of Target. Attached as Schedule 4.24 is an inventory
valuation as of September 30, 2000.
4.25 Accounts Receivable. Schedule 4.25(a) lists all receivables
of Target written off or as to which a reserve has been provided
since January 1, 1999. At least seventy-five percent (75%) of
Target's receivables reflected in the Most Recent Balance Sheet,
will be collected in the Ordinary Course of Business without
resort to legal proceedings and will be paid in cash within 90
days of the Closing Date. Schedule 4.25(b) consists of aged
accounts receivable trial balances at September 30, 2000 and June
30, 2000.
4.26 Tangible Personal Property. Schedule 4.26(a) lists all of
the tangible personal property and the ownership thereof which is
either owned or used by Target, except for (i) items of inventory
or supplies reflected on Target's Most Recent Balance Sheet,
(ii) items having an initial unit cost of $1,000 or less (which
items do not exceed $100,000 in the aggregate), and (iii) items
to be acquired after the Effective Time to the extent the
acquisition thereof is not prohibited under Article 6 below.
Except as described in Schedule 4.26(b), all tangible personal
property owned or used by Target is situated at the business
premises of Target and is currently used by Target in its
business. Schedule 4.26(c) lists or describes all tangible
personal property owned by, or an interest in which is claimed
by, any other Person (whether a customer, supplier or other
Person) for which Target is responsible (copies of all Contracts
relating thereto have been delivered as part of Schedule
4.16(b)), and all such property is in the actual possession of
Target and is in such condition that, upon the return of such
property in its present condition to its owner in accordance with
the terms of any Contract relating thereto, Target will not be
liable in any amount to such owner.
4.27 Patents, Trademarks, Licenses and Trade Secrets. The
copyrights, patents, invention disclosures, trademarks, trade
names and service marks, whether registered or held under common
law, and all applications therefor that are pending or in the
process of preparation, and trade secrets, secret processes and
other proprietary rights of every kind and nature, in the United
States and in foreign countries (the "Rights"), to the extent
directly or indirectly owned, licensed, used, required for use or
controlled in whole or in part by Target or Stockholder (or, to
the extent currently involving Target, owned, licensed or
controlled in whole or in part by any present or former corporate
officer, director or other employee of Target), are listed (or in
the case of trade secrets and secret processes, generally
described) in Schedule 4.27. Schedule 4.27 lists all licenses
and other Contracts allowing Target to use Rights of third
parties in the United States or foreign countries. Schedule 4.27
contains a complete and accurate list of all Rights in which
Target has any direct or indirect interest. Except as set forth
in Schedule 4.27, (a) Target is the sole and exclusive owner of
the Rights listed in Schedule 4.27, free and clear of any
Security Interests, licenses or sublicenses, and no governmental
registration of any of the Rights
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of Target has lapsed, expired or been canceled, abandoned,
opposed or is the subject of a re-examination request, (b) there
have been no claims, and there is no Basis for any claim,
challenging the scope, validity or enforceability of any of the
Rights, (c) there are no instances where it has been held,
claimed or alleged, whether directly or indirectly, and neither
Target nor Stockholder has Knowledge of any Basis upon which a
claim may be made, that any activity of Target infringes upon the
Rights of any third party or that any activity of any third party
infringes upon any of the Rights of Target. Except as set forth
in Exhibit 4.27, Target has been and is now conducting its
business in a manner which has not been and is not now in
violation of any Right of another and does not require a license
or other proprietary right from another Person to so operate its
business.
4.28 Compensation and Other Benefits. Schedule 4.28 sets forth
the names, positions and annual salaries of all corporate
officers and other non-hourly rated employees of Target receiving
compensation at an annual rate (including bonuses, commissions
and other compensation) in excess of $40,000, together with the
amount of bonuses and description of agreements or arrangements
for commissions and other compensation or benefits of any nature
to be paid or provided to any of such persons pursuant to
agreement, custom or present understanding. Except for group
policies set forth in Schedule 4.16(b), there is no insurance
policy on the life of any of such officer or other person, the
premium for which is paid, or contributed to, by Target.
4.29 Insurance. Schedule 4.29 contains a full and complete list
of all policies of insurance insuring Target or any of its assets
or properties (whether owned or leased) against casualty,
Liability or other risks, and such policies provide adequate
coverage for all risks normally insured against. All of the
policies of insurance to be described therein (copies of which
have been delivered as part of Schedule 4.16(b)) are in full
force and effect as stated therein and the premiums therefor have
been paid as they became due and payable.
4.30 Authority. Stockholder has full power and authority to
enter into this Agreement and the other agreements contemplated
hereby as to which Stockholder is a signatory (the "Ancillary
Agreements"), including the agreements described in Section 6.16
below to which Stockholder is a party, and to consummate the
transactions contemplated herein and therein. This Agreement has
been duly executed and delivered by Stockholder and the Ancillary
Agreements, upon execution by Stockholder signatory thereto, will
have been duly executed and delivered by Stockholder, and each
such agreement is or upon execution will be a valid and legally
binding obligation of Stockholder, enforceable in accordance with
its terms, except as the same may be limited by applicable
bankruptcy, insolvency, reorganization or other laws affecting
the enforcement of creditors' rights generally and the
application of general principles of equity.
4.31 Noncontravention. Except as set forth in Schedule 4.31,
neither the execution, delivery and performance of this Agreement
or the Ancillary Agreements, nor the consummation of the
transactions contemplated herein or therein, will (a) constitute
or cause a breach, default or violation of the charter documents
or bylaws of Target, or any License to which Target or
Stockholder is a party, (b) cause a Security Interest to attach
to any of Target's assets or properties or to the Stock
Consideration, (c) result in the acceleration of or the right to
accelerate any obligation under or the termination of or the
right to terminate any such License or (d) require a consent of
any Person to prevent such breach, default, violation, Security
Interest,
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acceleration, right or termination or to permit the consummation
of the transactions contemplated by this Agreement.
4.32 Governmental Approvals of Agreement. No approval of or
filing with any Governmental Entity is necessary to authorize the
execution and delivery of this Agreement and the Ancillary
Agreements by Target or Stockholder or the consummation of the
transactions contemplated herein and therein by Target and
Stockholder.
4.33 Broker's Fees. Neither Target nor Stockholder has any
Liability to pay any fees or commissions to any broker, finder,
financial advisor or agent with respect to the transactions
contemplated by this Agreement.
