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ACQUISITION OF CERTAIN ASSETS
OF
THRIFT DRUG, INC.,
A DELAWARE CORPORATION
AND
XXX'X INCORPORATED,
A NEW YORK CORPORATION
BY
NCS HEALTHCARE OF NEW YORK, INC.,
AN OHIO CORPORATION
ASSET PURCHASE AGREEMENT
DECEMBER 29, 1997
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TABLE OF CONTENTS
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Page
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ARTICLE 1 PURCHASE OF ASSETS; ASSUMPTION OF LIABILITIES...........................................................1
1.1 Definition Reference.................................................................................1
1.2 Purchased Assets.....................................................................................1
1.3 Retained Assets......................................................................................2
1.4 Assumed Liabilities..................................................................................2
1.5 Retained Liabilities.................................................................................2
1.6 Satisfaction of Liabilities by Seller................................................................3
ARTICLE 2 CONSIDERATION...........................................................................................3
2.1 Purchase Price.......................................................................................3
2.2 Purchase Price Adjustments...........................................................................3
2.3 Determination of Net Asset Value....................................................................3
2.4 Allocation..........................................................................................5
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE SELLERS...........................................................5
3.1 Organization.........................................................................................5
3.2 Agreements...........................................................................................6
3.3 Financial............................................................................................7
3.4 Legal................................................................................................8
3.5 Business.............................................................................................9
3.6 Assets..............................................................................................10
3.7 Real Property.......................................................................................11
3.8 Miscellaneous.......................................................................................12
ARTICLE 3A REPRESENTATIONS AND WARRANTIES OF ECKERD..............................................................12
3A.1 Enforceability.....................................................................................12
3A.2 Consents...........................................................................................13
3A.3 No Conflicts.......................................................................................13
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF BUYER AND NCS........................................................13
4.1 Organization and Power..............................................................................13
4.2 Agreements..........................................................................................13
ARTICLE 5 CLOSING................................................................................................14
5.1 Closing.............................................................................................14
5.2 Conditions to Buyer's Obligations...................................................................14
5.3 Conditions to Sellers' Obligations..................................................................16
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5.3.A Conditions to Buyer's and Sellers' Obligations....................................................16
5.4 Pre-Closing Covenants...............................................................................17
ARTICLE 6 COVENANTS..............................................................................................20
6.1 Miscellaneous Covenants.............................................................................20
6.2 Restrictive Covenants...............................................................................22
6.3 Employee Covenants..................................................................................25
ARTICLE 7 INDEMNIFICATION........................................................................................26
7.1 Survival of Representations and Warranties..........................................................26
7.2 Indemnification by the Sellers......................................................................27
7.2A Indemnification by Eckerd..........................................................................28
7.3 Indemnification by Buyer............................................................................28
7.4 Third Party Claims..................................................................................29
7.5 Limitations on Indemnification of Buyer.............................................................29
7.6 Limitations on Indemnification of Seller............................................................30
7.7 General Limitations on Indemnification..............................................................31
ARTICLE 8 CONSTRUCTION...........................................................................................31
8.1 Definitions.........................................................................................31
8.2 Notices.............................................................................................34
8.3 Binding Effect......................................................................................34
8.4 Headings............................................................................................35
8.5 Exhibits and Schedules..............................................................................35
8.6 Counterparts........................................................................................35
8.7 Governing Law.......................................................................................35
8.8 Waivers.............................................................................................35
8.9 Pronouns............................................................................................35
8.10 Time Periods.......................................................................................35
8.11 No Strict Construction.............................................................................35
8.12 Modification.......................................................................................35
8.13 Entire Agreement...................................................................................35
8.14 Severability.......................................................................................36
8.15 Further Assurances.................................................................................36
8.16 Risk of Loss.......................................................................................36
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ASSET PURCHASE AGREEMENT
------------------------
THIS ASSET PURCHASE AGREEMENT ("Agreement") is entered into
this 29th day of December, 1997, by and among NCS HEALTHCARE OF NEW YORK, INC.,
an Ohio corporation ("Buyer"), solely for purposes of Article 4 and Sections
5.4.5, 6.1.5 and 6.1.7, NCS HEALTHCARE, INC., a Delaware corporation ("NCS"),
THRIFT DRUG, INC. (d/b/a Greenwood Pharmacy), a Delaware corporation
("Greenwood"), XXX'X INCORPORATED (d/b/a Managed Pharmacy Services and MPS), a
New York corporation (individually referred to as "MPS" and collectively with
Xxxxxxxxx referred to as the "Sellers"), and, solely for purposes of Article 3A
and Sections 6.1.9, 6.2 and 7.2A, ECKERD CORPORATION, a Delaware corporation and
an Affiliate of the Sellers ("Eckerd").
RECITALS:
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A. The Sellers are engaged, among other things, in the business of
providing pharmaceuticals, drugs, biologicals, medical devices and other health
or medical supplies and related services to correctional facilities, nursing
homes, other institutional care facilities and individuals residing in such
facilities (the "Business").
B. The parties desire that the Sellers sell to Buyer and that Buyer
purchase from the Sellers substantially all of the assets that are used or
useful primarily in the Business upon the terms and conditions hereinafter set
forth.
X. Xxxxxx is an Affiliate of the Sellers and will benefit from the sale
of the assets to Buyer hereunder.
D. NCS owns 100% of the outstanding shares of the capital stock of
Buyer and will benefit from the sale of the assets by the Sellers hereunder.
In consideration of and in reliance upon the representations,
warranties and obligations in this Agreement, the parties agree as follows:
ARTICLE 1
PURCHASE OF ASSETS; ASSUMPTION OF LIABILITIES
---------------------------------------------
1.1 Certain capitalized terms are defined in Section 8.1.
1.2 PURCHASED ASSETS. On the Closing Date, the Sellers agree
to sell, deliver, transfer, assign and convey to Buyer free of all Liens other
than Permitted Liens, and Xxxxx agrees to purchase, all right, title and
interest in and to all of the Sellers' properties, assets, and rights owned,
used, acquired for use, or arising or existing primarily in connection with the
Business, whether known or unknown, tangible or intangible, real, personal or
mixed and wherever located, including, without limitation, all property, plant,
equipment, accounts receivable, inventories, books and records, permits and
other governmental authorizations pertaining to the
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Business (to the extent such permits and authorizations may legally be
assigned), all proprietary information and rights owned, used or useful by the
Sellers primarily in the operation of the Business, including, without
limitation, all patents, patent applications, copyrights, trademarks, trade
names (including the trade names "Greenwood Pharmacy" and "MPS" and all variants
thereof, and all rights to the use of such names as a trademark, trade name or
service mark), licenses or other rights to technology or information, trade
secrets, customer and supplier lists, estimating and bidding methodologies,
computer software and programming, and all other intangible property and
goodwill associated with the Business; PROVIDED, HOWEVER, that (a) the Sellers
shall not sell and Buyer shall not purchase the Retained Assets described in
Section 1.3 hereof, and (b) as to contracts, subject to the terms of Section
6.1.5 hereof, the Sellers shall assign and Buyer shall assume only those
contracts of the Sellers that are described and expressly set forth in Section
1.4(a) hereof. The assets to be purchased and sold pursuant to this Agreement
are sometimes collectively referred to as the "Purchased Assets."
1.3 RETAINED ASSETS. The Sellers shall not sell, transfer or
assign, and Buyer shall not purchase (a) any cash, (b) rights of the Sellers
arising under this Agreement, (c) the Sellers' corporate minute books, stock
records, and tax returns or other similar corporate books and records, and those
records originals of which the Sellers are required to maintain under applicable
laws (PROVIDED, copies of the same will be made available to Buyer), (d) rights
of the Sellers in any pending litigation, (e) all contracts of the Sellers that
are NOT described in Section 1.4 or otherwise as provided in Section 6.1.5
hereof, (f) any other assets of the Sellers that are specifically set forth on
SCHEDULE 1.3, and (g) any other assets of the Sellers not owned, used or useful
primarily in the Business (collectively, the "Retained Assets").
1.4 ASSUMED LIABILITIES. On the Closing Date, Xxxxx agrees to
assume only the following liabilities of the Sellers (a) the contracts set forth
on SCHEDULE 1.4(a) to the extent such contract liabilities accrue and relate
solely to the period after the Closing (subject to the terms of Section 6.1.5
hereof), (b) the accrued vacation pay of employees of the Sellers who work
primarily in the Business and who are hired by Xxxxx simultaneously with the
Closing, which amount shall be determined by the mutual agreement of the Sellers
and Buyer immediately prior to the Closing Date and shall be set forth at the
Closing on SCHEDULE 1.4(b), and (c) open purchase orders for inventory, supplies
and the like which are ordered in the ordinary course of business consistent
with past practice by the Sellers for the Business prior to the Closing Date and
such inventory, supplies and the like are delivered to Buyer after the Closing
Date (collectively, the "Assumed Liabilities"). Nothing in this Section 1.4
shall be construed or implied to impose upon Buyer any Liabilities of the
Sellers, except as set forth in this Section 1.4.
1.5 Notwithstanding anything in this Agreement to the
contrary, except for the Assumed Liabilities expressly provided in Section 1.4,
Buyer shall not assume and shall not be liable for any Liabilities of the
Sellers or any Affiliate of the Sellers of any nature whatsoever, whether
related to the Business or otherwise (the "Retained Liabilities"), including,
without limitation, any Liabilities for or relating to Taxes, trade or other
accounts payable of the Sellers, litigation, employee benefits, employee
compensation, workers' compensation, cobra benefits (including any that may
result from this transaction) or other employment or labor-related claims or
obligations of the Sellers, environmental liabilities, product
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warranty or product liability claims, any pension or other employee benefit plan
liabilities, any claims under any contract or arrangement or any other
contingent liabilities, whether known or unknown.
1.6 SATISFACTION OF LIABILITIES BY SELLER. To preserve for
Buyer the opportunity to maintain good relations with the Sellers' creditors,
suppliers and vendors and preclude the assertion of claims for nonpayment
against Buyer, the Sellers agree to pay or otherwise satisfy and discharge
promptly after the Closing, or otherwise in accordance with their terms, all
Retained Liabilities owed by the Sellers to the Sellers' creditors, suppliers
and vendors.
ARTICLE 2
CONSIDERATION
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2.1 PURCHASE PRICE. In consideration for the Purchased Assets
and the noncompetition obligation of the Sellers and Eckerd set forth in Section
6.2.2, Buyer will (a) assume the Assumed Liabilities, and (b) pay to the Sellers
an aggregate amount equal to Eighty Five Million Dollars ($85,000,000.00),
subject to adjustment as provided in Section 2.2 (the "Purchase Price"). The
Purchase Price will be payable at the Closing by wire transfer in immediately
available United States federal funds as allocated to the accounts designated by
the Sellers at least two (2) business days prior to the Closing Date.
2.2 PURCHASE PRICE ADJUSTMENTS. The Purchase Price payable at
the Closing will be reduced in an amount equal to the accrued vacation pay set
forth on the updated SCHEDULE 1.4(b). In addition, if the Valued Assets being
acquired by Buyer have a net book value at the Closing (the "Net Asset Value")
of less than $29,129,000 (the "Target Value"), the Purchase Price payable at the
Closing will be further reduced by the excess of the Target Value over the Net
Asset Value. If the Valued Assets being acquired by Buyer have a Net Asset Value
of more than the Target Value, the Purchase Price payable at the Closing will be
increased by the excess of the Net Asset Value over the Target Value. The Net
Asset Value will be determined pursuant to Section 2.3 hereof.
