ASSET PURCHASE AGREEMENT
BY AND AMONG
XXXXXX HEALTH SERVICES, INC.,
XXXXXX DISTRIBUTORS, INC.
AND
DRUG GUILD DISTRIBUTORS, INC.
Dated as of July 1, 1997
TABLE OF CONTENTS
Page
I. SALE AND DELIVERY OF THE ASSETS ...................................... 2
ss.1.01 Delivery of the Assets ....................................... 2
ss.1.02 Further Assurances ........................................... 6
ss.1.03 Assumption of Liabilities .................................... 7
ss.1.04 Purchase Price ............................................... 13
ss.1.05 Second Note .................................................. 21
ss.1.06 The Closing .................................................. 22
II. COVENANTS ............................................................ 22
ss.2.01 Covenant of DGD, NDI and Xxxxxx .............................. 22
ss.2.02 Covenants of DGD ............................................. 22
(a) Dividends and Purchases of Stock ........................ 22
(b) Financial Information; Access ........................... 23
(c) Conduct of Business ..................................... 24
(d) Advice of Changes ....................................... 25
(e) Public Statements ....................................... 25
(f) Consents Without Any Condition .......................... 26
(g) Transfer Taxes .......................................... 27
(h) Compensation; Employment Plans; Retirement Plans; etc.... 27
(i) Liens; Indebtedness; etc................................. 27
(j) Business Combinations ................................... 28
(k) Compliance with Laws .................................... 28
(l) Taxes ................................................... 28
(m) Inventory ............................................... 28
ss.2.03 Covenants of Xxxxxx and NDI .................................. 29
(a) Access .................................................. 29
(b) Conduct of Business ..................................... 29
(c) Advice of Changes ....................................... 29
(d) Public Statements ....................................... 30
(e) Consents ................................................ 30
III. EMPLOYEE MATTERS ..................................................... 30
ss.3.01 DGD Employees ................................................ 30
(a) Salaried and Non-Union Hourly Employees ................. 30
(b) Hourly Employees Covered by the Collective Agreement .... 31
ss.3.02 Plant Closing ................................................ 32
ss.3.03 Indemnification .............................................. 32
ss.3.04 Reporting of Data ............................................ 33
i
IV. REPRESENTATIONS AND WARRANTIES ...................................... 33
ss.4.01 Certain Representations and Warranties of DGD .......... 33
(a) Organization ...................................... 33
(b) Subsidiaries ...................................... 33
(c) Authorization ..................................... 34
(d) No Breach ......................................... 34
(e) Consents .......................................... 35
(f) Other Liabilities ................................. 35
(g) Receivables ....................................... 36
(h) Inventory ......................................... 36
(i) Contracts and Other Instruments ................... 37
(j) Benefit Plans ..................................... 38
(k) Brokers ........................................... 41
(l) Books and Records ................................. 41
(m) Disclosure ........................................ 41
(n) Environmental Conditions .......................... 41
(o) Financial Statements .............................. 47
(p) Tax Matters ....................................... 48
(q) Real Property ..................................... 49
(r) Owned Personal Property ........................... 51
(s) Title to Assets ................................... 52
(t) Assets for Conduct of Business .................... 52
(u) Bank Accounts, Powers of Attorney ................. 52
(v) Permits: Licenses ................................. 52
(w) Intangible Property ............................... 53
(x) Business Operations; Changes ...................... 54
(y) Litigation; Claims; Proceedings ................... 55
(z) Insurance ......................................... 55
(aa) Customers and Suppliers .......................... 55
ss.4.02 Certain Representations and Warranties of Xxxxxx
and NDI ........................................ 56
(a) Organization ...................................... 56
(b) Authority ......................................... 56
(c) Brokers ........................................... 57
(d) Financial Condition ............................... 58
V. CONDITIONS TO CLOSING ................................................ 59
ss.5.01 Conditions of Xxxxxx ................................... 59
(a) Accuracy of Representations and Compliance
With Conditions ................................ 59
(b) Opinions of DGD's Counsel ......................... 59
(c) Other Closing Documents ........................... 59
(d) Review of Proceedings ............................. 60
(e) Legal Action ...................................... 60
(f) No Governmental Action ............................ 60
(g) Contractual Consents Needed ....................... 61
(h) Shareholder Consent ............................... 61
ii
(i) No Material Adverse Effect .......................... 61
(j) Financing Approvals ................................. 62
(k) ISRA ................................................ 62
(l) Intentionally Deleted ............................... 62
(m) Delivery ............................................ 62
(n) Bridging ............................................ 62
ss.5.02 Conditions of DGD ........................................ 65
(a) Accuracy of Representations and
Compliance With Conditions ....................... 65
(b) Opinion of Xxxxxx'x Counsel ......................... 66
(c) Other Closing Documents ............................. 66
(d) Review of Proceedings ............................... 66
(e) Legal Action ........................................ 66
(f) No Governmental Action .............................. 67
(g) No Material Adverse Effect .......................... 67
(h) Delivery ............................................ 67
(i) Bridging ............................................ 67
(j) Shareholder Consent ................................. 67
ss.5.03 Other Closing Conditions ................................. 68
VI. POST-CLOSING COVENANTS ................................................ 69
ss.6.01 Transfer Taxes and Other Costs ........................... 69
ss.6.02 Bulk Sales Compliance .................................... 69
ss.6.03 Corporate Name ........................................... 69
ss.6.04 Xxxxxx Shares ............................................ 70
ss.6.05 Documents ................................................ 72
ss.6.06 Employee Benefit Plans ................................... 72
ss.6.07 Liquidation .............................................. 73
VII. TERMINATION .......................................................... 73
ss.7.01 Termination of Agreement ................................. 73
ss.7.02 Effect of Termination .................................... 73
ss.7.03 Costs and Expenses ....................................... 74
ss.7.04 Financing Contingency .................................... 74
VIII. MISCELLANEOUS ....................................................... 74
ss.8.01 Further Actions .......................................... 74
ss.8.02 Availability of Equitable Remedies ....................... 75
ss.8.03 Survival ................................................. 75
ss.8.04 Modification ............................................. 76
ss.8.05 Notices .................................................. 76
ss.8.06 Waiver ................................................... 77
ss.8.07 Binding Effect ........................................... 77
ss.8.08 No Third-Party Beneficiaries ............................. 77
ss.8.09 Severability ............................................. 78
ss.8.10 Headings ................................................. 78
iii
ss.8.11 Counterparts; Governing Law; Jurisdiction, Etc............ 78
ss.8.12 Xxxxxx Guarantee ......................................... 79
ss.8.13 Definitions .............................................. 79
SCHEDULES
1.01(a)(ii) Accounts Receivable
1.01(a)(iii) Prepaid Expenses
1.01(a)(viii) Motor Vehicles and Rolling Stock
2.02(c) Capital Expenditures
3.01(b) Collective Bargaining Agreement
4.01(b) DGD Corporate Structure
4.01(d) Breaches
4.01(g) Accounts Receivable
4.01(h) DGD Consignment Purchases
4.01(i) DGD Contracts
4.01(j) Employee Benefit Matters
4.01(n) Environmental Conditions
4.01(o) Financial Statements
4.01(p) Tax Matters
4.01(q) Real Property
4.01(r) Tangible Personal Property
4.01(s) Encumbered Assets
4.01(u) Bank Accounts
4.01(v) Permits and Licenses
4.01(w) Intangible Property
4.01(x) Business Operations
4.01(y) Litigation, Claims and Proceedings
4.01(z) Insurance Policies
iv
ASSET PURCHASE AGREEMENT
BY AND AMONG
XXXXXX HEALTH SERVICES, INC.,
XXXXXX DISTRIBUTORS, INC.
AND
DRUG GUILD DISTRIBUTORS, INC.
AGREEMENT, dated as of July 1, 1997, by and among Xxxxxx Health Services,
Inc. a New Jersey corporation whose address is 000 Xxxxxxxx Xxxxxx, Xxxxxxxxxx,
Xxx Xxxxxx 00000 ("Xxxxxx"), Xxxxxx Distributors, Inc., a New Jersey corporation
whose address is 000 Xxxxxxxx Xxxxxx, Xxxxxxxxxx, Xxx Xxxxxx 00000 ("NDI"), and
Drug Guild Distributors, Inc., a New Jersey corporation whose address is 000
Xxxxxxxxxx Xxxxxxx, Xxxxxxxx, Xxx Xxxxxx 00000 ("DGD", which term shall include
any successor to DGD).
Xxxxxx through its wholly owned subsidiary, NDI, desires to purchase, and
DGD desires to sell, certain of the assets and business of DGD primarily
relating to the wholesale distribution of a wide variety of products to drug
stores and health and beauty aid stores located primarily in the State of New
Jersey, the greater New York City metropolitan area and the State of Connecticut
(the "Business") for the consideration set forth below and the assumption of
certain of DGD's liabilities set forth below, subject to the terms and
conditions of this Agreement.
NOW, THEREFORE, in consideration of the mutual promises hereinafter set
forth and other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereby agree as follows:
I. SALE AND DELIVERY OF THE ASSETS
ss.1.01 Delivery of the Assets.
(a) Subject to and upon the terms and conditions of this Agreement, except
as specifically provided in Section 1.01(b) hereof, at the closing of the
transactions contemplated by this Agreement (the "Closing"), DGD shall sell,
transfer, convey, assign and deliver to NDI, and NDI shall purchase from DGD,
free and clear of all liens, liabilities, security interests, leasehold
interests and encumbrances of any nature whatsoever (except as otherwise
expressly provided herein), all of the properties, assets and other claims,
rights and interests reflected on the Closing Balance Sheet (as defined below),
except if otherwise sold or disposed of in the ordinary course of business prior
to the Closing Date, or which on the Closing Date (as defined below) are owned
by DGD, including but not limited to:
(i) all inventories of DGD (collectively, the "Inventory");
(ii) all accounts, accounts receivable, notes and notes receivable,
including but not limited to (A) receivables in collection or in suit
included in the Closing Balance Sheet and (B) those receivables documented
in accordance with Schedule 1.01(a)(ii) attached hereto and not previously,
paid, retired or cancelled (collectively, the "Accounts Receivable");
(iii) those prepaid expenses set forth in Schedule 1.01(a)(iii)
attached hereto;
2
(iv) all rights under the contracts, agreements, leases, licenses,
purchase orders, customer sales agreements and other instruments set forth
on Schedule 4.01(i) and Schedule 4.01(q) attached hereto (collectively, the
"Contract Rights");
(v) all real estate set forth on Schedule 4.01(q), together with all
buildings, fixtures and improvements located on or attached thereto,
including DGD's right, title and interest in and to all leases, subleases,
franchises, licenses, permits (to the extent transferable), easements and
rights-of-way which are appurtenant to said real estate (collectively, the
"Real Estate");
(vi) all books; payment records, accounts; customer lists;
environmental reports or studies; correspondence; technical, accounting,
and procedural manuals; employment and personnel records; and other useful
business records, including electronic media, and any confidential or other
information (other than information relating to claims retained by DGD
pursuant to Section 1.01(b)(iii)) which has been reduced to writing or
utilized in the conduct of or relating to the Business or the Assets (as
hereinafter defined), subject to DGD's right to retain or obtain from time
to time, copies thereof (or originals, if reasonably required by DGD's
accountants) which DGD reasonably requires for its ongoing operation,
winding-up or dissolution;
(vii) all rights of DGD under express or implied warranties from the
suppliers of the Assets to the extent transferable (but excluding such
rights insofar as the same pertain to liabilities retained by DGD
hereunder);
(viii) the motor vehicles and rolling stock, including forklifts,
listed on Schedule 1.01(a)(viii);
3
(ix) all of the machinery, equipment, maintenance machinery and
equipment, computers, software and information technology solutions or
systems and all manuals or source codes with respect thereto,
telecommunication systems, office equipment, furniture, leasehold
improvements and construction in progress on the Closing Date whether or
not reflected as capital assets in the accounting records of DGD which are
owned by DGD and used or useful in the Business including but not limited
to all of the foregoing located at the locations set forth on Schedule
4.01(q) (collectively, the "Fixed Assets");
(x) all right, title and interest of DGD in and to all intangible
property rights relating to the Business, including but not limited to
trade secrets, processes, formulas, know-how, trade names, trademarks,
trademark registrations, applications for trademark registrations,
copyrights, copyright registrations, certification marks, technical
expertise, research data and other similar property and the registrations
and applications for registration thereof owned by DGD or, where not owned,
used by DGD in the business and all licenses and other agreements to which
DGD is party (as licensor or licensee) or by which DGD is bound relating to
any of the foregoing kinds of property or rights to any "know-how" or
disclosure or use of ideas (collectively, the "Intangible Property");
(xi) all transferable approvals, authorizations, certifications,
consents, variances, permissions, licenses and permits to or from, or
filings, notices or recordings to or with, federal, state, foreign,
provincial and local governmental authorities as held or effected by DGD,
including any licenses authorizations or
4
permits from the Drug Enforcement Agency ("DEA"), in connection with the
Business and the Assets;
(xii) all of DGD's goodwill and the exclusive right to use the name
"Drug Guild" as all or part of a corporate name;
(xiii) cash and cash equivalents; and
(xiv) except as specifically provided in Section 1.01(b) hereof, all
other assets, properties, claims, rights and interests of DGD which relate
to the Business and exist on the Closing Date, of every kind and nature and
description, whether tangible or intangible, real, personal or mixed.
(b) Notwithstanding the provisions of Section 1.01(a) above, the assets to
be transferred to NDI under this Agreement shall not include (i) any refunds of
federal, state or local income or other tax paid by DGD which are not reflected
on the Closing Balance Sheet, (ii) any insurance policies currently held by DGD
and related premium agreements for general liability, product liability and
workers compensation insurance for periods prior to the Closing Date, (iii) any
claims DGD may have against its officers, employees, suppliers of services and
goods (other than claims relating to Inventory), including but not limited to
claims against Anchin, Block & Anchin and its partners, Liberty Mutual Insurance
Company and Honeywell Inc., and the proceeds or any benefits resulting to DGD as
a result of the prosecution or settlement of any such claims, (iv) the life
insurance policy on the life of Xxxxx Xxxxxxxxx, (v) all trucks or motor
vehicles owned or leased by DGD (other than those set forth on Schedule
1.01(a)(viii)), (vi) any "net operating loss" carry forwards, (vii) DGD's
corporate minute books and stock books, (viii) accounts receivable previously
written off by DGD, for which there is no reserve therefor on the Closing
Balance Sheet, (ix) any
5
claims against any person or entity relating to DGD's inventory defalcation and
(x) any other assets or claims of DGD that are off balance sheet items or
otherwise not transferred pursuant to this Agreement (collectively, the
"Excluded Assets").
(c) The Inventory, Accounts Receivable, Contract Rights, Real Estate, Fixed
Assets, Intangible Property and other properties, assets and business of DGD
described in Section 1.01(a) above, other than the Excluded Assets, shall be
referred to collectively as the "Assets."
ss.1.02 Further Assurances. (a) At the Closing, DGD shall execute and
deliver a Xxxx of Sale (the "Xxxx of Sale") substantially in the form attached
hereto as Exhibit A and assignments described in Section 5.01(o) hereof. At any
time and from time to time after the Closing Date, at the request of NDI and
without further consideration, DGD (or its successors) promptly shall execute
and deliver such deeds, assignments of leases and other instruments of sale,
transfer, conveyance, assignment and confirmation, and take such other action,
as NDI may reasonably request to more effectively transfer, convey and assign to
NDI, and to confirm NDI's title to, all of the Assets and the Business, to put
NDI in actual possession and operating control thereof, to assist NDI in
exercising all rights with respect thereto and to carry out the purpose and
intent of this Agreement.
(b) DGD and NDI each will use its best efforts to obtain as promptly as
possible written consents to the transfer, assignment or sublicense to NDI of
all agreements, commitments, purchase orders, contracts, licenses, leases,
rights and other contract documents being transferred pursuant to Section
1.01(a) hereof where the approval or other consent of any other person or entity
is required. If any such approval or consent cannot be obtained, or if the
parties hereafter agree in writing that it is not in their respective best
6
interests to obtain any such approval or other consent, DGD will cooperate with
NDI in any reasonable arrangement designed to provide NDI with substantially the
same economic benefits as if such approval or other consent had been obtained
and the transfer effected on or before the Closing Date.
ss.1.03 Assumption of Liabilities.