4.34 Compliance with Medicare/Medicaid Programs. Except as
otherwise noted on Schedule 4.34 attached hereto, Target is
qualified for participation in the Medicare and Medicaid
reimbursement programs and is a party to provider agreements for
such programs which are in full force and effect with no events
of default having occurred thereunder. Neither Stockholder nor
Target has been convicted of, or pled guilty or nolo contendere
to, patient abuse or neglect, or any other Medicare or Medicaid
program-related offense. Neither Stockholder nor Target has (a)
committed any offense which may serve as the basis for suspension
or exclusion from the Medicare and Medicare programs, including,
but not limited to, defrauding a government program, loss of a
license to provide health care services, and failure to provide
quality care, or (b) engaged in any prohibited reassignment of
Medicare or Medicaid program accounts receivable. Neither
Stockholder nor Target has been or is excluded from participation
in the Medicaid or Medicare programs.
4.35 Filing of Third-Party Payor Claims. Target has timely filed
all claims or other reports required to be filed prior to the
Closing Date with respect to the purchase of services by third-
party payors ("Payors"), including, but not limited to, the
Medicare and Medicaid reimbursement programs. All such claims or
reports ("Third-Party Payor Claims") are complete and accurate in
all material respects. Except as otherwise noted on Schedule
4.35 attached hereto, there are not pending any appeals,
overpayment determinations, adjustments, challenges, audits,
litigation or notices of intent to reopen Medicare and/or
Medicaid claims, determinations or other reports required to be
filed by Target in order to be paid by a Payor for services
rendered.
4.36 Fraud and Abuse. Except as set forth in Schedule 4.36,
neither Target, Stockholder nor any persons and/or entities
providing professional services therefor have engaged in any
activities which are prohibited under Sec. 1320a-7b of Title 42
of the United States Code, or the regulations promulgated
thereunder, or related state or local statutes or regulations, or
which are prohibited by rules of professional conduct, including,
but not limited to, the following:
(a) knowingly and willfully making or causing to be made a
false statement or representation of a material fact in any
application for any benefit or payment;
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(b) knowingly and willfully making or causing to be made any
false statement or representation of a material fact for use in
determining rights to any benefit or payment;
(c) failure to disclose knowledge by a claimant of the
occurrence of any event affecting the initial or continued right
to any benefit or payment on its own behalf or on behalf of
another with intent to fraudulently secured such benefit or
payment; and
(d) knowingly and willfully soliciting or receiving any
remuneration (including any kickback, bribe or rebate), directly
or indirectly, overtly or covertly, in cash or in kind, or
offering to pay or receive such remuneration (i) in return for
referring an individual to a person for the furnishing or
arranging for the furnishing of any item or service for which
payment may be made in whole or in part by the Medicare or
Medicaid reimbursement programs, or (ii) in return for
purchasing, leasing or ordering or arranging for or recommending,
purchasing, leasing or ordering any good, facility, service or
item for which payment may be made in whole or in part by the
Medicare or Medicaid reimbursement programs.
4.37 Compliance with Xxxxx I and II. Neither Target,
Stockholder, nor any person proving professional services on
behalf of Target has engaged in any activities which are
prohibited under Section 1395nn of Title 42 of the United States
Code (subject to the exceptions set forth therein), including the
referring of a patient for "designated health services" (as
defined by 42 U.S.C. Section 1395nn) to or providing designated
health services to a patient upon a referral from an entity or
person which the Target or Stockholder (or an immediate family
member thereof) has a financial relationship and to which no
exception under said section applies.
4.38 Investment Intent and Sophistication. Stockholder is
acquiring the shares of capital stock of Parent to be issued
pursuant to the Merger for its own account for investment and not
with a view towards distribution. Stockholder is an "accredited
investor" as defined in Rule 501 of the Securities Act, and has
reviewed Parent's Annual Report on Form 10-K for the Year Ended
June 30, 1999 (including, without limitation, the risks and
considerations described therein under the caption "Certain
Business Factors"). Stockholder has had the opportunity to ask
questions and receive answers from Parent regarding its business,
assets, results of operations and financial condition.
Stockholder is able to bear the economic risk of receiving the
shares in the Merger, and has such Knowledge and experience in
financial and business matters that he is capable of evaluating
the merits and risks of an investment in Parent. Stockholder
understands that the shares of stock received by Stockholder in
the Merger have not been registered pursuant to the Securities
Act or under applicable state securities laws, and that such
shares cannot be sold or otherwise disposed of without
registration under the Securities Act or an exemption therefrom.
Stockholder acknowledges that no representations have been made
to him by Parent regarding the ability to dispose of shares of
stock received in the Merger. Stockholder understands that the
certificates representing the Parent Preferred Stock shall
contain, in addition to any legends required by applicable law or
other agreement, a legend in substantially the following form:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED PURSUANT TO THE SECURITIES ACT OF 1933,
AS
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AMENDED, OR ANY STATE SECURITIES LAWS. SUCH SHARES MAY
NOT BE SOLD OR OTHERWISE TRANSFERRED UNLESS THEY ARE
FIRST REGISTERED PURSUANT TO THAT ACT AND APPLICABLE
STATE SECURITIES LAWS OR UNLESS THE CORPORATION
RECEIVES A WRITTEN OPINION OF COUNSEL, WHICH OPINION IS
REASONABLY SATISFACTORY TO THE CORPORATION, TO THE
EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED."
4.39 Advisors. Stockholder has relied on his own legal, tax and
other advisors regarding this transaction, and has not relied on
any statements or representations from Parent or its advisors
with regard to any matters pertaining to this transaction,
including, without limitation, the treatment of the Merger as a
tax-free reorganization under the Code.
5. REPRESENTATIONS AND WARRANTIES OF PARENT
Parent represents and warrants to Stockholder that the
statements contained in this Article 5 are correct and complete
as of the date of the date hereof, and will be correct and
complete as of the Closing Date:
5.1 Due Organization. Parent is a corporation duly organized,
validly existing and in good standing under the laws of the State
of Colorado, and has full corporate power and authority to enter
into and perform this Agreement and each other instrument,
agreement and document to be executed by it in connection
herewith. Merger Sub is a corporation validly existing and in
good standing under the laws of the State of Texas, and has full
corporate power and authority to enter into and perform this
Agreement and each other instrument, agreement and document to be
executed by it in connection herewith.