2.3 DETERMINATION OF NET ASSET VALUE. Within three (3) days
preceding the Closing Date, the Chief Financial Officer of the Sellers shall
deliver a certificate to Buyer setting forth such officer's good faith estimate
of the Net Asset Value of the Valued Assets as of the Closing Date (the "CFO's
Certificate") for the purpose of determining any adjustment to the Purchase
Price to be paid by Buyer at the Closing. The Net Asset Value of the Valued
Assets shall be the book value of the Valued Assets determined as follows:
(a) INVENTORY. The Net Asset Value of the
"marketable" inventory shall be determined based on a physical inventory of the
inventory which shall be taken by an independent and nationally recognized
inventory service immediately prior to the Closing Date, which physical
inventory may be observed by representatives of the Sellers and Buyer. For
purposes of this Section 2.3(a), the inventory shall be valued as described on
SCHEDULE 2.3(a) hereto and shall be considered "marketable" only if it satisfies
the criteria set forth on SCHEDULE
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2.3(a) hereto. The cost of the inventory service shall be shared equally by the
Sellers on the one hand and Buyer on the other. Within three (3) days after the
taking of the inventory, the inventory service shall provide to the Sellers and
Buyer its estimate of the amount of the inventory based on the preceding
methodology. The Sellers and Buyer shall then have five (5) days to submit any
comments or objections on the inventory to the inventory service. Within three
(3) days thereafter, the inventory service shall notify the Sellers and Buyer of
its final calculation of the amount of the inventory, which calculation shall be
final and binding on Buyer and the Sellers for the purpose of determining the
value of the "marketable" inventory on such date.
(b) ACCOUNTS RECEIVABLE. The Sellers acknowledge and
agree that the estimate of the Net Asset Value of the accounts receivable shall
fix an allowance for doubtful accounts at seven percent (7%) of the Sellers'
gross accounts receivable. In calculating the Net Asset Value of the Sellers'
accounts receivable as described in Section 2.3(d) below, Xxxxx shall calculate
the gross amount of the accounts receivable as of the Closing Date and apply the
same percentage of allowance for doubtful accounts as referred to above. In
calculating the gross amount of the accounts receivable, Buyer shall not be
entitled to any adjustments for additional write-offs made by Buyer of accounts
receivable as of the Closing.
(c) FIXED ASSETS. The Net Asset Value of the Fixed
Assets shall be determined based upon the cost of such assets less the amount of
depreciation through the Closing Date. In calculating the Net Asset Value of the
Fixed Assets, Buyer shall use the same depreciation methodology as used by the
Sellers in their preparation of the CFO's Certificate.
(d) BUYER'S DETERMINATION. Within thirty (30) days
after the Closing, Buyer shall prepare and deliver to the Sellers, a certificate
as to its calculation using the methodology described in Section 2.3(a)-(c)
above of the Net Asset Value as of the Closing Date (the "Buyer's Certificate")
and the resulting additional adjustment to the Purchase Price, if any, which
will be the difference between the Net Asset Value on the CFO's Certificate and
the Net Asset Value on the Buyer's Certificate (the "Purchase Price
Adjustment"). Buyer shall provide the Sellers with appropriate backup for its
calculation of the Net Asset Value. If the Sellers do not dispute the Net Asset
Value set forth on the Buyer's Certificate within fifteen (15) business days
after receipt of same, the Net Asset Value set forth on the Buyer's Certificate
shall become the final Net Asset Value and the Sellers shall reimburse to Buyer,
or Buyer shall pay to the Sellers, as the case may be, the Purchase Price
Adjustment by wire transfer in immediately available United States federal funds
within five (5) days of the Net Asset Value becoming finalized. If the Sellers
dispute the Net Asset Value set forth on the Buyer's Certificate, they shall
deliver written notice to Buyer specifying, in reasonable detail, the nature and
basis of such dispute (the "Sellers' Dispute Notice"). Buyer and the Sellers
shall attempt in good faith to reach an agreement with regard to the Net Asset
Value within twenty (20) days after the Sellers' Dispute Notice is received by
Buyer, in which event the Net Asset Value, as agreed to, shall be the conclusive
and binding Net Asset Value, and the Sellers shall reimburse to Buyer, or Buyer
shall pay to the Sellers, as the case may be, the Purchase Price Adjustment, by
wire transfer in immediately available United States federal funds within five
(5) days of the Net Asset Value becoming finalized.
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(e) FINAL DETERMINATION. If Buyer and the Sellers are
unable to resolve the Net Asset Value within the aforesaid 20-day period, the
parties shall, promptly after the expiration of such time period, submit their
unresolved dispute to a nationally (or, if none is available, regionally)
recognized accounting firm not affiliated in any way with the Sellers or Buyer
as selected by Buyer and approved by the Sellers, which approval shall not be
unreasonably withheld (the "Net Asset Value Arbiter"). Promptly, but no later
than thirty (30) days after acceptance of its appointment, the Net Asset Value
Arbiter shall render a written report as to the resolution of the dispute and
the resulting calculation of the Net Asset Value. The decision of the Net Asset
Value Arbiter will be delivered in writing to Buyer and the Sellers, will be
final and binding upon such parties, and payment by either the Sellers or Buyer,
as the case may be, to the other of the Purchase Price Adjustment, shall be made
by wire transfer in immediately available United States federal funds within
five (5) days of the Net Asset Value becoming finalized by the Net Asset Value
Arbiter. The Net Asset Value Arbiter shall have exclusive jurisdiction over, and
resort to the Net Asset Value Arbiter as provided in this paragraph shall be the
sole recourse and remedy of the parties against one another or any other person
with respect to determining the Net Asset Value. The fees and expenses of the
Net Asset Value Arbiter shall be borne equally by Buyer, on the one hand, and
the Sellers, on the other hand.
2.4 ALLOCATION. The Purchase Price shall be allocated among
the Purchased Assets in the manner required by Section 1060 of the Internal
Revenue Code of 1986, as amended.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
---------------------------------------------
The Sellers, jointly and severally, represent and warrant to
Buyer as follows:
3.1 Organization.
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3.1.1 ORGANIZATION AND POWER. Greenwood is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. Greenwood has full corporate power to own, lease and
operate the Purchased Assets owned, leased or operated by it and carry on the
Business as and where such assets are now owned or leased and as such Business
is presently being conducted. MPS is a corporation duly organized, validly
existing and in good standing under the laws of the State of New York. MPS has
full corporate power to own, lease and operate the Purchased Assets owned,
leased or operated by it and carry on the Business as and where such assets are
now owned or leased and as such business is presently being conducted.
3.1.2 QUALIFICATION. SCHEDULE 3.1.2 lists all of the
states and countries in which each Seller (i) owns or leases real property used
primarily in the Business, (ii) maintains sales offices or sales agents used
primarily in the Business, or (iii) maintains inventory used primarily in the
Business. The Sellers are not, and are not required to be, qualified to do
business as a foreign corporation in connection with the Business in any states
or countries other than those listed in SCHEDULE 3.1.2, and the Sellers are duly
qualified as a foreign corporation to do business in
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each of those states or countries, except for where the failure to so qualify
would not have a material adverse effect on the Business or the Purchased
Assets.
3.2 AGREEMENTS.
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3.2.1 ENFORCEABILITY. All requisite corporate action
to approve, execute, deliver and perform this Agreement and each other agreement
and document delivered by each of the Sellers in connection herewith has been
taken by each of the Sellers. This Agreement and each other agreement and
document delivered by each of the Sellers in connection herewith has been duly
executed and delivered by each of the Sellers and constitute the binding
obligations of each of the Sellers enforceable in accordance with their
respective terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
rights of creditors generally or by principles of equity.
3.2.2 CONSENTS. Except as required by the HSR Act and
as set forth on SCHEDULE 3.2.2, no approval or consent of, or filing with, any
Person or Governmental Authority is required in connection with the transactions
contemplated hereby or the execution, delivery or performance by either of the
Sellers of this Agreement or any other agreement or document delivered by or on
behalf of either of the Sellers in connection herewith.
3.2.3 NO CONFLICTS. Except as set forth on SCHEDULE
3.2.3, no action taken or required to be taken by or on behalf of either of the
Sellers in connection herewith, including, but not limited to, the execution,
delivery and performance of this Agreement, and each other agreement and
document delivered by either of them in connection herewith:
(a) gives rise to a right of termination or
acceleration under any Contract by which any
of them are bound;
(b) to the Knowledge of Sellers, disrupts or
impairs any business relationship which
either of the Sellers have with any vendor,
manufacturer, dealer, distributor, sales
representative, supplier or customer;
(c) conflicts with or violates, in any material
respect:
(i) any Law;
(ii) either of the Sellers' Certificate of
Incorporation or By-Laws;
(iii) any Contract by which either of the
Sellers is bound;
(iv) any order, arbitration award,
judgment, decree or other similar
restriction to which
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either of the Sellers is subject; or
(d) constitutes an event which, after notice or
lapse of time or both, could result in any of
the foregoing, in each case, with respect to
the foregoing clauses (a) through (d), which
could reasonably be expected to have a
material adverse effect on the Purchased
Assets, the Business, or their ability to
consummate the transactions contemplated by
this Agreement.
3.3 Financial.
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3.3.1 FINANCIAL RECORDS. SCHEDULE 3.3.1 consists of
(a) a schedule of the Valued Assets as of September 27, 1997 (the "Acquisition
Balance Sheet"), and (b) an unaudited condensed combined statement of income of
the Business for the 35 week period ending September 27, 1997, as prepared by
the Sellers. Except as set forth on SCHEDULE 3.3.1, all such financial records
were compiled from the Sellers' books of account, are accurate and complete in
all material respects, and present fairly the Valued Assets and the results of
operations of the Business at the date and for the period indicated.
3.3.2 NO CHANGES. Since September 27, 1997, each of
the Sellers has, in all material respects, operated the Business only in the
ordinary course, consistent with past practice. Since that date, there has not
been any material adverse change, or event or circumstance which might
reasonably be expected to result in a material adverse change, in the Purchased
Assets or the Business that are specific to either Seller and not to the
Sellers' industry as a whole. Without limiting the generality of the foregoing,
since September 27, 1997, except as listed on SCHEDULE 3.3.2, there has not been
with respect to the Business any:
(a) waiver, release, cancellation or compromise
of any debts owed to it or claims or rights
against others exceeding $50,000 in the
aggregate;
(b) adverse change in existing credit
arrangements with any bank or other
institution;
(c) dividend or other distribution declared or
paid or any redemption or repurchase of any
shares of capital stock;
(d) purchase or lease (or commitment to purchase
or lease) any assets (other than inventory)
in excess of $50,000 individually or $250,000
in the aggregate;
(e) (i) creation, incurrence or assumption of any
debt for borrowed money, (ii) assumption,
guarantee, endorsement or other act of
becoming liable or responsible for the
obligation
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of any other Person, or (iii) making of any
loans, advances or capital contributions to,
or investments in, any other Person;
(f) new Contract entered into, except in the
ordinary course of business consistent with
past practice, or then existing Contract
modified or terminated under circumstances
which might adversely affect the condition
(financial or otherwise) or prospects of the
Business taken as a whole; or
(g) sale or disposition of any assets other than
(i) inventory in the ordinary course of
business or (ii) assets individually worth
less than $3,000 or in the aggregate worth
less than $20,000.
3.3.3 TAXES. All Tax returns, reports and
declarations (hereinafter collectively, "Tax Returns") required by any
Governmental Authority to be filed in connection with the properties, business,
sales, income, expenses, net worth and franchises of the Sellers, the failure of
which to file would have a material adverse effect on the Purchased Assets, have
been timely filed, and such returns are correct and complete in all material
respects. All Tax due in connection with the properties, business, sales,
income, expenses, net worth and franchises of the Sellers has been paid, other
than any Tax which is not yet due or which, if due, is not yet delinquent or is
being contested in good faith. There are no Tax claims, audits or proceedings
pending in connection with the properties, business, income, expenses, net worth
and franchises of the Sellers' Business, and, to the Knowledge of the Sellers,
there are no such threatened claims, audits or proceedings. There are not
currently in force any extensions of time with respect to the dates on which any
Tax Return was or is due to be filed by the Sellers, or any waivers or
agreements for the extension of time for the assessment or payment of any Tax.