(a) At the Closing, NDI shall with respect to DGD's accounts receivable and
inventory financing agreement (the "Bank Debt"), and without cost to DGD, either
(i) execute such documents as may be necessary to assume the Bank Debt, with the
consent of DGD's lender, or (ii) cause payment in full of such Bank Debt to be
effected.
(b) At the Closing, NDI shall execute and deliver an Assignment and
Assumption Agreement (the "Assignment and Assumption Agreement") substantially
in the form attached hereto as Exhibit B, pursuant to which it shall assume and
agree to (i) perform, pay and discharge (x) all those trade accounts payable and
(y) all those accrued expenses and withholdings (I) reflected in the Closing
Balance Sheet as "Current Liabilities", except to the extent performed, paid or
discharged prior to the Closing Date, or (II) which are outstanding on the
Closing Date and which were incurred in the ordinary course of business or with
the express written consent of the Chief Financial Officer of NDI (the "Assumed
Current Liabilities"), (ii) perform and discharge in accordance with their terms
those (A) obligations outstanding on the Closing Date under the Contract Rights
including but not limited to the Collective Agreement (as defined in Section
3.01(b)) with Union Local 815 and each of the leases set forth on Schedule
4.01(q) hereof and (B) issued, outstanding but uncleared checks of DGD (the
"Checks") to the extent the Checks are classified and reflected as trade
accounts payable on the Closing Balance Sheet and would perform, pay or
discharge any other
7
Assumed Liability (as defined below), (iii) perform, discharge and pay in
accordance with their terms those liabilities directly arising after the Closing
Date from any agreement, commitment, purchase, order, contract, license, lease,
right or other contract document which NDI has requested be transferred to it
pursuant to Section 1.01(a) hereof but which has not been so transferred due to
the failure of DGD to obtain the consent or approval required for transfer,
provided that NDI has requested and received the same economic benefit of such
contract pursuant to Section 1.02(b) hereof and such liability shall not have
arisen as a result of DGD's actions or inactions, (iv) perform, pay and
discharge any other liabilities of DGD included in the Closing Balance Sheet
other than any such liabilities which are specifically excluded herein and (v)
perform, pay and discharge any liability of DGD incurred with the express
written consent of the Chief Financial Officer of NDI since the Balance Sheet
Date (the obligations set forth in this Section 1.03(b) (i), (ii), (iii), (iv)
and (v) along with NDI's obligations under Section 1.03(a) regarding the Bank
Debt are, collectively, the "Assumed Liabilities").
(c) Except as otherwise provided herein, Xxxxxx and NDI shall not assume
any of the liabilities of DGD and shall purchase the Assets free and clear of
all liens, mortgages security interests, encumbrances and claims and DGD
represents, warrants and agrees that neither Xxxxxx nor NDI shall be or become
liable for claims, demands, liabilities or obligations not expressly assumed in
this Agreement of any kind whatsoever arising out of or relating to the conduct
of the Business by DGD or the Assets or Assumed Liabilities prior to the Closing
Date. Without limiting the foregoing, at the Closing, other than the Assumed
Liabilities, NDI shall not assume or agree to perform, pay or discharge, and DGD
shall
8
remain unconditionally liable for, all obligations, liabilities and commitments,
fixed or contingent, of DGD (the "Excluded Liabilities"), including but not
limited to:
(i) with respect to all periods prior to the Closing Date, except as
specifically set forth in Section III hereof, severance, termination or
other payments or benefits (including but not limited to post-retirement
benefits which include but are not limited to those owing under DGD's
severance policy), any union contract or any employment agreement to any
employees (union or non-union), sales agents or independent contractors
employed by DGD prior to the Closing Date, liabilities arising under any
federal, state or local "plant closing law", liabilities accruing under
DGD's employee benefit plans, vacation pay plans or programs, retirement
plans, pension plans or savings or profit sharing plans heretofore or
presently maintained by DGD;
(ii) worker's compensation claims;
(iii) stock option or other stock-based awards made to employees of
DGD or any subsidiary of DGD, if any;
(iv) liabilities for any federal, state or local income, gross
receipts, license, payroll, excise, withholding, transfer, registration,
value added, alternative, add-on minimum, sales and/or compensating use tax
taxes (including interest, penalties and additions to such taxes) or any
deferred income taxes of DGD;
(v) liabilities incurred in connection with violations of occupational
safety, wage, health, welfare, employee benefit or Environmental Laws or
regulations, which violation did not result from the action or inaction of
NDI subsequent to the Closing Date including, but not limited to, any claim
arising from the violation of any law,
9
regulation or ordinance relating to environmental matters or disposal of
hazardous substances and liabilities relating to the remediation of
environmental conditions;
(vi) liabilities to the extent related solely to the Excluded Assets;
(vii) any tax (including but not limited to any federal, state or
local income, franchise, single business, value added, excise, customs,
intangible, transfer, recording, documentary or other tax) imposed upon, or
incurred by, DGD, if any, in connection with or related to this Agreement
or the transactions contemplated hereby;
(viii) other than the Assumed Liabilities, any liabilities of DGD to
third parties arising out of the failure of DGD to obtain any necessary
consents to the assignment to NDI of contracts or leases to which DGD is a
party (including damages asserted by third parties for breach of such
contracts or leases due to the failure to obtain such consents);
(ix) except to the extent reserved for on the Closing Balance Sheet,
liabilities which are undisclosed or contingent;
(x) liabilities, other than the Assumed Liabilities, to creditors of
DGD;
(xi) liabilities for any state franchise taxes or annual license or
other fees relating to qualification as a foreign corporation or
authorization to do business in such states (including interest, penalties
and additions to such taxes and fees);
(xii) liabilities resulting from any investigations or inquiries by
governmental authorities relating to the Business;
(xiii) liabilities with respect to the operation of the Business prior
to the Closing Date that may be incurred by DGD as penalties, fines,
charges or assessments by the DEA;
10
(xiv) liabilities or obligations in respect of preferred shares of
capital stock of DGD or the holders thereof;
(xv) liabilities (including without limitation any liabilities under
the federal Comprehensive Environmental Response, Compensation, and
Liability Act ("CERCLA"), 42 U.S.C xx.xx. 9601 et seq.) arising out of or
incurred in connection with (i) those items set forth on Schedule 4.01(n)
and (ii) any Hazardous Material (as defined in Section 4.01(n) hereunder)
located in, on, under, or originating from the Real Estate, equipment of
any type thereon and/or leasehold improvements prior to the Closing Date,
whether the existence of such Hazardous Material is currently known or
unknown, as well as any liabilities arising out of or in connection with
any Environmental Law (as defined in Section 4.01(n) hereunder) relating in
any way to the conduct of the Business prior to the Closing Date;
(xvi) liabilities or obligations in respect of DGD's relationship with
Meadow Trucking Inc. ("Meadow");
(xvii) liabilities or obligations relating to any brokerage fees
payable by DGD upon the consummation of the transaction contemplated
hereby; and
(xviii) any other liabilities of any kind or nature whether now in
existence or arising hereafter not expressly assumed by NDI under Section
1.03(a) and (b) hereof.
(d) Notice and Opportunity to Defend.
If there occurs an event or a claim regarding an Excluded Liability, NDI
shall promptly notify DGD of such claim, specifying the amount thereof, if any,
and the commencement of any action or proceeding related thereto. Such
notification shall be required of all material oral or written claims, notices,
demands, inquiries, assessments or
11
reassessments that have been received or communicated to NDI. Nothing herein,
however, including NDI's failure to promptly notify DGD, shall relieve DGD of
its obligations with respect to such Excluded Liability, unless NDI's failure or
delay in giving DGD notice was unduly prejudicial to DGD. DGD shall have a
period of 20 calendar days in which to respond to NDI's notification. If DGD
accepts responsibility, then DGD shall be obligated to compromise or defend, at
its own expense and by counsel chosen by DGD, such claim, and DGD shall provide
NDI with such assurances as may be reasonably required by NDI to assure that DGD
will assume and be responsible for the entire liability at issue. If DGD fails
to assume the defense of such matter within said 20 calendar day period, NDI
will (upon delivering notice to such effect to DGD) have the right to undertake,
at DGD's sole cost and expense, the defense, compromise or settlement of such
matter on behalf of NDI. In any event, NDI shall have the right to participate
at its own expense in the defense of such asserted claim. DGD shall not be
liable for any settlement of any action effected without its written consent,
but if settled with its written consent or if there be a final judgment for the
plaintiff in any such action, DGD agrees to indemnify and hold harmless NDI from
and against any loss, costs or expenses incurred by NDI by reason of such
settlement or judgment. If DGD proposes a compromise or settlement of an action
involving only monetary damages, and NDI does not reasonably consent to the
proposed compromise or settlement, then the aggregate amount of losses resulting
from or in connection with such action for which DGD shall be required to
indemnify NDI for shall be an amount equal to the lesser of (A) the actual
amount of losses resulting from or in connection with such action and (B) the
amount of losses that DGD would have been required to pay if NDI consented to
such proposed compromise or settlement. The amount of any loss which DGD is
required to
12
pay for or on behalf of NDI shall be reduced (including, without limitation,
retroactively) by any insurance proceeds actually recovered by or on behalf of
NDI in reduction of the related loss and shall be computed on an after taxes
basis.
ss.1.04 Purchase Price.
(a) Subject to the adjustment set forth in Section 1.04A hereof, if any,
the purchase price for the Assets shall be the sum of (i) $4,000,000 (the "Cash
Consideration"), (ii) the principal amount of the promissory note of NDI
described in Section 1.04(d) hereof (the "Note"), (iii) the principal amount of
the promissory note described in Section 1.05 hereof (the "Second Note") plus
(iv) the assumption or discharge of the Assumed Liabilities (collectively the
"Purchase Price").
(b) The Purchase Price shall be paid as follows:
(i) At the Closing, NDI shall deliver to DGD the Cash Consideration,
the Note, the Second Note and shall assume or discharge the Assumed
Liabilities.
(ii) The Cash Consideration and all payments pursuant to the Note and
the Second Note shall be paid by NDI by wire transfer of immediately
available funds to such account as may be designated by DGD, in writing, to
NDI.
(c) At or prior to the Closing, DGD shall deliver to NDI an unaudited
balance sheet containing a good faith estimate of the value of the Assets and
the Assumed Liabilities as of the last day of the month immediately preceding
the Closing (the "Balance Sheet Date") and certified by the Chief Financial
Officer of DGD as being prepared in accordance with DGD's past practices
regarding unaudited balance sheets, consistently applied, subject to year end
audit adjustment, except that Inventory shall be valued at latest cost which DGD
would be required to pay to acquire such Inventory (the "Closing Balance
Sheet"); provided
13
however, if the Closing shall take place during the first fifteen days of a
calendar month the Balance Sheet Date shall be the last day of the second month
immediately proceeding the Closing. Upon delivery of the Closing Balance Sheet,
DGD shall also deliver a statement, as of the Balance Sheet Date, setting forth
the difference between (i) the value of the Assets and (ii) the value of the
Assumed Liabilities, each as set forth on the Closing Balance Sheet (the "Net
Asset Value"), together with a statement from DGD's lender setting forth the
balance of the Bank Debt (the "Lender Statement"), as of the Balance Sheet Date
and as of the Closing Date. The principal amount of the Note issued at Closing
shall be (x) the Net Asset Value less (y) the Cash Consideration.
(d) (i) The Note shall have a term of four years from the Closing Date and
be in the form annexed hereto as Exhibit C.
(ii) The Note shall bear interest from and after the Closing Date and
be payable as follows:
(A) Except as provided for in subsection (D) of this Section
1.04(d)(ii), interest for the first year of the Note shall be payable,
in arrears, on the amount of the unpaid balance of the Note, after any
adjustment required in accordance with Section 1.04A hereof, within
ten days after the amount of the Total Adjustment (as defined in
Section 1.04A(e)) shall have been finally determined.
(B) Interest during the remaining term of the Note shall be
payable, in arrears, on the last day of each consecutive three month
period.
(C) The rate of interest to be paid on the Note shall be
determined quarterly at a rate equal to the higher of (i) the LIBOR
Rate (as defined below) plus one percent (1%) or (ii) the rate on
United States Treasury Notes with maturities equal to the
14
remaining term of the Note (the "Interest Rate"), provided, however that the
Interest Rate shall in no event be lower than the Federal Rate announced by the
Internal Revenue Service from time to time. "LIBOR Rate" shall mean the 180 day
LIBOR rate, as such rate may be quoted by The Wall Street Journal. The Interest
Rate for the first consecutive three month period of the Note shall be
determined by reference to the Interest Rate in effect two business days prior
to the Closing Date and the Interest Rate for each successive three month period
during the term of the Note shall be determined by reference to the Interest
Rate in effect on the first business day of each such three month period.
(D) The principal amount of the Note shall be paid by NDI to DGD as
follows: (i) four installments of $500,000.00 each, together with accrued and
unpaid interest on such installment, shall be paid on the last day of each
consecutive three month period following the Closing Date during the first year
of the Note, and (ii) the remaining balance of the Note, as such balance may be
adjusted in accordance with Section 1.04A hereof, shall be paid in twelve equal
installments, payable on the last day of each consecutive three month period
following the first anniversary of the Closing Date.
(e) The Note shall at all times be secured by an irrevocable stand-by
letter of credit issued by Bank of America (or another financial institution of
comparable size and standing designated by NDI but which shall be satisfactory
to DGD) in form and substance satisfactory to DGD and in an amount equal to the
outstanding balance plus accrued interest due under the Note from time to time
(the "LC"). The Note shall provide, and the LC shall confirm, (i) that not later
than thirty days prior to the expiration of the LC evidence of renewal of the LC
for the subsequent year of the remaining term of the Note shall be delivered to
DGD and (ii) that the failure to evidence such timely renewal shall constitute a
15
default under the Note. The principal balance of the Note, together with all
accrued interest thereon, may be prepaid at any time by NDI without penalty. The
Note, DGD's rights under the LC, and the Second Note may each be assigned in its
entirety to a wholly owned subsidiary or to an entity under the control of DGD
or owned by the shareholders of DGD in the same proportion as their ownership in
DGD.
ss. 1.04A. Adjustment to Note. The unpaid balance of the principal amount
under the Note shall be adjusted as of the first anniversary date of the Note in
accordance with the following procedures:
(a) Following the Closing, NDI shall cause its independent certified public
accountants to conduct an audit of a balance sheet as of June 30, 1996, prepared
by DGD with respect to the Assets and Assumed Liabilities, for, among other
purposes, the purpose of establishing an opening balance sheet for NDI with
respect to such Assets and Assumed Liabilities as of the Closing Date. For
purposes of such audit, physical inventory shall be determined with all items
valued at latest cost which DGD would be required to pay to acquire such
Inventory. NDI will use commercially reasonable efforts to cause its independent
certified public accountants to complete and deliver its audit of such balance
sheet within 90 days of the Closing Date. The balance sheet resulting from such
audit (the "Audited Balance Sheet") shall be compared to the Closing Balance
Sheet and, to the extent adjustments are required, the procedures set forth in
Section 1.04A(f) below shall be followed until such adjustments are finally
determined and the amount thereof so determined shall constitute the "Audit
Adjustments".
(b) On or before the first anniversary date of the Closing, NDI or DGD may
advise the other of any other adjustments from the Audited Balance Sheet that
have come to its
16
attention with respect to those accounts payable and accrued expenses that have
been assumed by NDI, and NDI or DGD, as applicable, shall provide the other
party with documentary evidence supporting such adjustments (the "Post Audit
Adjustment Notice"). The procedures set forth in Section 1.04A(g) below shall be
followed until the amount of such adjustments is finally determined and the
amount thereof, with the NDI and DGD adjustments being aggregated, shall
constitute the "Post Audit Adjustment"; provided, however, that no effect shall
be given to the Post Audit Adjustment unless the Post Audit Adjustment exceeds
$300,000.00 and only the amount of the Post Audit Adjustment in excess of
$300,000.00 shall be taken into account for purposes of subparagraph (c) hereof.
(c) The amount of the Audit Adjustments and Post Audit Adjustment shall be
netted together to constitute the "Total Audit Adjustment."