5.2 Due Authorization. The execution, delivery and performance
of this Agreement and such other agreements, instruments and
documents to be executed in connection herewith by Parent and
Merger Sub have been duly authorized by the Board of Directors of
Parent and Merger Sub. This Agreement has been duly and validly
executed and delivered by Parent and Merger Sub and constitutes a
valid and binding obligation of Parent and Merger Sub enforceable
in accordance with its terms, except as the same may be limited
by applicable bankruptcy, insolvency, reorganization or other
laws affecting the enforcement of creditors' rights generally and
the application of general principles of equity. The execution,
delivery and performance of this Agreement by Parent and Merger
Sub will not (a) violate any federal, state, county or local law,
rule or regulation or Legal Requirement applicable to Parent and
Merger Sub or its property, (b) violate or result in the
cancellation of, any agreement to which Parent or Merger Sub is a
party or by which it or its property is bound, (c) result in the
acceleration of the maturity of any indebtedness of, or any
indebtedness secured by the property of, Parent or Merger Sub, or
(d) violate any provision of Parent's or Merger Sub's articles of
incorporation or by-laws. No action, consent or approval of or
filing with any federal, state, county or local governmental
authority is required in connection with the execution, delivery
or performance of this Agreement (or any other agreement,
instrument or document executed in connection herewith by Parent
or Merger Sub), except for filings required under applicable
federal and state securities laws.
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5.3 Broker's Fees. Parent has no Liability to pay any fees or
commissions to any broker, finder, financial advisor or agent
with respect to the transactions contemplated by this Agreement.
5.4 Securities to be Issued. When delivered to Stockholder
pursuant to this Agreement, the Parent Preferred Stock will have
been duly and validly issued (free of any preemptive rights of
shareholders), and will be fully paid and non-assessable.
6. COVENANTS OF STOCKHOLDER
Stockholder covenants and agrees that from and after the
date hereof until the Effective Time, except with Parent's prior
written consent:
6.1 Preservation of Business. Target will carry on its business
in a good and diligent manner consistent with prior practice in
the Ordinary Course of Business, will not introduce any new
method of management or operation, and will use its best efforts
to preserve its business organization intact and preserve the
goodwill and relationships of its customers, suppliers and others
having business relations with it and the services of all
officers, employees, agents and representatives.
6.2 Preservation of Corporate Status. Target will maintain its
corporate existence and good standing in its state of
incorporation and in each jurisdiction in which it is required to
be qualified to do business, and it will not amend its charter
documents or bylaws from the forms to be delivered to Parent as
Schedule 4.5.
6.3 No Dividends or Distributions. Target will not declare,
make, set aside or pay any payment, dividend or other
distribution of any nature in respect of any of its capital stock
nor will it, directly or indirectly, issue, redeem, retire,
purchase or otherwise acquire any of its shares of capital stock.
6.4 Restrictions on Compensation and Benefits. Target will not
increase the compensation or rate of compensation payable or to
become payable to directors, corporate officers or other
employees of Target, or accrue, set aside or pay for or on behalf
of any director, corporate officer or other employee any bonus,
profit sharing, retirement, insurance, death, fringe benefit or
other extraordinary or indirect compensation and will not
consent, adopt or agree to any plan with respect to the same.
6.5 No Modifications of or New Contracts and Commitments.
Target will not waive a material right or cancel a material
Contract or Liability, or assume or enter into a material
Contract, Liability, purchase or sale, and, except in the
Ordinary Course of Business, Target will not enter into or assume
any other Contract, Liability, purchase or sale. For purposes of
this Section 6.5 and without limiting the generality of the
foregoing, all indebtedness for borrowed money, and Contracts
having a duration in excess of three (3) months (other than sales
contracts with customers or purchase contracts with suppliers in
the Ordinary Course of Business), are deemed to be material and
not in the Ordinary Course of Business.
6.6 Restrictions on Payment of Certain Obligations. Target will
not discharge or satisfy a Security Interest or pay or perform
any Liability, other than (a) Liabilities reflected in
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the Most Recent Financial Statements and (b) current Liabilities
incurred in the Ordinary Course of Business since the Most Recent
Fiscal Month End, and then, in either case, only as required by
the express terms of the Contract or other instrument pursuant to
which the Liability was incurred.
6.7 No New Security Interest. Target will not enter into or
assume any Security Interest or other title retention agreement,
permit any Security Interest of any kind to attach to any of its
assets or properties, whether now owned or hereafter acquired, or
guarantee or otherwise become contingently liable for any
obligation, security or dividend of another Person, except
obligations arising by reason of endorsement for collection and
other similar transactions in the Ordinary Course of Business.
6.8 No Capital or Other Material Transactions. Target will not
make any capital contribution or investment in any Person.
Target will not acquire or dispose of a capital asset having an
initial cost of $1,000 or more. Target will not merge or
consolidate with any other Person or acquire any assets of any
other Person (other than inventory in the Ordinary Course of
Business or as otherwise specifically permitted by this
Agreement).
6.9 No Material Change to Inventories. Target will not alter
the physical content or character of any of its inventories so as
to affect the nature of its business or result in an increase or
a decrease in the total dollar valuation thereof other than as a
result of transactions in the Ordinary Course of Business.
6.10 Taxes, Tax Returns and Business Insurance. Target will (a)
duly and timely file all Returns required to be filed by it with
any Governmental Entity and will promptly pay when due all Taxes
owed by it; (b) maintain and keep in good order all buildings,
offices, shops and other structures, and keep all machinery,
tools, equipment, fixtures and other property used or useable in
its business in good condition, repair and working order; (c)
maintain in full force and effect all policies of insurance now
in effect; and (d) not do any act or omit any act or permit any
action or omission to act, within its control, which will cause a
material breach or default in any respect in any of its
Contracts.
6.11 Cooperation with Parent's Due Diligence. Target will afford
Parent and its representatives full access during normal business
hours on reasonable notice to all of its stores, offices,
properties and records, including such access as may be necessary
to allow Parent at its expense to make an audit or otherwise
attempt to satisfy itself that the representations and warranties
contained in this Agreement are correct and complete and that the
conditions and covenants contained in this Agreement have been
satisfied or complied with. Target will furnish documents and
all such other information concerning its properties and business
as Parent may reasonably request; provided, however that any
investigation or inquiry made by or on behalf of Parent, or
Knowledge obtained by Parent, shall not in any way limit or
otherwise affect the representations and warranties contained in
this Agreement or their survival of the Closing.
