PURCHASE AND SALE AGREEMENT
This Agreement is made and entered into this ___ day of February, 1997 by
and between Xxxxxx Drug Company, Inc., a North Carolina corporation ("Seller")
and Sunscript Pharmacy Corporation, a New Mexico corporation ("Purchaser").
PURCHASE AND SALE
1. On the terms and conditions set forth herein, Seller shall sell to
Purchaser and Purchaser shall purchase from Seller all of the assets,
properties, rights and claims used in connection with the operation of Seller's
institutional pharmacy operations in Pink Hill, North Carolina (the "Pharmacy
Business"), including, but not limited to the following (collectively, the
"Seller's Assets"):
(a) All of Seller's inventory used in connection with the operation
of the Pharmacy Business (the "Inventory");
(b) All of Seller's operating supplies, including, but not limited
to, unit dose supplies, pharmacy labels, pharmacy forms and packaging
supplies used and usable in connection with the operation of the Pharmacy
Business (the "Operating Supplies");
(c) All motor vehicles, listed on Exhibit A hereto (the "Motor
Vehicles");
(d) All outstanding and uncollected accounts receivable of Seller
generated by the Pharmacy Business, as the same exist as the close of business
on the last business day prior to the Closing Date (the "Receivables"), subject
to the provisions hereinafter set forth;
(e) All of Seller's rights in, to and under the "Rx Contracts" as
defined in Paragraph 8(h) hereof;
(f) All of Seller's rights in, to and under any contracts or leases,
other than the Rx Contracts, relating to the operation of the Pharmacy Business
(the "Contracts");
(g) All service marks, trademarks or trade names owned or employed by
Seller in conjunction with the Pharmacy Business, specifically including the
name "Tar Heel Consultants" (the "Trade Name") and any trademarks related
thereto; provided Purchaser acknowledges and agrees that Seller claims no legal
right to the use or exclusive use of the Trade Name and any sale shall be
limited to any rights which Seller may have therein and thereto;
(h) All of Seller's intangible property, including any going concern
systems and institutional goodwill associated with the Pharmacy Business (the
"Intangible Property"); and
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(i) All of the equipment, furniture, fixtures and other tangible
personal property used in connection with the operation of the Pharmacy Business
and not described above, including, but not limited to, entitlements and
telephone numbers (the "Personal Property");
(j) Any items of prepaid expenses relating to the operation of the
Pharmacy Business for the sixty (60) day period immediately preceding the
Closing Date;
provided, however, the Seller's Assets shall not include Seller's cash on hand
or in banks, bank accounts of any kind, prepaid insurance or personal items
belonging to Seller and set forth on Exhibit B hereto (collectively, the
"Excluded Assets").
In addition to Purchaser's purchase of the Seller's Assets, at Closing
Purchaser shall assume all of Seller's liabilities and obligations for the Trade
Payables and arising under the Rx Contracts and the Contracts, provided in each
case Seller is not in breach thereof. As used herein, "Trade Payables" shall
mean the reasonable expenses incurred in the ordinary course of operating the
Pharmacy Business for the sixty (60) day period immediately preceding the
Closing Date, for Inventory, Operating Supplies, advertising, utilities,
insurance, postage and shipping, rental, repair and maintenance of property,
travel expenses, commissions and fees paid to third parties for their services,
and all other ordinary and necessary expenses of the Pharmacy Business, but
excluding wages, employee benefits, employee taxes, debt service, depreciation
and amortization, income taxes, and any and all extraordinary items.
AGGREGATE CONSIDERATION
2. The aggregate consideration payable by Purchaser shall be One Million Eight
Hundred Fifty Thousand and no/100 Dollars ($1,850,000) (the "Aggregate
Consideration") and shall be payable by certified or cashier's check or wire
transfer at Closing, Seven Hundred Fifty Thousand and no/100 ($750,000) of -
Compete Agreement (as defined below) and the Xxxxxx Employment Agreement (as
defined below); and the balance of which, i.e., One Million One Hundred Thousand
and no/100 Dollars ($1,100,000), shall be paid to Seller in consideration for
the Seller's Assets. In addition, at Closing Purchaser shall cause to be issued
to Xxxxxxx Xxxxxx non-transferrable Warrants to acquire an aggregate of 40,000
shares of the common stock of Sun Healthcare Group, Inc. ("Sun"), at an exercise
price per share of $3.00 above the closing trading price of Sun's common stock
on the trading day immediately preceding the Closing Date, which Warrants shall
be in substantially the form attached hereto as Exhibit C. For good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Xxxxxxx Xxxxxx is hereby granted an option to sell to Sun and
require Sun to purchase the Warrants for a purchase price of $100,000 (the "Put
Option"). The Put Option may be exercised only by giving written notification
to that effect to Sun and only within the thirty day period following Closing.
(a) The Aggregate Consideration assumes that at Closing the Receivables
will be equal to the Trade Payables (as hereinafter defined). Accordingly, in
the event the Receivables are more
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than the Trade Payables, the Aggregate Consideration shall be increased on a
dollar for dollar basis by such excess and in the event the Receivables are
less than the Trade Payables, the Aggregate Consideration shall be reduced on
a dollar for dollar basis by such shortfall. In order to implement the
foregoing provision, the following procedures shall apply:
(i) Seller shall close its books as of the close of business on the last
business day prior to the Closing Date and shall cause Seller's Accountants
(as hereinafter defined) to prepare and deliver to Purchaser, not more than
thirty (30) days after the Closing Date, a written Closing Date Balance
Sheet of Seller (the "Closing Date Balance Sheet"). The Closing Date
Balance Sheet shall reflect, among other assets and liabilities of Seller,
the amounts of Inventory, Operating Supplies, Receivables and Trade
Payables, each as of the close of business on the last business day prior
to the Closing Date. The Closing Date Balance Sheet shall be certified by
Seller's Accountants as having been prepared in accordance with appropriate
rules and standards for compiled financial statements applied on a
consistent basis. As used herein, the term "Seller's Accountants" shall
mean the firm of certified public accountants then providing accounting
services to Seller, and the term "Purchaser's Accountants" shall mean the
corporate accounting department of the Purchaser or Sun.
(ii) After review by Purchaser and, if desired by Purchaser, by Purchaser's
Accountants, Purchaser shall notify Seller, within thirty (30) business
days following receipt by Purchaser of the Closing Date Balance Sheet, as
to whether it accepts or proposes changes to the Closing Date Balance
Sheet, or both.
(A) If Purchaser shall notify Seller that it accepts the Closing Date
Balance Sheet prepared by Seller's Accountants, such Closing Date
Balance Sheet, and the amounts reflected therein for Seller's
Receivables and Trade Payables, shall become final and binding as of
the date of such notification by Purchaser to Seller (the "Final
Closing Date Balance Sheet").
(B) If Purchaser shall notify Seller that it proposes changes to the
Closing Date Balance Sheet and if Purchaser and Seller reach agreement
on such changes, then the Closing Date Balance Sheet with the agreed
changes shall become the Final Closing Date Balance Sheet as of the
date upon which such agreement is reached.
(C) If Purchaser shall notify Seller that it proposes changes to any
of the amounts for Receivables or Trade Payables reflected in the
Closing Date Balance Sheet prepared by Seller's Accountants, and if
Purchaser and Seller do not reach agreement on such proposed changes
(the "Disputed Amount(s)") within ten (10) business days thereafter,
then Seller's Accountants and Purchaser's Accountants shall jointly
select a firm of certified public accountants (the "Independent
Accountants") which has no prior business relationship with either
Seller or Purchaser. The Independent Accountants shall then review
each of the Disputed Amount(s).
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(1) If the Independent Accountants shall determine that any of
the Disputed Amount(s) should be modified in any respect, the
Independent Accountants will make such changes therein as they
deem necessary and forward the Closing Date Balance Sheet, as so
modified, to Purchaser and Seller.
(2) If the Independent Accountants shall determine that each of
the Disputed Amount(s) is correct as is, they shall so notify
Purchaser and Seller.
(3) The Independent Accountants shall reach their determination
and either notify Purchaser and Seller that each of the Disputed
Amount(s) is correct as is or shall forward the modified Closing
Date Balance Sheet to Purchaser and Seller within thirty (30)
business days after having been engaged to perform such work.
Such determination of the Independent Accountants shall be final
and binding.
(b) The Aggregate Consideration also assumes that within the first twelve
months after the Closing Date Purchaser will, exercising its reasonable efforts,
collect no less than 90% of the Receivables reflected on the Closing Balance
Sheet. Accordingly, within thirty (30) days after the first anniversary of the
Closing Date, Purchaser shall advise Seller in writing as to the amount of the
Receivables actually collected by it and whether any payment is due from Seller
to Purchaser and, if so, the amount thereof. In the event a payment is owing
from Seller to Purchaser, Purchaser shall include an accounting which reflects
the Receivables on the Closing Balance Sheet and the collection history with
respect thereto. Any payment due from Seller to Purchaser shall be payable
within thirty (30) days after Seller's receipt of a written demand therefor and
shall bear interest at the rate of 10% per annum from the date due to the date
paid if not paid within said ten (10) day period. Seller shall have the right
to audit, at its sole cost and expense, the books and records of Purchaser in
order to verify the collection history provided by Purchaser to Seller.
(c) The Aggregate Consideration payable to Seller shall be allocated among
the Seller's Assets as shown on Exhibit D hereto. Purchaser and Seller make
this allocation with the knowledge and understanding that it will be used by
them for all purposes including tax purposes. Each party agrees that it will
report this transaction in accordance with such allocation and in accordance
with Section 1060 of the Internal Revenue code of 1986, and that neither will
maintain a position inconsistent with such allocation except with the written
consent of the other party hereto.
(d) Seller and Purchaser agree that the estimated value of the Inventory
as of January 7, 1997 is $161,125.96 and that such Inventory value as of May
___, 1996 was $119,118.44, with a difference of $42,007.52. Purchaser and Selrm
this figure in accordance with the reconciliation procedure to be followed under
Paragraph 2(a) for the Receivables and Trade Payables. Purchaser and Seller
further agree that Inventory value approximating $42,007.52 shall be offset
against the Receivables/Trade Payables reconciliation. Purchaser shall remit
a positive difference to Seller within the time period
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contemplated in Paragraph 2(a), and Seller shall remit any deficiency to
Purchaser within the time period contemplated in Paragraph 2(a). In the
event of any disagreement between Purchaser and Seller as to the Inventory
value, the parties shall follow the dispute procedures set forth in Paragraph
2(a).
Except as specifically provided in this Agreement, Purchaser does not hereby or
in connection herewith assume any liability of Seller whatsoever in relation to
the Pharmacy Business or Seller's Assets.