3.4 LEGAL.
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3.4.1 COMPLIANCE WITH LAWS. Neither Seller is in
violation, in any material respects, of any outstanding arbitration award,
judgment, order or decree relating in any manner to the Purchased Assets or the
Business. SCHEDULE 3.4.1 lists all material permits, licenses, approvals or
authorizations of any Governmental Authority required by Sellers to conduct the
Business (the "Permits"). All such Permits have been legally obtained and
maintained by the Sellers and are in full force and effect in all material
respects. No proceeding is pending to revoke or limit any Permit. The Sellers
have timely made all filings required to be made in connection with the sale of
their products in each state where they have sold products, the failure of which
to file would have a material adverse effect on the Purchased Assets, and, to
the Knowledge of Sellers no such filing has been the subject of any inquiry or
investigation. In the past year, there have been no material claims, notices,
orders or directives issued by any Governmental Authority with respect to the
Business or the Purchased Assets.
3.4.2 LITIGATION. Except as listed in SCHEDULE 3.4.2:
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(a) no claim, litigation, investigation or
proceeding is pending or, to the Knowledge of
the Sellers, threatened against either of the
Sellers relating in any manner to the
Business or the Purchased Assets, which would
have a material adverse effect on the
Purchased Assets or the Business; and
(b) no arbitration award, judgment, order, decree
or similar restriction is outstanding against
or relating in any manner to the Business or
the Purchased Assets, which would have a
material adverse effect on the Purchased
Assets or the Business.
3.5 Business.
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3.5.1 EMPLOYMENT. As it relates to the Business, as
of December 29, 1997 Xxxxxxxxx employed a total of 330 employees, of which 287
were full-time and 43 were part-time. As it relates to the Business, as of
December 29, 1997 MPS employed a total of 334 employees, of which 255 were
full-time and 79 were part-time. SCHEDULE 3.5.1 lists the names, current annual
compensation rates and other compensation arrangements of each of the Sellers'
employees at the Business whose annual compensation (as shown on such employee's
tax withholding form) for the prior calendar year exceeds $50,000. Each Seller
has paid in full to all employees of the Business, or made appropriate accruals
for on its books of account, all wages, commissions, bonuses and other direct
compensation for all services performed by them. Each Seller has withheld or
collected from each payment made to each of its employees of the Business the
amount of all Taxes required to be withheld or collected therefrom, and each
Seller has paid the same when due to the proper Governmental Authorities, the
failure of which to withhold would have a material adverse effect on the
Purchased Assets of the Business. There are no pending controversies, grievances
or claims by any of the employees, former employees or beneficiaries of
employees of either of the Sellers' Business with respect to their employment or
benefits incident thereto, including, but not limited to, sexual harassment and
discrimination claims and claims arising under workers' compensation laws
("Employee Claims"). There is no union representation of either of the Sellers'
employees at the Business, there has been no attempt by a labor organization to
organize either of the Sellers' employees at the Business into a collective
bargaining unit, and there is no basis to believe that there is any imminent
threat of an attempt to organize a union at the Business. Except as set forth on
SCHEDULE 3.5.1, since September 27, 1997, other than normal increases using
standards consistent with past practice, there has not been any general increase
made or promised in the level or rate of salaries or compensation (including,
but not limited to, bonuses) of any of the Sellers' employees, increases made or
promised in the salary or compensation (including, but not limited to, bonuses)
paid to or accrued for the benefit of any employee, director, representative or
agent of either Seller whose compensation (including, but not limited to,
bonuses) after such increase would be at an annual rate in excess of $50,000.
3.5.1.1 WORKER ADJUSTMENT AND RETRAINING NOTIFICATION
ACT ("WARN"). Sellers represent that SCHEDULE 3.5.1.1 indicates each of the
Leased Properties and, with respect to each, lists each and every employee
employed there as of November 1, 1997. In
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addition, if any of the employees listed within SCHEDULE 3.5.1.1 (i) incurred an
employment termination, other than a discharge for cause, voluntary departure or
retirement; (ii) was laid off for any reason; or (iii) experienced a reduction
in hours of work of more than fifty percent (50%) from November 1, 1997 to the
date of this Agreement, such shall be indicated next to the employee's name,
with the date of such occurrence(s) provided.
3.5.2 CONTRACTS. SCHEDULE 3.5.2 contains a complete
and accurate list of the material Contracts of the Sellers that relate to the
Business. The Sellers have delivered or made available to Buyer copies of such
written Contracts which are accurate and complete in all material respects, in
each case with all material modifications and amendments thereto. There has been
no material modification or termination of any such Contract or Lease Agreement
under circumstances which would reasonably be expected to have a material
adverse effect on the Business and each such Contract and Lease Agreement is
valid and in full force and effect.
3.5.3 COMPLIANCE WITH CONTRACTS. Except as set forth
on SCHEDULE 3.5.3, with respect to the Contracts and Lease Agreements that are
being assigned to Buyer hereunder, the applicable Seller is not in material
default under or in material violation of any thereof, and no event has occurred
which, with notice or lapse of time or both, would constitute such a material
default or material violation. There have been no discussions or correspondence
concerning a breach by either Seller or termination of any of the foregoing. To
the Knowledge of the Sellers, there is no material default under or any material
violation of any of the foregoing by any other party thereto.
3.5.4 PREPAYMENTS AND DEPOSITS. Neither Seller has
received any prepayments or deposits from customers for products to be shipped,
or services to be performed, in the future.
3.5.5 SUPPLIERS AND CUSTOMERS. No supplier or
customer which accounted for more than 5% of either of the Sellers' sales or
purchases in the past year has terminated, or, to the Knowledge of Sellers,
threatened to terminate, its relationship with either of the Sellers.
3.6 Assets.
-------
3.6.1 TITLE. The Purchased Assets are, or at the
Closing will be, free and clear of all Liens other than the Permitted Liens.
Collectively, the Sellers own or lease all of the Purchased Assets. Except for
the Retained Assets, assets leased under Contracts listed on SCHEDULE 3.5.2 and
immaterial personal property of employees, the Purchased Assets include all
assets that are useful, or are being used, primarily to operate the Business.
All of the Contracts by which either Seller is bound with respect to which Xxxxx
is acquiring the rights of either Seller pursuant to Section 1.4 hereof are
valid, in full force and effect, and, in all material respects, enforceable in
accordance with their terms and, to the Knowledge of Sellers, will not be
affected by the consummation of the transaction contemplated hereby, except to
the extent that any consent required in connection with the assignment thereof
is not obtained. There exists no condition affecting the title to or use of any
part of the Purchased Assets that would prevent Buyer from occupying, using, or
enforcing its rights in respect of any part of the Purchased Assets to the same
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full extent that the Sellers could continue to do so if the transactions
contemplated hereby did not take place.
3.6.2 ACCOUNTS RECEIVABLE. To the Knowledge of
Sellers, none of the Sellers' accounts receivable are subject to any set-off or
counterclaim. SCHEDULE 3.6.2 sets forth the Sellers' aging summaries of the
Sellers' accounts receivable relating to the Business as of the date of the
Acquisition Balance Sheet.
3.6.3 INVENTORIES. All inventory has been valued on
the Acquisition Balance Sheet at the cost reflected on the most recent vendor
invoice.
3.6.4 CONDITION. All of the Fixed Assets included in
the Purchased Assets are in good operating condition, normal wear and tear
excepted. Except as provided in the preceding sentence, the Fixed Assets are
being transferred AS IS, WHERE IS, WITH ALL FAULTS, and the Sellers disclaim any
express or implied warranties, including the warranties of merchantability or
fitness for a particular purpose.
3.6.5 INTELLECTUAL PROPERTY. SCHEDULE 3.6.5 lists all
material Intellectual Property Rights owned by either Seller or in which (as
noted on such Schedule) either Seller has any rights or licenses which is useful
or used primarily in the Business. To the Knowledge of the Sellers, there has
not been any infringement or alleged infringement by others of any such
Intellectual Property Rights. Except as set forth in SCHEDULE 3.5.2, neither
Seller is a party to any material contract, whether as licensor, licensee,
franchisor, franchisee, dealer, distributor, or otherwise, with respect to any
Intellectual Property Rights or Trade Secrets which is useful or used primarily
in the Business. The Sellers have the right to use all Intellectual Property
Rights as are necessary to enable the Sellers to conduct all phases of the
Business in the manner presently conducted, and the use of the trade names
"Greenwood," "Managed Pharmacy Services" and "MPS" and, to the Knowledge of
Sellers, the use of any other Intellectual Property Rights, has not conflicted
with, infringed, or otherwise violated any rights of any Person. The
Intellectual Property Rights listed in SCHEDULE 3.6.5 are valid and in full
force and effect and are not subject to any material interference action or
other judicial, arbitration, or other adversary proceeding, the effect of which
would have a material adverse effect on the Purchased Assets or the Business.
3.7 REAL PROPERTY. Neither of the Sellers own any real
property that is used primarily in the Business, nor has either Seller agreed to
acquire any real property or any fee interest in any real property. Except as
set forth on SCHEDULE 3.7, each of the Sellers has the exclusive right to
possess, use and occupy their respective Leased Properties pursuant to valid and
binding lease agreements that are enforceable in all material respects (the
"Lease Agreements"). To the Knowledge of the Sellers, none of the buildings,
structures, improvements or appurtenances of the Leased Properties, nor the
operation or maintenance thereof, violates in any material respect any
restrictive covenant or any provision of any Law, or encroaches on any property
owned by others. To the Knowledge of Sellers, all accounts for work and services
performed and materials placed or furnished upon or in respect to the Leased
Properties at the request of either of the Sellers have been fully paid and
satisfied and no person is entitled to claim a Lien under any Law against the
Leased Properties or any part thereof in connection therewith. To the Knowledge
of Sellers, there is
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nothing owing in respect of the Leased Properties by either of the Sellers to
any municipal corporation or to any other corporation or commission owning or
operating a public utility for water, gas, electrical power or energy, steam or
hot water, or for the use thereof, other than current accounts in respect of
which the payment due date has not yet passed. To the Knowledge of the Sellers,
there are no material structural repairs or replacements that are necessary with
respect to the Leased Properties. To the Knowledge of the Sellers, no
underground storage tanks are or have been located on the Leased Properties. The
Sellers have delivered to Buyer true and complete copies of the Lease Agreements
and all environmental audits, evaluations, assessments, studies or tests
relating to the Leased Properties and their use which are within the possession
or control of the Sellers.
3.8 Miscellaneous.
--------------
3.8.1 CONFLICTS OF INTEREST. Except as set forth on
SCHEDULE 3.8.1, to the Knowledge of Sellers, no shareholder, director or
employee of the Sellers, nor any relative of any director or employee of the
Sellers nor an Affiliate of any of the foregoing:
(a) owns, directly or indirectly, any interest
in, or is an employee or agent of, any entity
which is a competitor, lessor, lessee,
customer or supplier of either of the
Sellers;
(b) owns, directly or indirectly, any interest
in, any tangible or intangible property,
asset, or right which either of the Sellers
uses in the Business;
(c) has any cause of action or claim against,
owes any amount to, or is owed any amount by
either of the Sellers;
(d) is a party to any Contract with either of the
Sellers; or
(e) received a loan, gift or advance from either
of the Sellers in the three year period
preceding the Closing Date.
3.8.2 FULL DISCLOSURE. No representation or warranty
by either of the Sellers in this Agreement and no statement contained in any
Schedule to this Agreement contains any untrue statement of a material fact, or
omits to state a material fact necessary to make the statements contained
therein, in light of the circumstances in which they are made, not misleading.
ARTICLE 3A
REPRESENTATIONS AND WARRANTIES OF ECKERD
----------------------------------------
Eckerd represents and warrants to Buyer as follows:
3A.1 ENFORCEABILITY. Eckerd is a corporation duly organized,
validly existing and
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in good standing under the laws of the State of Delaware. Eckerd has full
corporate power and authority to execute, deliver and perform this Agreement and
each of the agreements and documents delivered by Eckerd in connection herewith.
This Agreement and each other agreement and document delivered by Eckerd in
connection herewith has been duly executed and delivered by Eckerd and
constitutes the binding obligations of Eckerd enforceable in accordance with
their respective terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting rights of creditors generally or by principles of equity.