6.12 Real Property Deliveries. [Intentionally Omitted.]
6.13 Good Standing Certificates. Target will, upon the execution
of this Agreement, furnish Parent with certificates of good
standing from the appropriate agencies certifying that
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Target is in good standing in the jurisdiction of its
incorporation and in each of the jurisdictions in which it is
required to be qualified to do business as a foreign corporation.
6.14 Maintenance of Stockholder's Representations and Warranties.
Neither Target nor Stockholder shall take any action or omit to
take any action within the control of any of them to the extent
such action or omission might result in any of the
representations or warranties contained in this Agreement being
inaccurate or incomplete on and as of the Closing Date.
6.15 Exclusive Negotiations. For the period from the date hereof
until December 31, 2000 or until the date this Agreement is
terminated in accordance with Article 10 below, whichever is
earlier, Stockholder and Target and its corporate officers and
directors and all of their respective representatives will
negotiate exclusively with Parent and its representatives with
regard to any disposition of Target, its capital stock, its
assets and/or its business and neither Target nor Stockholder, or
Target's corporate officers, directors or representatives will
initiate or entertain discussions or negotiate or enter into any
Contract with any other Person, as to any sale of Target, its
capital stock, its assets and/or its business, or any merger or
other business combination involving Target, its assets and/or
its business, without the prior written consent of Parent.
6.16 Covenant Not to Compete and Non-solicitation. In
consideration of the execution and delivery of this Agreement by
Parent, and in consideration of, among other things, the delivery
by Parent of the Merger Consideration to Stockholder, and as
additional consideration therefor, Stockholder agrees that during
the Restricted Period (as defined below), neither of Stockholder
nor any entity or person controlled by Stockholder will, directly
or indirectly (including, but not limited to, as a partner,
shareholder, director, officer or employee of, or lender or
consultant to, any other person or entity, or in any other
capacity):
(a) within, into or from the Restricted Territory (as defined
below) engage or cause others to engage in the Acquired Business,
or any aspect thereof in competition with Parent, its
Subsidiaries or Affiliates,
(b) solicit in respect of the Acquired Business, any person or
entity that is or was within the twelve (12) months preceding the
date of this Agreement a customer, supplier and/or patient of
Target in any manner that could reasonably be anticipated to
adversely affect the Surviving Corporation's conduct of the
Acquired Business in the Restricted Territory,
(c) solicit, take away, hire, employ or endeavor to solicit,
employ or hire any person who is an employee of the Surviving
Corporation, any Affiliate of the Surviving Corporation or the
Acquired Business.
For purposes of this Agreement, the term "Restricted Period"
shall mean the period ending five (5) years from the date hereof.
For purposes of this Agreement, the term "Restricted Territory"
shall mean (i) Collin, Dallas, Denton and Xxxxxxx Counties in the
state of Texas, and (ii) any area within 100 miles of the borders
of Collin, Dallas, Denton or Xxxxxxx Counties. If Stockholder
violates any obligation under this Section 6.16(b), then the
Restricted Period hereunder shall be
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extended by the period of time equal to that period beginning
when the activities constituting such violation commenced and
ending when the activities constituting such violation
terminated. At or prior to the Closing, the persons listed on
the attached Schedule 6.16 will enter into employment agreements
with Surviving Corporation substantially in the form attached as
Exhibit 6.16 (the "Employment Agreements").
6.17 [Reserved].
7. TAX MATTERS
7.1 Tax Matters and Post-Closing Cooperation. Stockholder shall
timely prepare and file the final Tax Return for Target in for
the tax year of Target ending as of the Effective Time in
accordance with all Legal Requirements, and be liable for, shall
pay, and indemnify Parent against and hold Parent harmless from,
all Taxes Liability associated therewith.
7.2 Transfer Taxes. Stockholder shall bear and pay all sales,
use, transfer and documentary Taxes and recording and filing
fees, if any, applicable to the transactions effectuated pursuant
to the terms of this Agreement.
7.3 Access to Records Following Closing. Parent and Stockholder
agree that so long as any books, records and files retained by
Stockholder relating to the business of Target, or the books,
records and files delivered to Parent pursuant to this Agreement
(to the extent they relate to the operations of Target prior to
the Closing Date) remain in existence and available, each party
(at its expense) shall have the right upon prior notice to
inspect and make copies of the same at any time during business
hours for any proper purpose.
8. STOCKHOLDER'S CONDITIONS PRECEDENT
All of the following shall be conditions precedent to
Stockholder's obligation to consummate the transactions
contemplated by this Agreement:
8.1 Accuracy of Parent's Representations and Warranties. The
representations and warranties made by Parent herein shall be
correct and complete on and as of the date when made, and on and
as of the Closing Date as if made on and as of that date, and
Stockholder shall have received a certificate dated the Closing
Date signed by an officer of Parent to the foregoing effect.
8.2 Corporate Approvals. All necessary action (corporate or
otherwise) shall have been taken by Parent to authorize, approve
and adopt this Agreement and the consummation and performance of
the transactions contemplated hereby, and Stockholder shall have
received the Certificate, dated as of the Closing Date, of an
officer Parent to the foregoing effect.
8.3 Ancillary Documents. Parent or the Surviving Corporation,
as applicable, shall have executed and delivered each Ancillary
Agreement required to be executed and delivered by it pursuant to
the terms of this Agreement.
8.4 No Legal Restraints. There shall not be in effect any
statute, rule or regulation which makes it illegal for
Stockholder to consummate the transactions contemplated hereby,
or
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any order, decree or judgment which enjoins Parent or Stockholder
from consummating the transactions contemplated hereby, except
that the lack of any such order, decree or judgment shall not be
a condition precedent if Parent shall have offered and provided
an indemnity to Stockholder with respect thereto that is
reasonably satisfactory to Stockholder.
8.5 No Adverse Legal Actions . No suit, action or other
proceeding shall be pending or threatened before any Governmental
Entity seeking to restrain, prohibit or obtain damages or other
relief in connection with this Agreement or the consummation of
the transactions contemplated herein and there shall have been no
investigation or inquiry made or commenced by any Governmental
Entity in connection with this Agreement or the transactions
contemplated herein, except that the existence or threat of such
suit, action or other proceeding, or the commencement of such
investigation or inquiry, shall not be a condition precedent if
Parent shall have offered and provided an indemnity to
Stockholder with respect thereto that is reasonably satisfactory
to Stockholder.