CLOSING
3. The Closing of the purchase and sale under this Agreement (the "Closing")
shall take place on February 14, 1997 (the "Closing Date") (provided all of the
conditions to Closing set forth in Paragraph(s) 14 and 15 have been satisfied or
waived) or on such later date as soon thereafter as possible to which the
parties may mutually agree but in no event later than February 28, 1997. Closing
shall occur at such place as Purchaser and Seller may mutually agree. Time is
of the essence hereto.
CONVEYANCES
4. Conveyance of the Seller's Assets to Purchaser shall be effected by Xxxx of
Sale with respect to the Personal Property, the Inventory and the Operating
Supplies and by Assignment and Assumption Agreement with respect to the Trade
Name, the Receivables and the Trade Payables, all of which shall be in the forms
attached hereto as Exhibits E and F. Title to the Personal Property, the
Operating Supplies, the Inventory and the Receivables shall be conveyed from
Seller to Purchaser free and clear of all liens, charges, easements and
encumbrances of any kind or nature.
COSTS AND PRORATIONS.
5. The costs of the transaction described herein shall be allocated among
Seller and Purchaser as follows:
(a) Seller shall pay any state, county, or local transfer tax or sales tax
due and payable as a result of the sale hereunder of Seller's Assets,
including any transfer taxes due upon the sale to Purchaser of any vehicles
included in Seller's Assets (the "Vehicle Taxes").
(b) Purchaser and Seller shall each pay their own attorney's fees.
6. The revenues and expenses associated with the ownership and operation of
the Pharmacy Business shall be allocated between Purchaser and Seller as
provided below:
(a) Except as otherwise specifically provided herein with respect to the
Receivables and the Trade Payables, all ordinary operating expenses of the
Pharmacy Business, such as real
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and personal property taxes and all revenues generated by the Pharmacy
Business shall be prorated and allocated as of the Closing Date so that
such expenses and revenues are for the account of the Seller for the period
prior to the Closing Date, and for the account of the Purchaser from and
after the Closing Date. Except as otherwise provided herein, any
adjustments and payments between Seller and Purchaser by reason of the
foregoing provisions hereof shall be made upon the completion of the
Closing Date Balance Sheet and related income statement.
(b) In furtherance of the foregoing, the parties acknowledge and agree
that except as otherwise specifically provided herein:
(i) Seller shall be responsible and shall remain liable for all costs
and expenses, obligations, liabilities, occurrences and/or claims of
every kind and nature whatsoever attributable to or incurred in
connection with the possession, operation, management, and maintenance
of the Seller's Assets, the Pharmacy Premises and the Pharmacy
Business prior to the Closing Date other than the Trade Payables as
provided for herein; and
(ii) At Closing, Purchaser shall assume and be responsible for
all costs and expenses, obligations, liabilities, occurrences and/or
claims of every kind and nature whatsoever attributable to or incurred
in connection with the possession, operation, management and
maintenance of the Seller's Assets, the Pharmacy Premises and the
Pharmacy Business, including the Trade Payables as provided for
herein, but excluding any state or federal income taxes due and
payable by Seller.
POSSESSION
7. At Closing, Purchaser shall be entitled to possession of the Seller's
Assets and to all records located at the pharmacy operated by Seller and
used or developed by Seller in connection with the Pharmacy Business.
REPRESENTATIONS AND WARRANTIES
8. Seller hereby warrants and represents to Purchaser that:
(a) STATUS OF SELLER. Seller is a duly organized and validly existing
North Carolina corporation and is in good standing under the laws thereof.
(b) AUTHORITY. Seller has full power and authority to execute and to
deliver this Agreement and all related documents, and to carry out the
transactions contemplated herein. This Agreement is valid, binding and
enforceable against Seller in accordance with its terms and Seller has not
previously agreed to sell the Seller's Assets to anyone other than
Purchaser. Subject to Purchaser obtaining licensure approval from the
North Carolina Board
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of Pharmacy and a controlled substances number from the federal Drug
Enforcement Agency or securing from Seller the right to operate the
Pharmacy Business under Seller's license and DEA number until the same
are issued to Purchaser, the execution of this Agreement and the
consummation of the transactions contemplated herein do not result in a
breach of the terms and conditions of nor constitute a default under or
violation of Seller's Articles of Incorporation or Bylaws or any law,
regulation, court order, mortgage, note, bond, indenture, agreement,
license or other instrument or obligation to which Seller is now a party or
by which Seller or any of the Seller's Assets may be bound or affected.
(c) TITLE. The items listed in Paragraph 1 of this Agreement and the
items listed on Exhibit G of this Agreement are all of the items of
tangible and intangible personal property used by Seller in connection with
the Pharmacy Business. Seller has good and marketable title to the Seller's
Assets, subject to liens and encumbrances identified in Exhibit H that will
be paid and discharged as of the Closing Date and subject to property taxes
not yet due and payable. Seller is the owner of all of the Personal
Property described in D other than the Personal Property specifically
identified therein as leased by Seller (the "Leased Personal Property"). As
of the Closing Date, Seller will have and will deliver to Purchaser good
and marketable title to the Seller's Assets free and clear of all liens and
encumbrances, except for the lien for property taxes not yet due and
payable and the lessor's interest in the Leased Personal Property;
provided, however, to the extent certain software conveyed as a part of the
Seller's Assets may be subject to the terms of license agreements, and
certain leasehold interests or the Contracts may be subject to provisions
restricting assignment thereof, Seller shall proceed with all due diligence
to secure any consents required thereunder in accord with section 8(j)
below. The Seller's Assets are being conveyed "AS IS" and "WHERE IS";
provided, however, that as of the Closing Date Seller's Assets shall be in
the same condition as existed as of the Purchaser's inspection thereof,
ordinary wear and tear excepted.
(d) THE PHARMACY PREMISES. A true and correct copy of the lease with
respect to the premises from which Seller currently conducts the Pharmacy
Business, which are commonly known as 000 Xxxx Xxxxxxxx, Xxxx Xxxx, Xxxxx
Xxxxxxxx, formerly known as 000 Xxxx Xxxxxxxx, (the "Pharmacy Premises")
has been provided by Seller to Purchaser prior to the execution of this
Agreement (the "Pharmacy Premises Lease").
(e) LICENSURE. Seller currently maintains all local, state and federal
licenses necessary for the lawful operation of the Pharmacy Business,
including, but not limited to, its license issued by the North Carolina
Board of Pharmacy and a controlled substances number issued by the federal
Drug Enforcement Agency (the "Licenses") and currently meets all
requirements necessary for re-licensure as of, or as soon as practicable
after, the Closing Date. Seller has not received notice of any action
pending or, to the best knowledge of Seller, recommended by the appropriate
local, state or federal agency having jurisdiction thereof, to terminate or
rescind or not to renew any of the Licenses or any action of any other type
which would have a material adverse effect on the Pharmacy Business or the
Seller's Assets.
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(f) EMPLOYEES; UNIONS.
(i) Set forth in Exhibit I (the "Employee Schedule") is a schedule of
all persons presently employed by Seller (including without limitation
any "casual employees") in the operation of the Pharmacy Business and
the wages and other benefits presently paid to such employees, all
earned and accrued vacation, holiday and sick pay and retirement and
severance benefits and earned bonuses due to and/or coming due to the
employees of the Pharmacy Business as of _____________, 19__. Exhibit
I also separately lists the independent contractors who assist in the
operation of the Pharmacy Business with a brief description of the job
of each such independent contractor.
(ii) Except as set forth on Exhibit I, there are no agency,
employment or consulting agreements, union contracts, or pension,
profit sharing, retirement, deferred compensation, bonus, stock
purchase, hospitalization, insurance or other plans, agreements,
otherwise affecting the Pharmacy Business, and, except as set forth on
Exhibit I, the employment of any or all of such persons may be
terminated at the option of Seller, without penalty or additional
payment of any nature, upon not more than thirty (30) days' prior
written notice.
(iii) Except as set forth on Exhibit I, (A) Seller's operation of
the Pharmacy Business is in compliance in all material respects with
all applicable local, state and federal laws respecting employment and
employment practices, terms and conditions of employment and wages and
hours, and Seller is not engaged in any unfair labor practice; (B)
there is no unfair labor practice charge or complaint against Seller
pending or, to Seller's best knowledge, threatened before the National
Labor Relations Board; (C) there is not now, nor has there been in the
last three (3) years, any labor strike, dispute, request for
representation, work slowdown or work stoppage actually pending or, to
Seller's best knowledge, threatened against or affecting the Pharmacy
Business; (D) Seller is not a party to any collective bargaining
agreement or other contract or commitment to or with any labor union
and, to the best knowledge of Seller, no representative of any labor
union has made any attempt to organize or represent all or any part of
the employees of Seller; and (E) there are no pending grievance
proceedings by any employee of Seller against Seller, or against any
agent, representative or employee of Seller, and, to the best
knowledge of Seller, there are no existing facts which would provide a
basis for any such grievance proceedings.
(g) COMPLIANCE WITH LAW.
(i) The Pharmacy Business, Seller's Assets and the Pharmacy Premises
are in compliance with all currently applicable municipal, county,
state and federal laws,
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regulations, ordinances, standards and orders and with all municipal
and health regulations where the failure to comply therewith or to
obtain a waiver therefrom could have a material adverse effect on the
business, property, condition (financial or otherwise) or operation of
the Seller's Assets, the Pharmacy Premises or the Pharmacy Business.
(ii) Seller has no knowledge of nor has Seller received any notice,
verbal or written, of any outstanding deficiencies or work orders of
any authority having jurisdiction over the Pharmacy Business, the
Pharmacy Premises or the Seller's Assets requiring conformity to any
applicable statute, regulation, ordinance or by-law pertaining
thereto; and
(iii) Seller is not aware of any claim, requirement or demand of any
licensing or certifying agency supervising or having authority over
the Pharmacy Premises to rework or redesign it or to provide
additional furniture, fixtures or equipment so as to conform to or
comply with any existing law, code or standard which has not been
fully satisfied prior to the date hereof or which will not be
satisfied prior to the Closing Date.
(h) CONTRACTS. Attached hereto as Exhibit J is a true and correct copy of
each of the Pharmaceutical and Consulting Pharmacist Agreements between
Seller and the institutional providers currently serviced by it (the "Rx
Contracts"). Each of the Rx Contracts is in full force and effect and none
of the Rx Contracts has been modified or amended except as set forth in
Exhibit J. Seller is not in default of any of its obligations under the Rx
Contracts nor is Seller aware of any default or any action which, with the
passage or time or the giving of notice or both would constitute a default,
under the Rx Contracts by any other party thereto. At Closing Seller shall
deliver to Purchaser either duly executed assignments of the Seller Rx
Contracts or new contracts between Purchaser and each of the facilities
which are parties to the Rx Contracts (the "New Rx Contracts").