3A.2 CONSENTS. No approval or consent of, or filing with, any
Person or Governmental Authority is required in connection with the execution,
delivery or performance by Eckerd of this Agreement or any other agreement or
document delivered by Eckerd in connection herewith.
3A.3 NO CONFLICTS. No action taken or required to be taken by
or on behalf of Eckerd in connection with the execution, delivery and
performance of this Agreement, and each other agreement and document delivered
by Eckerd in connection herewith conflicts with or violates: (a) any Law; (b)
Eckerd's Certificate of Incorporation or Bylaws; or (c) any order, arbitration
award, judgment, decree or other similar restriction to which Eckerd is subject.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER AND NCS
-----------------------------------------------
Buyer and NCS, jointly and severally, represent and warrant to
the Sellers as follows:
4.1 ORGANIZATION AND POWER. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Ohio, and at the Closing will be qualified to do business in each state where
such qualification is necessary. Xxxxx has full corporate power and authority to
execute, deliver and perform this Agreement and all other agreements and
documents to be executed and delivered by it in connection herewith. NCS is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. NCS has full corporate power and authority to execute,
deliver and perform this Agreement and all other agreements and documents to be
executed and delivered by it in connection herewith.
4.2 Agreements.
-----------
4.2.1 ENFORCEABILITY. All requisite corporate action
to approve, execute, deliver and perform this Agreement and each other agreement
and document delivered by Xxxxx and NCS in connection herewith has been taken by
Buyer and NCS. This Agreement and each other agreement and document delivered by
Xxxxx and NCS in connection herewith have been duly executed and delivered by
Buyer and NCS and constitutes the binding obligations of Buyer and NCS
enforceable in accordance with their respective terms, except as such
enforceability may be
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limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting rights of creditors generally or by principles of equity.
4.2.2 CONSENTS. Except as required by the HSR Act
and, other than those already received, no approval or consent of, or filing
with, any Person or Governmental Authority is required in connection with the
transactions contemplated hereby or the execution, delivery or performance by
Buyer or NCS of this Agreement or any other agreement or document delivered by
Buyer or NCS in connection herewith.
4.2.3 NO CONFLICTS. No action taken by or on behalf
of Buyer or NCS in connection herewith, including, but not limited to, the
execution, delivery and performance of this Agreement, and each other agreement
and document delivered by them in connection herewith, conflicts with or
violates, in any material respect (a) any Law, (b) Buyer's Articles of
Incorporation or Code of Regulations, (c) NCS's Certificate of Incorporation or
By-Laws, (d) any contract by which Buyer or NCS is bound, or (e) any order,
arbitration award, judgment, decree or other similar restriction to which either
Buyer or NCS is subject, or constitutes an event which, after notice or lapse of
time or both, could result in any of the foregoing, in each case, with respect
to the foregoing clauses (a) through (e), which could reasonably be expected to
have a material adverse effect on Buyer's or NCS' business or their ability to
consummate the transactions contemplated by this Agreement.
4.2.4 FULL DISCLOSURE. No representation or warranty
by Buyer or NCS in this Agreement and no statement contained in any Schedule to
this Agreement contains any untrue statement of a material fact, or omits to
state a material fact necessary to make the statements contained therein, in
light of the circumstances in which they are made, not misleading.
ARTICLE 5
CLOSING; CONDITIONS
-------------------
5.1 CLOSING. The consummation of the transactions contemplated
hereby (the "Closing") shall take place at 10:00 a.m. (local time) on a mutually
agreed upon date that is within five (5) business days after the satisfaction or
written waiver of the conditions contained in Sections 5.2, 5.3 and 5.3A (the
"Closing Date") at the offices of Eckerd, or on such other date, place or time
as the parties may mutually agree. The transfers and deliveries herein
contemplated will be mutually interdependent and regarded as occurring
simultaneously; and no such transfer or delivery will become effective until all
of the transfers and deliveries provided for in Sections 5.2 and 5.3 have been
consummated. The transfers and deliveries herein contemplated will be deemed to
have occurred and the Closing will be effective as of the start of business on
the Closing Date.
5.2 CONDITIONS TO BUYER'S OBLIGATIONS. The obligation of Buyer
to perform this Agreement is subject to satisfaction or written waiver of the
following conditions at or before the Closing:
5.2.1 AGREEMENTS PERFORMED. Each Seller shall
have performed in
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all material respects all of the obligations under this Agreement to be
performed by them at or before the Closing;
5.2.2 REPRESENTATIONS ACCURATE. The
representations and warranties of the Sellers and Eckerd contained herein will
continue to be accurate in all material respects as if made as of the Closing;
5.2.3 SELLERS' CERTIFICATE. Buyer will have
received a certificate from each Seller, with the referenced attachments, in the
form of EXHIBIT A attached hereto;
5.2.4 ECKERD'S CERTIFICATE. Buyer will have
received a certificate from Eckerd, with the referenced attachments, in the form
of EXHIBIT B attached hereto;
5.2.5 NO CHANGE. There will have been no
material adverse change in the Business or the Purchased Assets taken as a
whole;
5.2.6 LEGAL ACTION. There will be no pending
or threatened legal action or inquiry that challenges the validity or legality
of or seeks or could reasonably be expected to prevent, delay or impose
conditions on the consummation of the transactions contemplated by this
Agreement;
5.2.7 CONSENTS. Buyer will have received all
consents and approvals of all Governmental Authorities (other than under the HSR
Act) necessary for Buyer and the Sellers to execute, deliver and perform this
Agreement, and the consents and approvals of all Persons listed on SCHEDULE
5.2.7;
5.2.8 LIEN TERMINATION STATEMENTS. Buyer will
have received termination statements of all security interests in, and releases
of all Liens, other than Permitted Liens, on, the Purchased Assets, including,
but not limited to, UCC Termination Statements;
5.2.9 TRANSFER INSTRUMENTS. Buyer will have
received from each Seller a general bill of sale and assignment ("Bill of Sale")
and such certificates of title (including, but not limited to, those for motor
vehicles), endorsements, assignments in recordable form (including, but not
limited to, those for the Leased Properties and all of Sellers' Intellectual
Property Rights owned, useful or used primarily in the Business), affidavits,
and other instruments of transfer, all of which shall be in form and substance
reasonably satisfactory to the Sellers and Buyer, as shall be required to permit
Buyer to acquire the Purchased Assets, free of any Liens other than the
Permitted Liens;
5.2.10 ASSIGNMENT OF CONTRACTS. Buyer will
have received from each Seller an instrument, in form and substance reasonably
satisfactory to the Sellers and Buyer, pursuant to which the Sellers assign the
Contracts set forth on SCHEDULE 1.4(a) to Buyer;
5.2.11 LEGAL OPINION. Xxxxx will have
received an opinion of counsel from Xxxxxx's General Counsel as to the matters
set forth on SCHEDULE 5.2.11, dated as of
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the Closing Date; and
5.2.12 OTHER. Buyer will have received each
other document required to be delivered to Buyer hereunder.
5.3 CONDITIONS TO SELLERS' OBLIGATIONS. The obligation of the
Sellers to perform this Agreement is subject to satisfaction or written waiver
of the following conditions at or before the Closing:
5.3.1 AGREEMENTS PERFORMED. Buyer will have
performed in all material respects all of the obligations under this Agreement
to be performed by it at or before the Closing;
5.3.2 REPRESENTATIONS ACCURATE. The
representations and warranties of Buyer and NCS contained herein will continue
to be accurate in all material respects as if made as of the Closing;
5.3.3 BUYER'S CERTIFICATE. The Sellers will
have received a certificate from Buyer, with the referenced attachments, in the
form of EXHIBIT C attached hereto;
5.3.4 NCS'S CERTIFICATE. The Sellers will
have received a certificate from NCS, with the referenced attachments, in the
form of EXHIBIT D attached hereto;
5.3.5 LEGAL ACTION. There will be no pending
or threatened legal action or inquiry that challenges the validity or legality
of or seeks or could reasonably be expected to prevent, delay or impose
conditions on the consummation of the transactions contemplated by this
Agreement;
5.3.6 PAYMENT OF THE PURCHASE PRICE. The
Sellers will have received immediately available funds by wire transfer in the
amount and to the accounts designated pursuant to Section 2.1 hereof;
5.3.7 ASSUMPTION OF ASSUMED LIABILITIES. The
Sellers will have received an instrument, in form and substance reasonably
satisfactory to the Sellers and Buyer, pursuant to which Buyer assumes the
Assumed Liabilities;
5.3.8 LEGAL OPINION. The Sellers will have
received an opinion of counsel from Xxxxxx, Xxxxxx & Xxxxxxxx LLP as to the
matters set forth on SCHEDULE 5.3.8, dated as of the Closing Date; and
5.3.9 OTHER. The Sellers will have received
each other document required to be delivered to them hereunder.
5.3.A CONDITIONS TO BUYER'S AND SELLERS' OBLIGATIONS. The
obligations of the Sellers and of the Buyer, respectively, to consummate the
transactions contemplated by this
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Agreement shall be subject to the fulfillment, at or prior to the Closing, of
each of the following additional conditions:
(a) HSR ACT. Any waiting period (and any extension thereof)
under the HSR Act applicable to the transaction contemplated hereby shall have
expired or shall have been terminated; and
(b) NO ORDER. No Governmental Authority shall have enacted,
issued, promulgated, enforced or entered any statute, rule, regulation,
injunction or other order (whether temporary, preliminary or permanent) which is
in effect and has the effect of making the transactions contemplated by this
Agreement illegal or otherwise restraining or prohibiting consummation of such
transactions; PROVIDED, HOWEVER, that the parties hereto shall use their
reasonable efforts to have any such order or injunction vacated.
5.4 Pre-Closing Covenants.
----------------------
5.4.1 CONDUCT OF THE BUSINESS. From the date hereof
until the Closing, except to the extent that Buyer otherwise consents
in writing or except as disclosed on SCHEDULE 5.4.1 hereto, the Sellers' will
operate the Business substantially as presently operated and only in the
ordinary course. The Sellers will use commercially reasonable efforts to
preserve intact the present business organization and the relationships with
persons having business dealings with them in connection with the Business.
Without limiting the generality of the foregoing, in connection with the
Business, the Sellers will not:
(a) purchase or lease (or commit to purchase or
lease) any assets (other than inventory) in
excess of $25,000 individually or $100,000
in the aggregate;
(b) (i) create, incur or assume any debt (other
than trade payables in the ordinary course
of business, consistent with past practice),
(ii) assume, guarantee, endorse or otherwise
become liable or responsible for the
obligation of any other Person, or (iii)
make any loans, advances or capital
contributions to, or investments in, any
other Person;
(c) (i) increase in any manner the rate of
compensation of any of its employees in the
Business, other than normal increases using
standards consistent with past practice or
as required by any collective bargaining
agreement, or (ii) pay or agree to pay any
bonus, pension, retirement allowance,
severance or other employee benefit not
required or permitted by any existing
Employee Benefit Plan or by applicable Law;
(d) permit any of the Purchased Assets to be
subjected to any Lien other than Permitted
Liens;
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(e) enter into any Contract, except in the
ordinary course of business consistent with
past practice, or modify or terminate any
Contract under circumstances which might
adversely affect the condition (financial or
otherwise) or prospects of the Business;
(f) sell or dispose of any assets other than (i)
inventory in the ordinary course of
business, or (ii) assets individually worth
less than $3,000 or in the aggregate worth
less than $20,000; or
(g) take any action the taking of which, or omit
to take any action the omission of which,
would cause any of the representations and
warranties herein to fail to be true and
correct in all material respects as of the
date of such action or omission as though
made at and as of the date of such action or
omission, except as otherwise specifically
contemplated by this Agreement.