9. PARENT'S CONDITIONS PRECEDENT
All of the following shall be conditions precedent to
Parent's obligation to consummate the transactions contemplated
by this Agreement:
9.1 Accuracy of Stockholder's Representations and Warranties.
All representations and warranties made by Stockholder, whether
contained in this Agreement or in any written document delivered
to Parent pursuant hereto, shall be correct and complete on and
as of the date when made, and on and as of the Closing Date as if
made on and as of that date, Stockholder shall have complied with
all of his respective obligations under this Agreement (including
performance of the covenants contained in Article 6) and Parent
shall have received a certificate dated the Closing Date signed
by Stockholder to the foregoing effect.
9.2 Opinion of Stockholder's Counsel. Parent shall have been
furnished with the opinion of Xxxxxxx X. Xxxxx, counsel to
Stockholder, dated as of the Closing Date and in the form of
Exhibit 9.2.
9.3 Corporate Approvals. All necessary action (corporate or
otherwise) shall have been taken by Stockholder and Target to
authorize, approve and adopt this Agreement and the consummation
and performance of the transactions contemplated hereby, and
Parent shall have received a certificate, dated as of the Closing
Date, of the Stockholder to the foregoing effect.
9.4 No Legal Restraints. There shall not be in effect any
statute, rule or regulation which makes it illegal for Parent to
consummate the transactions contemplated hereby or any order,
decree or judgment which enjoins Parent or Stockholder from
consummating the transactions contemplated hereby.
9.5 No Adverse Legal Actions. No suit, action or other
proceeding shall be pending or threatened before any Governmental
Entity seeking to restrain, prohibit or obtain damages or other
relief in connection with this Agreement or the consummation of
the transactions contemplated herein and there shall have been no
investigation or inquiry made or commenced
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by any Governmental Entity in connection with this Agreement or
the transactions contemplated herein.
9.6 Accuracy of Documents. There shall not have been any
material error, misstatement or omission in any Schedule,
Exhibit, information or other document delivered or to be
delivered to Parent in connection herewith.
9.7 No Material Adverse Change. During the period from the date
hereof to the Effective Time (a) there shall not have been any
material adverse change, either individually or in the aggregate,
in the general affairs, business, prospects, properties,
financial position, results of operations or net worth of Target
(whether as a result of any casualty or disaster, accident, labor
dispute, exercise of the power of eminent domain or other
governmental act, or as a result of any other event or
circumstance) and (b) Target shall not have sustained any loss or
damage to its assets or properties, whether or not insured, which
materially and adversely affects its ability to conduct its
business.
9.8 Ancillary Agreements. Stockholder shall have entered into
the Ancillary Agreements.
9.9 [Reserved].
9.10 [Reserved].
9.11 Closing Certificate. Parent shall have received a
certificate dated as of the Closing signed by Stockholder
representing that (a) all Liabilities of Target at the Closing
which are not reflected in the Most Recent Financial Statements
are only Liabilities incurred since the date of the Most Recent
Financial Statements in the Ordinary Course of Business (none of
which was incurred in violation or contravention of any provision
of this Agreement and none of which arose by reason of any breach
of Contract or warranty, tort, infringement of any third party
Rights or violation of any Legal Requirements) and (b) Parent's
conditions precedent provided in Sections 9.1 and 9.3 through
9.10 above have been satisfied. The delivery of such certificate
shall in no way diminish or supersede the representations and
warranties of Stockholder made in this Agreement.
10. EXAMINATION PERIOD AND TERMINATION
The following provisions shall apply during the period prior
to the Closing (except as otherwise indicated):
10.1 Examination and Contingency Period. At the date hereof,
Parent has not yet had an opportunity to complete its review,
analysis, examination, investigation, testing and inspection of
the business, operations, prospects, assets, liabilities,
properties and affairs of Target (collectively, "Review"), or the
Exhibits, Schedules, information and other documents attached or
delivered pursuant to this Agreement. Parent shall have all of
the period through the date which is 30 days after the date of
this Agreement in which to Review all of the facts, information
and other matters contained or referenced therein, and otherwise
to complete its Review. If in Parent's good faith judgment there
is any inaccuracy or incompleteness in any representation or
breach of any warranty contained herein, or any failure of
Stockholder to
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perform any agreement or covenant or to satisfy any condition
contained in this Agreement, or any error, misstatement or
omission with regard to any of the Exhibits, Schedules,
information or other documents referred to herein, or if Parent,
in its sole judgment, is not satisfied with the contents of any
of the Exhibits, Schedules, information or other documents, or
with the results of its Review, Parent may terminate this
Agreement at any time prior to the end of such period by written
notice to Stockholder's.
10.2 Termination of Agreement by Mutual Agreement. This
Agreement may be abandoned or terminated on or before the Closing
by mutual agreement of Parent and Stockholder. If the Closing
shall not have taken place on or prior to November 8, 2000,
either Parent or Stockholder may terminate this Agreement upon
five (5) days prior written notice so long as the failure to
close the transactions contemplated by this Agreement shall not
have been the result of a failure by the terminating party to
perform and comply with the terms and conditions of this
Agreement.
10.3 Termination of Agreement for Other Reasons. In addition to
Parent's rights provided elsewhere in this Article 10, Parent or
Stockholder may terminate this Agreement at any time prior to the
Closing by giving the other written notice thereof, if and only
if.
(a) there is a breach of or failure to perform any of the
warranties, commitments, covenants or conditions under this
Agreement in any material respect by the non-terminating party;
or
(b) there exists any material error, misstatement or omission on
the part of the non-terminating party with respect to any
representation or warranty contained herein (including the
Exhibits, Schedules, documents and other information delivered in
connection herewith).
Such notice shall clearly specify the breach or failure of such
notified party to perform any of its warranties, representations,
commitments, covenants or conditions, or the error, misstatement
or omission on the part of the notified party. If either Parent
or Stockholder terminates this Agreement pursuant to this Section
10.3, such termination shall not discharge the non-terminating
party from any Liability to the terminating party on account of
the breach, failure to perform, material error, misstatement or
omission which formed the Basis for such termination.
10.4 Waiver of Conditions. By an instrument in writing delivered
to Parent or Stockholder (as the case may be), Parent or
Stockholder may waive any condition precedent contained herein
for the benefit of the party delivering such waiver and, upon the
exercise of such right of waiver, the transactions contemplated
hereby shall be consummated in accordance with the terms
contained in this Agreement as modified by said writing.