(i) ACCOUNTS RECEIVABLE. Attached hereto as Exhibit K is a true and
correct accounts receivable aging (the "AR Aging Report") with respect to
the Pharmacy Business as of December 31, 1996 and a Trade Payables report
(the "Trade Payables Report") with respect to the Pharmacy Business as of
December 31, 1996. The AR Aging Report and the Trade Payables Report shall
be updated as of the Closing Date.
(j) NECESSARY ACTION. Seller will proceed with all due diligence to take
all action and obtain all consents prior to Closing necessary for it to
lawfully enter into and carry out the terms of this Agreement, including,
but not limited to, obtaining the approval of its Board of Directors and
shareholders.
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(k) INVENTORY/OPERATING SUPPLIES. All of the Inventory to be
transferred by Seller to Purchaser on Closing is salable and is not out-of-
date. As of the Closing Date, the Operating Supplies shall be consistent
with Seller's customary practices.
(l) TAXES AND TAX RETURNS. All tax and other returns, reports and
filings of any kind or nature, required to be filed by Seller prior to date
of execution of this Agreement have been properly completed and timely
filed, or extensions for the filing thereof have been timely secured, with
all such filings being in material compliance with all applicable
requirements and all taxes due and payable by Seller have been or will be
paid on a timely basis before the same become delinquent. On or prior to
the Closing Date, Seller will pay all state, federal and local taxes (the
"Taxes") due or overdue as of the Closing Date, including, but not limited
to, the Vehicle Taxes.
(m) LITIGATION. Except as provided in Exhibit L, Seller has no
knowledge of nor has Seller received any notice, verbal or written, of any
litigation, investigation or other proceeding pending or threatened against
or relating to Seller, its properties or business, which is material to the
Seller's Assets, the Pharmacy Premises or the Pharmacy Business or to this
Agreement. The transaction contemplated herein has not been challenged by
any governmental agency or any other person, nor does Seller know or have
reasonable grounds to know, of any basis for any such litigation,
investigation or other proceeding.
(n) LIENS. Seller has no knowledge of nor has Seller received any
notice, verbal or written, of any mechanics', materialmen's or similar
claims or liens presently claimed or, to the best of Seller's knowledge,
which will be claimed against the Pharmacy Premises or the Seller's Assets
for work performed or commenced prior to the date hereof at the request of
Seller or of which Seller has knowledge, Seller having made or caused to be
made arrangements for payment of all any improvements now under
construction or development.
(o) ENVIRONMENTAL MATTERS. Except in accordance with, and in full
compliance with, any and all applicable governmental laws, regulations and
requirements (collectively, the "Environmental Laws") relating to
environmental and occupational health and safety matters and hazardous
materials, substances or wastes (as defined from time to time under any
applicable federal, state or local laws, regulations or ordinances), Seller
has not released into the environment, or discharged, placed or disposed of
any such hazardous materials, substances or wastes or caused the same to be
so released into the environment or discharged, placed or disposed of at,
on or under the Pharmacy Premises. To the best of Seller's knowledge, no
hazardous materials, substances or wastes are located on the Pharmacy
Premises or have been released into the environment or discharged, placed
or disposed of in, on or under the Pharmacy Premises; to the best of
Seller's knowledge, no underground storage tanks are or have been located
on the Pharmacy Premises; to the best of Seller's knowledge, the real
property on which the Pharmacy Premises are located has never been used as
a dump for waste material; and to the best of Seller's knowledge, the
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Pharmacy Premises and its prior uses comply with, and at all times have
complied with, all Environmental Laws.
(p) SELLER'S FINANCIALS, BOOKS AND RECORDS, TAXES.
(i) True and correct copies of the Balance Sheet and Income Statement
of the Seller as at October 31, 1996 and for the periods ended October
31, 1996 have been previously delivered to Purchaser. All such
financial statements are consistent with the books and records of
Seller and fairly present the assets and liabilities and the financial
condition of Seller, and accurately set forth in all material respects
the results of the operations of Seller for the periods covered
thereby, and as to any such statements prepared by Seller's
Accountants, such financial statements have been prepared in
accordance with the appropriate rules and standards for compiled
financial statements applied on a consistent basis.
(ii) Since October 31, 1996, there has been no material adverse change
in the business, assets, properties, operations, or condition
(financial or otherwise) of the Pharmacy Business or Seller's
operation thereof and to Seller's actual knowledge (without any
independent investigation) there has not been any development or
threatened development of a nature that is or may be materially
adverse thereto. For purposes of this Agreement, price changes and
other changes affecting the institutional pharmacy industry generally
shall not be deemed to be material adverse changes.
(iii) Any financial statements of Seller prepared with respect to
any periods between October 31, 1996 and the Closing Date have been
prepared or will be prepared consistent with the books and records of
Seller, will fairly present the assets and liabilities and the
financial condition of Seller, and will accurately set forth in all
material respects the results of the operations of Seller for the
periods covered thereby and will be provided to Purchaser within ten
(10) days after the completion thereof.
(iv) All of the books and records of the Pharmacy Business are true
and correct in all material respects.
(q) INSURANCE. Set forth in Exhibit M is a true and complete schedule of
current insurance coverage, the premiums payable therefor and a brief
description of all policies or binders of fire, extended coverage,
liability, professional liability, bonding, crime, workmen's compensation,
vehicular and other insurance maintained by Seller with respect to Seller's
Assets. All such policies are in full force and effect and Seller has not
received any notices or threats of cancellation, change or modification of
coverage. All premiums covering all periods up to and including the date
hereof have been paid on such policies. Seller has no actual knowledge of
any state of facts, or of the occurrence of any event, which, with notice
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or lapse of time or both, reasonably might form the basis for any claim
against Seller not fully covered by the policies referred to on Exhibit M,
and Seller has received no notice regarding any increase in the insurance
premiums to be paid by Seller or that the insurance coverage listed on
Exhibit M will no longer be available on substantially the same terms as
are now in effect. Seller has not been refused any insurance with respect
to Seller's Assets, nor has its coverage been limited by any insurance
carrier to which it has applied for any such insurance or with which it has
carried insurance during the last five (5) years.
(r) DISCLOSURE. No representation or warranty of Seller set forth herein
or in the exhibits hereto and no statement contained in any certificate,
list, exhibit or other instrument furnished or to be furnished to Purchaser
pursuant hereto contains or will contain an untrue statement of a material
fact or omits or will omit to state any material facts necessary to make
the statements contained herein or therein not misleading.
9. Purchaser hereby warrants and represents to Seller that:
(a) STATUS OF PURCHASER. Purchaser is a duly organized, validly existing
New Mexico corporation and is, or prior to Closing will be, duly qualified
to do business in the State of North Carolina.
(b) AUTHORITY. Purchaser has, or shall have as of Closing, obtained the
approval of its Board of Directors (the "Board Approval"), Purchaser has
full corporate power and authority to execute and to deliver this Agreement
and all related documents, and to carry out the transactions contemplated
herein. This Agreement is valid, binding and enforceable as against
Purchaser in accordance with its terms. Subject to Purchaser obtaining
licensure approval from the North Carolina Board of Pharmacy, a controlled
substances number from the federal Drug Enforcement Agency, and the Board
Approval, the execution of this Agreement and the consummation of the
transaction contemplated herein do not result in a breach of the terms and
conditions of, nor constitute a default under or violation of, Purchaser's
Articles of Incorporation or Bylaws or any law, regulation, court order,
mortgage, note, bond, indenture, agreement, license or other instrument or
obligation to which Purchaser is a party or by which Purchaser or any of
the assets of Purchaser may be bound or affected.
(c) LITIGATION. To the best of Purchaser's knowledge there is no
litigation, investigation or other proceeding pending or threatened against
or relating to Purchaser, its properties or business which is material to
this Agreement, nor does Purchaser know or have reasonable grounds to know
of any basis for any such action.
(d) NECESSARY ACTION. Purchaser will proceed with all due diligence to
take all action and obtain all consents prior to Closing necessary for it
to lawfully enter into and carry out the terms of this Agreement,
including, but not limited to, securing the Board Approval.
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(e) DISCLOSURE. No representation or warranty of Purchaser set forth
herein or in the exhibits hereto and no statement contained in any
certificate, list, exhibit or other instrument furnished or to be furnished
to Seller pursuant hereto contains or will contain an untrue statement of a
material fact or omits or will omit to state any material facts necessary
to make the statements contained herein or therein not misleading.
10. BROKER.
Each party hereby represents, covenants, and warrants to the other that it
has employed no broker or finder in connection with the transaction contemplated
herein, and each party agrees to pay any commission or finder's fee which may be
due on account of the transaction contemplated herein to any broker or finder
employed by it, and to indemnify the other party hereto against any claim for
any commission made by any broker allegedly employed by it.
COVENANTS
11. SELLER.
(a) PRE-CLOSING. Between the date hereof and the Closing Date, except as
contemplated by this Agreement or with the consent of Purchaser:
(i) Seller will conduct the Pharmacy Business only in the
ordinary course and with due regard to the proper maintenance and
repair of the Pharmacy Premises and tangible components of the
Personal Property;
(ii) Seller will take all reasonable action to preserve the
goodwill of the institutional clients currently serviced by Seller
under the terms of the Rx Contracts;
(iii) Seller will make no material change in the operation of the
Pharmacy Business nor sell or agree to sell any of the items which
comprise the Personal Property nor otherwise enter into an agreement
materially affecting the Pharmacy Business or the Pharmacy Premises;
(iv) Seller will use its reasonable efforts to retain the
services and goodwill of the employees of Seller located at or
connected with the operation of the Pharmacy Business;
(v) Seller will maintain in force the existing hazard and
liability insurance policies, or comparable coverage, for the
Personal Property, the Inventory and the Pharmacy Premises as now in
effect;
(vi) Seller will maintain the Inventory in substantially the same
condition and quantities as presently being maintained;
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(vii) Seller will not increase the compensation or other benefits
or bonuses payable or to become payable to any of Seller's employees
connected with the operation of the Pharmacy Business, including but
not limited to, Xxxxxxx Xxxxxx, except for increases substantially in
accordance with existing employment practices disclosed to and
approved by Purchaser, if any;
(viii) Seller will not enter into any contract or commitment
affecting the Seller's Assets, the Pharmacy Business or the Pharmacy
Premises except in the ordinary course of business and Seller will
advise Purchaser of any contracts or commitments into which it enters,
whether in the ordinary course of business or otherwise;
(ix) Seller will satisfy and discharge all claims, liens, security
interests, tenancies, and encumbrances on Seller's Assets and the
Pharmacy Premises; provided, however, that Seller shall have the right
to discharge the same at the time of, and from the proceeds due from
Purchaser to Seller at, Closing;
(x) During normal business hours, Seller will provide Purchaser
with access on 24 hours notice to the Pharmacy Premises and Seller's
corporate offices, provided Purchaser does not interfere with the
operation of the Pharmacy Business and Seller's corporate offices and
at such times Seller shall permit Purchaser to inspect the books and
records of the Pharmacy Business in order to ascertain that the same
are true and accurate and have been kept in accordance with generally
accepted accounting principles; provided, however, that any agreements
between Seller and Purchaser with respect to confidential information
or trade secrets provided to Purchaser shall survive termination of
this Agreement in the event the transaction provided for herein fails
to close for any reason whatsoever.