(d) On the first anniversary date of the Closing, NDI shall, assuming the
Note is not then in default, have the right to reassign to DGD such amount of
Accounts Receivable as, during said year, have been uncollectible in accordance
with their applicable terms, as such terms are set forth in Schedule 4.01(g)
hereof. The amount of reassigned Accounts Receivable less the sum of (i) the
amount of the reserve for accounts and notes receivable on the Audited Balance
Sheet on a customer by customer basis, (ii) the amount of any reserved finance
charges collected during the first year of the Note and (iii) the amount of any
finance charges attributable to any reassigned Accounts Receivable, shall
constitute the "Receivables Adjustment". If the items set forth in (i)-(iii)
above when aggregated exceed the amount of the reassigned Accounts Receivables,
the principal balance of the Note shall be increased by such excess subject to
offset by the Total Audit Adjustment provided for in subparagraph (e) below.
17
(e) The principal balance of the Note shall be increased or decreased as of
the first anniversary date of the Note by the amount determined by netting
together the amount of the Total Audit Adjustment and the amount of the
Receivables Adjustment (collectively the "Total Adjustment") provided, however,
that the amount of the Total Adjustment shall, in no event, exceed an amount
determined by subtracting $2,000,000 from the principal amount of the Note as
issued on the Closing Date.
(f) DGD shall have thirty five calendar days from the latter of (i) its
receipt of the Audited Balance Sheet and (ii) its access to NDI's or its
accountants, if necessary, work papers, to submit, in writing, to NDI, any
objection to the Audited Balance Sheet and such adjustments as may be required
in connection therewith from the Closing Balance Sheet. If DGD fails to submit,
in writing, any objections to the Audited Balance Sheet within such thirty-five
calendar day period, the Audited Balance Sheet and adjustments related thereto
shall be deemed accepted by DGD. In the event DGD disputes the Audited Balance
Sheet, the parties hereto agree to resolve their dispute in the following
manner. Within fifteen business days of DGD's written objection to the Audited
Balance Sheet, the parties shall use their best efforts to resolve their
dispute. In the event the dispute is not resolved during such fifteen day
period, DGD and NDI shall submit to an independent accounting firm selected as
hereinafter provided (the "Accounting Firm") for review and resolution, any and
all such matters that remain in dispute. The Accounting Firm shall be a
nationally recognized independent accounting firm, agreed upon by the parties
hereto, in writing, having no prior relationship with either party. The
Accounting Firm shall deliver a written report to DGD and NDI, setting forth its
final resolution of all matters which remain in dispute, within thirty calendar
days after such matters are submitted to the Accounting Firm. The Audited
Balance
18
Sheet, as adjusted to reflect the parties' or the Accounting Firm's resolution
of matters in dispute, shall become final and binding upon DGD and NDI on the
earliest of (x) the date DGD indicates that it has no objection to the Audited
Balance Sheet or fails to submit in writing any objection to the Audited Balance
Sheet in a timely fashion, (y) the date that DGD and NDI resolve DGD's written
objections to the Audited Balance Sheet or (z) the date the Accounting Firm
delivers its written report of its final resolution to the parties.
(g) DGD or NDI, as applicable, shall have thirty five calendar days from
its receipt of a Post Audit Adjustment Notice to submit, in writing, an
objection to such notice and the proposed adjustments set forth therein. If DGD
or NDI, as applicable, fails to submit, in writing, any objections to the Post
Audit Adjustment Notice within such thirty five calendar day period, the
proposed adjustments set forth in the Post Audit Adjustment Notice shall be
deemed accepted by DGD or NDI, as applicable. In the event DGD or NDI, as
applicable, disputes the Post Audit Adjustment Notice, the parties hereto agree
to resolve their dispute in the following manner. Within fifteen business days
of DGD's or NDI's, as applicable, written objection to the Post Audit Adjustment
Notice the parties shall use their best efforts to resolve their dispute. In the
event the dispute is not resolved in such fifteen business day period, DGD and
NDI shall submit to the Accounting Firm for review and resolution, any and all
such matters that remain in dispute. The Accounting Firm shall deliver a written
report to DGD and NDI, setting forth its final resolution of all matters in
dispute, within twenty days after such matters are submitted to the Accounting
Firm. The proposed adjustments set forth in the Post Audit Adjustment Notice as
such may be adjusted to reflect the parties or the Accounting Firm's resolution
of matters in dispute, shall become final and binding upon DGD and NDI on the
earlier of (x) the date DGD or NDI, as applicable,
19
indicates that it has no objection to the Post Audit Adjustment Notice or fails
to submit in writing any objection to the Post Audit Adjustment Notice in a
timely fashion, (y) the date that DGD and NDI resolve DGD's or NDI's, as
applicable, written objection to the Post Audit Adjustment Notice or (z) the
date the Accounting Firm delivers its written report of its final resolution to
the parties hereto.
(h) Each party shall bear its own cost and expenses with respect to
implementation of the procedures set forth in subsections (f) and (g) above and
the costs and expenses of the Accounting Firm shall be shared equally among DGD
and NDI.
(i) To the extent set forth on Schedule 4.01(g), NDI shall not, during the
twelve months immediately following the Closing, change the terms of sale or
collection which any customer of DGD, whose accounts are acquired by NDI, has
received from DGD prior to the Closing. NDI shall have the right to modify any
such terms, however, to the extent (i) necessary to meet terms provided or
offered by competitors of NDI, subject to consultation with the Committee (as
defined below), or (ii) that any account balance existing as of the Closing Date
shall have subsequently been reduced to zero. Payments received by NDI with
respect to Accounts Receivable of any customer shall be credited against the
oldest balance outstanding unless NDI is otherwise directed in writing by such
customer when payment is made.
(j) In furtherance of this Section 1.04A, each of NDI and DGD shall
designate no less than two individuals to serve on a joint collections committee
(the "Committee") which shall meet at least quarterly and have the
responsibility for coordinating efforts to assist in timely collection of
Accounts Receivable, resolve disputes regarding Accounts Receivable and address
inquiries regarding Accounts Receivable from customers. NDI shall deliver
20
monthly to the Committee such aging reports regarding the status of the Accounts
Receivable. If the Committee cannot resolve any dispute regarding any Accounts
Receivable, the Committee shall submit to the Accounting Firm for review and
resolution any and all such matters that remain in dispute. The Accounting Firm
shall deliver a written report to DGD and NDI, setting forth its final
resolution of all matters in dispute, within twenty days after such matters are
submitted to the Accounting Firm, and such resolution shall be binding on the
Committee. NDI shall not, without the unanimous consent of the Committee, change
legal counsel involved in the collection of any Accounts Receivable "in
collection" or in suit on the Closing Date.
(k) Xxxxxx and NDI agree that with respect to the Accounts Receivable of
any customer that are reassigned to DGD, neither Xxxxxx, NDI nor any affiliate
of either shall directly or indirectly transact Business with such customer for
a period of two years following the date the reassignment is effected. In the
event that NDI, Xxxxxx or any of their affiliates violates the provision of this
Section 1.04A(k) by transacting Business with any such customer, then Xxxxxx,
NDI or any of their affiliates shall be subject to liquidated damages in the
amount of the Accounts Receivable reassigned to DGD with respect to such
customer.
ss.1.05 Second Note. The Second Note shall be in the form annexed hereto as
Exhibit D. The Second Note shall (a) have a principal amount of $1,000,000.00,
(b) have a term of four years, with the principal amount thereof payable on the
fourth anniversary date of the Closing Date, (c) not bear interest, (d) not be
subject to adjustment or set off, (e) be subject to prepayment by NDI without
penalty, (f) not be secured by a letter of credit, (g) be subject to
acceleration if payment of the Note is accelerated and (h) be guaranteed by
Xxxxxx.
21
ss.1.06 The Closing.
The Closing shall take place at the offices of Xxxxxx Xxxx & Xxxxxx LLP,
000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx xx July 1, 1997 or such other date as the
parties may agree (the "Closing Date"). The transfer of the Assets by DGD to NDI
and the assumption of the Assumed Liabilities by NDI shall be deemed to occur at
12:01 AM on the Closing Date.
II. COVENANTS
ss.2.01 Covenant of DGD, NDI and Xxxxxx. The Purchase Price shall, for tax
and financial accounting purposes only, be allocated among the Assets and
Assumed Liabilities substantially in accordance with their allocation and the
amounts shown on the Closing Balance Sheet, with any excess allocated to
goodwill. Such allocation shall be subject to adjustment to the extent the
Purchase Price is adjusted pursuant to Section 1.04A hereof. DGD, NDI and Xxxxxx
agree that they will not take any position which is materially inconsistent with
the allocations and amounts provided for on the Closing Balance Sheet in
preparing income, capital or franchise tax returns.
ss.2.02 Covenants of DGD
DGD agrees that, unless Xxxxxx otherwise agrees in writing:
(a) Dividends and Purchases of Stock. Until the Closing, no dividend or
liquidation or other distribution shall be authorized, declared, paid, or
effected by DGD in respect of the outstanding shares of DGD Common Stock or any
other security or instrument issued by DGD, other than mandatory dividends in
kind required to be paid on DGD Preferred Stock. Until the Closing Date, no
direct or indirect redemption or purchase (except for mandatory redemptions or
purchases at the option of a holder of DGD Preferred
22
Stock), retirement or other acquisition shall be made by DGD of shares of DGD
Common Stock or any other capital stock of DGD.
(b) Financial Information; Access. DGD will, promptly upon their completion
after the end of each calendar month until the Closing, deliver to NDI a true,
complete and accurate copy of its financial statements for such month (which
shall include a balance sheet and statements of income, which financial
statements shall (x) present fairly the financial condition, assets and
liabilities of DGD as of such date and the results of operation of DGD for the
period indicated and (y) be in accordance with the books and records of DGD.
Until the Closing (but subject to the confidentiality agreement dated April 24,
1997 previously executed on behalf of Xxxxxx), DGD will, from time to time, (i)
afford the officers, directors, employees, counsel, agents, investment bankers,
accountants, and other representatives of NDI free and full access to the
officers, directors, employees, counsel, agents, investment bankers,
accountants, other representatives, plants, properties, assets, books, records
(including tax returns) and systems of DGD, (ii) to the extent reasonable,
permit them to make extracts from and copies of such books and records, and
(iii) furnish them with such additional financial and operating data and other
information as to the condition (financial or otherwise), results of operations,
businesses, customer satisfaction, properties, assets, future prospects or
liabilities of DGD as they from time to time may reasonably request, provided
that Xxxxxx shall use its best efforts to limit access to information obtained
pursuant to the foregoing clauses (i) through (iii) to individuals on a
need-to-know basis. Until the Closing, DGD will cause the independent certified
public accountants of DGD to make available to NDI and its independent certified
public accountants such work papers as NDI may reasonably request relating to
the audit of DGD
23
referred to in Section 4.01(o). In furtherance of this paragraph, DGD
acknowledges and agrees that, from the date hereof through the Closing, Xxxxxx
may have up to three of its representatives situated at DGD's premises on a
continuing basis for observation purposes.
(c) Conduct of Business. Until the Closing Date, DGD will use its best
efforts to conduct the Business so that at the Closing Date no representation or
warranty of DGD made in connection with this Agreement will be inaccurate, no
covenant, obligation or agreement of DGD made in connection with this Agreement
will be breached, and no condition in this Agreement will remain unfulfilled by
reason of the actions or omissions of DGD. Except as otherwise requested by NDI
in writing, until the Closing Date, DGD will use its best efforts to preserve
the Business intact, to keep available the services of its present employees, to
preserve in full force and effect the contracts, agreements, instruments,
leases, licenses, arrangements, undertakings and understandings of DGD
(collectively, the "Contracts"), and to preserve the goodwill of its suppliers,
customers, and others having business relations with DGD. Until the Closing
Date, DGD will conduct its affairs in all respects in a manner consistent with
normal business practices. In addition to and without limiting the foregoing,
until the Closing Date, DGD shall not (i) engage in any transaction which is not
in the ordinary course of business, consistent with past practice, (ii)
materially alter existing sales or collection practices, terms or conditions,
(iii) defer payment of expenses, (iv) make any capital expenditure or
expenditures which will exceed $25,000 in the individual or $250,000 in the
aggregate (other than those capital expenditures set forth on Schedule 2.02(c)
for which DGD has already made a commitment), (v) terminate any key employees
without cause, (vi) hire any new employee whose aggregate annual compensation
shall exceed $50,000, or (vii) modify the terms of any lease intended as an
Assumed Liability or
24
Contract; in any of the above cases without the prior written consent of NDI,
which consent shall not be unreasonably withheld. If DGD is required to obtain
NDI's consent under the preceding sentence, it shall submit its request to NDI.
NDI shall decide promptly (but in no event later than seven (7) business days
after receiving from DGD all information reasonably requested by NDI) whether or
not to grant or deny such consent or request a modification of terms. If a
request submitted to NDI is not acted upon within such seven (7) business day
period, such request shall automatically be deemed approved.
(d) Advice of Changes. Until the Closing, DGD will promptly advise NDI in a
reasonably detailed written notice of any fact or occurrence or any pending or
threatened occurrence, other than a material adverse change in the economy in
general, of which any officer or Executive Committee member of DGD (each a "DGD
Responsible Employee") obtains knowledge and which (w) (if existing at the date
of the execution of this Agreement) would have been required to be set forth or
disclosed in or pursuant to this Agreement or the Schedules hereto, (x) (if
existing at any time prior to or at the Closing Date) would make the performance
by DGD of a covenant contained in this Agreement impossible or make such
performance materially more difficult than in the absence of such fact or
occurrence, (y) (if existing at the Closing Date) would cause a condition to the
obligations of Xxxxxx and NDI under Section 5.01 of this Agreement not to be
fully satisfied or (z) is otherwise material to the condition (financial or
otherwise), results of operations, businesses, properties, assets, future
prospects or current or future liabilities of DGD.
(e) Public Statements. DGD has heretofore furnished NDI with true, correct
and complete copies of all written statements, communications and other
documents filed with or issued or sent by DGD or on DGD's behalf during the past
36 months with or to (i) the
25
Securities and Exchange Commission (the "SEC") including, but not limited to,
Reports on Form 10-K, Form 10-Q or Form 8-K and proxy statements, (ii) the
National Association of Securities Dealers, Inc., (iii) any national securities
exchange upon which the DGD Common Stock has been listed, (iv) any other
governmental agency or instrumentality, including, but not limited to, the Food
and Drug Administration ("FDA") and the DEA, or (v) DGD's shareholders, and all
press releases issued by DGD during such 36 month period. DGD shall, until the
Closing Date, further furnish or cause to be furnished to NDI true and complete
copies of all statements, communications and other documents hereafter filed
with, or issued or sent by DGD or on DGD's behalf to, the SEC, the National
Association of Securities Dealers, Inc., any securities exchanges, any other
governmental agency or instrumentality or DGD's shareholders and all press
releases issued by DGD. Before DGD files, issues or sends any such statements,
communications or documents or releases any information concerning this
Agreement, or any of the other transactions contemplated by this Agreement,
which is intended for or may result in public dissemination thereof, DGD shall
obtain NDI's written consent, provided that if the statement, communication,
document or release is required by law, NDI's consent shall be limited to the
content thereof and shall not be unreasonably withheld.
(f) Consents Without Any Condition. DGD shall not make any agreement,
commitment or arrangement or reach any understanding not approved in advance in
writing by NDI, which approval shall not be unreasonably withheld, as a
condition for obtaining any consent, authorization, approval, order, license,
certificate, or permit required for the consummation of the transactions
contemplated by this Agreement, whether pursuant to Section 5.03 hereof or
otherwise.
26
(g) Transfer Taxes. DGD shall timely prepare and file any declaration or
filing necessary to comply with any transfer tax statutes that require any such
filing prior to the Closing.
(h) Compensation; Employment Plans; Retirement Plans; etc.
On or prior to the Closing, except with the consent of NDI, which consent
shall not be unreasonably withheld, DGD will not (i) increase the rate of
compensation of any of its directors, officers, employees, agents (including
sales agents), dealers or distributors other than in the ordinary course and
consistent with past practice, (ii) grant or pay any additional or special
compensation, bonus, perquisite, benefit, loan or advance to any of its
directors, officers, employees, agents (including sales agents), dealers or
distributors or (iii) except as required by law or as is necessary to terminate
any Pension Plan (as defined in Section 4.01(j) hereof), institute, enter into
or amend any employment, employee benefit, pension, retirement, stock option,
profit sharing, compensation, consultant, bonus, group insurance or similar plan
in respect of any of its directors, officers, employees, agents (including sales
agents), dealers or distributors.