10.5 Effect of Certain Terminations. If this Agreement is
abandoned or terminated as provided in Sections 10.1 or 10.2
above, this Agreement shall forthwith become wholly void and of
no effect, without Liability of any party to another.
10.6 Payment of Expenses; Transfer Taxes. Regardless of whether
the transactions contemplated by this Agreement are consummated,
each of Parent, on the one hand, and Stockholder, on the other
hand, shall pay all fees and expenses incurred by such party in
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connection herewith (including, in the case of Stockholder,
expenses related to the services of Stockholder's and Target's
counsel and accountants with respect to the transactions
contemplated hereby); provided that up to $4,000 of such fees and
expenses of Stockholder or Target may be paid by Target.
Notwithstanding anything in this Agreement to the contrary, all
transfer, sales, use or other similar Taxes resulting from the
consummation of the transactions contemplated hereby shall be
paid by Stockholder.
11. INDEMNIFICATION
11.1 Stockholder Indemnities.
(a) Without limiting any other rights or remedies available to
Parent and Surviving Corporation, but subject to the provisions
of Section 11.3, Stockholder shall indemnify, defend and hold
harmless Parent, Parent's Subsidiaries and other Affiliates,
Target and the respective officers, directors, employees,
attorneys, agents and stockholders (other than Stockholder and
any related of Stockholder) of the foregoing (the "Parent
Indemnified Parties") from, against and with respect to any
claim, Liability, obligation, loss, damage, assessment, judgment,
settlement, cost and expense, including costs attributable to the
loss of the use of funds to the date on which the indemnification
payment is made hereunder, reasonable attorneys' and accountants'
fees, and costs and expenses reasonably incurred in
investigating, preparing, defending against or prosecuting any
litigation or claim, action, suit, proceeding or demand
(individually, a "Loss" and collectively, "Losses"), of any kind
or character (and without giving effect to any Tax benefit to the
indemnified party), arising out of or in any manner incident,
relating or attributable to (a) any breach of a representation or
warranty of Stockholder contained in this Agreement, in the
Ancillary Agreements or in any certificate, instrument of
transfer or other document or agreement executed by Stockholder
in connection with this Agreement or otherwise made or given in
connection with this Agreement (together with this Agreement and
the Ancillary Agreements, the "Stockholder Agreements"), in each
case without regard to any disclosure in Schedule 4.19(b), (b)
any failure by Target or Stockholder to perform or observe, or to
have performed or observed, in full, any covenant or agreement to
be performed or observed by Target or Stockholder under the
Stockholder Agreements, (c) reliance by Parent on any books or
records of Target or on any information furnished to Parent
pursuant to this Agreement by or on behalf of Target, Stockholder
or any of Target's directors, officers or other employees, (d)
any of the matters described or referred to in Section 4.15 above
with respect to the period through the Closing, including
Target's handling, storage, use, disposal, delivery for disposal
or generation of hazardous or toxic substances, wastes of any
kind or similar materials, or the contamination of the Properties
or the Prior Properties with or by pollutants, wastes or any
other substances, in each case without regard to (i) any
disclosure regarding such matters in the Exhibits attached
hereto, (ii) the results of any environmental investigation or
audit, or (iii) Parent's Knowledge of any such matter at or prior
to the Closing, (e) the enforcement of Parent's rights under this
Agreement, (f) any Contracts, negotiations or other dealings by
Target or Stockholder with any Person other than Parent
concerning the sale of the capital stock or substantially all of
the business or assets of Target, or (g) any claim, demand or
allegation by any third party relating to any of the foregoing.
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(b) Notwithstanding anything to the contrary contained herein
(i) Parent shall not make any claim for indemnity against
Stockholder hereunder until the aggregate of all claims equals or
exceeds $10,000 (other than indemnities arising under Section
4.24 or Section 4.25, for which no basket applies), and (ii) in
no event shall the aggregate claims for indemnity against
Stockholder hereunder exceed the sum of the Cash Amount plus the
Agreed Share Value of the Holdback Shares and the Closing Shares.
11.2 Parent's Offset Rights Against Holdback Shares. At any time
or from time to time prior to the issuance of the Holdback
Shares, Parent or the Surviving Corporation shall be entitled, in
addition to, and not in lieu of, any other right or remedy which
Parent may have against Stockholder, to notify Stockholder in
writing (an "Offset Notice") that Parent reasonably believes that
it is entitled to indemnity for Losses under Section 11.1. Any
Offset Notice provided hereunder shall identify the provision of
this Agreement which Parent believes entitles it to such
indemnity for Losses and shall briefly identify the facts which
constitute the basis for each such claim of indemnity and the
dollar amount of such claim. If on or before thirty (30) days
after delivery of the Offset Notice, Stockholder shall not have
objected thereto, Parent shall be entitled to offset against any
portion of the unissued Holdback Shares the amount of the Losses
claimed in the Offset Notice (and thus to reduce the number of
Holdback Shares to be delivered in respect of such portion of the
Merger Consideration). Notwithstanding any offset rights
exercised pursuant to this Section 11.4, to the extent that the
actual amount of any Losses arising from a claim for indemnity
set forth in an Offset Notice shall exceed the value of the
offset against the Merger Consideration claimed, Stockholder
shall remain liable for, and shall promptly reimburse Parent or
the Surviving Corporation, the amount of any such excess Losses.