(xi) Except as otherwise provided for herein with respect to the
Trade Payables, Seller will timely pay all obligations which are due
and payable with respect to the Pharmacy Premises and the Seller's
Assets;
(xii) Seller will cause the Pharmacy Business to be operated in
substantial compliance with all applicable municipal, county, state
and federal laws, regulations, ordinances, standards and orders as now
in effect (including without limitation, the building and zoning codes
as currently applied and waived with respect to the Pharmacy Premises)
and with the Environmental Laws, where the failure to comply therewith
could have a material adverse effect on the business, property,
condition (financial or otherwise) or operation of the Pharmacy
Business, the Seller's Assets or the Pharmacy Premises;
(xiii) Seller will take all reasonable action to achieve
substantial compliance with any laws, regulations, ordinances,
standards and orders applicable to the Seller's
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Assets, the Pharmacy Business or the Pharmacy Premises which are
enacted after execution of this Agreement and prior to Closing;
(xiv) Seller will not take any action inconsistent with its
obligations under this Agreement or which could hinder or delay the
consummation of the transactions contemplated by this Agreement;
(xv) Seller will take such action as is reasonably necessary to
maintain the continued goodwill of the owner of the Pharmacy Premises
and that the Pharmacy Premises are in good condition and repair, on
the Closing Date, ordinary wear and tear excepted; and
(xvi) Seller will proceed with all due diligence to secure any
consents which may be necessary for the assignment and assumption of
the Rx Contracts or the execution of the New Rx Contracts and to
secure the approval of Seller's Board of Directors and shareholders.
(b) CLOSING. On the Closing Date, Seller agrees that it will:
(i) Execute and deliver to Purchaser a good and sufficient Xxxx of
Sale for the Personal Property, Operating Supplies and Inventory and
Assignment and Assumption Agreement for the Trade Name, Receivables
and Trade Payables and such endorsements, assignments and other
instruments of transfer, including motor vehicle titles, and
conveyance as shall be necessary to transfer and assign the Seller's
Assets and the Pharmacy Business to Purchaser as herein provided;
(ii) Deliver to Purchaser a certificate of a responsible officer
dated as of the Closing Date, certifying in such detail as Purchaser
may reasonably specify the fulfillment of the conditions to be
fulfilled by Seller set forth in Paragraph(s) 14(a) and (b) and the
incumbency of the officer(s) signing this Agreement and any documents
executed pursuant hereto on behalf of Seller;
(iii) Deliver the Pharmacy Premises and Personal Property to
Purchaser in good condition and repair, ordinary wear and tear
excepted;
(iv) Provide Purchaser with a resolution of Seller's Board of
Directors and a resolution of Seller's shareholders, each certified by
the Secretary of Seller as being true and correct and in full force
and effect, authorizing Seller to enter into this Agreement, to
execute the documents described herein and to consummate the
transaction provided for herein;
(v) Deliver to Purchaser either (i) duly executed assignments of
the Rx Contracts or (ii) the New Rx Contracts;
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(vi) Cause Xxxxxxx Xxxxxx to execute and deliver the Employment
Agreement attached hereto as Exhibit K (the "Xxxxxx Employment
Agreement");
(vii) Cause each of the shareholders of Seller to execute and
deliver a Non-Competition Agreement in the form attached hereto as
Exhibit O (the "Non-Competition Agreements"); and
(viii) Cause Xxxxxxx Xxxxxx to execute and deliver an
Acknowledgement Letter with respect to the risks associated with, and
the disclosure by Sun of certain matters in connection with, the
issuance of the Warrant in the form attached hereto as Exhibit P (the
"Warrant Acknowledgement Letter").
(ix) Cause Xxxxxxx Xxxxxx to execute and deliver a sublease
agreement with respect to the Pharmacy Premises in the form of
Exhibit Q attached hereto (the "Pharmacy Sublease").
(c) POST-CLOSING. After the Closing of this Agreement, Seller agrees that
it will:
(i) Take such actions and properly execute and deliver to
Purchaser such further instruments of assignment, conveyance and
transfer as, in the reasonable opinion of counsel for Purchaser, may
be necessary to assure, complete and evidence the full and effective
transfer and conveyance of the Seller's Assets and the Pharmacy
Business; provided, however, Seller shall not be responsible for the
collection of any Receivables; and
(ii) Not use the Trade Name.
12. PURCHASER.
(a) PRE-CLOSING. Between the date hereof and the Closing Date, except as
contemplated by this Agreement or with the consent of Seller, Purchaser agrees
that:
(i) Purchaser will not take any action inconsistent with its
obligations under this Agreement or which could hinder or delay the
consummation of the transaction contemplated by this Agreement; and
(ii) Purchaser will proceed with all due diligence to obtain all
consents, approvals and licenses necessary to permit the consummation
of the transaction contemplated by this Agreement and/or necessary to
permit Purchaser to own and to operate the Pharmacy Business,
including, but not limited to, the Board Approval and licensure
approval from the North Carolina Board of Pharmacy and the issuance of
a controlled substance number from the federal Drug Enforcement
Agency.
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(b) CLOSING. On the Closing Date, Purchaser agrees that it will:
(i) Pay the portion of the Aggregate Consideration which is due
at Closing pursuant to Paragraph 2(a);
(ii) Deliver to Seller a certificate of a responsible officer
dated as of the Closing Date certifying in such detail as Seller may
reasonably specify the fulfillment of the conditions set forth in
Paragraph 15(a) and (b) and the incumbency of the officers executing
this Agreement and any agreements executed pursuant hereto on behalf
of Purchaser;
(iii) Provide Seller with a resolution of Purchaser's Board of
Directors, certified by the Secretary of Purchaser as being true and
correct, authorizing Purchaser to enter into this Agreement, to
execute the documents described herein and to consummate the
transaction provided for herein; and
(iv) Deliver the fully executed Xxxxxx Employment Agreement.
(v) Deliver the Warrant Agreement fully executed by Sun.
(vi) Deliver the fully executed Assignment and Assumption
Agreement.
(vii) Deliver the fully executed Pharmacy Sublease.
(c) POST-CLOSING. After the Closing of this Agreement, Purchaser agrees
that it will:
(i) Provide Seller with access during normal business hours to
any books or records which Seller may need to file or to defend tax
returns or other filings filed prior or subsequent to the Closing Date
or litigation filed against Seller either before or after the Closing
Date which, in either case, relates to periods prior to the Closing
Date;
(ii) Fulfill its obligations under the Xxxxxx Employment
Agreement;
(iii) Participate in good faith and with reasonable diligence in
the Lease Negotiation Process;
(iv) Take such actions and properly execute and deliver such
further instruments as Seller may reasonably request to assure,
complete and evidence the transactions provided for in this Agreement;
(v) Pay the Trade Payables assumed by Purchaser hereunder as
and when due; and
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(vi) Collect the Receivables as provided for herein.
13. MUTUAL. Following the execution of this Agreement, Purchaser and Seller
agree:
(a) If any event should occur, either within or without the knowledge or
control of Purchaser or Seller, which would prevent fulfillment of the
conditions to the obligations of any party hereto to consummate the
transaction contemplated by this Agreement, to use its or their reasonable
efforts to cure the same as expeditiously as possible;
(b) To cooperate fully with each other in preparing, filing, prosecuting,
and taking any other actions which are or may be reasonable and necessary
to obtain the consent of any governmental instrumentality or any third
party or to accomplish the transaction contemplated by this Agreement;
(c) To pay or effect in a timely fashion all costs and prorations
contemplated in Paragraphs 5 and 6; and
(d) To the extent any exhibits referenced herein are not attached at the
time of the execution of this Agreement, to use their best efforts to agree
upon the terms of, and to attach, said exhibits prior to the Closing Date.
CONDITIONS
14. All obligations of Purchaser under this Agreement are subject to and
contingent upon fulfillment, prior to or at Closing, of each of the following
conditions, any one or all or which may be waived in writing by Purchaser:
(a) SELLER'S REPRESENTATIONS AND WARRANTIES TRUE AT CLOSING. Seller's
representations and warranties contained in this Agreement or in any
certificate or document delivered in connection with this Agreement or the
transactions contemplated herein shall be true in all material respects at
and as of the date of Closing as though such representations and warranties
were then again made.
(b) SELLER'S PERFORMANCE. Seller shall have performed all of its
obligations under this Agreement that are to be performed prior to or at
Closing.
(c) APPROVALS. Purchaser shall have received all consents, approvals,
certifications and licenses, including, but not limited to, the Board
Approval, as may be necessary to own the Seller's Assets and to operate the
Pharmacy Business or, in the event Purchaser has received its licenses but
not its DEA number, shall have entered into an agreement with Seller to
operate the Pharmacy Business under Seller's DEA number until Purchaser's
DEA number is issued.
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(d) DAMAGE AND CONDEMNATION. Prior to the Closing Date, no material
portion of the Pharmacy Premises or the Personal Property, Operating
Supplies or Inventory shall have been damaged or destroyed by fire or other
casualty, or shall have been taken or condemned by any public or quasi-
public authority under the power of eminent domain. If the Personal
Property, the Inventory, the Operating Supplies or the Pharmacy Premises
shall have been so damaged or destroyed and Purchaser waives this
condition, Seller shall assign to Purchaser all its rights to any insurance
proceeds and all claims in the connection therewith.
(e) NO DEFAULTS. Seller shall not be in default, where said default
cannot be cured by Closing, under any mortgage, contract, lease or other
agreement affecting or relating to the Seller's Assets, the Pharmacy
Premises and the Pharmacy Business including, but not limited to, the Rx
Contracts.
(f) WARRANT ACKNOWLEDGMENT LETTER. Xxxxxxx Xxxxxx shall have executed and
delivered to Sun the Warrant Acknowledgement Letter.
(g) PHARMACY SUBLEASE. Seller and Purchaser shall have entered into the
Pharmacy Sublease in form of Exhibit Q.
In the event any of the foregoing conditions is not satisfied by Seller or
Purchaser, as appropriate, or waived by Purchaser prior to Closing, Purchaser
shall have the right to terminate this Agreement in accordance with the
provisions of Paragraph 18.
15. CONDITIONS TO SELLER'S OBLIGATIONS.
All obligations of Seller under this Agreement are subject to and
contingent upon the fulfillment, prior to or at Closing, of each of the
following conditions, any one or all of which may be waived by Seller in
writing:
(a) PURCHASER'S REPRESENTATIONS AND WARRANTIES TRUE AT CLOSING.