(i) Liens; Indebtedness; etc. On or prior to the Closing Date, DGD will not
(i) except in the ordinary course of business consistent with past practices,
mortgage, pledge or subject to a lien, security interest or any other
encumbrance any of its property or assets, dispose of any of its property or
assets or incur or cancel any obligation, indebtedness or claims, (ii) except in
the ordinary course of business consistent with past practices, incur, increase,
renew, refinance or extend or agree or commit to incur, increase, renew,
refinance or extend any indebtedness for borrowed money, obligation which is
evidenced by any note, bond, debenture, instrument or security or obligation
with respect to any commercial or
27
standby letter of credit, or (iii) guaranty the obligations of any other person
or entity, except for guarantees of collection in the ordinary course of
business, consistent with past practice.
(j) Business Combinations. Until the Closing Date, DGD shall not merge or
consolidate with or into, or acquire all or any substantial part of the stock,
securities or property or assets of, dispose of any substantial amount of
property or assets outside the ordinary course of business to, or engage in any
business combination with, any other person or entity.
(k) Compliance with Laws. DGD is to the best of its knowledge and will
remain in compliance in all respects with all applicable federal, state, foreign
and local legal requirements (including without limitation Environmental Laws,
as hereinafter defined) in each of the jurisdictions in which DGD conducts
business, except where such noncompliance does not materially interfere with the
Business or Assets. DGD will promptly notify NDI if DGD receives any claim or
notice of violations with respect thereto.
(l) Taxes. DGD shall, from the date hereof through the Closing Date,
prepare and timely file all tax returns required to be filed in any jurisdiction
and shall pay all taxes required to be paid in such jurisdictions.
(m) Inventory. On the weekend immediately preceding the Closing, DGD shall
conduct a physical count of Inventory in the same manner as the physical count
conducted by DGD for preparation of its audited financial statements and NDI and
its independent certified public accountants shall be entitled to attend and
observe such physical count in its entirety. The Audited Balance Sheet shall
reflect the results of the physical count of the Inventory valued in accordance
with Section 1.04A(a).
28
ss.2.03 Covenants of Xxxxxx and NDI
Xxxxxx and NDI agree that, unless DGD otherwise agrees in writing:
(a) Access. Xxxxxx will, promptly upon their completion after the end of
each calendar month until the Closing Date, deliver to DGD a true, complete and
accurate copy of its consolidated financial statements for such month (which
shall include a consolidated balance sheet and consolidated statements of
income, shareholders' equity and cash flow for such month), which financial
statements shall (x) present fairly the consolidated financial condition,
assets, liabilities and shareholders' equity of Xxxxxx and the Xxxxxx
subsidiaries as of their respective dates and the results of operation of Xxxxxx
and the Xxxxxx subsidiaries for the period indicated and (y) be prepared in
accordance with GAAP and be in accordance with the books and records of Xxxxxx
and the Xxxxxx Subsidiaries.
(b) Conduct of Business. Until the Closing Date, each of Xxxxxx and NDI
will use its best efforts to conduct its affairs so that at the Closing Date no
representation or warranty of Xxxxxx or NDI will be inaccurate, no covenant,
obligation or agreement of Xxxxxx or NDI will be breached, and no condition in
this Agreement will remain unfulfilled by reason of the actions or omissions of
Xxxxxx or NDI.
(c) Advice of Changes. Until the Closing, Xxxxxx will promptly advise DGD
in a reasonably detailed written notice of any fact or occurrence or any pending
or threatened occurrence, other than a material adverse change in the economy in
general, of which any officer or director of Xxxxxx or any Xxxxxx subsidiary
(each a "Xxxxxx Responsible Employee") obtains knowledge and which (w) (if
existing at the date of the execution of this Agreement) would have been
required to be set forth or disclosed in or pursuant to this Agreement or the
Schedules hereto, (x) (if existing at any time prior to or at the Closing
29
Date) would make the performance by Xxxxxx or NDI of a covenant contained in
this Agreement impossible or make such performance materially more difficult
than in the absence of such fact or occurrence, (y) (if existing at the Closing
Date) would cause a condition to the obligations of DGD under Section 5.02
hereof not to be fully satisfied or (z) is otherwise material to the condition
(financial or otherwise), results of operations, businesses, properties, assets,
future prospects (other than a material adverse change in the economy in
general) or current or future liabilities of Xxxxxx.
(d) Public Statements. Before Xxxxxx or NDI files, issues or sends any
statement, communication, document or releases any information concerning this
Agreement, or any of the other transactions contemplated by this Agreement which
is intended for or may result in public dissemination thereof, Xxxxxx shall
obtain DGD's prior written consent provided that, if the statement,
communication, document or release is required by law, DGD's consent shall be
limited to the content thereof and shall not be unreasonably withheld.
(e) Consents. Xxxxxx shall notify DGD of any agreement, commitment,
arrangement or understanding reached by Xxxxxx as a condition for obtaining any
consent, authorization, approval, order, license, certificate, or permit
required for the consummation of the transactions contemplated by this
Agreement, whether pursuant to Section 5.03 hereof or otherwise.
III. EMPLOYEE MATTERS
ss.3.01 DGD Employees.
(a) Salaried and Non-Union Hourly Employees. DGD has furnished to NDI a
list containing the names of all salaried and hourly employees paid directly by
DGD whose employment is not covered by the Collective Agreement (hereinafter
collectively
30
called "Salaried Employees"), including each such employee's status, social
security number and current compensation. If any such employee's employment is
terminated or status changed prior to the Closing Date, DGD shall promptly
notify NDI of such termination or status change and, in the case of termination,
if such employee is replaced, the name, date of hire and compensation of the
individual replacing such employee.
NDI shall, prior to the Closing Date, offer continued employment, to all
Salaried Employees as of the day before the Closing Date, such employment to
become effective as of the Closing Date. The terms and conditions of offered
continued employment shall be determined by NDI. Salaried Employees shall be
immediately eligible on the Closing Date for benefits under NDI's various
benefit plans.
Nothing in this Section 3.01 shall require NDI to retain any of Salaried
Employees for any period of time after the Closing Date. Subject to requirements
of applicable law, NDI reserves the right at any time after the Closing Date to
terminate such employment and amend, modify or terminate any term or condition
of employment, including without limitation, any employee benefit plan, program,
policy, practice or arrangement.
(b) Hourly Employees Covered by the Collective Agreement. DGD has furnished
to NDI a list containing the names of all DGD employees who are covered by the
collective bargaining agreement identified in Schedule 3.01(b) (such agreement
hereinafter called the " Collective Agreement" and such individuals being herein
called the "Hourly Union Employees" and together with the Salaried Employees,
the "DGD Employees"), including each Hourly Union Employee's name and social
security number and such Hourly Union Employee's status. If any Hourly Union
Employee's employment status is changed
31
prior to the Closing Date, DGD shall promptly notify NDI of such changed status
and the reasons for such change (e.g., recalled from layoff). In the event an
individual is hired as a Hourly Union Employee, then DGD shall promptly notify
NDI of such individual's name, date of birth and date of hire. NDI shall assume
the Collective Agreement and, therefore, NDI will offer employment to all Hourly
Union Employees consistent with said Collective Agreement.
ss.3.02 Plant Closing. NDI will not, directly or indirectly, take or omit
to take any action which may result in DGD's liability to any person or entity
under the WARN Act. The term "any action" does not include the sale and
acquisition contemplated by this Agreement and the liability under the WARN Act,
if any, which results from DGD's termination of employees in connection with
such sale and acquisition is the sole responsibility of DGD.
ss.3.03 Indemnification. NDI shall fully defend, indemnify and hold DGD and
its legal successors and assigns harmless, without regard to rights of setoff,
from and against any liability, penalty, cost or expense incurred by or imposed
on DGD, including reasonable attorneys fees, as a result of:
(i) any claim which is attributable to periods of employment with NDI
or as a result of termination of employment from NDI;
(ii) any claim which is attributable to NDI's failure to employ DGD
Employees; provided, however, NDI shall not be obligated to indemnify DGD
for any claim resulting from NDI's subsequent change in the conditions of
employment of any DGD Employee hired by NDI on the Closing Date; or
32
(iii) any claim or liability incurred by DGD and arising under the
WARN Act as a direct or indirect result of NDI's acts or omissions except
any claim or liability relating to DGD's termination of employees in
connection with this sale and acquisition independent of or in combination
with acts or omissions of NDI subsequent to the Closing Date.
ss.3.04 Reporting of Data. NDI and DGD shall compile and furnish to
each other such actuarial and employee data as shall be required from time to
time for each party to perform and fulfill its obligations as may be required
pursuant to this Section III.
IV. REPRESENTATIONS AND WARRANTIES
ss.4.01 Certain Representations and Warranties of DGD
DGD represents and warrants to Xxxxxx and NDI as follows:
(a) Organization. DGD is a corporation duly organized, validly existing and
in good standing under the laws of the State of New Jersey, with all requisite
corporate power and authority necessary to (i) execute, deliver and perform its
obligations under this Agreement and other agreements contemplated hereby to
which it is a party, (ii) consummate the transactions contemplated hereby and
thereby, (iii) own, lease and use its properties and assets and (iv) conduct the
business presently conducted by it.
(b) Subsidiaries. DGD does not have any active or operating subsidiary
which is part of the Business or which holds or uses any of the Assets. Other
than as set forth in Schedule 4.01(b) attached hereto DGD has no equity or
similar investment, direct or indirect, in any corporation, partnership,
association, joint venture or other entity that is part of the Business or which
holds or uses any of the Assets.
33
(c) Authorization. The execution and delivery by DGD of this Agreement, the
performance by DGD of its obligations hereunder and the consummation by DGD of
the transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of DGD other than the approval of the requisite
number of shares of DGD Common Stock and DGD Preferred Stock in accordance with
Section 14A:10-11 of the New Jersey Business Corporation Act (the "NJBCA"). This
Agreement constitutes the legal, valid and binding obligation of DGD,
enforceable against DGD in accordance with its terms, except insofar as
enforceability may be limited by bankruptcy, moratorium or other laws which may
affect creditors' rights and remedies generally and by principles of equity
(regardless of whether enforceability is considered in a proceeding in equity or
at law).
(d) No Breach. The execution and delivery by DGD of this Agreement, the
performance by DGD of its obligations hereunder and the consummation by DGD of
the transactions contemplated hereby will not (a) conflict with, result in any
violation of or constitute a default under its Certificate of Incorporation or
its By-Laws, in each case as amended to date, (b) except as set forth on
Schedule 4.01(d) hereof (to the extent the consents disclosed thereon have not
been obtained on or before the Closing Date), constitute a default under, result
in a violation or breach of, result in the cancellation or termination of,
accelerate the performance required under or result in the creation of any lien,
claim or encumbrance upon any of the Assets pursuant to any Contract, mortgage,
guaranty, deed of trust, note, indenture, bond, lease, agreement or other
instrument to which DGD is a party or by which any of its properties is bound or
(c) result in a violation of or conflict with any law, ordinance, rule,
regulation, order, writ, judgment, award, edict or decree applicable to DGD, the
Assets or the Business.
34
(e) Consents. Except as set forth in Sections 4.01(c) and 5.03, no consent,
approval, exemption or authorization is required to be obtained from, no notice
is required to be given to and no filing is required to be made with any third
party (including, without limitation, governmental and quasi-governmental
agencies, authorities and instrumentalities of competent jurisdiction) by DGD,
(a) in order for this Agreement to constitute the legal, valid and binding
obligation of DGD or to authorize or permit the consummation by DGD of the
transactions contemplated hereby or (b) under or pursuant to any governmental or
quasi-governmental permits, licenses, consents, authorizations or approvals held
by or issued to DGD (including, without limitation, environmental, health,
safety and operating permits and licenses) by reason of this Agreement or the
consummation of the transactions contemplated hereby.
(f) Other Liabilities. Except as set forth in the Schedules hereto, DGD has
no indebtedness or liability of any nature (including, without limitation, any
liability arising from any Environmental Claim, as hereinafter defined), accrued
or contingent, for which provision should be made on the financial statements
which has not been made, other than the following:
(i) Liabilities for which full provision has been made in the Financial
Statements; and
(ii) Other liabilities arising since the Financial Statements and prior to
the Closing Date in the ordinary course of business (which shall not
include liabilities to customers on account of defective products or
services) which will not cause a breach of any representation and warranty
of DGD or any other provision of this Agreement.
35
No DGD Responsible Employee has knowledge of any existing or threatened
occurrence(s), event(s) or development(s) which, as of the date hereof,
individually or in the aggregate, are likely to have a material adverse effect
upon the Assets or the Business.
(g) Receivables. The Accounts Receivable reflected on the Closing Balance
Sheet represent bona fide claims of DGD against debtors for sales or advances
made or services performed in the ordinary course of business and have been
collected, or are and will be good and collectible in the ordinary course of
business, in each case at the aggregate recorded amounts thereof less applicable
reserves (which have been established in accordance with GAAP consistently
applied and which are adequate). Except as set forth on Schedule 4.01(g) hereof,
DGD has no knowledge of any such Accounts Receivable that are uncollectible or
in controversy or subject to offset or counterclaim. Schedule 4.01(g) hereof
also sets forth (i) DGD's standard terms and conditions for sales and
collections and (ii) a list of those customers to which such standard terms and
conditions do not apply and a description of such non-standard terms on a
customer by customer basis. Except as set forth on Schedule 4.01(g) hereof, DGD
has not made any sales in the past two years on a consignment basis and no such
sales are currently contemplated.
(h) Inventory. All Inventory of DGD (other than immaterial amounts of
Inventory) is in quantities which are usable on a normal basis in the existing
service lines of DGD at values at least equal to the values at which such items
are carried on DGD's books and records and contains no material amounts of items
with an expiration date less than six months after the Closing Date except for
items that are typically short dated in the ordinary course of business,
consistently applied. All inventory is merchantable and fit for the particular
purpose for which it is intended. Except as set forth on Schedule 4.01(h)
hereof,
36
DGD has not made any purchases in the past two years on a consignment basis and
no such purchases are currently contemplated. DGD is in compliance with the
Prescription Drug Marketing Act of 1986, as such Act relates to its inventory
procedure and policies.
(i) Contracts and Other Instruments. Schedule 4.01(i) hereof contains a
true, correct and complete description of each Contract to which DGD is a party
which is required by its terms or is expected to result in the payment or
receipt of more than $100,000 individually or has a term of more than one year.
Schedule 4.01(i) contains a true, correct and complete description of each
Contract with respect to DGD which is otherwise material to the Business or
Assets. DGD has furnished (or, in the case of clause (z)(A) below, made
available) to NDI true, complete and correct copies of (y) the Certificate of
Incorporation (or other charter document) and By-Laws of DGD and all amendments
thereto, as presently in effect, certified by the Secretary of DGD and (z) each
of the following: (A) all Contracts referred to in Schedule 4.01(i); (B) all
deeds to real property, all real property and master equipment leases and all
licenses referred to in Schedules 4.01(i), 4.01(q) or 4.01(v); (C) written
descriptions of all supply, distribution, agency, financing, or other
arrangements or understandings referred to in Schedule 4.01(i); (D) each
Contract defining the terms on which debts for borrowed money or guarantees by
DGD aggregating more than $25,000 have been or may be issued; and (E) all
employment Contracts not terminable at will without penalty to which DGD is a
party. Neither DGD nor, to the knowledge of DGD, any other party to any such
Contract is now or expects in the future to be in violation or breach of, or in
default with respect to complying with, any material term thereof, and each such
Contract is in full force and is the legal, valid, and binding obligation of DGD
and (subject to applicable bankruptcy, insolvency, and other laws affecting the
enforceability of creditors'
37
rights generally) is enforceable in accordance with its terms. To the best of
DGD's knowledge, there is no existing material breach, violation or default by
any other party to any of such Contracts and no event has occurred which with
the passage of time or giving of notice or both would constitute such a breach,
violation or default by such other party or result in a loss of material rights
thereunder or pursuant thereto. Each such supply, distribution, agency,
financing, or other arrangement or understanding set forth on Schedule 4.01(i)
is a valid and continuing arrangement or understanding; neither DGD nor any
other party to any such arrangement or understanding has given notice of
termination or taken any action inconsistent with the continuance of such
arrangement or understanding; and the execution, delivery, and performance of
this Agreement will not prejudice any such arrangement or understanding in any
way.
(j) Benefit Plans.