5.4.2 ACCESS. From the date hereof until Closing,
upon reasonable notice, the Sellers will provide Buyer and its representatives
reasonable access to the personnel, facilities and all Books and Records and
such other information and Persons relating to the Business as Buyer may
reasonably request, provided that such access does not materially interfere with
the operation of the Business. In addition, subject to applicable Law and the
terms of the Lease Agreements, the Sellers will permit Buyer to perform
engineering, environmental and workplace condition surveys and such other
physical inspections of the Leased Properties as Buyer may reasonably deem
necessary, at Buyer's sole cost and expense, in such a manner that will not
materially interfere with the Business. Xxxxx and the Sellers agree that the
terms and conditions of the letter agreement dated October 1, 1997 with regard
to confidentiality shall remain in full force and effect.
5.4.3 INTERIM FINANCIAL STATEMENTS. Within 20 days
after the end of each fiscal month prior to the Closing, the Sellers will
deliver to Buyer a schedule of Valued Assets and an unaudited condensed combined
statement of income for the Business for the fiscal month then ended and for
that portion of such fiscal year ended with the last day of such monthly period.
5.4.4 SUPPLEMENTAL DISCLOSURE. Until the Closing, the
Sellers will promptly notify Buyer of any event or circumstance that arises
hereafter and that, had it existed on or prior to the date hereof, would have
resulted in a material inaccuracy in a representation or warranty in Article 3
or 3A.
5.4.5 SATISFACTION OF CONDITIONS; HSR ACT FILING. The
Sellers agree to use all reasonable efforts to cause each of the conditions set
forth in Section 5.2 to Buyer's proceeding with the Closing and in Section 5.3.A
to be satisfied at or before the Closing. Xxxxx agrees to use all reasonable
efforts to cause each of the conditions set forth in Section 5.3 to the Sellers
proceeding with the Closing and in Section 5.3.A to be satisfied at or before
the Closing. Each party hereto will use its reasonable efforts to obtain all
authorizations, consents, orders and
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approvals of all Federal, state and local regulatory bodies and officials that
may be or become necessary for its execution and delivery of, and the
performance of its obligations pursuant to, this Agreement, and will cooperate
fully with the other party in promptly seeking to obtain all such
authorizations, consents, orders and approvals. Each party hereto agrees to make
an appropriate filing of a Notification and Report Form pursuant to the HSR Act
with respect to the transactions contemplated hereby promptly after the
execution of this Agreement and to supply promptly any additional information
and documentary material that may be requested pursuant to the HSR Act. The
parties hereto will not take any action that will have the effect of delaying,
impairing or impeding the receipt of any required authorizations, consents,
orders or approvals, PROVIDED, HOWEVER, that nothing in this Agreement shall be
construed to prevent or impair Buyer from taking any action it deems reasonable
in response to any action or proposed or threatened action by any Governmental
Authority with jurisdiction over the enforcement of any applicable antitrust
laws ("Governmental Antitrust Authority"). Each of the parties agrees to respond
to a request for additional information or documentary material, if any, made
pursuant to Section 803.20 of the Premerger Notification Rules by a Governmental
Antitrust Authority in order to consummate the transaction contemplated by this
Agreement. In no event shall any party be required to consummate a transaction
different than the transaction contemplated by this Agreement, unless otherwise
agreed to in writing by the parties hereto. Unless otherwise agreed to in
writing by Xxxxxxx, during the time between the date hereof and approval by the
applicable Governmental Antitrust Authorities, Buyer and NCS agree not to make
or agree to make an acquisition or enter or agree to enter into a business
transaction that would materially adversely impact competition in any of the
relevant markets applicable to the transaction contemplated herein.
5.4.6 TERMINATION. This Agreement may be terminated:
(a) by mutual written consent of Xxxxx and the
Sellers;
(b) by either the Sellers or the Buyer, if the
Closing shall not have occurred by the 105th
calendar day after the date of this
Agreement if the conditions set forth in
Section 5.3.A(a) or Section 5.3.A(b) shall
not have been satisfied; or
(c) by either the Sellers or the Buyer, if the
Closing shall not have occurred prior to the
date that is four (4) months after the date
of this Agreement; PROVIDED, HOWEVER, that
the right to terminate this Agreement under
Section 5.4.6 (b) or (c) shall not be
available to any party whose failure to
fulfill any obligation under this Agreement
shall have been the cause of, or shall have
resulted in, the failure of the Closing to
occur prior to such date.
If this Agreement is terminated pursuant to paragraph (a) of this Section, all
provisions of this Agreement except Section 6.1.2 and the last sentence of
Section 5.4.2 will become void without any liability on the part of any party.
If this Agreement is terminated pursuant to paragraph (b) or (c) of this
Section, all rights and remedies of each party hereunder and all other
provisions hereof related thereto will survive termination to the extent
required so that any party responsible for any
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breach or nonperformance of its obligations hereunder prior to termination will
remain liable for the damages resulting therefrom.
ARTICLE 6
COVENANTS
---------
6.1 Miscellaneous Covenants.
------------------------
6.1.1 PUBLICITY. All public announcements relating to
this Agreement or the transactions contemplated hereby will be made only as may
be agreed upon by the parties or as required by Law (it being agreed that the
parties hereto or their Affiliates are entitled to disclose all requisite
information concerning the transaction in any filings required with the United
States Securities and Exchange Commission and pursuant to the HSR Act).
6.1.2 EXPENSES. Except to the extent otherwise
specifically provided herein, Buyer will pay all of the expenses incident to the
transactions contemplated by this Agreement that are incurred by Buyer, NCS or
its representatives, and the Sellers will pay all of the expenses incident to
the transactions contemplated by this Agreement which are incurred by the
Sellers, Eckerd or their representatives or Affiliates. Notwithstanding the
foregoing, the Sellers on the one hand and the Buyer on the other agree that:
(i) all sales taxes arising in connection with the transfer of the Purchased
Assets shall be paid by Xxxxx, and (ii) Buyer shall pay all recording costs
payable in connection with the transactions contemplated by this Agreement and
transfer charges, if any, with respect to the transfer of motor vehicles.
Additionally, the parties agree that all proratable items such as rent under the
Lease Agreements, common area charges, utility charges, other obligations under
the Lease Agreements, payments owed with respect to the Assumed Liabilities and
all personal property taxes on the Purchased Assets or the Business shall be
prorated as of the Closing Date. The Sellers shall provide their good faith
estimate of such prorations, using estimates if necessary, to Buyer at the time
the Sellers provide the CFO's Certificate and, Buyer or the Sellers, as the case
may be, shall make the appropriate payment to the other on the Closing Date. As
soon as reasonably possible after the Closing Date, the parties shall calculate
the final correct amount of such prorations, and the Sellers or Buyer, as the
case may be, shall make the appropriate payment, if any, to the other within ten
(10) days thereafter. At the Closing, Buyer shall provide the Sellers with a
resale certificate with respect to the inventory included in the Purchased
Assets.
6.1.3 NO ASSIGNMENT. Except as provided in the
following sentence, no assignment of any part of this Agreement or any right or
obligation hereunder may be made by Xxxxx without the prior written consent of
the Sellers or by the Sellers or Eckerd without the prior written consent of
Buyer, and any assignment attempted without that consent will be void. Without
the consent of the Sellers, Buyer may assign all or any part of this Agreement
and all or any part of its rights and obligations hereunder to an Affiliate of
Buyer, in which event, the Sellers will execute and deliver any documents
reasonably requested by the assignee(s) in connection with such assignments,
provided that, with respect to any such assignment, no such assignment will
relieve Buyer or NCS of its obligations hereunder.
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6.1.4 ACCOUNTS RECEIVABLE AND PAYMENTS. The Sellers
covenant and agree to forward to Buyer, promptly after the Sellers' receipt of
the same, any and all payments that either of the Sellers or any of their
respective Affiliates may receive in respect of the accounts receivable acquired
by Buyer hereunder or any payments that relate or pertain to sales by Buyer
after the Closing, which payments are delivered to either of the Sellers or are
otherwise received by either of the Sellers or any of their respective
Affiliates. In the event that Buyer at any time receives checks payable to
either of the Sellers for amounts owed to Buyer, Buyer shall deliver such checks
to such Seller and such Seller shall endorse such checks to Buyer or remit to
Buyer the amounts represented by such checks promptly after Sellers' receipt of
same. Similarly, Buyer shall promptly reimburse the Sellers or Eckerd for any
Assumed Liabilities that are paid by the Sellers or Eckerd after the Closing
Date, so long as Sellers or Eckerd, as the case may be, provides Buyer at least
five (5) days notice of their receipt of any Assumed Liabilities and Buyer does
not object to payment of same within three (3) days after Xxxxx's receipt of
Sellers' or Eckerd's notice. If Sellers or Eckerd in good faith fail to provide
Buyer such notice, Xxxxx will reimburse the Sellers or Eckerd for any Assumed
Liabilities that are paid by the Sellers or Eckerd after the Closing Date, so
long as the payment by Buyer of any such Assumed Liability is not disputed by
Xxxxx.
6.1.5 ASSIGNMENT OF CONTRACTS, RIGHTS, ETC. Anything
in this Agreement to the contrary notwithstanding, this Agreement shall not
constitute an agreement to assign any Contract or any claim or right or any
benefit arising thereunder or resulting therefrom if such assignment, without
the consent of a third party thereto, would constitute a material breach or
other material contravention of such Contract and the failure to obtain such
consent materially adversely affects the rights of Buyer or the Sellers
thereunder. Sellers will use commercially reasonable efforts (but without any
payment of money by the Sellers) to obtain the consent of the other parties to
any such contracts or any claim or right or any benefit arising thereunder for
the assignment thereof to Buyer as Buyer may request. If requested by any other
party to such Contract, NCS will provide a guarantee of the obligations to be
assumed by Buyer thereunder, in form and substance reasonably satisfactory to
NCS. If, with respect to a particular contract, any such consent is not
obtained, and if any attempted assignment thereof would be ineffective or would
materially adversely affect the rights of the Sellers thereunder so that Buyer
would not in fact receive all such rights in all material respects under such
contract, the Sellers and Buyer will cooperate in a mutually agreeable alternate
arrangement under which Buyer would obtain the benefits and assume the
obligations thereunder in accordance with this Agreement, including
sub-contracting, sub-licensing, or sub-leasing to Buyer, or under which Sellers
would enforce for the benefit of Buyer, with Buyer assuming Sellers' obligations
under such contract any and all rights of Sellers against a third party thereto.
If: (i) any consent is required to any such sub-licensing, sub-contracting,
sub-leasing or other alternate arrangement and such consent is not obtained,
(ii) the substantial benefits under the contract have not been provided to Buyer
by any alternative arrangements, and (iii) the other party to such contract
takes an action or fails to take an action which results in Buyer not being able
to substantially enjoy and realize the benefits of the contract in question,
Buyer shall have the right to reject such contract and the Sellers, immediately
upon the request of Xxxxx, shall reassume their position as the party to such
contract and such contract shall no longer constitute an Assumed Liability.
Xxxxx acknowledges that the Sellers have endeavored to include on Schedule
1.4(a) the Contracts of the Sellers that relate
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primarily to the Business. The parties agree that the Sellers intend to assign
and Xxxxx intends to assume all contracts of the Sellers that relate primarily
to the Business. Accordingly the parties agree that any Contracts with customers
of the Business or immaterial Contracts of the Sellers that relate primarily to
the Business inadvertently omitted from Schedule 1.4(a) hereto shall be deemed
to be one of the Assumed Liabilities and subject to all the terms and provisions
of this Agreement, including but not limited to this Section 6.1.5.
6.1.6 POST-CLOSING AGREEMENT. The parties hereto
acknowledge and agree that Buyer may not have all required licenses, permits and
other governmental authorizations to take title to all of the Purchased Assets
and to hereafter operate all aspects of the Business. Buyer shall promptly apply
for such licenses, permits and other governmental authorizations. Xxxxx knows of
no reason why such permits or licenses will not be granted. The Sellers agree
that for a period not to exceed twelve (12) weeks after the Closing Date Buyer
may operate the Business under the authority of any of the Sellers' licenses,
permits or other governmental authorizations of the type that Buyer has not yet
obtained, PROVIDED, that such operation does not violate applicable laws or
regulations, and that Buyer indemnifies and holds the Sellers harmless against
any and all costs, liability, loss, damage or deficiency resulting from the
Sellers' performance of these obligations or use thereof. To the extent Buyer
operates the Business under the authority of any of the Sellers' licenses,
permits or governmental authorizations, Xxxxx agrees to distribute
pharmaceutical supplies and provide health and pharmacy services as would be
required of the Sellers under such licenses, permits and governmental
authorizations and will indemnify the Sellers against all liability for its
failure to do so and for all other liabilities arising in connection with such
actions.