Purchaser's representations and warranties contained in this Agreement or
in any certificate or document delivered in connection with this Agreement
or the transactions contemplated herein shall be true in all material
respects at and as of the date of Closing as though such representations
and warranties were then again made;
(b) PURCHASER'S PERFORMANCE. Purchaser shall have performed its
obligations under this Agreement that are to be performed prior to or at
Closing; and
(c) WARRANT AGREEMENT. Purchaser shall have delivered the Warrant
Agreement fully executed by Sun.
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In the event any of the foregoing conditions is not satisfied by Purchaser
or waived by Seller prior to Closing, Seller shall have the right to terminate
this Agreement in accordance with the provisions of Paragraph 18.
INDEMNIFICATION
16. Seller shall indemnify, defend and hold Purchaser harmless from and
against:
(a) Any and all damages, losses, settlement payments, obligations,
liabilities, claims, actions, or causes of action, encumbrances and
reasonable costs and expenses suffered, sustained, incurred, borne or paid
by Purchaser because of (i) the claims of any broker or finder engaged by
Seller; (ii) the failure of any representation or warranty of Seller
contained in this Agreement to be true and correct in all respects as of
the Closing Date; (iii) the failure of Seller to perform and comply in all
material respects with all agreements, obligations and conditions when and
as required by this Agreement; and (iv) claims or litigation or potential
claims or litigation against Seller's Assets or the Pharmacy Business with
respect to incidents or other matters which occurred prior to the Closing
Date, even if such claim or litigation is not asserted until after the
Closing Date; and
(b) All reasonable costs and expenses (including, without limitation,
attorney's fees, interest and penalties) incurred or borne by Purchaser in
connection with any action, suit, proceeding, demand, assessment or
judgment incident to any of the matters indemnified against in this
Paragraph 16.
17. Purchaser shall indemnify, defend and hold Seller harmless from and
against:
(a) Any and all damages, losses, settlement payments, obligations,
liabilities, claims, actions, or causes of action, encumbrances and
reasonable costs and expenses suffered, sustained, incurred, borne or paid
by Seller because of (i) the claims of any broker or finder engaged by
Purchaser; (ii) the failure of any representation or warranty of Purchaser
contained in this Agreement to be true and correct in all respects as of
the Closing Date; (iii) the failure of Purchaser to perform and comply in
all material respects with all agreements, obligations and conditions when
and as required by this Agreement; and (iv) claims or litigation or
potential claims or litigation against Seller's Assets or the Pharmacy
Business with respect to incidents or other matters which occur after the
Closing Date; and
(b) All reasonable costs and expenses (including, without limitation,
attorney's fees, interest and penalties) incurred or borne by Seller in
connection with any action, suit, proceeding, demand, assessment or
judgment incident to any of the matters indemnified against in this
Paragraph 17.
With respect to each specific claim for indemnification under Paragraph 16, the
indemnification of the Purchaser by the Seller shall be net of any recovery of
the Purchaser with respect to such specific
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claim under any insurance policy. Purchaser shall use its bests efforts to
have its insurance companies waive in writing and for the express benefit of
the Seller any right of subrogation that the insurance company may have
against the Seller. Notwithstanding the foregoing, nothing herein shall be
construed as obligating Purchaser to make any claim under any insurance
policy with respect to such specific claim.
Neither party hereto shall have any liability under Paragraphs 16 or 17
unless and until the aggregate amount of any costs, losses, expenses,
liabilities or damages (collectively, a "Loss") which is the subject of any
or all of the foregoing indemnity provisions exceeds Fifteen Thousand Dollars
($15,000.00) (the "Indemnity Threshold"), but once the Indemnity Threshold
has been met, each party's liability obligation to the other shall be for the
full amount of such Loss.
Notwithstanding anything contained herein to the contrary, neither party
hereto shall have an obligation to indemnify the other party in an aggregate
amount in excess of One Million Seven Hundred Thousand ($1,700,000) (the
"Indemnity Ceiling"); provided, however, the parties understand and agree
that any amount owing under the post Closing Receivables reconciliation (as
provided for in Section 2 herein) shall not be counted toward nor subject to
the Indemnity Ceiling.
Each party entitled to indemnification under this Section 5 (the "Indemnified
Party") will give notice to the party required to provide indemnification
(the "Indemnifying Party") promptly after such Indemnified Party has actual
knowledge of any claim as to which indemnity may be sought, and will permit
the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, PROVIDED that counsel for the Indemnifying
Party, who will conduct the defense of such claim or litigation, will be
approved by the Indemnified Party (whose approval will not unreasonably be
withheld), and the Indemnified Party may participate in such defense at such
party's expense, and PROVIDED, FURTHER, that the failure of any Indemnified
Party to give notice as provided herein will not relieve the Indemnifying
Party of its obligations under this Agreement unless the failure to give
notice is materially prejudicial to an Indemnifying Party's ability to defend
such action and, PROVIDED, FURTHER, that the Indemnifying Party will not
assume the defense for matters as to which there is a conflict of interest or
separate and different defenses.
No Indemnifying Party, in the defense of any such claim or litigation, will,
except with the consent of each Indemnified Party, consent to entry of any
judgement or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect of such claim or
litigation.
Except as herein expressly provided, the remedies provided in this Agreement
shall be cumulative.
TERMINATION
18. (a) Purchaser and Seller shall have the right to terminate this Agreement
prior to Closing in accordance with the terms hereof:
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(i) By mutual consent of the parties;
(ii) By Purchaser if the conditions to Closing set forth in Paragraph 14
have not been satisfied or waived by the Outside Closing Date through no
fault of Purchaser;
(iii) By Seller if the conditions to Closing set forth in Paragraph 15
have not been satisfied or waived by the Outside Closing Date through no
fault of Seller; and/or
(iv) By either party if the Closing has not occurred by February 28, 1997
(the "Outside Closing Date").
(b) Neither party to this Agreement may claim termination or pursue any
other remedy referred to above on account of a breach of a condition ,
covenant or warranty by the other without first giving such other party
written notice of such breach and not less than ten (10) days within which
to cure such breach. The Closing Date shall be postponed if necessary to
afford such opportunity to cure, provided, however, in no event shall the
Closing Date be later than the Outside Closing Date.
(c) In the event of the termination of this Agreement under either
Paragraph 18(iii) or (iv) where, in either case the Closing has failed to
occur as a result of a material breach by Purchaser of its obligations
hereunder, Seller shall be entitled to seek compensation for any damages
suffered as a result thereof.
(d) In the event of the termination of this Agreement by Purchaser under
either Paragraph 18(ii) or (iv) where, in either case, the Closing has
failed to occur as a result of a material breach by Seller of its
obligations hereunder, Purchaser shall have the right either (A) to seek
specific performance of Seller's obligations hereunder or (B) to terminate
this Agreement and to xxx for damages suffered as a result thereof, which
damages shall include the costs incurred by Purchaser in negotiating and
preparing this Agreement and preparing to consummate the transaction
provided for herein.
EMPLOYEE BENEFITS
19. Seller will terminate the employment of all current employees of the
Pharmacy Business on or prior to the close of business on the last business day
prior to the Closing Date. Seller acknowledges and confirms to Purchaser that
Seller will be solely responsible for all payroll, payroll taxes, accrued
vacation (or compensation in lieu thereof) and other employee benefits and other
payments to which current employees of the Pharmacy Business are entitled up to
and including the respective termination dates of such employees and any to
which such employees are entitled thereafter to the extent arising out of
Seller's employment of such employees and that Seller shall pay the same to its
employees within such period of time as may be specified by North Carolina wage
and hour laws. From and after the Closing Date, Purchaser acknowledges and
confirms to Seller that Purchaser intends to rehire all of the employees and
that Purchaser shall be solely
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responsible for all payroll, payroll taxes, vacation time and other employee
benefits to which any current employee of the Pharmacy Business becomes
entitled by reason of becoming an employee of Purchaser. For purposes of
clarification, such employee benefits shall be determined based upon the
number of years of employment with the Pharmacy Business. Purchaser further
acknowledges and confirms to Seller that Seller shall ever arising out of or
based upon the employment of any current employees of the Pharmacy Business
by Purchaser.
NOTICES
20. Any notice, request or other communication to be given by any party
hereunder shall be in writing and shall be sent by registered or certified mail,
postage prepaid, by overnight courier guaranteeing overnight delivery or by
facsimile transmission, to the following address:
To Seller: Mr. Xxxxxxx Xxxxxx
Tar Heel Consultants
Xxxxxx Drug Company, Inc.
000 Xxxx Xxxxxxxx
Xxxx Xxxx, XX 00000
Phone: 000-000-0000
Facsimile: 000-000-0000
with copy to: Xxxxx Xxx Xxxxxx, Esq.
Parker, Poe, Xxxxx & Xxxxxxxxx L.L.P.
0000 Xxxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Phone: 000-000-0000
Facsimile: 704-334-4706
To Purchaser: Sunscript Pharmacy Corporation
000 Xxx Xxxx, XX
Xxxxxxxxxxx, XX 00000
Phone: 000-000-0000
Facsimile: 000-000-0000
Attn: Xxxx X. Xxxxxxxx
with copy to: Xxxxx X. Xxxxxxxxx, Esq.
The Xxxxxxxxx Group
0000 Xxxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, XX 00000
Phone: 000-000-0000
Facsimile: 000-000-0000
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Notice shall be deemed given three (3) business days after deposit in the
mail, on the next day if sent by overnight courier and on receipt if sent by
facsimile.
SOLE AGREEMENT
21. This Agreement may not be amended or modified in any respect whatsoever
except by instrument in writing signed by the parties hereto. This Agreement
constitutes the entire agreement between the parties hereto and supersedes all
prior negotiations, discussions, writings and agreements between them.
SUCCESSORS
22. Purchaser shall not have the right to assign this Agreement without the
prior written consent of Seller, which shall not be unreasonably withheld.
Subject to the foregoing, this Agreement shall be binding upon and inure to the
benefit of and be enforceable by and against the heirs, successors and assigns
of the parties hereto.
CAPTIONS
23. The captions of this Agreement are for convenience of reference only and
shall not define or limit any of the terms or provisions hereof.
SURVIVAL
24. All covenants, warranties and representations of Purchaser and Seller
herein shall survive for a period of one year after the Closing; provided,
however, that as to any claims brought within said one year period, the same
shall survive until the final and non-appealable resolution thereof.
GOVERNING LAW
25. This Agreement shall be deemed to be a contract made under the laws of the
State of North Carolina, and for all purposes shall be governed by, and
construed in all respects (including matters of construction, validity and
performance) in accordance with, the laws of the State of North Carolina,
without regard to the conflicts of law rules of such state.