(i) Except as set forth on Schedule 4.01(j) hereof, DGD does not
maintain or contribute to, any pension, profit-sharing, option, other
incentive plan, or any other type of Employee Benefit Plan (as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA")), or have any obligation to or arrangement with employees
for bonuses, incentive compensation, vacations, severance pay, sick pay,
sick leave, insurance, service award, relocation, disability, tuition
refund, or other benefits, whether oral or written. Schedule 4.01(j) sets
forth a complete and accurate list of each such Employee Benefit Plan or
arrangement. The total value of carry-forward vacation, sick pay and sick
leave for all employees of DGD as of March 31, 1997 is not more than
$300,000. DGD has furnished to Xxxxxx true, complete and correct copies of
all documents evidencing
38
plans, obligations, or arrangements referred to on Schedule 4.01(j) or
true, complete and correct written summaries of such plans, obligations, or
arrangements, which accurately and fully describe such plans, obligations
or arrangements in all material respects.
(ii) Each Pension Plan (as defined in Section 3(2) of ERISA)
maintained by DGD has been funded in accordance with the assumptions
contained in the applicable actuarial valuations prepared with respect to
such Pension Plan and no such Pension Plan has incurred an accumulated or
waived funding deficiency as such term is defined in Section 412 of the
Code. All contributions required to be made under each such Pension Plan
have been timely made. All liabilities (for contributions or otherwise) of
DGD as of the Closing Date to each Employee Benefit Plan and with respect
to each obligation to or customary arrangement with employees for bonuses,
incentive compensation, vacations, severance pay, sick pay, sick leave,
insurance, service award, relocation, disability, tuition refund, or other
benefits, whether oral or written, have been paid or accrued for all
periods ending prior to the Closing Date. For purposes of the preceding
sentence, "liabilities" shall include contributions as due in accordance
with the terms of each Employee Benefit Plan to each Employee Benefit Plan
or with respect to each such obligation or arrangement for that portion of
a plan year or other applicable period which commences prior to and ends
after the Closing Date, and accrued liabilities for any portion of a plan
year or other applicable period shall be determined consistently with DGD's
past practices and in accordance with GAAP.
39
(iii) Each Employee Benefit Plan which is a group health plan within
the meaning of Section 5000(b)(1) of the Code is and has been maintained in
all material respects with the applicable requirements of Section 4980B of
the Code. To the knowledge of DGD, there is no litigation, arbitration,
claim, governmental or other proceeding (formal or informal), or
investigation pending, threatened, or in prospect (or any basis therefor
known to DGD) with respect to any Employee Benefit Plan or related trust or
with respect to any fiduciary, administrator, or sponsor (in its capacity
as such) of any Employee Benefit Plan.
(iv) Except as set forth on Schedule 4.01(j), DGD does not currently
contribute to any multi-employer Pension Plan within the meaning of Section
3(37) of ERISA. Since January 1, 1986 DGD has not effectuated either a
complete or partial withdrawal from any multi-employer Pension Plan within
the meaning of Section 3(37) of ERISA and as of the date hereof no
withdrawal liabilities with respect to such multi-employer Pension Plans
exist.
(v) Schedule 4.01(j) contains a true, complete and correct statement
of the names, relationship with DGD, present rates of compensation (whether
in the form of salary, bonuses, commissions, or other supplemental
compensation now or hereafter payable), and aggregate compensation for the
calendar year ended December 31, 1996 of (A) each director, officer, or
other employee of DGD who earned at least $100,000, and (B) all sales
agents, dealers, or distributors of DGD. Except as set forth on Schedule
4.01(j), since July 31, 1996, DGD has not changed the rate of compensation
of any of its directors, officers, employees, agents, dealers, or
distributors thereunder out of the ordinary course of business, nor has any
Employee
40
Benefit Plan or program been instituted or amended to increase benefits
thereunder. Except as set forth on Schedule 4.01(j), there is no Contract
covering any person that, individually or collectively, could give rise to
the payment of any amount that would not be deductible by DGD by reason of
Section 280G of the Code.
(k) Brokers. Neither DGD nor any of its officers, directors, employees,
counsel, investment bankers, accountants, agents or representatives has employed
any broker or finder or incurred any liability for any fee, commission, or other
compensation payable to any person or entity on account of alleged employment as
a broker or finder, or alleged performance of services as a broker or finder, in
connection with or as a result of this Agreement or the transactions
contemplated hereby.
(l) Books and Records. The general ledgers and books of account of DGD and
all other books and records of DGD with respect to the Business are in all
material respects complete and correct and have been maintained in a consistent
manner in accordance with good business practices and to the best knowledge of
DGD in accordance in all material respects with all applicable procedures
required by laws and regulations.
(m) Disclosure. No representation or warranty by DGD in this Agreement or
on any Schedule hereto contains any untrue statement of a material fact or omits
to state any material fact necessary in order to make the statements contained
therein not misleading as of the date made.
(n) Environmental Conditions.
Except as set forth in Schedule 4.01(n), DGD represents and warrants that:
(i) DGD, the real properties set forth on Schedule 4.01(q) (the "Owned
Properties") and the leased properties set forth on Schedule 4.01(q) (the
"Leased
41
Properties") comply and to the best knowledge of DGD have been in
compliance with all applicable Environmental Laws (as hereinafter defined),
and there is no event, condition, circumstance, activity, practice,
incident, action or plan which may interfere with or prevent the continued
compliance with any Environmental Law;
(ii) to the best knowledge of DGD, DGD has (a) taken all actions
required under Environmental Laws to register any products, materials or
structures at, on or under the Owned Properties and Leased Properties
required to be registered under Environmental Laws, and (b) obtained all
permits, licenses, approvals and authorizations required for its operations
at the Owned Properties and Leased Properties by any applicable
Environmental Law, and each such permit, license, approval, registration
and authorization is valid and in full force and effect and is not subject
to any pending or threatened administrative or judicial proceeding to
revoke, cancel or declare such permit, license, approval, registration and
authorization invalid in any respect;
(iii) to the best knowledge of DGD, neither DGD nor any other person
or entity has caused any Release (as hereinafter defined), threatened
Release, or disposal of any Hazardous Material (as hereinafter defined) at,
from, under or about the Owned Properties, the Leased Properties or any
properties formerly owned or leased by DGD at the time of such ownership or
tenancy by DGD, and none of the Owned Properties or Leased Properties is
adversely affected by any Release, threatened Release, or disposal of any
Hazardous Material at, from, under or about any such properties or
originating or emanating from any other property; DGD has no knowledge of
any groundwater or soil contamination;
42
(iv) to the best knowledge of DGD, there are no Hazardous Materials
on, in or under the Owned Properties or Leased Properties, whether
contained in barrels, tanks, equipment (moveable or fixed) or other
containers, deposited or located in land, waters, sumps or in any other
part of such properties, incorporated into any structure on such
properties, or otherwise existing thereon;
(v) to the best knowledge of DGD, neither the Owned Properties nor the
Leased Properties contain or has ever contained any: (a) underground
storage tank or other receptacle used for the storage of Hazardous
Materials, (b) asbestos-containing building material, (c) polychlorinated
biphenyls ("PCBs"), (d) any landfills or dumps, (e) hazardous waste
management facility as defined pursuant to the federal Resource
Conservation and Recovery Act ("RCRA"), 42 U.S.C. xx.xx. 6901 et seq., or
any comparable state law, or (f) area designated for any removal or cleanup
activity pursuant to CERCLA or any comparable state law;
(vi) to the best knowledge of DGD, neither DGD nor any other person or
entity has used any Hazardous Materials, or conducted any activities
involving the use, handling, treatment, storage, transportation or disposal
of any Hazardous Material (except for Hazardous Materials comprised
exclusively of inventoried items that are carried by DGD in the ordinary
course which are not in excess of amounts required to be reported under
applicable Environmental Law), at either the Owned Properties or the Leased
Properties, including but not limited to activities involving any sort of
manufacturing, processing or refining, or cleaning or degreasing of
equipment, machinery, part or component;
43
(vii) DGD has not received any notice of any pending or threatened
Environmental Claim (as hereinafter defined), and to the best of DGD's
knowledge there are no Environmental Law violations at the Owned
Properties, the Leased Properties, any property formerly owned or leased by
DGD or any subsidiary of DGD, or any other property (including, without
limitation, any off-site disposal facility to which Hazardous Materials
originating from the Owned Properties, Leased Properties, or any properties
formerly owned or leased by DGD or any subsidiary of DGD have been sent);
(viii) DGD has not submitted to any governmental agency or other
person or entity any notice, and is not required to give any such notice,
regarding any Release on, under, or from the Owned Properties, the Leased
Properties, or any properties formerly owned or leased by DGD;
(ix) neither the Owned Properties nor the Leased Properties is subject
to, and DGD has no knowledge of, any pending or threatened lien or
restriction on the ownership, occupancy, use, or transferability of the
Owned Properties or the Leased Properties in connection with any (a)
Environmental Law or (b) Release, threatened Release, or disposal of a
Hazardous Material;
(x) NDI's obligation to close shall be conditioned on DGD having
obtained prior to the Closing Date either (1) a Letter of
Non-Applicability, (2) a Remediation Agreement, (3) a No Further Action
letter, or (4) other approval from the New Jersey Department of
Environmental Protection authorizing consummation of the transaction,
pursuant to the New Jersey Industrial Site Recovery Act ("ISRA"), N.J.S.A.
xx.xx. 13:1K-6 et seq.; and
44
(xi) DGD has provided or otherwise made available to NDI true,
complete and accurate copies of all environmental audits, reports, and
assessments concerning DGD and the Owned Properties and the Leased
Properties which DGD possess or reasonably could have obtained.
"Environmental Claim" means any investigation, notice, violation, demand,
allegation, action, suit, injunction, judgment, order, consent decree, penalty,
fine, lien, proceeding, or claim (whether administrative, judicial,
quasi-judicial or private in nature) arising (a) pursuant to or in connection
with any actual or alleged violation of any Environmental Law, or (b) from any
investigatory, abatement, removal, remedial, corrective, or other response
action in connection with a Hazardous Material or an Environmental Law, or (c)
from any actual or alleged damage, injury, threat, or harm to health, safety,
natural resources, property, or the environment, regardless of whether such
matter is now known or unknown, or how or when such matter occurred or is
discovered.
"Environmental Law" means (a) any present federal, state or local law or
regulation relating to the handling, use, control, management, treatment,
storage, disposal, release or threat of release of any Hazardous Material,
including without limitation, CERCLA, RCRA, the federal Clean Water Act ("CWA"),
33 U.S.C. ss.ss.1251 et seq., the federal Clean Air Act ("CAA"), 42 U.S.C.
xx.xx. 7401 et seq., the Toxic Substances Control Act ("TSCA"), 7 U.S.C. xx.xx.
136 et seq., the Safe Drinking Water Act ("SDWA"), 42 U.S.C. xx.xx. 300f et
seq., the Occupation Safety and Health Act of 1970 (the "OSH Act"), 29 U.S.C.
xx.xx. 651 et seq., ISRA, the New Jersey Spill Compensation and Control Act
("Spill Act"), N.J.S.A. ss. 58:10- 23.11 et seq., the New Jersey Solid Waste
Management Act ("SWMA"), N.J.S.A. ss. 13:1E-1 et seq., the New Jersey Air
Pollution Control Act ("APCA"), N.J.S.A. ss. 26:2C-1 et seq.,
45
the New Jersey Water Pollution Control Act ("WPCA"), N.J.S.A. ss. 58:10A-1 et
seq., and the New Jersey Freshwater Wetlands Protection Act ("FWPA"), N.J.S.A.
ss. 13:9B-1 et seq., and any similar state or local laws, rules or regulations,
and (b) any and all requirements arising under applicable present federal, state
or local laws, statutes, rules, ordinances, codes, orders, licenses, permits,
approvals, plans, authorizations, concessions, or the like, and all applicable
judicial, administrative, and regulatory decrees, judgments, and orders,
relating to the protection of human health or the environment, including without
limitation: (i) any and all requirements pertaining to reporting, licensing,
authorizing, approving, permitting, investigating, and remediating emissions,
discharges, releases, or threat of releases of any Hazardous Materials into the
outdoor air, surface water, groundwater, or land, or otherwise into the
environment, or relating to the manufacture, operation, processing,
distribution, use, treatment, storage, disposal, transport, handling or
management of any Hazardous Material; and (ii) any and all requirements
pertaining to the protection of the health and safety of employees or the public
and/or the environment.
"Hazardous Material" means any substance or material: (a) the presence of
which requires investigation or remediation under any Environmental Law, (b)
which is regulated by any federal, state or local governmental authority,
including without limitation, any substance or waste material which is defined
or listed as a "hazardous waste," "extremely hazardous waste," "restricted
hazardous waste," "industrial waste," "hazardous substance," "solid waste,"
"hazardous material," "pollutant" or "contaminant" under any Environmental Law;
(c) which contains gasoline, diesel fuel or other petroleum hydrocarbons or a
petroleum derivative; (d) which contains PCBs, asbestos or urea formaldehyde;
(e) which is explosive,
46
corrosive, flammable, infectious, radioactive or toxic; or (f) which poses an
unreasonable risk of injury to human health or the environment.
"Release" shall mean any spilling, leaking, seeping, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping,
placement, burying or disposing in or upon or under any land or water or air, or
otherwise into the outdoor environment, including, without limitation, the
abandonment or discarding of barrels, drums, containers, tanks, and other
receptacles containing or previously containing any Hazardous Material.
NDI agrees that it will execute all documents necessary to obtain a
Declaration of Environmental Restriction pursuant to the requirements of ISRA or
Environmental Law, provided that such Declaration of Environmental Restriction
shall not materially interfere with NDI's use or operation of the related
property.
(o) Financial Statements. DGD has previously delivered to NDI its audited
financial statements for the fiscal year ended July 31, 1996, including the
report of DGD's certified public accountants thereon and the notes thereto
(collectively, the "Audited Financial Statements"). The Audited Financial
Statements present fairly the financial position and stockholders' equity of DGD
at such date and the results of operations and cash flows of DGD for the fiscal
year then ended in accordance with GAAP.
(i) Schedule 4.01(o) hereof sets forth a complete and accurate copy of
the unaudited balance sheet for the period ended March 31, 1997 (the "March
Balance Sheet", and together with the Audited Financial Statements, the
"Financial Statements"). The March Balance Sheet presents fairly the
financial position of DGD as of March 31, 1997, subject to year end audit
adjustment.
47
(ii) All books and records of DGD are accurate and complete, have been
maintained in the normal course of business and accurately reflect the
business, transactions and operations of DGD.
(iii) No uncollectible accounts receivable are reflected in such
Financial Statements without adequate reserve for uncollectible amounts.
Inventories reflected on such Financial Statements represent only good and
marketable items priced at the lower of cost or market values with adequate
provision for obsolescence, shrinkage, excess quantities, defective
materials and deterioration. The Financial Statements set forth all
material liabilities that should properly be reflected or reserved for in a
financial statement prepared in accordance with GAAP, subject to year end
audit adjustment.
(p) Tax Matters. Since July 31, 1993, all federal, state and local income,
gross receipts, sales, use, property, franchise, privilege, employment
(including, without limitation, social security), license, payroll, excise,
withholding, transfer, registration, value added, alternative, add-on minimum
and other tax returns, reports, estimates and information statements for DGD
that DGD was required to file have been timely filed for all years and periods
for which such returns, reports, estimates and information statements were due
(taking into account all filing date extensions), all such returns, reports,
estimates and information statements are true, complete and correct and all
taxes whether or not shown thereon to be due and payable have been paid. Except
as set forth on Schedule 4.01(p) hereto, there are no tax obligations of DGD
which constitute, or may in the future constitute, a lien on the Assets, and, if
any such lien exists or arises, it will be promptly discharged by
48
DGD prior to the Closing. Except as set forth on Schedule 4.01(p), all of DGD's
tax returns for periods prior to July 31, 1993 are closed.
(q) Real Property. (i) Schedule 4.01(q) accurately sets forth: (A) a
description of all of the real property which is leased to DGD (the "Real
Property"); (B) all of the leases pertaining to Real Property (the "Leases");
(C) all of the easements, rights of way, covenants, restrictions and other
rights and interests (including leases to third parties by DGD) which pertain to
Real Property; and (D) all suits, actions, proceedings, investigations and
written claims since July 1, 1996 and all final orders, judgments and
stipulations of any court of competent jurisdiction presently outstanding which
pertain to the Real Property.