6.1.7 NCS GUARANTY. NCS hereby unconditionally
guaranties the performance of any and all of Xxxxx's liabilities and obligations
hereunder and those under any other agreements or documents delivered in
connection with this Agreement.
6.1.8 SERVICE AGREEMENT. After the date hereof, the
Sellers and Xxxxx agree to negotiate in good faith to enter into a Service
Agreement at the Closing providing for back-up pharmacy services by the Sellers.
6.1.9 RIGHT OF FIRST OFFER AGREEMENT. After the date
hereof, the Sellers, Eckerd and Buyer agree to negotiate in good faith to enter
into a Right of First Offer Agreement at the Closing providing for certain
rights relating to businesses acquired by the parties after the Closing.
6.1.10 ESTOPPEL CERTIFICATE. After the date hereof,
the Sellers agree to use commercially reasonable efforts to obtain a
certificate, in form and substance reasonably satisfactory to Buyer, executed by
the landlord of the Leased Property located at Sharon, Pennsylvania with respect
to the status of the Lease Agreement for such property.
6.2 Restrictive Covenants.
----------------------
6.2.1 CONFIDENTIALITY. Each Seller and Eckerd agree
with Buyer that each
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will not and will cause its Affiliates not to disclose or use, directly or
indirectly, any Confidential Information, at any time after the Closing. If the
disclosure of Confidential Information is required by Law, each Seller and
Eckerd agree to use its best efforts to provide Buyer an opportunity to object
to the disclosure and as much prior written notice as is possible under the
circumstances. For purposes of this Subsection 6.2.1, "Confidential Information"
means (i) all information belonging to, used by, or that is in the possession of
the Sellers or Eckerd relating to the Business to the extent such information is
not intended to be disseminated to the public or is otherwise not generally
known to competitors of the Business, including, but not limited to, information
relating to the Sellers' Business' products, services, strategies, pricing,
customers, representatives, suppliers, distributors, technology, finances,
employee compensation, computer software and hardware, inventions, developments,
or Trade Secrets, and (ii) all information relating to the acquisition
hereunder, including without limitation all strategies, negotiations,
discussions, terms, conditions and other information relating to this Agreement
and each other document and agreement delivered in connection herewith. Each
Seller and Eckerd acknowledge that following the Closing the Confidential
Information referred to in (i) above will be the exclusive proprietary property
of Buyer, whether or not prepared in whole or in part by either of the Sellers
and whether or not disclosed to or entrusted to the custody of either of the
Sellers.
6.2.2 NONCOMPETITION. Until the fourth (4th)
anniversary of the Closing Date, each Seller and Eckerd agree with Buyer that
each will not and will cause its Affiliates not to:
(a) develop, manufacture, sell, or distribute
products or perform services in competition
with the Business;
(b) perform any advisory or consulting services
for, invest in or otherwise become associated
with in any capacity, any Person which
develops, manufactures, sells, or distributes
products or performs services in competition
with the Business; or
(c) solicit any current customers or, except as
provided in Section 6.2.3 below, any
prospective customers of or for the Business;
within the State of New York, the Commonwealth of Pennsylvania, and the State of
North Carolina. Notwithstanding the foregoing, the covenants of the Sellers and
Eckerd set forth in this Section 6.2.2 shall not restrict their ability to
continue to conduct their retail pharmacy business in such states, except that,
with respect to providing nursing homes, correctional institutions, or any other
institutional care facilities with pharmaceuticals, drugs, biologicals, medical
devises, durable medical equipment, or other home health or medical supplies,
their retail pharmacies in such states will be permitted only to continue to
service their then current customers not acquired by Buyer hereunder and,
subject to the terms of Section 6.2.3 below, to service new customers. Nothing
in this Section 6.2.2 shall prevent the Sellers, Eckerd or their Affiliates from
acquiring an equity interest of less than three percent in a corporation whose
shares are listed on a national securities exchange or regularly quoted in a
United States over-the-counter market. Nothing in this
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Section 6.2.2 shall prevent the Sellers, Eckerd or their Affiliates from
acquiring one or more entities or business divisions whose principal operations
do not fall within the prohibitions of this covenant, notwithstanding the fact
that such entity or division may conduct operations that would otherwise fall
within the prohibitions of this covenant. If, on or before the date that is
three (3) years after the Closing Date, the Sellers, Eckerd or their Affiliates
make any acquisition of the type described in the preceding sentence, the
Sellers and Eckerd agree to, and agree to cause their Affiliates to, use
reasonable efforts to divest themselves of the acquired business operations that
violate this covenant within one year after the date of such acquisition.
6.2.3 SOLICITATION. Until the fourth (4th)
anniversary of the Closing Date, each Seller and Eckerd agree with Buyer that
each will not and will cause its Affiliates not to solicit new customers of the
Business inside (a) the State of New York, (b) the Commonwealth of Pennsylvania,
or (c) a fifty (50) mile radius of Raleigh, North Carolina.
6.2.4 NONINTERFERENCE. Until the fourth (4th)
anniversary of the Closing Date, each Seller and Eckerd agree with Buyer that
each will not and will cause its Affiliates not to induce, attempt to induce, or
assist others in inducing or attempting to induce any employee or agent of Buyer
or any other Person affiliated or doing business with Buyer to terminate their
relationship with Buyer, or in any reckless or intentional manner, interfere
with the relationship between Buyer and any such Person or the relationship
between Buyer and any of its suppliers or customers. The foregoing shall not
preclude general employment advertisements or general solicitations of
employment not directed specifically to employees of Buyer.
6.2.5 EQUITABLE RELIEF. Each Seller and Eckerd agree
that money damages alone will not be a sufficient remedy for any breach of the
provisions of this Section 6.2, and that in addition to all other remedies Buyer
will be entitled to specific performance and injunctive or other equitable
relief as a remedy for any such breach, and each Seller and Eckerd waive the
securing or posting of any bond in connection with such remedy, and each Seller
and Eckerd agree not to assert as a defense in any proceeding where Xxxxx seeks
such relief that Xxxxx has an adequate remedy at law.
6.2.6 REFORMATION OF AGREEMENT. If any of the
covenants contained in Section 6.2, or any portion thereof, is found by a court
of competent jurisdiction to be invalid or unenforceable as against public
policy or for any other reason, such court shall exercise its discretion to
reform such covenant to the end that the Sellers and Eckerd shall be subject to
non-disclosure, non-interference, non-competition or other covenants that are
reasonable under the circumstances and are enforceable by Buyer. In any event,
if any provision of Section 6.2 is found unenforceable for any reason, such
provision shall remain in force and effect to the maximum extent allowable and
all non-affected provisions shall remain fully valid and enforceable.
6.2.7 EXTENSION OF COVENANTS. If a court of competent
jurisdiction finds that either Seller or Eckerd has violated any of the
restrictions or covenants contained in Section 6.2, then the parties agree that
the period of all restrictions and covenants set forth therein shall
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automatically be extended by the number of days that the court determines such
Seller or Eckerd to have been in violation of such restriction or covenant.
6.2.8 REASONABLENESS OF TERMS. Buyer, each Seller and
Eckerd stipulate and agree that the covenants and other terms contained in this
Section 6.2 are reasonable in all respects, including time period, geographical
area and scope of restricted activities (it being acknowledged that the Business
is being carried on within a consolidating industry), that the Buyer would not
have purchased the assets and the Business had the Sellers and Eckerd not agreed
to these covenants, and that the restrictions contained herein are designed to
protect the Business acquired by Buyer hereunder and ensure that the Sellers and
Eckerd do not engage in unfair competition against Buyer.
6.2.9 ACKNOWLEDGMENT OF CONSIDERATION. Eckerd
acknowledges that it is a beneficiary of the payments made to the Sellers
hereunder and that such payments constitute adequate consideration for Eckerd's
obligations under this Section 6.2.
6.3 Employee Covenants.
-------------------
6.3.1 EMPLOYMENT. The parties acknowledge and agree
that certain employees of the Sellers' Business have had access to valuable and
proprietary information related to the Business. In order to achieve the full
benefits associated with the acquisition contemplated hereunder, the Sellers
agree that following the execution of this Agreement, Xxxxx shall be allowed to
discuss with the employees of each of the Sellers who perform services primarily
for the Business the possibility of employment with Xxxxx and Buyer shall be
allowed to employ such persons on such terms and conditions as might be
negotiated between Buyer and such employee, with the final decision as to
employment remaining with the individual employee. Each Seller covenants not to
interfere with any such efforts by Xxxxx. Each of the Sellers shall be
responsible for and shall pay the cost of any compensation, severance or other
benefits that may be payable to such employees not accepting employment with
Buyer or to whom Buyer does not offer employment. Nothing in this Section 6.3.1
shall be deemed to require Buyer to hire or retain any employee for any period
of time or at any particular compensation rate or in any particular position.
The employment by Xxxxx of any employee of either of the Sellers who accepts the
terms of employment offered by Xxxxx will commence on the Closing Date. Xxxxx
agrees to provide any employees of the Sellers' Business who are hired by Xxxxx
on or after the Closing Date with first day medical benefits coverage and agrees
to waive any preexisting conditions with respect to such employees' medical
coverage. All employees of the Sellers' Business who are hired by Xxxxx shall be
given years of service credit for the time period they were employed by the
Sellers for purposes of vacation days. With respect to any employee of the
Sellers' Business who are hired by Xxxxx, Buyer shall allow such employees to
take the accrued vacation being assumed by Buyer in accordance with the Sellers'
vacation policy in effect on the Closing Date. As soon as possible after the
date hereof but in no event later than five (5) days prior to the Closing, Buyer
shall provide the Sellers a list of all of the Sellers' employees that Buyer
desires NOT to employ following the Closing. The Sellers shall be free to retain
the services of any employees not hired by Xxxxx. In the event that Xxxxx hires
less than all of the Sellers' employees who work in the Business and such event
triggers an obligation under WARN, then Buyer shall be responsible for
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all notification and payment obligations imposed by WARN on Sellers or Buyer in
connection therewith. From the date hereof through the Closing, without the
express written consent of Buyer, the Sellers agree not to (i) incur an
employment termination, other than a discharge for cause, voluntary departure or
retirement; (ii) lay off for any reason; or (iii) reduce the hours of work by
more than fifty percent (50%), of any of the Sellers' employees who work in the
Business.
6.3.2 TAX DEPOSITS. With respect to any employee of
either Seller who becomes an employee of Buyer, the appropriate Seller shall
make all required deposits for all withholding, social security and unemployment
insurance Taxes through the Closing and shall file timely required quarterly and
annual reports with respect to such Taxes in accordance with applicable Law
whether such reports are due prior to or after the Closing.
6.3.3 COBRA COMPLIANCE. The Sellers will timely
provide all notices and any continuation of health benefit coverage required to
be provided to any of the Sellers' employees of the Business, former employees
of the Business, or the beneficiaries or dependents of such employees or former
employees, under Part 6 of Subtitle B of Title I of ERISA or Section 4980B(f) of
the Code (herein collectively referred to as "COBRA") who are not hired by
Buyer, to the extent such notices and continuation of health benefit coverage
are required to be provided by each of the Sellers by reason of events occurring
prior to or on the Closing Date or by reason of the transactions contemplated by
this Agreement. For the purposes of the foregoing, the Sellers will treat all of
their employees of the Business (and such employees' beneficiaries and
dependents) who are not hired by Xxxxx as of the Closing Date as having incurred
a "qualifying event" (within the meaning of ERISA Section 603 and Code Section
4980B(f)(3)) on the Closing Date. The Sellers will continue the health benefit
coverage required by COBRA with respect to the Sellers' employees in the
Business who are not hired by Xxxxx and the provisions of this Agreement
irrespective of the elimination of any health benefit plan of the Sellers.