If on or before thirty days following delivery of the Offset
Notice, Stockholder shall notify Parent that Stockholder
questions the amount of any Losses for which indemnity is claimed
therein (or the entitlement to indemnity), Parent shall
nonetheless be entitled to exercise its rights of offset provided
for in this Section 11.4, but in lieu of reducing the Holdback
Shares immediately, shall defer issuance of the Holdback Shares
having a Closing Average Value to the amount of the maximum
amount of disputed claim until such time as (i) Parent shall have
received written authorization from Stockholder to retain such
unissued portion of the Holdback Shares in partial or total
satisfaction of Parent's applicable claim for indemnity, or (ii)
Parent shall have delivered to Stockholder a certified or file-
stamped copy of a final decision of a court of competent
jurisdiction establishing the amount of such Losses or directing
a specific distribution of all or any part of the Holdback Shares
being retained by Parent pursuant to this Section 11.4. It shall
be a condition to Parent's obligation to defer applying any
unissued portion of the Holdback Shares, subject to the
resolution of Stockholder's objection to the amount of Losses
claimed or the entitlement to indemnity with regard thereto, that
Stockholder specify in writing the provisions of this Agreement
and other facts supporting such objection. Neither Parent nor
the Surviving Corporation shall be obligated to exercise the
rights of offset provided for in this Section 11.4, and no
failure to exercise any such right of offset shall relieve
Stockholder of his indemnity obligations under Section 11.1, or
otherwise. For purposes of determining the number of Holdback
Shares to be withheld or retained by Parent in satisfaction of
part or all of Stockholder's indemnification obligations pursuant
to this Section 11.4, such Holdback Shares shall be valued at the
Closing Average Value. At the expiration of the Holdback Period,
Parent shall issue to Stockholder any Holdback Shares that are
not then subject to an unresolved Off-Set Notice. Upon the
resolution of any Loss that is the subject of an Off-
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Set Notice following the expiration of the Holdback Period,
Parent shall issue to Stockholder any Holdback Shares that have
not otherwise been used to offset Losses pursuant to this Section
11.4.
11.3 Survival of Stockholder's Representations and Warranties.
The representations and warranties contained in this Agreement
(other than the representations and warranties contained in
Sections 4.1, 4.6, 4.15, 4.18, 4.21, 4.22, 4.23, 4.34, 4.35,
4.36, 4.37, 4.38 and 4.39) and in any of the other Stockholder
Agreements to be delivered at the Closing, shall survive for a
period of one (1) year following the Closing Date. The
representations and warranties contained in Sections 4.1, 4.6,
4.15, 4.18, 4.21, 4.22, 4.23, 4.34, 4.35, 4.36, 4.37, 4.38 and
4.39 of this Agreement and the obligations of Stockholder
pursuant to Section 11.1 above shall survive the Closing Date
(without limitation).
11.4 Notice to Indemnifying Party. If any of the Parent
Indemnified Parties (the "Indemnitee") has a claim or potential
claim or receives notice of any claim or potential claim or the
commencement of any action or proceeding that could give rise to
an obligation on the part of Stockholder (the "Indemnifying
Party") to provide indemnification pursuant to Section 11.1,
Parent, on behalf of the Parent Indemnified Parties, shall
promptly give the Indemnifying Party notice thereof; provided
that no failure by Indemnitee to provide any notice, permit any
participation or seek any consent under this Article 11 shall
relieve the Indemnifying Party of its obligations under this
Article 11 unless and only to the extent that such failure shall
increase the amount of a Loss. Such notice shall describe the
claim in reasonable detail, shall indicate the amount (estimated
if necessary) of the Losses that has been or may be sustained by
the Indemnitee and shall be accompanied by supporting
documentation, if any. The Indemnifying Party may elect to
compromise or defend, at such Indemnifying Party's own expense
and by such Indemnifying Party's own counsel, any such matter
involving the asserted Liability of the Indemnitee. If the
Indemnifying Party elects to compromise or defend such asserted
Liability, it shall within thirty (30) days (or sooner, if the
nature of the asserted Liability so requires) notify the
Indemnitee of its intent to do so and the Indemnitee shall
cooperate, at the expense of the Indemnifying Party, in the
compromise of, or defense against, any such asserted Liability.
If the Indemnifying Party fails to compromise or defend such
asserted Liability, or fails to notify the Indemnitee of its
election as herein provided, the Indemnitee may, at the
Indemnifying Party's expense, pay, compromise or defend such
asserted Liability. Notwithstanding the foregoing, the
Indemnifying Party may not settle or compromise any claim over
the objection of the Indemnitee; provided, however, that if the
settlement or compromise does not result in any Liability to the
Indemnitee or otherwise requires the Indemnitee to take any
action or refrain from taking any action, consent to such
settlement or compromise shall not be unreasonably withheld. In
any event, the Indemnitee and the Indemnifying Party may each
participate, at its own expense, in the defense of such asserted
Liability. If the Indemnifying Party chooses to defend any
claim, the Indemnitee shall make available to the Indemnifying
Party any books, records or other documents within its control
that are necessary or appropriate for such defense.
Notwithstanding the foregoing, the Indemnitee shall have the
right to employ separate counsel at the Indemnifying Party's
expense and to control its own defense of such asserted Liability
if (a) there are or may be legal defenses available to such
Indemnitee or to other Indemnities that are different from or
additional to those available to the Indemnifying Party or (b) in
the reasonable opinion of counsel to such Indemnitee, a conflict
or potential conflict exists between the Indemnifying Party and
such Indemnitee that would make such separate representation
advisable.
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12. GENERAL
12.1 Construction; Governing Law. This Agreement, determination
of any rights, duties or remedies of the parties arising out of
or relating to this Agreement shall be governed by and construed
in accordance with the laws of the State of Texas, without giving
effect to any choice or conflict of law provision or rule
(whether of the State of Texas or any other jurisdiction) that
would cause the application of the laws of any jurisdiction other
than the State of Texas.
12.2 Survival of Representations, Warranties and Ancillary
Documents. Ancillary Agreements shall survive the Closing in
accordance with their terms. The representations, warranties,
covenants and other agreements herein contained shall continue in
full force and effect after the Closing notwithstanding any
investigation by a party hereto or such party's knowledge of any
inaccuracy or incompleteness in any representation or any breach
of warranty or covenant, subject to the provisions of Article 11
above.
12.3 Entire Agreement, Waiver. Except for the Ancillary
Agreements, this Agreement (which term, as used in this
Agreement, includes the Exhibits and Schedules referred to
herein) constitutes the entire agreement among the parties
pertaining to the subject matter hereof and supersedes all prior
and contemporaneous agreements, understandings, negotiations and
discussions, whether oral or written, of the parties, including
that certain letter agreement dated October 2, 2000, written by
Parent to Stockholder, and there are no representations,
warranties, covenants or other agreements between the parties in
connection with the subject matter hereof except as set forth
specifically herein. No amendment, supplement, modification,
waiver or termination of this Agreement shall be implied or be
binding (including any alleged waiver based on a Party's
Knowledge of any inaccuracy or incompleteness in any
representation or any breach of any warranty or covenant
contained herein) unless in writing and signed by the party
against which such amendment, supplement, modification, waiver or
termination is asserted. No waiver of a provision of this
Agreement shall be deemed or shall constitute a waiver of any
other provision hereof (whether or not similar), nor shall such
waiver constitute a continuing waiver unless otherwise expressly
therein provided.