(ii) Except as set forth in Schedule 4.01(q), with respect to each
parcel of Real Property leased to DGD: (A) each Lease has been validly
executed and delivered by the parties thereto and is in full force and
effect; (B) neither DGD nor any other party to the Lease is in breach or
default, and no event has occurred which, with notice or lapse of time,
would constitute such a breach or default or permit termination,
modification or acceleration under the Lease; (C) the Lease will continue
to be binding in accordance with its terms following the Closing; (D) no
party to the Lease has repudiated any provision thereof; (E) there are no
disputes, oral agreements or delayed payment programs in effect as to the
Lease; and (F) all facilities leased thereunder have been approved by all
necessary governmental authorities, have been maintained in accordance with
normal industry practice and are suitable for the purposes for which they
are being used.
(iii) To the best knowledge of DGD, there are no (A) pending or
threatened condemnation proceedings relating to the Real Property; (B)
pending or, to the
49
knowledge of DGD, threatened litigation or administrative actions relating
to the Real Property; or (C) other matters affecting materially and
adversely the current use, occupancy or value thereof.
(iv) The legal description set forth in Schedule 4.01(q) for each
parcel of Real Property describes such Real Property fully and adequately,
the buildings and improvements are located within the boundary lines of the
described parcels of land, are not in violation of applicable setback
requirements, zoning laws and ordinances (and none of the properties or
buildings or improvements thereon are subject to "permitted non-conforming
use" or "permitted non-conforming structure" classifications) and do not
encroach on any easement which may burden the land, the land does not serve
any adjoining property for any purpose inconsistent with the use of the
land, the property is not located within any flood plain or subject to any
similar type restriction for which any material permits or licenses
necessary to the use thereof have not been obtained and access to the
property is provided by paved public right-of-way.
(v) All facilities located on the Real Property have received all
material approvals of governmental authorities (including licenses and
permits) required in connection with the operation thereof and have been
operated and maintained in accordance with applicable laws, rules and
regulations.
(vi) There are no leases, subleases, licenses, concessions or other
agreements, written or oral, granting to any party or parties the right of
use or occupancy of any portion of the Real Property.
50
(vii) There are no outstanding options or rights of first refusal to
purchase any of Real Property, or any portion thereof or interest therein.
(viii) Except DGD, there are no parties in possession of the Real
Property, other than tenants under any Leases disclosed on Schedule 4.01(q)
attached hereto who are in possession of the space to which they are
entitled under such Leases.
(ix) All facilities located on the Real Property are supplied with
utilities and other services necessary for the operation of such
facilities, including gas, electricity, water, telephone, sanitary sewer,
and storm sewer, all of which services are adequate in accordance with all
applicable laws, ordinances, rules and regulations and are provided via
public roads or via permanent, irrevocable, appurtenant easements
benefitting the Real Property.
(x) Each parcel of Real Property abuts on and has direct vehicular
access to a public road or access to a public road via a permanent,
irrevocable, appurtenant easement benefitting such parcel of Real Property.
(xi) Except as set forth on Schedule 4.01(q), each building or fixture
owned or leased by DGD is in good operating condition and repair (and with
regard to each building, is structurally sound, and with regard to each
mechanical system, is in good repair), subject to normal wear and tear, in
compliance with zoning, building and fire codes.
(r) Owned Personal Property. Except as set forth in Schedule 4.01(r) and
except for properties sold, transferred or otherwise disposed of by DGD in the
ordinary course of business since July 31, 1996, all of DGD's tangible personal
property (including, without limitation, plants, leasehold improvements,
furnishings, furniture, office equipment, vehicles,
51
inventories, tools, machinery, equipment, structures and movable fixtures) are
reflected in the Financial Statements. All items of DGD tangible personal
property are in operating condition, reasonable wear and tear excepted, and such
tangible personal property, taken as a whole, is suitable for the conduct of the
Business.
(s) Title to Assets. Except as set forth in Schedule 4.01(s) hereof, DGD
has good and marketable title to or leasehold interests in all of the Assets,
free and clear of all pledges, security interests, liens, claims and
encumbrances other than:
(i) liens, claims and encumbrances reflected in the Financial
Statements which do not impair the current use, occupancy or value thereof,
or the marketability of title;
(ii) liens for taxes, charges and assessments imposed by any taxing
authority which are not yet due and payable; and
(iii) mechanics', suppliers', installment sales and similar liens for
services rendered or materials furnished, the charges for which are not yet
due and payable.
(t) Assets for Conduct of Business. Except for assets relating to delivery
services, the Assets constitute all properties, assets, rights and claims which
are necessary to the conduct of the Business as currently conducted by DGD.
(u) Bank Accounts, Powers of Attorney. Schedule 4.01(u) hereof lists the
names of all banks in which DGD has accounts and safe deposit boxes and the
names of all persons authorized to draw thereon or to have access thereto.
(v) Permits: Licenses. Schedule 4.01(v) hereof sets forth all of the
governmental and quasi-governmental consents, approvals, permits, licenses,
franchises and other authorizations which have been issued to or are held or
used by DGD, or for which DGD
52
has applied, and which are material to the conduct of the Business as presently
conducted by DGD. Except as set forth in Schedule 4.01(v), DGD has obtained all
of the governmental and quasi-governmental consents, approvals, permits,
licenses, franchises and other authorizations which are necessary for the
ownership of the Assets or the conduct of the Business as presently conducted.
Except as set forth in Schedule 4.01(v) all such consents, approvals, permits,
licenses, franchises and other authorizations are in full force and effect, and
no violations exist or have been recorded in respect of any thereof, and no
proceeding is pending or, to the knowledge of DGD, threatened to revoke or limit
any thereof.
(w) Intangible Property.
(i) Schedule 4.01(w) hereof sets forth an accurate and complete list
of all Intangible Property (including any registrations issued and any
applications pending for any of such Intangible Property), and, except as
set forth in such Schedule, DGD is the sole and exclusive owner of all such
Intangible Property.
(ii) Except as set forth on Schedule 4.01(w), all of the Intangible
Property has been duly registered or is the subject of pending registration
applications in the applicable jurisdiction. None of the Intangible
Property is subject to any pending or threatened challenge or reversion,
and the consummation of the transactions contemplated by this Agreement
shall not result in any change in the terms or provisions thereof or create
any right of termination, cancellation or reversion with respect thereto
anywhere in the world. Except as set forth on Schedule 4.01(w), DGD has not
licensed, sublicensed, assigned, transferred or otherwise conveyed any of
the Intangible Property, or any right, title or interest therein, to any
person or entity. DGD has heretofore provided to NDI complete and correct
copies of each license agreement relating to the Intangible Property. DGD
has
53
exercised quality control with respect to all Intangible Property licensed
by DGD to the extent necessary to preserve the validity of such Intangible
Property. To the best of its knowledge, DGD has not infringed on any
proprietary right, trademark, trade name, service xxxx or copyright of
others, and there is no claim for damages or any proceeding pending, or
threatened against DGD or the Business with respect thereto. To the best of
DGD's knowledge, no person or entity is infringing or otherwise acting
adversely with respect to DGD's rights under or in respect of any of the
Intangible Property.
(iii) DGD owns all proprietary rights necessary to conduct the
Business, including without limitation, those listed in Schedule 4.01(w),
free and clear of all liens, claims and encumbrances whatsoever.
(x) Business Operations; Changes.
Except as set forth in Schedule 4.01(x) hereto, since July 31, 1996:
(i) DGD has not, in connection with the conduct of the Business, made
any material change in practices, operations or policies with respect to
(A) the method for selling products, (B) the standard terms and conditions
of sale of products (including standard terms regarding returns and
discounts, but excluding price changes), (C) the method for accounting for
sale of products, (D) the compensation of employees, (E) the policy
regarding maintenance of inventory levels or (F) the conduct of accounts
receivable collection and accounts payable payment activities, which change
in practices, operations or policies, individually or in the aggregate,
could have a material adverse effect on the Business as presently
conducted; and
54
(ii) there has been no material damage to or loss of the assets or
properties owned, leased or used by DGD which is material to the Business
(regardless of whether such damage or loss is covered by insurance).
(y) Litigation; Claims; Proceedings.
Except as described in Schedule 4.01(y) hereto, there are no outstanding
suits, actions, proceedings, investigations, audits, claims, orders, judgments,
writs or awards presently pending or, to the best of the knowledge of DGD,
threatened against DGD or with respect to the Business or any of the Assets
(collectively, "Litigation") and, to the best of the knowledge of DGD, there is
no basis for any such Litigation. There are no final orders, judgments, writs or
decrees presently outstanding against DGD, the Assets or with respect to the
Business.
(z) Insurance. All policies of insurance of any kind maintained, owned or
held by DGD are set forth in Schedule 4.01(z) hereto and such policies are in
full force and effect, all premiums with respect thereto covering all periods up
to and including the Closing Date have been paid, and no notice of cancellation
or termination has been received with respect to any such policy which has not
been replaced on substantially similar terms prior to the date of such
cancellation or termination. The insurance policies to which DGD is a party are
sufficient for compliance with all requirements of applicable laws and all
agreements to which DGD is a party or by which DGD is bound and the coverages
provided by said policies are sufficient to cover all risks insured against.
(aa) Customers and Suppliers. Assuming NDI does not (A) change the terms of
sale or collection as set forth in Section 1.04A(i) or (B) discontinue the use
of the "Drug Guild" name or the "Drug Guild" product line, DGD does not know of
any reason why NDI
55
will be unable to maintain the same relationship with any of DGD's current
customers, licensors or vendors, or others having business relations with DGD,
in connection with the Business or the Assets that DGD now maintains.
ss.4.02 Certain Representations and Warranties of Xxxxxx and NDI
Xxxxxx and NDI hereby represent and warrant to DGD that (it being agreed
that Xxxxxx and NDI jointly and severally make the representations and
warranties with respect to NDI set forth below, and Xxxxxx alone makes the
representations and warranties with respect to Xxxxxx):
(a) Organization. Xxxxxx and NDI are each a corporation duly organized,
validly existing, and in good standing under the laws of New Jersey, each with
all requisite corporate power and authority necessary to (i) perform its
obligations under this Agreement, and other agreements contemplated hereby to
which it is a party, (ii) consummate the transactions contemplated hereby and
thereby, (iii) own, lease and use its properties and assets, and (iv) conduct
its business as presently conducted.
(b) Authority. All necessary corporate proceedings of Xxxxxx and NDI have
been duly taken to authorize the execution, delivery, and performance of this
Agreement by Xxxxxx and NDI. This Agreement has been duly authorized, executed,
and delivered by Xxxxxx and NDI, constitutes the legal, valid, and binding
obligation of Xxxxxx and NDI, and is enforceable as to Xxxxxx and NDI in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, fraudulent conveyance or transfers or
similar laws affecting creditors' rights generally and equitable principles.
Except as set forth in Sections 5.03 and 5.01(j), no consent, authorization,
approval, order, license, certificate, or permit of or from, or declaration or
filing with, or
56
notice to any federal, state, local, or other governmental authority or any
court or other tribunal or any other person or entity is required to be obtained
or made by Xxxxxx or NDI for the execution, delivery, or performance of this
Agreement by Xxxxxx and NDI. Except as set forth in Section 5.01(j), no consent
of any party to any contract, agreement, instrument, lease, license,
arrangement, undertaking or understanding to which Xxxxxx or NDI is a party, or
to which its businesses, properties, or assets are subject, is required for the
execution, delivery, or performance of this Agreement; and the execution,
delivery, and performance of this Agreement will not violate, result in a breach
of, conflict with, or (with or without the giving of notice or the passage of
time or both) entitle any person or entity to terminate or call a default under,
entitle any person or entity to receive rights or privileges that such person or
entity was not entitled to receive before this Agreement was executed under, or
create any obligation on the part of Xxxxxx or NDI to which it was not subject
immediately before this Agreement was executed under, any term of any such
contract, agreement, instrument, lease, license, arrangement, or understanding,
or violate or result in a breach of any term of the certificate of incorporation
or by-laws of Xxxxxx or NDI, or (if the provisions of Sections 5.03, are
satisfied) violate, result in a breach of, or conflict with any law, rule,
regulation, order, judgment, or decree binding on Xxxxxx or to which any of its
respective businesses, properties, or assets are subject.
(c) Brokers. Neither Xxxxxx, nor any of its respective officers, directors,
employees, counsel, investment bankers, accountants or agents has employed any
broker or finder or incurred any liability for any fee, commission, or other
compensation payable by any person or entity on account of alleged employment as
a broker or finder, or alleged
57
performance of services as a broker or finder, in connection with or as a result
of this Agreement or the other transactions contemplated by this Agreement.
(d) Financial Condition. Xxxxxx has delivered to DGD true, correct,
complete and accurate copies of the following: the audited balance sheets of
Xxxxxx as of April 30, 1996; audited statements of income, statements of
shareholders' equity, and statements of cash flows of Xxxxxx for the year ended
April 30, 1996; the unaudited consolidated balance sheet of Xxxxxx as of July
31, 1996, October 31, 1996 and January 31, 1997; and the unaudited consolidated
statement of income, consolidated statement of shareholders' equity, and
consolidated statement of cash flows of Xxxxxx for the quarters ended July 31,
1996, October 31, 1996 and January 31, 1997. Each such balance sheet presents
fairly the financial condition, assets, liabilities, and shareholders' equity of
Xxxxxx and its subsidiaries as of its date; and each such statement of income,
shareholders' equity and cash flows presents fairly the results of operations of
Xxxxxx and its subsidiaries for the periods indicated, all in accordance with
GAAP. The financial statements referred to in this Section 4.02(d) are in
agreement with the detailed books and records of Xxxxxx and its subsidiaries.
Since January 31, 1997, except as may be expressly disclosed in the January 31,
1997 unaudited financial statements:
(i) There has at no time been a material adverse effect on the
business of Xxxxxx; and
(ii) The operations and businesses of Xxxxxx, NDI and their subsidiaries
have been conducted in all material respects only in the ordinary course,
consistent with past practices.
58
V. CONDITIONS TO CLOSING
ss.5.01 Conditions of Xxxxxx
The obligations of Xxxxxx to consummate the transactions contemplated
herein shall be subject to the following conditions precedent:
(a) Accuracy of Representations and Compliance With Conditions. All
representations and warranties of DGD made in or pursuant to this Agreement or
any related agreement shall be accurate when made in all material respects
(without regard to any knowledge limitations contained therein) and, in
addition, shall be accurate in all material respects as of the Closing Date as
though such representations and warranties were then made in exactly the same
language by DGD (without regard to any knowledge limitations contained therein),
and regardless of changes beyond its control. As of the Closing Date, DGD shall
have performed and complied in all material respects with all covenants and
agreements and satisfied all conditions required to be performed and complied
with by it under this Agreement or any related agreement at or before the
Closing Date. Xxxxxx shall have received certificates, each dated the Closing
Date, in form and substance reasonably satisfactory to Xxxxxx executed on behalf
of DGD by its Chief Financial Officer, to that effect.
(b) Opinions of DGD's Counsel. There shall have been delivered to Xxxxxx at
the Closing, in form and substance reasonably satisfactory to Xxxxxx, the
opinion of Scheichet & Xxxxx P.C. regarding various customary corporate matters,
dated as of the Closing Date.
(c) Other Closing Documents. DGD shall have delivered to Xxxxxx at or prior
to the Closing Date such other documents (including certificates of officers of
DGD) as
59
Xxxxxx may reasonably request in order to enable Xxxxxx to determine whether the
conditions to their obligations under this Agreement have been met and otherwise
to carry out the provisions of this Agreement.
(d) Review of Proceedings. All actions, proceedings, instruments, and
documents required of DGD to carry out this Agreement or incidental thereto and
all other related legal matters shall be subject to the reasonable approval of
counsel to Xxxxxx, and DGD shall have furnished such counsel such documents as
such counsel may have reasonably requested for the purpose of enabling them to
pass upon such matters.
(e) Legal Action. There shall not have been instituted or threatened any
legal proceeding relating to, or seeking to prohibit or otherwise challenge the
consummation of, the transactions contemplated by this Agreement, or to obtain
substantial damages with respect thereto which in the reasonable judgment of
Xxxxxx otherwise materially prohibit, restrict, condition or delay consummation
of the transactions contemplated by this Agreement or materially impair the
contemplated benefits to Xxxxxx of this Agreement or any other transaction
contemplated by this Agreement.