SEVERABILITY
26. Should any one or more of the provisions of this Agreement be determined to
be invalid, unlawful or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions hereof shall not in any way be
affected or impaired thereby.
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COUNTERPARTS
27. This Agreement may be executed in any number of counterparts, each of which
shall be an original; but such counterparts shall together constitute but one
and the same instrument.
CONFIDENTIALITY
28. In the event the transaction contemplated by this Agreement fails to close
for any reason, Purchaser and Seller agree to keep confidential any proprietary
information disclosed to them by the other party during the course of this
transaction.
THIRD PARTY BENEFICIARY
29. Except as specifically set forth herein with respect to the employment of
Xxxxxxx Xxxxxx, and with respect to the issuance of the Warrants to Xxxxxxx
Xxxxxx, the provisions of this Agreement are not intended to confer any benefits
upon any person or entity not a party to this Agreement.
IN WITNESS WHEREOF, the parties hereby execute this Agreement as of the day
and year first set forth above.
SELLER: XXXXXX DRUG COMPANY, INC.
By:______________________________
Its:_____________________________
PURCHASER: SUNSCRIPT PHARMACY CORPORATION
By:______________________________
Its:_____________________________
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EXHIBIT INDEX
EXHIBIT A MOTOR VEHICLES
EXHIBIT B EXCLUDED ASSETS
EXHIBIT C WARRANTS
EXHIBIT D AGGREGATE CONSIDERATION ALLOCATION
EXHIBIT E XXXX OF SALE
EXHIBIT F ASSIGNMENT AND ASSUMPTION AGREEMENT
EXHIBIT G PERSONAL PROPERTY INVENTORY
EXHIBIT H LIENS AND ENCUMBRANCES
EXHIBIT I EMPLOYEE SCHEDULE
EXHIBIT J Rx CONTRACTS
EXHIBIT K AR AGING REPORTS
EXHIBIT L LITIGATION
EXHIBIT M INSURANCE
EXHIBIT N XXXXXX EMPLOYMENT AGREEMENT
EXHIBIT O SHAREHOLDER NON-COMPETE AGREEMENTS
EXHIBIT P WARRANT ACKNOWLEDGEMENT LETTER
EXHIBIT Q PHARMACY SUBLEASE
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EXHIBIT A
MOTOR VEHICLES
-27-
EXHIBIT B
EXCLUDED ASSETS
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EXHIBIT C
FORM OF WARRANT AGREEMENT
-----------------
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 NOR REGISTERED OR QUALIFIED UNDER
THE SECURITIES OR BLUE SKY LAWS OF ANY STATE. THE SECURITIES ISSUABLE UPON
EXERCISE HEREOF, NOR ANY INTEREST OR PARTICIPATION THEREIN, MAY NOT BE SOLD,
ASSIGNED, PLEDGED, HYPOTHECATED, ENCUMBERED OR IN ANY OTHER MANNER
TRANSFERRED OR DISPOSED OF UNLESS (I) REGISTERED UNDER AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 AND IN FULL
COMPLIANCE WITH THE APPLICABLE RULES AND REGULATIONS THEREUNDER AND
APPLICABLE STATE SECURITIES OR BLUE SKY LAWS OR (II) UNLESS SUN HEALTHCARE
GROUP, INC. RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF SUCH SECURITIES,
REASONABLY SATISFACTORY TO SUN HEALTHCARE GROUP, INC., STATING THAT SUCH
SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION, ENCUMBRANCE OR OTHER MANNER OF
TRANSFER OR DISPOSITION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS
DELIVERY REQUIREMENTS OF THE SECURITIES ACT OF 1933 AND APPLICABLE STATE
SECURITIES OR BLUE SKY LAW. THIS WARRANT IS SUBJECT TO RESTRICTIONS ON
TRANSFER AS SET FORTH IN SECTION 5(B) HEREOF, WHICH PROVIDES THAT THIS
WARRANT MAY NOT BE SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR ENCUMBERED IN ANY
MANNER EXCEPT SUCH ASSIGNMENTS AS MAY BE SPECIFICALLY PERMITTED BY THE TERMS
HEREOF UPON THE DEATH OF THE HOLDER OF THE WARRANT.
SUN HEALTHCARE GROUP, INC.
WARRANT FOR THE PURCHASE
OF SHARES OF COMMON STOCK
40,000 Shares
FOR VALUE RECEIVED, SUN HEALTHCARE GROUP, INC., a Delaware
corporation (the "Company"), hereby certifies that Xxxxxxx Xxxxxx (the
"Holder") is entitled, subject to the provisions of this Warrant, to purchase
from the Company, at any time or from time to time during the applicable
Exercise Period (as hereinafter defined) the number of fully paid and
nonassessable shares of common stock of the Company, par value $.01 per share
("Common Stock"), set forth above at the applicable Exercise Price (as
hereinafter defined).
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The number and character of shares of Common Stock or other
securities to be received upon exercise of this Warrant are subject to
adjustment in accordance with the provisions herein (including without
limitation Sections 7 and 8).
For purposes of this Warrant, "Warrant Shares" means the shares of
Common Stock deliverable upon exercise of this Warrant, as adjusted from time
to time. Unless the context requires otherwise all references to Common
Stock and Warrant Shares in this Warrant shall, in the event of an adjustment
pursuant to Section 7 hereof, be deemed to refer also to any securities or
property then issuable upon exercise of this Warrant as a result of such
adjustment.
Section 1. EXERCISE OF WARRANT. This Warrant may be exercised,
as a whole or in part, at any time or from time to time during the applicable
Exercise Period (as hereinafter defined) or, if such day is a day on which
banking institutions in New York City are authorized by law to close, then on
the next succeeding day that shall not be such a day, by presentation and
surrender hereof to the Company at its principal office at the address set
forth on the signature page hereof (or at such other address as the Company
may hereafter notify the Holder in writing), or at the office of its stock
transfer agent or warrant agent, if any, with the Purchase Form annexed
hereto duly executed and accompanied by proper payment of the aggregate
applicable Exercise Price in lawful money of the United States of America in
the form of a certified or cashier's check to the order of Sun Healthcare
Group, Inc., for the number of Warrant Shares specified in such form. If
this Warrant should be exercised in part only, the Company shall, upon
surrender of this Warrant, execute and deliver a new Warrant evidencing the
rights of the Holder thereof to purchase the balance of the Warrant Shares
purchasable hereunder. Upon receipt by the Company of this Warrant and such
Purchase Form, together with the aggregate applicable Exercise Price (as
hereinafter defined) for the number of Warrant Shares specified in such
Purchase Form, at such office, or by the stock transfer agent or warrant
agent of the Company, if any, at its office, the Company or the stock
transfer agent or warrant agent, if any, shall issue and deliver to or upon
the written order of the Holder and in such name or names as the Holder may
designate, a certificate or certificates for the Warrant Shares. Such
certificate or certificates shall be deemed to have been issued and any
person so designated to be named therein shall be deemed to have become the
holder of record of such Warrant Shares as of the date of the surrender of
this Warrant and reto duly executed and payment of the Exercise Price,
notwithstanding that the stock transfer books of the Company shall then be
closed or that certificates representing such Warrant Shares shall not then
be actually delivered to the Holder or its designee. The Company shall pay
any and all documentary stamp or similar issue or transfer taxes payable in
respect of the issue or delivery of the Warrant Shares.
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Section 2. EXERCISE PERIOD AND EXERCISE PRICE.
(a) This Warrant shall be exercisable during the period
(the "Exercise Period") beginning on the date of execution of this Warrant
Agreement (the "Initial Exercise Date") and ending at 5:00 p.m. (New York
City time) on a date forty eight (48) months from the execution of this
Warrant Agreement (the "Termination Date"); provided, however, this Warrant
shall not be exercisable during the period beginning on the date three months
from the execution of this Warrant Agreement and ending at 5:00 p.m. (New
York City time) on the date twelve months from the execution of this Warrant
Agreement.
(b) "Exercise Price" means $17.00 per Share.
Section 3. RESERVATION OF SHARES. The Company hereby agrees that
at all times there shall be reserved for issuance and delivery upon exercise
of this Warrant all shares of its Common Stock or other shares of capital
stock of the Company or other property from time to time issuable upon
exercise of this Warrant. All such shares shall be duly authorized and, when
issued upon such exercise in accordance with the terms of this Warrant, shall
be validly issued, fully paid and nonassessable, free and clear of all liens,
security interests, charges and other encumbrances or restrictions on sale
(other than any restrictions on sale pursuant to applicable federal and state
securities laws) and free and clear of all preemptive rights.
Section 4. FRACTIONAL SHARES. The Company shall not be required
to issue fractional shares of Common Stock on the exercise of this Warrant.
If any fraction of a share of Common Stock would, except for the provisions
of this Section 4, be issuable on the exercise of this Warrant (or specified
portion thereof), the Company shall pay an amount in cash calculated by it to
be equal to the then Current Market Value (as hereinafter defined) per share
of Common Stock multiplied by such fraction computed to the nearest whole
cent. For the purposes of any computation under this Warrant, the Current
Market Value per share of Common Stock or of any other equity security
(herein collectively referred to as a "security") at the date herein
specified shall be:
(i) if the security is not registered under the Securities Exchange
Act of 1934, the Current Market Value per share of the security shall be
determined in good faith by the Board of Directors of the Company, or
(ii) if the security is registered under the Securities Exchange Act
of 1934, the Current Market Value per share of the security shall be deemed
to be the average of the daily market prices of the security for the 10
consecutive trading days immediately preceding the day as of which Current
Market Value is being determined or, if the security has been registered
under the Securities Exchange Act of 1934 for less than 10 consecutive
trading days before such date, then the average of the daily market prices
for all of the trading days before such date for which daily market prices
are available.
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The market price for each such trading day shall be: (A) in the case of
a security listed or admitted to trading on any securities exchange, the
closing price on the primary exchange on which the Common Stock is then
listed, on such day, or if no sale takes place on such day, the average
of the closing bid and asked prices on such day, (B) in the case of a
security not then listed or admitted to trading on any securities
exchange, the last reported sale price on such day, or if no sale takes
place on such day, the average of the closing bid and asked prices on
such day, as reported by a reputable quotation source designated by the
Company, (C) in the case of a security not then listed or admitted to
trading on any securities exchange and as to which no such reported sale
price or bid and asked prices are available, the average of the reported
high bid and low asked prices on such day, as reported by a reputable
quotation service, or a newspaper of general circulation in the Borough
of Manhattan, City and State of New York, customarily published on each
business day, designated by the Company, or if there shall be no bid and
asked prices on such day, the average of the high bid and low asked
prices, as so reported, on the most recent day (not more than 10 days
prior to the date in question) for which prices have been so reported,
and (D) if there are no bid and asked prices reported during the 10 days
prior to the date in question, the Current Market Value of the security
shall be determined as if the security were not registered under the
Securities Exchange Act of 1934.