6.3.4 USE OF FACILITY. The Sellers agree to allow
Buyer to use the facility located at 0000 Xxxxx Xxxx Xxxxxxxxx, Xxxxxxxxx, Xxx
Xxxx, for a period of ninety (90) days after the Closing Date, at no cost to
Buyer, in the same manner such facility was used by MPS' Western Manager
immediately preceding the date hereof.
ARTICLE 7
INDEMNIFICATION
---------------
7.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of the Sellers in Article 3, of Eckerd in Article
3A and of Buyer and NCS in Article 4 will survive the Closing and continue to be
binding regardless of any investigation made at any time by any party. The right
of the Buyer Indemnified Parties to bring certain indemnification claims is
subject to the time and amount limits in Section 7.5, and the right of the
Seller Indemnified Parties to bring certain indemnification claims is subject to
the time and amount limits in Section 7.6.
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7.2 INDEMNIFICATION BY THE SELLERS. The Sellers will, jointly
and severally, indemnify Buyer and its Affiliates and the shareholders,
directors, employees and agents of Buyer (collectively, the "Buyer Indemnified
Parties") against and hold them harmless from:
(a) REPRESENTATIONS. All Liability, loss, damage or
deficiency suffered or incurred by them resulting from or arising out of any
inaccuracy in or breach of any representation or warranty by the Sellers herein
or in any other agreement or document delivered by the Sellers in connection
herewith;
(b) COVENANTS. All Liability, loss, damage or
deficiency suffered or incurred by them resulting from or arising out of any
breach or nonperformance of any covenant or obligation made or incurred by the
Sellers herein or in any other agreement or document delivered by the Sellers in
connection herewith;
(c) LIABILITIES. All Liability, loss, damage or
deficiency suffered or incurred by them resulting from or arising out of the
imposition or attempted imposition (including, without limitation, by operation
of bulk transfer or other Laws) by any third party of any Liability of the
Sellers or the Sellers' Business, other than the Assumed Liabilities, and all
Liability, loss, damage or deficiency suffered or incurred by them resulting
from or arising out of the Sellers' operation of the Business on or before the
Closing that is not an Assumed Liability, in each case other than any Liability,
loss, damage or deficiency covered by the following subparagraph;
(d) INVENTORY; BILLING. Any claim asserted against
Buyer or the Purchased Assets resulting from or arising out of any violation of
any Law, including, without limitation, the Federal Food, Drug and Cosmetic Act,
relating to the packaging, labeling, dispensing or other treatment, handling or
dispensing of drugs, biologicals or pharmaceuticals, or any Law relating to
Medicare, Medicaid, or other reimbursement program, where such violation is
committed by the Sellers prior to the Closing, or, with respect to any drugs,
biologicals or pharmaceuticals in the Sellers' possession or control on the
Closing Date, where such violation is committed by the Sellers or Buyer after
the Closing Date (the Sellers acknowledge that the foregoing is intended to
include any and all claims arising in connection with the restocking or
recycling ((as such terms are generally understood within the industry)) of
pharmaceuticals, or sale or other disposal of adultered ((as such term is used
under the Federal Food, Drug and Cosmetic Act or similar Law)) pharmaceuticals,
in each case, before or after the Closing Date relating to pharmaceuticals in
the Sellers' stock on or before the Closing Date);
(e) ENVIRONMENTAL. All Liability, loss, damage or
deficiency suffered or incurred by them resulting from or arising out of either
of the Sellers' generation, production, treatment, transportation, use, or
storage before the Closing of any hazardous substances which could result in
damage to the environment, danger to the health and safety of the public, or
Liability to Buyer;
(f) BROKERS AND FINDERS. All Liability, loss, damage
or deficiency
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suffered or incurred by them resulting from or arising out of the claims of any
broker, finder, or other Person acting in a similar capacity on behalf of the
Sellers or its Affiliates in connection with the transactions contemplated
herein; and
(g) COSTS. Any and all reasonable costs and expenses
(including, but not limited to, legal and accounting fees) related to any of the
foregoing.
7.2A INDEMNIFICATION BY ECKERD. Eckerd will indemnify the
Buyer Indemnified Parties against and hold them harmless from:
(a) REPRESENTATIONS. All Liability, loss, damage or
deficiency suffered or incurred by them resulting from or arising out of any
inaccuracy in or breach of any representation or warranty by Eckerd herein or in
any other agreement or document delivered by Eckerd in connection herewith;
(b) COVENANTS. All Liability, loss, damage or
deficiency suffered or incurred by them resulting from or arising out of any
breach or nonperformance of any covenant or obligation made or incurred by
Eckerd herein or in any other agreement or document delivered by Eckerd in
connection herewith; and
(c) COSTS. Any and all reasonable costs and expenses
(including, but not limited to, legal and accounting fees) related to any of the
foregoing.
7.3 INDEMNIFICATION BY BUYER. Xxxxx will indemnify the Sellers
and their Affiliates and the shareholders, directors, employees and agents of
the Sellers (the "Seller Indemnified Parties") against and hold them harmless
from:
(a) REPRESENTATIONS. All Liability, loss, damage or
deficiency suffered or incurred by them resulting from or arising out of any
inaccuracy in or breach of any representation or warranty by Buyer or NCS herein
or in any other agreement or document delivered by Buyer or NCS in connection
herewith;
(b) COVENANTS. All Liability, loss, damage or
deficiency suffered or incurred by them resulting from or arising out of any
breach or nonperformance of any covenant or obligation made or incurred by Buyer
or NCS herein or in any other agreement or document delivered by Buyer or NCS in
connection herewith;
(c) LIABILITIES. All Liability, loss, damage or
deficiency suffered or incurred by them resulting from or arising out of Buyer's
failure to perform, from and after the Closing Date, its obligations with
respect to the Assumed Liabilities, and all Liability, loss, damage or
deficiency suffered or incurred by them resulting from or arising solely out of
Buyer's operation of the Business after the Closing;
(d) BROKERS AND FINDERS. All Liability, loss, damage
or deficiency suffered or incurred by them resulting from or arising out the
claims of any broker, finder or other
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Person acting in a similar capacity on behalf of Buyer or its Affiliates in
connection with the transactions contemplated herein; and
(e) COSTS. Any and all reasonable costs and expenses
(including, but not limited to, legal and accounting fees) related to any of the
foregoing.
7.4 THIRD PARTY CLAIMS. If any legal proceedings are
instituted or any claim is asserted by any third party with respect to which the
Seller Indemnified Parties on the one hand, or the Buyer Indemnified Parties on
the other hand, may be entitled to indemnity hereunder, the party asserting such
right to indemnity will give the party from whom indemnity is sought written
notice thereof, including copies of any legal proceedings or documents
associated therewith. A delay in giving notice will only relieve the recipient
of liability to the extent the recipient suffers actual prejudice because of the
delay. The party from whom indemnity is sought will have the right, at its
option and expense, to participate in the defense of such a proceeding or claim,
but not to control the defense, negotiation or settlement thereof, which control
will (except as hereinafter provided) at all times rest with the party asserting
such right to indemnity, unless, and to the extent that the proceeding or claim
involves money damages and the party from whom indemnity is sought irrevocably
acknowledges in writing complete responsibility for and agrees to indemnify the
party asserting such right to indemnity, in which case the party from whom
indemnity is sought may assume the control of the monetary damage portion of
such defense through counsel of its choice and at its expense, but the party
asserting such right to indemnity will continue to have the right to be
represented in the monetary aspect of such defense, at its own expense, by
counsel of its choice, and in all events will retain control of the defense of a
proceeding or claim to the extent that it involves other than monetary damages.
If the party from whom indemnity is sought does not assume control of the
defense of such a proceeding or claim, the entire defense of the proceeding or
claim by the party asserting such right to indemnity, any settlement made by the
party asserting such right to indemnity, and any judgment entered in the
proceeding or claim will be deemed to have been consented to by, and will be
binding on, the party from whom indemnity is sought as fully as though it alone
had assumed the defense thereof and a judgment had been entered in the
proceeding or claim in the amount of such settlement or judgment, except that
the right of the party from whom indemnity is sought to contest the right of the
other to indemnification under this Agreement with respect to the proceeding or
claim will not be extinguished. If the party from whom indemnity is sought does
assume control of the defense of such a proceeding or claim, it will not,
without the prior written consent of the party asserting such right to
indemnity, settle the proceeding or claim or consent to entry of any judgment
relating thereto which does not include as an unconditional term thereof the
giving by the claimant to the party asserting such right to indemnity a release
from all Liability in respect of the proceeding or claim and such settlement is
solely for monetary damages. The parties hereto agree to cooperate fully with
each other in connection with the defense, negotiation or settlement of any such
proceeding or claim, including reasonable and necessary access to documents and
personnel.
7.5 LIMITATION ON INDEMNIFICATION OF BUYER INDEMNIFIED
PARTIES. The indemnification of the Buyer Indemnified Parties provided for under
Sections 7.2 and 7.2A will be limited in certain respects as follows:
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(a) Any claim for indemnification under paragraph (a)
of Section 7.2 or 7.2A by the Buyer Indemnified Parties must be made within
eighteen (18) months of the Closing Date except that there will be no limits on
the time for making a claim for indemnification relating to the representations
and warranties contained in Sections 3.2.1, the first three sentences of 3.6.1,
or 3A.1, and except that a claim for indemnification relating to the
representations and warranties contained in Section 3.3.3 may be made until a
period of sixty (60) days after the expiration of the applicable statute of
limitations (including extensions) for the assessment or collection of Taxes for
the periods referred to therein. Any indemnification claim under Section 7.2(d)
must be made within three (3) years after the Closing Date.
(b) The Sellers shall not be liable to the Buyer
Indemnified Parties for indemnification claims under paragraph (a) of Section
7.2 until the aggregate amount of indemnification claims under paragraph (a) of
Section 7.2 exceeds $500,000, and upon reaching such amount the Sellers will be
liable to the Buyer Indemnified Parties for amounts in excess of that amount up
to a maximum of the Purchase Price for all indemnification claims under
paragraph (a) of Section 7.2, except that there shall be no such minimum or
limit for any indemnification claims made pursuant to paragraph (a) of Section
7.2 to the extent that the claims relate to Sections 3.2.1 or the first three
sentences of 3.6.1. For purposes of determining the dollar amount of an
indemnification claim by Xxxxx under paragraph (a) of Section 7.2 the use of
"materiality" to qualify the Sellers' representations and warranties in Article
3 shall not be considered.
(c) The Sellers shall not be liable to the Buyer
Indemnified Parties for indemnification claims under paragraphs (d) of Section
7.2 until the aggregate amount of indemnification claims under paragraphs (d) of
Section 7.2 exceeds $375,000, and upon reaching such amount the Sellers will be
liable to the Buyer Indemnified Parties from the first dollar up to a maximum of
the Purchase Price for all indemnification claims under Section 7.2(d).
(d) Eckerd shall not be liable to the Buyer
Indemnified Parties for indemnification claims under paragraph (a) of Section
7.2A until the aggregate amount of indemnification claims under paragraph (a) of
Section 7.2A exceeds $500,000, and upon reaching such amount Eckerd will be
liable to the Buyer Indemnified Parties for amounts in excess of that amount up
to a maximum of the Purchase Price for all indemnification claims under Section
7.2A, except that there shall be no minimum or limit for any indemnification
claims made pursuant to Sections 3A.1 and 6.2.
7.6 LIMITATION ON INDEMNIFICATION OF SELLER INDEMNIFIED
PARTIES. The indemnification of the Seller Indemnified Parties provided for
under paragraph (a) of Section 7.3 will be limited in certain respects as
follows:
(a) Any claim for indemnification under paragraph (a)
of Section 7.3 by the Seller Indemnified Parties must be made within eighteen
(18) months of the Closing Date except that there will be no limits on the time
for making a claim for indemnification relating to the representations and
warranties contained in Section 4.2.1.