(f) No Governmental Action. There shall not have been any action taken, or
any law, rule, regulation, order, judgment, or decree proposed, promulgated,
enacted, entered, enforced, or deemed applicable to the transactions
contemplated by this Agreement by any federal, state, local, or other
governmental authority or by any court or other tribunal, including the entry of
a temporary restraining order or a preliminary or permanent injunction, which,
in the reasonable judgment of Xxxxxx, (i) makes this Agreement or any of the
other transactions contemplated by this Agreement illegal, (ii) results in a
substantial delay in the ability of DGD, Xxxxxx or NDI to consummate the
transactions contemplated
60
by this Agreement, (iii) requires the divestiture by Xxxxxx of a material
portion of its business or any other Xxxxxx subsidiary, or of DGD, (iv) imposes
material limitations on the ability of Xxxxxx effectively to exercise full
rights of ownership of the Assets, or (v) otherwise prohibits, or materially
restricts, conditions or delays consummation of the transactions contemplated by
this Agreement or impairs the contemplated benefits to Xxxxxx of this Agreement,
or any of the other transactions contemplated by this Agreement.
(g) Contractual Consents Needed. The parties to this Agreement shall have
obtained at or prior to the Closing Date all consents required to be delivered
by DGD for the consummation of the transactions contemplated by this Agreement
from any party to any material Contract, to which any of them is a party, or to
which any of them or any of their respective businesses, properties, or assets
are subject.
(h) Shareholder Consent. DGD shall have obtained prior to the Closing, the
approval of the transactions contemplated hereby by the holders of the requisite
number of shares of DGD Common Stock and DGD Preferred Stock pursuant to Section
14A:10-11 of the NJBCA.
(i) No Material Adverse Effect. From the date hereof through the Closing
Date there shall have been no material adverse effect affecting the Assets or
Business of DGD. There shall be no pending or threatened litigation or claims
against DGD which could, individually or in the aggregate, materially and
adversely affect any of the conditions (financial or otherwise), results of
operations, businesses, customer satisfaction, properties, assets, future
prospects or current or future liabilities of DGD.
61
(j) Financing Approvals. Xxxxxx shall have received from Xxxxxx'x primary
lending institutions (i) written approval of the transactions contemplated
herein and (ii) financing in an amount sufficient to assume, refinance or repay
the Bank Debt.
(k) ISRA. The condition set forth in Section 4.01(n)(x) shall have been
fulfilled.
(l) Intentionally Deleted.
(m) Delivery. NDI and Meadow shall have executed and delivered a
transportation delivery agreement in the form annexed hereto as Exhibit E (the
"Delivery Service Agreement").
(n) Bridging. The parties hereto shall have executed and delivered a
bridging agreement in the form annexed hereto as Exhibit F (the "Bridging
Agreement").
(o) Xxxxxx and NDI shall have received at or prior to the Closing each of
the following documents:
(i) a Xxxx of Sale substantially in the form attached hereto as
Exhibit A;
(ii) such instruments of conveyance, assignment and transfer, and
motor vehicle transfers and safety inspection certificates, if any, in form
and substance satisfactory to NDI, as shall be appropriate to convey,
transfer and assign to, and to vest in, NDI, good and marketable title to
the Assets other than the Intangible Property and the Real Estate;
(iii) such instruments of conveyance, assignment and transfer in form
and substance satisfactory to NDI and in a form appropriate to file, if
required, with the United States Office of Patents and Trademarks
sufficient to convey, transfer and assign to, and to vest in, NDI, good and
marketable title to the Intangible Property;
62
(iv) such deeds and instruments of conveyance, assignment and
transfer, in form and substance satisfactory to NDI, as shall be
appropriate to convey, transfer and assign to, and to vest in, NDI, good,
clear, record, marketable and insurable title to the Real Estate;
(v) such instruments of conveyance, assignment and transfer, in form
and substance satisfactory to NDI, as shall be appropriate to convey,
transfer and assign to, and to vest in, NDI, DGD's right, title and
interest in and to all intangible personal property interests comprising or
necessary for the use of the Real Estate for the purposes contemplated
hereby, including but not limited to DGD's interest in (i) all permits,
variances and other governmental approvals and consents (if any) relating
to the Real Estate, and (ii) all contracts and agreements affecting the
Real Estate which NDI elects to assume in writing, free and clear of all
liens and encumbrances;
(vi) such contracts, files and other data and documents pertaining to
the Assets or the Business as NDI may reasonably request;
(vii) copies of the general ledgers and books of account of DGD
related to the Business;
(viii) such certificates of DGD's officers and such other documents
evidencing satisfaction of the conditions specified in Section 5.01(a) and
(c) as NDI shall reasonably request (which certificates may also be relied
upon by NDI's lenders);
(ix) certificate of the Secretary of DGD attesting to the incumbency
of DGD's officers and the authenticity of the resolutions authorizing the
transactions
63
contemplated by the Agreement, such resolutions to include authorization
for the termination of all Employee Benefit Plans (as described in Section
4.01(j));
(x) a certificate of the Secretary of State of the State of New Jersey
as to the good standing of DGD in New Jersey;
(xi) estoppel certificates from each lessor under the Leases set forth
on Schedule 4.01(q) attached hereto (i) consenting to the assignment of
such Leases to NDI; (ii) representing that there are no outstanding claims
against DGD under any such Leases, and no outstanding defaults or events
which, with the passage of time, may become defaults; (iii) specifying the
commencement and termination dates under the Leases; and (iv) providing
that any purchase right, purchase option, right of first refusal, renewal
right or other similar provision is enforceable by NDI and specifying the
rental rates under the Leases and any other matters NDI may reasonably
require;
(xii) a certificate of DGD stating that DGD has not received any
notice of noncompliance with respect to any federal or state environmental
laws;
(xiii) a cross receipt executed by DGD, NDI and Xxxxxx (the "Cross
Receipt");
(xiv) the Closing Balance Sheet and statement setting forth the
estimated net asset value, as certified by the Chief Financial Officer of
DGD in accordance with Section 1.04(c);
(xv) the proposed amendment of the Certificate of Incorporation of DGD
to discontinue the use of the name "Drug Guild Distributors" and a
certificate of the
64
Secretary of DGD stating that the amendment has been duly authorized by all
necessary corporate action on the part of DGD;
(xvi) the Delivery Service Agreement;
(xvii) the Bridging Agreement;
(xviii) the Lender Statement; and
(xix) such other documents, instruments or certificates as Xxxxxx may
reasonably request in order to evidence the accuracy of DGD's
representations or compliance by DGD of its covenants hereunder.
ss.5.02 Conditions of DGD
DGD's obligation to consummate the transactions contemplated herein shall
be subject to the following conditions precedent:
(a) Accuracy of Representations and Compliance With Conditions. All
representations and warranties of Xxxxxx and NDI made in or pursuant to this
Agreement or any related agreement shall be accurate when made in all material
respects (without regard to any knowledge limitations contained therein) and, in
addition, shall be accurate in all material respects as of the Closing Date as
though such representations and warranties were then made in exactly the same
language by Xxxxxx and NDI (without regard to any knowledge limitations
contained therein) and regardless of changes beyond their control. As of the
Closing Date, Xxxxxx and NDI shall have performed and complied in all material
respects with all covenants and agreements and satisfied all conditions required
to be performed and complied with by them under this Agreement at or before the
Closing Date. DGD shall have received a certificate in form and substance
reasonably satisfactory to DGD,
65
executed on behalf of Xxxxxx and NDI by the President or Chief Financial Officer
of Xxxxxx and NDI, dated the Closing Date, to that effect.
(b) Opinion of Xxxxxx'x Counsel. There shall have been delivered to DGD at
the Closing in form and substance reasonably satisfactory to DGD and its counsel
the opinion of Xxxxxx Xxxx & Xxxxxx LLP regarding certain customary corporate
matters, dated as of the Closing Date.
(c) Other Closing Documents. Xxxxxx and NDI shall have delivered to DGD at
or prior to the Closing Time such other documents (including certificates of
officers of Xxxxxx, NDI or of any subsidiary of Xxxxxx or NDI) as DGD may
reasonably request in order to enable DGD to determine whether the conditions to
its obligations under this Agreement have been met.
(d) Review of Proceedings. All actions, proceedings, instruments, and
documents required by Xxxxxx and NDI to carry out this Agreement or incidental
thereto and all other related legal matters shall be subject to the reasonable
approval of counsel to DGD, and Xxxxxx and NDI shall have furnished such counsel
such documents as such counsel may have reasonably requested for the purpose of
enabling them to pass upon such matters.
(e) Legal Action. There shall not have been instituted or threatened any
legal proceeding relating to, or seeking to prohibit or otherwise challenge the
consummation of, the transactions contemplated by this Agreement, or to obtain
substantial damages with respect thereto which in the reasonable judgment of DGD
otherwise materially prohibits, restricts, conditions or delays consummation of
the transactions contemplated by this Agreement or materially impairs the
contemplated benefits to DGD of this Agreement or other transaction contemplated
by this Agreement.
66
(f) No Governmental Action. There shall not have been any action taken, or
any law, rule, regulation, order, judgment, or decree proposed, promulgated,
enacted, entered, enforced, or deemed applicable to the transactions
contemplated by this Agreement by any federal, state, local, or other
governmental authority or by any court or other tribunal, including the entry of
a temporary restraining order or a preliminary or permanent injunction, which,
in the reasonable judgment of DGD, (i) makes this Agreement or any of the other
transactions contemplated by this Agreement illegal, (ii) results in a
substantial delay in the ability of Xxxxxx, NDI or DGD to consummate the
transactions contemplated by this Agreement, or (iii) otherwise prohibits,
restricts, conditions or delays consummation of transactions contemplated by
this Agreement or impairs the contemplated benefits to the shareholders of DGD
of this Agreement or any of the other transactions contemplated by this
Agreement.
(g) No Material Adverse Effect. From the date hereof, through the Closing
Date, there shall have been no material adverse effect affecting Xxxxxx and NDI.
(h) Delivery. NDI and Meadow shall have executed and delivered the Delivery
Service Agreement and DGD and Meadow shall have entered into a truck rental
agreement in form and substance satisfactory to DGD (the "Rental Agreement").
(i) Bridging. The parties hereto shall have executed and delivered the
Bridging Agreement.
(j) Shareholder Consent. DGD shall have obtained prior to the Closing, the
approval of the transactions contemplated hereby by the holders of the requisite
number of shares of DGD Common Stock and DGD Preferred Stock pursuant to Section
14A:10-11 of the NJBCA.
67
(k) DGD shall have received at or prior to the Closing each of the
following documents:
(i) such certificates of Xxxxxx or NDI and their respective officers
and such other documents evidencing satisfaction of the conditions
specified in this Section 5 as DGD shall reasonably request;
(ii) a certificate of the Secretary of State of the State of New
Jersey as to the good standing of each of Xxxxxx and NDI in New Jersey;
(iii) a certificate of the Secretary of each of Xxxxxx and NDI
attesting to the incumbency of their respective officers and the
authenticity of the resolutions authorizing the transactions contemplated
by this Agreement;
(iv) Assignment and Assumption Agreement executed by NDI and DGD; (v)
payment of the Cash Consideration, delivery of each of the Note, the Second
Note and the LC;
(vi) the Cross Receipt;
(vii) the Delivery Service Agreement;
(viii) the Bridging Agreement;
(ix) the Rental Agreement; and
(x) such other documents, instruments or certificates as DGD may
reasonably request.
ss.5.03 Other Closing Conditions.
DGD and NDI shall have, at their own cost and expense (other than the
filing fee which shall be borne exclusively by NDI), promptly filed, requesting
early termination, and thereafter diligently pursued any filing required on its
part under the Xxxx-Xxxxx-Xxxxxx
68
Antitrust Improvements Act of 1976, as amended, and all rules and regulations
adopted thereunder (collectively, the "HSR Act") in connection with the
transactions contemplated by this Agreement, and the applicable waiting period
under the HSR Act, including all extensions thereof, shall have expired.
VI. POST-CLOSING COVENANTS.
ss.6.01 Transfer Taxes and Other Costs.
(a) DGD shall be responsible for all income, gain, transfer, conveyance,
excise, documentary and other government taxes, duties, changes, fees, imposts
and assessments, and all interest and penalties thereon, imposed at any time by
any taxing authority with respect to this Agreement, the sale, assignment or
delivery of the Business and the Assets or the consummation of the transactions
contemplated hereby. NDI shall be responsible for all sales and use tax imposed
by any taxing authority with respect to the sale, assignment and delivery of the
Business and the Assets.
(b) Except for HSR Act filing fees, DGD shall be responsible for all filing
fees, recording fees, notarial fees and other similar fees and costs arising out
of this Agreement, the purchase, assignment or delivery of the Business or the
Assets or the consummation of the transactions contemplated hereby.
ss.6.02 Bulk Sales Compliance. NDI and Xxxxxx hereby waive compliance by
DGD with any bulk sales or similar law applicable to the transactions
contemplated by this Agreement.
ss.6.03 Corporate Name. DGD shall, immediately after the Closing, amend its
certificate of incorporation to change its corporate name to one which does not
contain the words "Drug Guild", "Xxxxxx" or "Distributors".
69
ss.6.04 Xxxxxx Shares. In the event that, at any time prior to the fourth
anniversary of the Closing Date, Xxxxxx files a registration statement with the
SEC (the "Registration Statement") for the purpose of initiating an initial
public offering of shares of Xxxxxx common stock ("Xxxxxx Shares"), then, at
such time, Xxxxxx shall grant to the DGD Shareholders (as defined below) options
to purchase, in the aggregate an amount of Xxxxxx Shares equal to ten percent
(10%) of the Xxxxxx Shares to be made available in such public offering
(excluding any shares subject to an underwriters over-allotment) at a per share
purchase price equal to eighty-five percent (85%) of the per share offering
price of Xxxxxx Shares in the public offering (the "Options"). At the Closing,
DGD shall provide NDI a list, as of the Closing Date, of all shareholders of
DGD. The Options shall be granted in accordance with the following procedures
and in accordance with the following terms and conditions:
(i) for purposes of this Section 6.04, "DGD Shareholders" shall mean
those persons or entities that were shareholders of DGD on the Closing Date
and who have maintained a continuing supplier relationship consistent with
past historical volumes with NDI through the date the Registration
Statement is filed by Xxxxxx provided, however that a shareholder of DGD
who (A) was not in the pharmacy business on the Closing Date, (B) retires
from the pharmacy business prior to the date the Registration Statement is
filed or (C) sells his pharmacy business and no longer owns 5% or more of
any pharmacy business shall not be subject to the continuing supplier
relationship requirement;
(ii) in no event shall the aggregate amount of Xxxxxx Shares subject
to the Options exceed an amount of shares equal to two percent (2%) of the
issued and outstanding common shares of Xxxxxx upon conclusion of the
proposed offering;
70
(iii) the Xxxxxx Shares made available to DGD Shareholders pursuant to
the Options shall be duly authorized and validly issued registered shares
which shall be freely tradeable, but shall not be part of any underwritten
offering;
(iv) upon the filing of the Registration Statement, Xxxxxx shall
deliver to each DGD Shareholder an option agreement setting forth the
proposed terms of the public offering, including the proposed offering
price, the proposed aggregate number of Xxxxxx Shares to be offered and the
number of Xxxxxx Shares which are to be offered to such DGD Shareholder.
Each DGD Shareholder who determines, on a tentative basis, to exercise the
option shall advise Xxxxxx, within the time prescribed in the option
agreement, which in any event will not be less than ten calendar days, of
such intent by returning a signed agreement to Xxxxxx;
(v) the offering of the Xxxxxx Shares and the exercise of any option
for such shares shall be by prospectus which shall be delivered, by Xxxxxx,
to each DGD Shareholder who advises Xxxxxx of its intent to purchase Xxxxxx
Shares. Upon the public offering becoming effective and the determination
of the offering price, Xxxxxx shall advise each such DGD Shareholder of the
offering price and the price of the Xxxxxx Shares to such DGD Shareholder
at 85% of the offering price. Upon receipt of such notice each such DGD
Shareholder shall, within the time period set forth in the notice, remit
payment for the Xxxxxx Shares or decline to effect such purchase;
(vi) the rights and options of DGD Shareholders pursuant to this
Section 6.04 are not assignable or transferable (except to the estate or
successors by law of a deceased shareholder or upon the liquidation,
distribution or dividend to shareholders of corporate DGD Shareholders) and
to the extent that any DGD Shareholder does not purchase Xxxxxx Shares
71
pursuant to such right and option, such Xxxxxx Shares shall not be
reallocated to other DGD Shareholders for option of purchase;
(vii) the amount of shares allocable to each DGD Shareholder shall be
determined by the result of multiplying (A) a fraction, the numerator of
which is the number of shares of DGD held by such shareholder at the
Closing Date and the denominator of which is the total amount of shares of
DGD held by all DGD Shareholders, by (B) the number of Xxxxxx Shares
allocated to DGD Shareholders pursuant to the public offering; and
(viii) the Board of Directors of Xxxxxx shall, at the time any
Registration Statement is filed, revise or supplement any procedures set
forth herein in such manner as may be required in order to effectuate the
intent of this Section 6.04.
ss.6.05 Documents.