12.4 Binding Effect; Successors; Assignment. All of the terms
and provisions of this Agreement by or for the benefit of the
parties shall be binding upon and inure to the benefit of their
respective successors, permitted assigns, heirs and personal
representatives. The rights and obligations provided by this
Agreement shall not be assignable by any party, other than by
Parent (without discharge of any of its obligations hereunder) to
a Subsidiary or Affiliate or a successor to its business, and,
except as expressly provided herein, nothing herein is intended
to confer upon any Person, other than the parties and their
respective successors and permitted assigns, any rights or
remedies under or by reason of this Agreement.
12.5 Exhibits and Schedules. All instruments or documents to be
delivered by any party to this Agreement shall be in form and
content reasonably satisfactory to the counsel for the party
receiving such instrument or document. Each Exhibit and Schedule
shall be identified by a cover page and initialed on each page
for purposes of identification on behalf of Stockholder by
Stockholder's Representative. Parent's authorized representative
shall likewise initial each page
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thereof solely for purposes of identification and to acknowledge
receipt thereof. Each Exhibit and Schedule shall be deemed an
integral part of this Agreement.
12.6 Validity; Breach; Definition of Knowledge. The parties have
participated jointly in the negotiation and drafting of this
Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if
drafted jointly by the parties and no presumption or burden of
proof shall arise favoring or disfavoring any party by virtue of
the authorship of any of the provisions of this Agreement. Any
reference to any federal, state, local, or foreign statue or law
shall be deemed also to refer to all rules and regulations
promulgated thereunder, unless the context requires otherwise.
The term "including" shall mean including without limitation.
The parties intend that each representation, warranty, and
covenant contained herein shall have independent significance.
If any party has breached any representation, warranty or
covenant contained herein in any respect, the fact that there
exists another representation, warranty or covenant relating to
the same subject matter (regardless of the relative levels of
specificity) which the party has not breached shall not detract
from or mitigate the fact that the party is in breach of the
first representation, warranty or covenant. The term "Knowledge"
when used to qualify any representation or warranty contained in
this Agreement, shall mean, in the case of Target, knowledge,
after reasonable investigation, of Target's corporate officers
and Key Employees in each case after such individuals have
consulted with individuals who would reasonably be expected to
have knowledge of the matter in question, and, in the case of
Stockholder and Parent, knowledge after reasonable investigation.
Any term or provision of this Agreement that is invalid or
unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and
provisions hereof or the validity or enforceability of the
offending term or provision in any other situation or in any
other jurisdiction.
12.7 Injunctive Relief. Stockholder agrees that Parent would be
damaged irreparably in the event that Stockholder breaches any of
the provisions of this Agreement or fails to perform such
provisions in accordance with their specific terms. Accordingly,
Stockholder agrees that Parent shall be entitled to an injunction
or injunctions to prevent breaches of the provisions of this
Agreement and to enforce specifically this Agreement and the
terms and provisions hereof in any action instituted in any court
of the United States or any state thereof having jurisdiction
over the parties and the matter, in addition to any other remedy
to which it may be entitled, at law or in equity.
12.8 Notices. All notices, requests, approvals, demands, claims
and other communications required or permitted to be given under
this Agreement (individually and collectively, "Notices") shall
be in writing. Any such written communications shall be deemed
to have been duly given (except as may otherwise be specifically
provided here to the contrary) and shall be deemed sufficient to
preserve the rights of the sending party, if either (a) mailed by
certified or registered mail, with postage prepaid by sender, or
shipped by express courier service, with charges prepaid by,
sender and receipted for by or on behalf of the intended
recipient, in each case to the following address (or to such
other address as any party may designate for itself by notice to
the other party given pursuant hereto), (b) delivered by hand and
receipted for by or on behalf of the intended recipient, or (c)
sent by facsimile (with proof of transmission):
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If to Parent or Merger Sub to:
Park Pharmacy Corporation
00000 Xxxxxxx Xxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attn: Xx. Xxxxxx X. Xxxxx
Facsimile: 000-000-0000
with a copy to:
Xxxxx & Xxxxxx
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attn: Xxxxxxx X. Xxxxxx
Facsimile: 000-000-0000
If to Stockholder or Target:
Xx. Xxxxxxx X. Xxxxx
MJN Enterprises, Inc. d/b/a Total Health Care
0000 Xxxxxxxxx Xxxxx Xxxx
Xxxxxxxxx, Xxxxx 00000
Facsimile: 000-000-0000
with a copy to:
Xxxxxxx X. Xxxxx
0000 X. 0xx Xxxxxx
Xx. Xxxxx, XX 00000
Facsimile: 817-332-1303
Any notice duly given to Stockholder's Representative in
accordance with this Section 12.1 shall be deemed proper notice
to Stockholder.
12.9 Counterparts. This Agreement may be executed in
counterparts by the parties. All counterparts shall be construed
together and shall constitute one agreement. This Agreement
maybe executed by facsimile signature.
12.10 Effect of Headings. The titles or headings of the
various articles, sections and paragraphs hereof are intended
solely for convenience of reference and are not intended and
shall not be deemed to or in any way may be used to modify,
explain or place any construction upon any of the provisions of
this Agreement.
12.11 Severability. If any provision of this Agreement,
including any phrase, sentence, clause, section or subsection, is
legally inoperative or unenforceable for any reason, such
circumstances shall not have the effect of rendering any other
provision or provisions herein contained invalid, inoperative, or
unenforceable to any extent whatsoever.
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12.12 Public Announcement. Except as required by applicable
securities laws, no party shall, or permit any of their
Affiliates to, make any public announcement with regard to this
Agreement or the transactions contemplated hereby without the
prior written consent of Stockholder and Parent.
[signature page follows]
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date and year first above written.
PARK PHARMACY CORPORATION
By: /s/ Xxxxxx X. Xxxxx
--------------------------------
Name: Xxxxxx X. Xxxxx
Title: President
MJN ACQUISITION CORP.
By: /s/ Xxxxxx X. Xxxxx
--------------------------------
Name: Xxxxxx X. Xxxxx
Title: President
MJN ENTERPRISES, INC.
By: /s/ Xxxxxxx X. Xxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxx
------------------------------
Title: President
-----------------------------
STOCKHOLDER:
By: /s/ Xxxxxxx X. Xxxxx
--------------------------------
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