Section 5. EXCHANGE, TRANSFER, ASSIGNMENT OR LOSS OF WARRANT.
(a) This Warrant is exchangeable, without expense, at the
option of the Holder, upon presentation and surrender hereof to the Company
or at the office of its stock transfer agent or warrant agent, if any, for
other warrants of different denomination, entitling the Holder thereof to
purchase in the aggregate the same number of Warrant Shares and otherwise
carrying the same rights as this Warrant.
(b) The Holder of this Warrant shall not be entitled to
sell, assign, pledge, hypothecate, encumber or in any other manner transfer
or dispose of its interest in this Warrant as a whole or in part to any
person or persons except at death by transfer by the terms of the Holder's
will or the laws governing intestate succession.
(c) This Warrant may be divided or combined by the Holder
with other warrants that carry the same rights upon presentation hereof at
the office of the Company or at the office of its stock transfer agent or
warrant agent, if any, together with a written notice specifying the names
and denominations in which new warrants are to be issued and signed by the
Holder hereof. The term "Warrant" as used herein includes any warrants into
which this Warrant may be divided or for which it may be exchanged.
(d) Upon receipt by the Company of evidence satisfactory
to it of the loss, theft, destruction or mutilation of this Warrant, and (in
the case of loss, theft or
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destruction) of reasonably satisfactory indemnification, and upon surrender
and cancellation of this Warrant, if mutilated, the Company shall execute and
deliver a new Warrant of like tenor and date.
Section 6. RIGHTS OF THE HOLDER. The Holder shall not, by virtue
hereof, be entitled to any rights of a stockholder in the Company, either at
law or in equity, and the rights of the Holder are limited to those expressed
in this Warrant.
Section 7. ANTIDILUTION PROVISIONS AND OTHER ADJUSTMENTS. The
number of Warrant Shares which may be purchased upon the exercise hereof
shall be subject to change or adjustment from time to time as follows:
(a) STOCK DIVIDENDS; STOCK SPLITS; REVERSE STOCK SPLITS;
RECLASSIFICATIONS. In case the Company shall (i) pay a dividend or make any
other distribution with respect to its Common Stock in shares of its capital
stock, (ii) subdivide its outstanding Common Stock, (iii) combine its
outstanding Common Stock into a smaller number of shares, or (iv) issue any
shares of its capital stock in a reclassification of the Common Stock
(including any such reclassification in connection with a merger,
consolidation or other business combination in which the Company is the
continuing corporation) the number of shares of Common Stock issuable upon
exercise of this Warrant immediately prior to the record date for each such
dividend or distribution or the effective date of each such subdivision or
combination shall be adjusted so that the Holder shall thereafter be entitled
after the completion of each such event to receive the kind and number of
shares of Common Stock or other securities of the Company that the Holder
would have owned or have been entitled to receive after the happening of each
such event, had this Warrant been exercised immediately prior to the
happening of each such event or any record date with respect thereto. Each
adjustment made pursuant to this Section 7(a) shall become effective
immediately after the effective date of the applicable event retroactive to
the record date, if any, for such event.
(b) RIGHTS; OPTIONS; WARRANTS. In case the Company shall
issue rights, options, warrants or convertible or exchangeable securities
(other than a transaction subject to Section 7(a)) to all holders of its
Common Stock, entitling them to subscribe for or purchase Common Stock at a
price per share that is lower (at the record date for such issuance) than
ninety-five percent (95%) of the Current Market Value (as defined in Section
4 hereof) per share of Common Stock, the number of shares of Common Stock
thereafter issuable upon exercise of this Warrant shall be determined by
adding the number of shares of Common Stock theretofore issuable upon
exercise of this Warrant to the product of (x) the Cheap Stock Issued (as
hereinafter defined), multiplied by (y) the Ownership Ratio (as hereinafter
defined). Such adjustment shall be made whenever such rights, options,
warrants or convertible or exchangeable securities are issued, and shall
become effective retroactively immediately after the record date for the
determination of stockholders entitled to receive such rights, options,
warrants or convertible or exchangeable securities.
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For purposes of this Section 7(b), (i) the "Cheap Stock
Issued" shall be the number of additional shares of any Common Stock offered
by the Company for subscription or purchase as described above minus the
number of shares of Common Stock that the aggregate offering price of the
total number of shares of Common Stock so offered would purchase at the then
Current Market Value per share of Common Stock and (ii) the "Ownership Ratio"
shall be a fraction, the numerator of which shall be the number of shares of
Common Stock theretofore issuable upon exercise of this Warrant, and the
denominator of which shall be the fully diluted shares of Common Stock then
outstanding on the date of issuance of such rights, options, warrants or
convertible or exchangeable securities minus the number of shares of Common
Stock theretofore issuable upon the exercise of this Warrant.
(c) DISTRIBUTIONS OF DEBT, ASSETS, SUBSCRIPTION RIGHTS OR
CONVERTIBLE SECURITIES. In case the Company shall fix a record date for the
making of a distribution to all holders of shares of its Common Stock of
evidences of indebtedness of the Company, assets (other than cash dividends
payable out of retained earnings or securities (excluding those referred to
in Sections 7(a) and 7(b)) (any such evidences of indebtedness, assets, or
securities being referred to in this Section 7(c) as the "assets or
securities"), then in each case the Holder, upon the exercise of this
Warrant, shall be entitled to receive in addition to the shares of Common
Stock issuable upon exercise of this Warrant, (i) the assets or securities to
which the Holder would have been entitled as a holder of Common Stock if the
Holder had exercised this Warrant immediately prior to the record date for
such distribution and (ii) any income earned on the assets or securities
distributed from the distribution date to the date of exercise. At the time
of any such distribution, the Company shall either (A) deposit the assets or
securities payable to the Holder pursuant hereto in trust for the Holder with
an eligible institution (as hereinafter defined) with instructions as to the
investment of such property and any proceeds therefrom so as to protect the
value of such property for the Holder or (B) distribute to the Holder the
assets or securities to which it would be entitled upon exercise and, upon
any such distribution pursuant to this Clause (B), the provisions of this
Section 7(c) shall no longer apply to such event. Such election shall be
made by the Company by giving written notice thereof to the Holder.
For purposes of this Section 7(c), the term "eligible
institution" shall mean a corporation organized and doing business under the
laws of the United States of America or of any state thereof, authorized
under such laws to exercise corporate trust powers, having a combined capital
and surplus of at least $50,000,000, and subject to supervision or
examination by Federal or state authority.
(d) DE MINIMIS ADJUSTMENTS. Except as provided in
Section 7(e) with reference to adjustments required by such Section 7(e), no
adjustment in the number of shares of Common Stock issuable hereunder shall
be required unless such adjustment would require an increase or decrease of
at least one percent (1%) in the number of shares of Common Stock issuable
upon the exercise of each Warrant; PROVIDED, HOWEVER, that any
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adjustments which by reason of this Section 7(d) are not required to be made
shall be carried forward and taken into account in any subsequent adjustment.
All calculations shall be made to the nearest one-thousandth of a share.
(e) ADJUSTMENTS. In case the Company after the date
hereof shall take any action affecting the Warrant Shares, other than any
action described in subsections (a), (b) or (c) of this Section 7 or in
Section 8 hereof, which the Company's board of directors, acting in the good
faith exercise of their reasonable judgement, determines would have a
material adverse effect on the rights of the Holder, the Exercise Price, the
number of Warrant Shares and/or the character of the securities receivable
upon exercise of this Warrant shall be adjusted in such manner, if any, and
at such time, by action of the directors, in their sole discretion as they
may determine to be equitable in the circumstances, subject to obtaining all
necessary approvals to such adjustment, including, without limitation, any
necessary approvals of any stock exchange or over-the-counter market on which
securities of the Company are then listed or quoted.
(f) NOTICE OF ADJUSTMENT. Whenever the number of shares
of Common Stock or other stock or property issuable upon the exercise of this
Warrant is adjusted, as herein provided, the Company shall promptly cause to
be mailed by first class mail, postage prepaid, to the Holder notice of such
adjustment or adjustments.
Section 8. RECLASSIFICATION, REORGANIZATION, CONSOLIDATION OR
MERGER. In the event of any reclassification, capital reorganization or other
change of outstanding shares of Common Stock of the Company (other than a
subdivision or combination of the outstanding Common Stock and other than a
change in the par value of the Common Stock) or in the event of any
consolidation or merger of the Company with or into another corporation
(other than a merger in which merger the Company is the continuing
corporation and that does not result in any reclassification, capital
reorganization or other change of outstanding shares of Common Stock of the
class issuable upon exercise of this Warrant) or in the event of any sale,
lease, transfer or conveyance to another corporation of the property and
assets of the Company as an entirety or substantially as an entirety, the
Company shall, as a condition precedent to such transaction, cause effective
provisions to be made so that such other corporation shall assume all of the
obligations of the Company hereunder and the Holder shall have the right
thereafter, by exercising this Warrant, to purchase the kind and amount of
shares of stock and other securities and property (including cash) receivable
upon such reclassification, capital reorganization and other change,
consolidation, merger, sale, lease or conveyance by a holder of the number of
shares of Common Stock that might have been received upon exercise of this
Warrant immediately prior to such reclassification, capital reorganization,
change, consolidation, merger, sale, lease or conveyance. Any such provision
shall include provision for adjustments in respect of such shares of stock
and other securities and property that shall be as nearly equivalent as may
be practicable to the adjustments provided for in this Warrant. The
foregoing provisions of this Section 8 shall similarly apply to successive
reclassification,
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capital reorganizations and changes of shares of Common Stock and to
successive consolidations, mergers, sale lease, transfers or conveyances. In
the event that in connection with any such capital reorganization, or
reclassification, consolidation, merger, sale, lease, transfer or conveyance,
additional shares of Common Stock shall be issued in exchange, conversion,
substitution or payment, as a whole or in part, for, or of, a security of the
Company other than Common Stock, any such issue shall be treated as an issue
of Common Stock covered by the provisions of Section 7(a).
Section 9. TRANSFER TO COMPLY WITH THE SECURITIES ACT OF 1933.