NDI shall make available to DGD, upon reasonable request, the originals of
any documents set forth in Section 1.01(a)(vi) hereof, subject to appropriate
arrangements for the return thereof. Prior to NDI's destruction or disposal of
any original books or records acquired pursuant to Section 1.01(a)(vi) hereof or
otherwise, NDI will give DGD 30 days' prior written notice of such destruction
or disposal. DGD shall have the right during such 30 day notice period to
request NDI by written notice to return such books or records to DGD and NDI
shall promptly return such books and records to DGD. If DGD does not provide a
written request during such 30 day period, NDI shall have no further liability
or responsibility to DGD with respect to the destruction or disposal of such
books and records.
ss.6.06 Employee Benefit Plans.
Following the Closing, DGD shall proceed expeditiously to effect the
termination of all Employee Benefit Plans (as described in Section 4.01(j)).
72
ss.6.07 Liquidation.
DGD covenants and agrees that on and after the Closing it will not make any
distribution to its shareholders, except to the extent permitted by Section
14A:7-15 of the NJBCA, without making adequate provision for the payment of any
Excluded Liability, including payments with respect to any DEA liability or
environmental liability.
VII. TERMINATION
ss.7.01 Termination of Agreement.
This Agreement may be terminated at or before the Closing Date,
notwithstanding adoption and approval of this Agreement, and the other
transactions contemplated hereby by the shareholders of DGD:
(a) by mutual agreement of the Boards of Directors of Xxxxxx and DGD;
(b) at the option of either (i) Xxxxxx'x Board of Directors or (ii) DGD's
Board of Directors,if the Closing shall not have occurred on or before September
1, 1997;
(c) at the option of Xxxxxx'x Board of Directors at any time prior to the
Closing Date, if facts exist which render impossible compliance with one or more
of the conditions set forth in Section 5.01, and such are not waived by Xxxxxx;
and
(d) at the option of DGD's Board of Directors at any time prior to the
Closing Date, if facts exist which render impossible compliance with one or more
of the conditions set forth in Section 5.02 and such are not waived by DGD.
ss.7.02 Effect of Termination
If this Agreement is terminated in accordance with this Article VII, it
shall, subject to Section 7.04 hereof, forthwith become wholly void and of no
further force or effect without liability on the part of any party to this
Agreement or on the part of any officer, director,
73
controlling person or entity (if any), employee, agent, or shareholder thereof;
provided, however, that nothing in this Section 7.02 shall release Xxxxxx, NDI
or DGD from liability for a willful failure to carry out their respective
obligations under this Agreement.
ss.7.03 Costs and Expenses.
Each of Xxxxxx, NDI and DGD shall pay and bear its own fees and expenses
incident to the negotiation, preparation, and execution of this Agreement and
any meeting of its respective shareholders, including fees and expenses of its
counsel, accountants, investment banking firm, and other experts; provided,
however, that NDI shall pay the cost of any filing under the HSR Act.
ss.7.04 Financing Contingency.
In the event that NDI shall fail to obtain the financing approvals set
forth in Section 5.01(j) hereof and the transactions contemplated herein do not
close for failure to obtain such financing approvals on or before the date set
forth in Section 7.01(b) hereof, then NDI shall reimburse DGD for its costs and
expenses, including but not limited to reasonable attorneys' fees, accounting
fees, investment banking fees, environmental expenses and the like incurred in
connection with this transaction, provided, however that the amount of such
reimbursement shall not exceed $200,000 and the amount of such reimbursement
shall be reasonably evidenced by appropriate invoices and statements. If NDI
does not timely pay such amount after receipt of such appropriate invoices and
statements, NDI shall reimburse DGD for any reasonable amounts expended by DGD
in the collection of such amount.
VIII. MISCELLANEOUS
ss.8.01 Further Actions
74
At any time and from time to time, the parties hereto agree, subject to the
terms and conditions of this Agreement, to take such actions and to execute and
deliver such documents as may be reasonably necessary to effectuate the purposes
of this Agreement at the earliest practicable time.
ss.8.02 Availability of Equitable Remedies
Since a breach of the provisions of this Agreement could not adequately be
compensated by money damages, any party shall be entitled, either before or
after the Closing, in addition to any other right or remedy available to it, to
an injunction restraining such breach or threatened breach and to specific
performance of any such provision of this Agreement, and, in either case, no
bond or other security shall be required in connection therewith, and the
parties hereby consent to the issuance of such an injunction and to the ordering
of specific performance.
ss.8.03 Survival
The representations and warranties contained in or made pursuant to this
Agreement shall not survive the Closing except for representations and
warranties made in Section 4.01(n), (p) and (s) which shall survive for a period
of one year. The statements contained in any document executed by DGD relating
hereto or delivered to Xxxxxx in connection with the transactions contemplated
hereby or thereby, or in any statement, certificate, or other instrument
delivered by or on behalf of DGD pursuant hereto or thereto or delivered to
Xxxxxx in connection with the transactions contemplated hereby or thereby shall
be deemed representations and warranties, covenants and agreements, or
conditions, as the case may be, of DGD hereunder for all purposes of this
Agreement (including all statements, certificates, or other instruments
delivered pursuant hereto or thereto or delivered in connection with this
75
Agreement or any of the other transactions contemplated hereby). The statements
contained in any document executed by Xxxxxx or NDI relating hereto or delivered
to DGD in connection with the transactions contemplated hereby or thereby, or in
any statement, certificate, or other instrument delivered by or on behalf of
Xxxxxx or NDI pursuant hereto or thereto or delivered to DGD in connection with
the transactions contemplated hereby or thereby shall be deemed representations
and warranties, covenants and agreements, or conditions, as the case may be, of
Xxxxxx or NDI, as the case may be, hereunder for all purposes of this Agreement
(including all statements, certificates, or other instruments delivered pursuant
hereto or thereto or delivered in connection with this Agreement or any of the
other transactions contemplated hereby).
ss.8.04 Modification
This Agreement sets forth the entire understanding of the parties with
respect to the subject matter hereof and supersedes all prior or existing
agreements among them concerning such subject matter. This Agreement may be
amended by a written instrument executed by Xxxxxx and DGD with the approval of
their respective Boards of Directors.
ss.8.05 Notices
Any notice or other communication required or permitted to be given
hereunder shall be in writing and shall be mailed by certified mail, return
receipt requested or by Federal Express, Express Mail, or similar overnight
delivery or courier service or delivered (in person or by facsimile, or similar
telecommunications equipment) against receipt to the party to which it is to be
given at the address of such party set forth in the preamble to this Agreement
(or to such other address as the party shall have furnished in writing in
accordance with the provisions of this Section 8.05) or to the facsimile number
set forth
76
beneath such party's signature to this Agreement. Any notice: to DGD shall be
addressed to the attention of Xxxx Xxxxx, Secretary/Treasurer, with a copy to
Scheichet & Xxxxx P.C., 000 Xxxx Xxxxxx, Xxx Xxxx, XX 00000, Attention: Xxxxx X.
Xxxxxxxxx, Esq.; or to Xxxxxx shall be addressed to the attention of Xxxxxxx
Xxxxxxx, President with a copy to Xxxxxx Xxxx & Xxxxxx LLP, 000 Xxxx Xxxxxx, Xxx
Xxxx 00000, Attention: Xxxxxx X. Xxxxxxxx, Esq. Any notice given by any means
permitted by this Section 8.05 shall be deemed given at the time of receipt
thereof.
ss.8.06 Waiver
Any waiver by any party of a breach, violation or default of any provision
of this Agreement shall not operate as or be construed to be a waiver of any
other breach, violation or default of that provision or of any breach, violation
or default of any other provision of this Agreement. The failure of a party to
insist upon strict adherence to any provision of this Agreement on one or more
occasions will not be considered a waiver or deprive that party of the right
thereafter to insist upon strict adherence to that provision or any other
provision of this Agreement. Any waiver must be in writing and be authorized by
an officer of the waiving party. No party shall have the right to waive
compliance with the second sentence of Section 8.04, any other condition
required by applicable law, or this sentence.
ss.8.07 Binding Effect
The provisions of this Agreement shall be binding upon and inure to the
benefit of Xxxxxx, NDI and DGD, and their respective successors and assigns.
ss.8.08 No Third-Party Beneficiaries
77
Other than with respect to Section 6.04 hereof, this Agreement does not
create, and shall not be construed as creating, any rights enforceable by any
person or entity not a party to this Agreement.
ss.8.09 Severability
If any provision of this Agreement shall hereafter be held to be invalid or
unenforceable for any reason, such provision shall be reformed to the maximum
extent permitted to preserve the parties' original intent, failing which, it
shall be severed from this Agreement with the balance of this Agreement
continuing in full force and effect, provided, however, that the economic
benefits accruing to each party hereto shall remain substantially unchanged.
Such occurrence shall not have the effect of rendering the provision in question
invalid in any other jurisdiction or in any other case or circumstance, or of
rendering invalid any other provisions contained herein to the extent that such
other provisions are not themselves actually in conflict with or invalid or
unenforceable under any applicable law.
ss.8.10 Headings
The headings in this Agreement are solely for convenience of reference and
shall be given no effect in the construction or interpretation of this
Agreement.
ss.8.11 Counterparts; Governing Law; Jurisdiction, Etc.
This Agreement may be executed in any number of counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument. It shall be governed by and construed in accordance with
the laws of the State of New Jersey, without giving effect to conflict of laws
principals. Any action, suit, or proceeding arising out of, based on, or in
connection with this Agreement, any document relating hereto or delivered in
connection with the transactions contemplated hereby, any
78
statement, certificate, or other instrument delivered by or on behalf of, or
delivered to, any party hereto or thereto in connection with the transactions
contemplated hereby or thereby, any breach of this Agreement or such other
document, or the other transactions contemplated hereby or thereby may be
brought only in the United States District Court for the Northern District of
New Jersey or the Courts of the State of New Jersey, and each party covenants,
waives and agrees not to assert, by way of motion, as a defense, or otherwise,
in any such action, suit, or proceeding, any claim that it is not subject
personally to the jurisdiction of such court if it has been duly served with
process, that its property is exempt or immune from attachment or execution,
that the action, suit, or proceeding is brought in an inconvenient forum, that
the venue of the action, suit, or proceeding is improper, or that this Agreement
or the subject matter hereof may not be enforced in or by any such court. Each
party hereto consents to the personal jurisdiction of each such court and to the
service of process by mail at its address to which notices are to be sent under
Section 8.05 hereof in connection with any such action, suit or proceeding.
ss.8.12 Xxxxxx Guarantee.
Xxxxxx hereby guarantees the timely performance and obligations of NDI
under this Agreement.
ss.8.13 Definitions.
The following terms are defined in this Agreement at the locations
indicated below:
Term Section Page
---- ------- ----
"Accounting Firm" 1.04A(f) 18
"Accounts Receivable" 1.01(a)(ii) 2
"APCA" 4.01(n) 45
"Assets" 1.01(c) 6
"Assignment and Assumption Agreement" 1.03(b) 7
79
"Assumed Liabilities" 1.03(b) 8
"Assumed Current Liabilities" 1.03(b) 7
"Audit Adjustments" 1.04A(a) 16
"Audited Balance Sheet" 1.04A(a) 16
"Audited Financial Statements" 4.01(o) 47
"Balance Sheet Date" 1.04(c) 13
"Bank Debt" 1.03(a) 7
"Xxxx of Sale" 1.02 6
"Bridging Agreement" 5.01(n) 62
"Business" Title 1
"CAA" 4.01(n) 45
"Cash Consideration" 1.04(a) 13
"CERCLA" 1.03(c)(xv) 11
"Checks" 1.03(b) 7
"Closing Date" 1.06 22
"Closing Balance Sheet" 1.04(c) 13
"Closing" 1.01(a) 22
"Collective Agreement" 3.01(b) 31
"Committee" 1.04A(j) 20
"Contract Rights" 1.01(a)(iv) 3
"Contracts" 2.02(c) 24
"Cross Receipt" 5.01(o)(xii) 64
"CWA" 4.01(n) 45
"DEA" 1.01(a)(xi) 4
"Delivery Service Agreement" 5.01(m) 62
"DGD Shareholders" 6.04 68
"DGD Responsible Employee" 2.02(d) 25
"DGD Employees" 3.01(b) 31
"DGD" Title 1
"Environmental Law" 4.01(n) 45
"Environmental Claim" 4.01(n) 45
"ERISA" 4.01(j)(i) 38
"Excluded Assets" 1.01(b) 6
"Excluded Liabilities" 1.03(c) 9
"FDA" 2.02(e) 26
"Financial Statements" 4.01(o)(i) 47
"Fixed Assets" 1.01(a)(ix) 4
"FWPA" 4.01(n) 45
"Hazardous Material" 4.01(n) 46
"Hourly Union Employees" 3.01(b) 00
"XXX Xxx" 5.03 68
"Intangible Property" 1.01(a)(x) 4
"Interest Rate" 1.04(d)(ii)(C) 15
"Inventory" 1.01(a)(i) 2
"ISRA" 4.01(n)(x) 44
80
"LC" 1.04(e) 15
"Leased Properties" 4.01(n)(i) 41
"Leases" 4.01(q)(i)(B) 49
"Lender Statement" 1.04(c) 14
"Litigation" 4.01(y) 55
"March Balance Sheet" 4.01(o)(i) 47
"Meadow" 1.03(c)(xvi) 11
"NDI" Title 1
"Net Asset Value" 1.04(c) 14
"Xxxxxx Shares" 6.04 70
"Xxxxxx Responsible Employee" 2.03(c) 29
"Xxxxxx" Title 1
"NJBCA" 4.01(c) 34
"Note" 1.04(a) 13
"Options" 6.04 70
"OSH Act" 4.01(n) 45
"Owned Properties" 4.01(n)(i) 41
"PCBs" 4.01(n)(v) 43
"Post Audit Adjustment" 1.04A(b) 17
"Post Audit Adjustment Notice" 1.04A(b) 17
"Purchase Price" 1.04(a) 13
"RCRA" 4.01(n)(v) 43
"Real Estate" 1.01(a)(v) 3
"Real Property" 4.01(q)(i)(A) 49
"Receivable Adjustment" 1.04A(d) 17
"Registration Statement" 6.04 70
"Release" 4.01(n) 46
"Rental Agreement" 5.02(h) 67
"Salaried Employees" 3.01(a) 30
"SDWA" 4.01(n) 45
"SEC" 2.02(e) 25
"Second Note" 1.04(a) 13
"Spill Act" 4.01(n) 45
"SWMA" 4.01(n) 44
"Total Audit Adjustment" 1.04A(c) 17
"Total Adjustment" 1.04A(e) 18
"TSCA" 4.01(n) 45
"WPCA" 4.01(n) 45
81
IN WITNESS WHEREOF, this Agreement has been executed by duly authorized
officers of each of the parties hereto as of the date first above written.
XXXXXX HEALTH SERVICES, INC.
By /s/ Xxxxxxx X. Xxxxxxx
------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: President
Facsimile No.: (000) 000-0000
Attest:
/s/ Xxxxxx Xxxxxxx
-----------------------------
XXXXXX DISTRIBUTORS, INC.
By /s/ Xxxxxxx X. Xxxxxxx
------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: President
Facsimile No.: (000) 000-0000
Attest:
/s/ Xxxxxx Xxxxxxx
-----------------------------
DRUG GUILD DISTRIBUTORS, INC.
By /s/ Xxxxxx Xxxxxxxxxxxx
------------------------
Name: Xxxxxx Xxxxxxxxxxxx
Title: President
Facsimile No.: (000) 000-0000
Attest:
/s/ Xxxxxxx Xxxx
-----------------------------
82