(b) Buyer shall not be liable to the Seller
Indemnified Parties for
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indemnification claims under paragraph (a) of Section 7.3 until the aggregate
amount of indemnification claims under paragraph (a) of Section 7.3 exceeds
$500,000, and upon reaching such amount Buyer will be liable to the Seller
Indemnified Parties for amounts in excess of that amount up to a maximum of the
Purchase Price for all indemnification claims under paragraph (a) of Section
7.3, except that there shall be no minimum or limit for any indemnification
claims made pursuant to Section 4.2.1.
7.7 General Limitations on Indemnification.
---------------------------------------
(a) The parties agree that their sole and exclusive
remedy with respect to any and all claims relating to the subject matter of this
Agreement shall be pursuant to the indemnification provisions set forth in this
Article 7. In no event will either party be liable to the other for
consequential damages.
(b) Payments by the Sellers or Buyer pursuant to this
Article 7 shall be limited to the amount of any liability or damage that remains
after deducting therefrom (i) any Tax benefit to the indemnified party (as
determined below), and (ii) any insurance proceeds and any indemnity,
contribution or other similar payment recovered by the indemnified party from
any third party with respect thereto. A Tax benefit will be considered
recognized by an indemnified party for purposes hereof in the tax period in
which the indemnity payment occurs and the amount of the Tax benefit will be
based on the value to the indemnified party at such time and shall be determined
by the indemnified party in its reasonable judgment which will include that such
indemnified party is in the maximum applicable statutory tax bracket after any
deductions or other allowances reportable with respect to a payment thereunder.
ARTICLE 8
CONSTRUCTION
------------
8.1 DEFINITIONS. Accounting terms used herein and not
otherwise defined herein will have the meanings attributed to them under
generally accepted accounting principles except as otherwise specified. When
used in this Agreement, the following terms in all of their tenses and cases
will have the meanings assigned to them below or elsewhere in this Agreement as
indicated below:
"Acquisition Balance Sheet" is defined in Section 3.3.1.
"Affiliate" of any Person means any person directly or
indirectly controlling, controlled by, or under common control with, any such
Person and any officer, director or controlling person of such Person.
"Assumed Liabilities" is defined in Section 1.4.
"Bill of Sale" is defined in Section 5.2.9.
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"Books and Records" means all books and records relating
primarily to the Business, including, but not limited to, (i) all books and
records relating to the purchase of materials and supplies, sales of products,
dealings with customers, invoices, suppliers' lists and personnel records, (ii)
all contracts, reports, opinions, maps and other documents affecting the title
to or the value of the properties of the Sellers, and (iii) all financial and
operating data, files and other information with respect to the Business.
"Business" is defined in the recitals to this Agreement.
"Buyer" means NCS HealthCare of New York, Inc., an Ohio
corporation.
"Buyer Indemnified Parties" is defined in Section 7.2.
"Closing" and "Closing Date" are defined in Article 5.
"Confidential Information" is defined in Section 6.2.1.
"Contract" means any commitment, understanding, instrument,
lease, pledge, mortgage, indenture, note, license, agreement, purchase or sale
order, contract, promise, or similar arrangement evidencing or creating any
obligation, whether written or oral, relating primarily to the Business.
"Disclosure Schedule" means the disclosure schedule, dated as
of the date hereof, delivered to Buyer by the Sellers and forming a part of this
Agreement, which shall include a reference to each applicable schedule referred
to herein.
"Employee Claims" is defined in Section 3.5.1.
"Fixed Assets" means the tangible personal property, other
than inventory and accounts receivable, owned, used or useful primarily in the
operation of the Business.
"Governmental Authority" means any federal, provincial,
municipal, state, regional or local authority, agency, body, court or
instrumentality, regulatory or otherwise, domestic or foreign, which, in whole
or in part, was formed by or operates under the auspices of any federal,
provincial, municipal, state, regional or local government, domestic or foreign.
"HSR Act" means the Xxxx Xxxxx Xxxxxx AntiTrust Improvements
Act of 1976, as amended.
"Intellectual Property Rights" means trade names, trademarks,
service marks, trade dress and mask works and all registrations and applications
for any of the foregoing, together with the goodwill symbolized or represented
by the foregoing, works of authorship and all copyrights related thereto and all
registrations and applications therefor, inventions, discoveries, designs,
industrial models and all United States and foreign patent rights covered by,
disclosed in or otherwise related thereto and all registrations (issued or
pending) and applications therefor and
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all reissues, divisions, continuations, continuations-in-part, re-examinations
and extensions thereof, together with the right to sue for past infringement and
improper, unlawful or unfair use of any of the foregoing.
"Internal Revenue Code" means the Internal Revenue Code of
1986, as amended.
"Law" means any common law and any federal, provincial,
municipal, state, regional, local or foreign law, bylaw, rule, statute,
ordinance, rule, order or regulation.
"Leased Properties" means the properties listed on SCHEDULE
8.1(A).
"Liabilities" means responsibilities, obligations, duties,
commitments, claims, and liabilities of any and every kind, whether known or
unknown, accrued, absolute, contingent or otherwise.
"Lien" means any lien, encumbrance, charge, security interest,
option, or pledge of any kind.
"Permitted Lien" means landlord liens, tax liens and other
statutory or inchoate liens for amounts not yet due and payable, and
notification liens for leased assets included in the Purchased Assets.
"Person" means any individual, corporation, partnership,
association or any other entity or organization.
"Purchased Assets" is defined in Section 1.2.
"Purchase Price" is defined in Section 2.1.
"Sellers" means Thrift Drug, Inc., a Delaware corporation and
Xxx'x Incorporated, a New York corporation.
"Seller Indemnified Parties" is defined in Section 7.3.
"Tax" means any charge or assessment by or Liability to any
governmental tax authority, including, but not limited to, any deficiency,
interest or penalty.
"to the Knowledge of the Sellers" means the actual knowledge
of each Seller and Eckerd, each officer of each Seller and Eckerd, and each of
the District Managers of Sellers' Business, Xxxx Xxxxxxx, and Xxx Xxxxxxxxx.
"Trade Secrets" means, with respect to any Person, any
information that is not known to any competitor or other third party and, if it
were to be known by a competitor or other third party, could be harmful to the
owner of the information.
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"Valued Assets" means the Sellers' accounts receivable,
inventory and Fixed Assets that are owned, used, useful or generated primarily
in connection with the Business.
8.2 NOTICES. All notices shall be in writing delivered
as follows:
(a) If to Buyer or to NCS, to:
NCS HealthCare of New York, Inc.
c/o NCS HealthCare, Inc.
0000 Xxxxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxx 00000
Attn: Chief Financial Officer
With a copy to:
Xxxxxx, Halter & Xxxxxxxx LLP
1400 XxXxxxxx Investment Center
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Attn: Xxxxxx X. Xxxx, Esq.
(b) If to the Sellers or to Eckerd, to:
Eckerd Corporation
0000 Xxxxx Xxxxx Xxxx
Xxxxx, Xxxxxxx 00000
Attn: Chief Financial Officer
With a copy to:
Eckerd Corporation
0000 Xxxxx Xxxxx Xxxx
Xxxxx, Xxxxxxx 00000
Attn: General Counsel
or to such other address as may have been designated in a prior notice pursuant
to this section. Notices sent by registered or certified mail, postage prepaid,
return receipt requested, shall be deemed to have been given two business days
after being mailed, and otherwise notices shall be deemed to have been given
when received.
8.3 BINDING EFFECT. Except as may be otherwise provided
herein, this Agreement will be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns. Except as
otherwise specifically provided in this Agreement, nothing in this Agreement is
intended or will be construed to confer on any Person other than the parties
hereto any rights or benefits hereunder.
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8.4 HEADINGS. The headings in this Agreement are intended
solely for convenience of reference and will be given no effect in the
construction or interpretation of this Agreement.
8.5 EXHIBITS AND SCHEDULES. The Exhibits and Schedules
referred to in this Agreement will be deemed to be a part of this Agreement.
8.6 COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which will be deemed an original, and all of which
together will constitute one and the same document.
8.7 GOVERNING LAW. This Agreement will be governed by and
construed under Delaware law, without regard to conflict of laws principles
thereof.
8.8 WAIVERS. Compliance with the provisions of this Agreement
may be waived only be a written instrument specifically referring to this
Agreement and signed by the party waiving compliance. No course of dealing, nor
any failure or delay in exercising any right, will be construed as a waiver, and
no single or partial exercise of a right will preclude any other or further
exercise of that or any other right.
8.9 PRONOUNS. The use of a particular pronoun herein will not
be restrictive as to gender or number but will be interpreted in all cases as
the context may require.
8.10 TIME PERIODS. Any action required hereunder to be taken
within a certain number of days will be taken within that number of CALENDAR
days; provided, however, that if the last day for taking such action falls on a
weekend or a holiday, the period during which such action may be taken will be
automatically extended to the next business day.
8.11 NO STRICT CONSTRUCTION. The language used in this
Agreement will be deemed to be the language chosen by the parties hereto to
express their mutual intent, and no rule of strict construction will be applied
against either party.
8.12 MODIFICATION. No supplement, modification or amendment of
this Agreement will be binding unless made in a written instrument that is
signed by all of the parties hereto and that specifically refers to this
Agreement.
8.13 ENTIRE AGREEMENT. This Agreement and the agreements and
documents referred to in this Agreement or delivered hereunder are the exclusive
statement of the agreement among the parties concerning the subject matter
hereof. All negotiations among the parties are merged into this Agreement, and
there are no representations, warranties, covenants, understandings, or
agreements, oral or otherwise, in relation thereto among the parties other than
those incorporated herein and to be delivered hereunder.
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8.14 SEVERABILITY. If any one or more of the provisions of
this Agreement shall be held to be invalid, illegal or unenforceable, the
validity, legality or enforceability of the remaining provisions of this
Agreement shall not be affected thereby. To the extent permitted by applicable
law, each party waives any provision of law which renders any provision of this
Agreement invalid, illegal or unenforceable in any respect.
8.15 FURTHER ASSURANCES. The parties hereto agree that each
will execute and deliver to the other any and all documents in addition to those
expressly provided for herein that may be necessary or appropriate to carry out
the provisions of this Agreement, whether before, at, or after the Closing. The
Sellers further agree that, at any time and from time to time after the Closing,
each will execute and deliver to Buyer such further assignments, certificates or
other written assurances as Buyer may reasonably request to perfect and protect
Xxxxx's title to the Purchased Assets or as may otherwise be required to carry
out the provisions of this Agreement.
8.16 RISK OF LOSS. Risk of loss for the Purchased Assets shall
be and remain with the Sellers from and after the date hereof until Buyer shall
have acquired title to the Purchased Assets on the Closing Date, at which time
risk of loss for the Purchased Assets shall pass to Buyer. The Sellers shall
insure the Purchased Assets in a manner consistent with Eckerd's practices until
risk of loss for the Purchased Assets is transferred to Buyer in accordance
herewith.
[signature page follows]
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INTENDING TO BE LEGALLY BOUND, the parties have signed this
Agreement as of the date first written above.
NCS HEALTHCARE OF NEW YORK, INC.
By: /s/ Xxxxxxx X. Xxxxx
-----------------------------------
Title: Vice President
-----------------------------------
("Buyer")
NCS HEALTHCARE, INC.
By: /s/ Xxxxxxx X. Xxxxx
-----------------------------------
Title: Vice President
-----------------------------------
("NCS")
ECKERD CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------
Title: Executive Vice President, C.F.O.
-----------------------------------
("Eckerd")
THRIFT DRUG, INC.
(d/b/a Greenwood Pharmacy)
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------
Title: Executive Vice President, C.F.O.
-----------------------------------
XXX'X INCORPORATED
(d/b/a MPS)
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------
Title: Executive Vice President, C.F.O.
-----------------------------------
(collectively, the "Sellers")
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