This Warrant may not be sold, assigned, pledged, hypothecated, encumbered or
in any other manner transferred or disposed of except in accordance with
Section 5(b) hereof. This Warrant may not be exercised and none of the
Warrant Shares, nor any interest therein, may be sold, assigned, pledged,
hypothecated, encumbered or in any other manner transferred or disposed of,
as a whole or in part, except in compliance with applicable United States
federal and state securities or Blue Sky laws and the terms and conditions
hereof. The Company may require the Holder or his estate to obtain an
opinion of counsel, at the expense of the Holder or his estate, reasonably
satisfactory to the Company to the effect that the proposed exercise of the
Warrant and/or sale, assignment, pledge, hypothecation, encumbrance or other
transfer of the Warrant Shares may be effected without registration under
federal and state securities or Blue Sky laws. Each Warrant shall bear a
legend in substantially the same form as the legend set forth on the first
page of this initial Warrant. Each certificate for Warrant Shares issued
upon exercise of this Warrant, unless at the time of exercise such Warrant
Shares are registered under the Securities Act of 1933, shall bear a legend
substantially in the following form:
The securities represented by this certificate have not been registered
under the Securities Act of 1933 or registered or qualified under the
securities or Blue Sky laws of any state. Neither these securities nor any
interest or participation therein may be sold, assigned, pledged,
hypothecated, encumbered or in any other manner transferred or disposed of
unless registered under an effective registration statement under the
Securities Act of 1933 and in full compliance with the applicable rules and
regulations thereunder and applicable state securities or Blue Sky laws or
unless Sun Healthcare Group, Inc. receives an opinion of counsel for the
holder of this certificate, reasonably satisfactory to Sun Healthcare
Group, Inc., stating that such sale, assignment, pledge, hypothecation,
encumbrance or other manner of transfer or disposition is exempt from the
registration and prospectus delivery requirements of the Securities Act of
1933 and applicable state securities or Blue Sky law.
Any certificate for any Warrant Shares issued at any time in exchange or
substitution for any certificate for any Warrant Shares bearing such legend
(except a new certificate for any Warrant Shares issued after registration of
such Warrant Shares under the Securities Act of 1933) shall also bear such
legend unless, in the opinion of counsel for the Company, the Warrant Shares
represented thereby need no longer be subject to the restriction contained
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herein. The provisions of this Section 9 shall be binding upon all
subsequent holders of certificates for Warrant Shares bearing the above
legend and all subsequent Holders of this Warrant, if any. Warrant Shares
distributed to the public in accordance with Section 8 or sold by the holder
thereof under Rule 144 under the Securities Act of 1933 shall thereafter
cease to be deemed to be "Warrant Shares" for all purposes of this Warrant.
Section 10. LISTING ON SECURITIES EXCHANGES. The Company shall
list on each national securities exchange on which any Common Stock may at
any time be listed, including, for the purpose of this Section 10, the New
York Stock Exchange, subject to official notice of issuance upon the exercise
of this Warrant, all shares of Common Stock from time to time issuable upon
exercise of this Warrant and the Company shall maintain, so long as any other
shares of its Common Stock shall be so listed, all shares of Common Stock
from time to time issuable upon the exercise of this Warrant; and the Company
shall so list on each national securities exchange, and shall maintain such
listing of, any other shares of capital stock of the Company issuable upon
the exercise of this Warrant if and so long as any shares of capital stock of
the same class shall be listed on such national securities exchange by the
Company. Any such listing shall be at the Company's expense.
Section 11. AVAILABILITY OF INFORMATION. The Company shall comply
with the reporting requirements of Sections 13 and 15(d) of the Securities
Exchange Act of 1934 to the extent it is required to do so under the
Securities Exchange Act of 1934, and shall likewise comply with all other
applicable public information reporting requirements of the Securities and
Exchange Commission (including those required to make available the benefits
of Rule 144 under the Securities Act of 1933) to which it may from time to
time be subject. The Company shall also cooperate with the holder of this
Warrant and the holder of any Warrant Shares in supplying such information as
may be necessary for such holder to complete and file any information
reporting forms currently or hereafter required by the Commission as a
condition to the availability of Rule 144 or any successor rule under the
Securities Act of 1933 for the sale of this Warrant or the Warrant Shares.
The provisions of this Section 11 shall survive termination of this Warrant,
whether upon exercise of this Warrant in full or otherwise. The Company
shall also provide to holders of this Warrant the same information that it
provides to holders of its Common Stock.
Section 12. REGISTRATION RIGHTS.
(a) See Exhibit A attached hereto and incorporated by reference
herein. Capitalized terms defined in Exhibit A and not otherwise defined in
this Section 12 are used in this Section 12 as therein defined.
(b) The rights to cause the Company to register Registrable
Securities pursuant to Section 12(a) and Exhibit A are personal to the Holder
may not be assigned by
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Holder other than in connection with an assignment of the Warrant on the
death of Holder as permitted by Section 5(b) or other permitted transfer
hereunder.
Section 13. SUCCESSORS. Subject to the limitations on transfer
and assignment provided for herein, all the provisions of this Warrant by or
for the benefit of the Company or the Holder shall bind and inure to the
benefit of their respective successors, assigns, heirs and personal
representatives.
Section 14. HEADINGS. The headings of sections of this Warrant
have been inserted for convenience of reference only, are not to be
considered a part hereof and shall in no way modify or restrict any of the
terms or provisions hereof.
Section 15. AMENDMENTS. This Warrant may not be amended except by
the written consent of the Company and the Holder.
Section 16. NOTICES. Unless otherwise provided in this Warrant,
any notice or other communication or mailing required or permitted to be made
or given to any party hereto pursuant to this Warrant shall be deemed made or
given if delivered by hand on the date of such delivery to such party or, if
mailed, on the fifth day after the date of mailing, if sent to such party by
certified or registered mail or air mail, postage prepaid, addressed to it
(in the case of the Holder) at its address at ________________________________,
or (in the case of the Company) at its address set forth on the signature page
hereof, Attention: _____________________, or to such other address as is
designated by written notice, similarly given to each other party hereto.
Section 17. TRANSFER AGENT. The Company's transfer agent as of
the date hereof is Boatmen's Trust Company, 000 Xxxxxx Xxxxxx, Xx. Xxxxx, XX
00000.
Section 18. GOVERNING LAW. This Warrant shall be governed by the
laws of the State of New York.
[SIGNATURE PAGE FOLLOWS.]
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IN WITNESS WHEREOF, the Company has duly caused this Warrant to be
signed by its duly authorized officer and to be dated as of ______________,
1997.
SUN HEALTHCARE GROUP, INC.
000 Xxx Xxxx XX
Xxxxxxxxxxx, XX 00000
By:
-----------------------
Name:
Title:
ACKNOWLEDGMENT
By his signature set forth below, the Holder of this Warrant does hereby
acknowledge receipt thereof and does hereby agree to be bound by the terms
and conditions of the Exhibit A attached hereto.
----------------------------------
Xxxxxxx Xxxxxx
PURCHASE FORM
Dated ___________________
The undersigned hereby irrevocably elects to exercise the within
Warrant to purchase __________ shares of Common Stock and hereby makes payment
of _______________________ in payment of the exercise price thereof, and
requests that the certificates for such shares be issued in the name of, and
delivered to, _______________________________, whose address is
___________________________________________________________________________.
Signature
---------------------------
ASSIGNMENT FORM
Dated ___________________
FOR VALUE RECEIVED, ___________________________ hereby sells, assigns
and transfers unto ____________________________________________ (the
"Assignee"), (please type or print name and address in block letters)
its right to purchase up to ___________________ shares of Common Stock
represented by this Warrant and does hereby irrevocably constitute and appoint
________________________ Attorney, to transfer the same on the books of the
Company, with full power of substitution in the premises.
Signature ___________________________
ACKNOWLEDGMENT
By his or her signature set forth below, the Assignee of this Warrant does
hereby acknowledge receipt hereof and does hereby agree to be bound by the
provisions contained in Exhibit A attached hereto.
Signature ___________________________
EXHIBIT A
REGISTRATION RIGHTS
This Exhibit A is attached to, and forms a part of, that certain
Warrant Agreement (the "Warrant") to purchase 40,000 shares of common stock, par
value $.01 per share of Sun Healthcare Group, Inc. (the "Company").
1. CERTAIN DEFINITIONS. As used in this Exhibit A, the following terms
will have the following respective meanings:
"COMMISSION" shall mean the Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act.
"COMMON STOCK" means the common stock, par value $.01 of the Company.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
or any similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"HOLDER" means Xxxxxxx Xxxxxx who received the Warrant from the
Company pursuant to that certain Purchase and Sale Agreement dated _________
between Sunscript Pharmacy Corporation and Xxxxxx Drug Company, Inc. (the
"Purchase Agreement") and any assignee or transferee of a Warrant from any
Holder in any transaction in which registration rights are assigned or
transferred as permitted by Section 12(b) of the Warrant.
"NYSE" means the New York Stock Exchange, Inc.
"REGISTRABLE SECURITIES" means (i) the Warrant Shares, and (ii) any
Common Stock directly or indirectly issued or issuable in respect of such
Warrant Shares upon any stock split, stock dividend, recapitalization, or
similar event; PROVIDED, HOWEVER, that shares of Common Stock will cease to be
Registrable Securities if (A) such Registrable Securities, or the Warrant
pursuant to which such Registrable Securities have been or may be issued, have
been sold by a Holder in a transaction in which its registration rights under
this Exhibit A are not assigned, (B) a registration statement with respect to
the issuance or sale of such Registrable Securities shall have become effective
under the Securities Act and such Registrable Securities shall have been issued
or disposed of in accordance with such registration statement, (C) such
Registrable Securities are available for sale in a transaction which complies
with the provisions of Rule 144 promulgated under the Securities Act, including,
without limitation, the volume restrictions applicable to such transaction under
Rule 144, (D) such Registrable Securities shall have been otherwise transferred,
new certificates for such Registrable Securities not bearing a
legend restricting further transfer shall have been delivered by the Company,
and subsequent disposition of such Registrable Securities shall not be
subject to registration or qualification under the Securities Act, (E) such
Registrable Securities, or the Warrant pursuant to which such Registrable
Securities have been or may be issued, shall have ceased to be outstanding or
(F) in the opinion of counsel to the Company, such Registrable Securities are
otherwise available for sale in a transaction exempt from the registration
and prospectus delivery requirements of the Securities Act so that all
transfer restrictions and restrictive legends with respect thereto are
removed upon the consummation of such sale.
The terms "REGISTER," "REGISTERED" and "REGISTRATION" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering by the
Commission of the effectiveness of such registration statement.
"REGISTRATION EXPENSES" means all expenses, except as otherwise stated
below, incurred by the Company in complying with Section 2 hereof, including,
without limitation, all registration, qualification and filing fees required to
be paid to the Commission, the NYSE, the National Association of Securities
Dealers, Inc., and any applicable state agency, printing expenses, any transfer
taxes or fees, escrow fees, fees and disbursements of counsel for the Company,
fees and expenses incurred in connection with complying with state securities or
"blue sky" laws, the expense of any special audits incident to or required by
any such registration (but excluding the compensation of regular employees of
the Company which will be paid in any event by the Company).
"SELLING EXPENSES" means all underwriting discounts and selling
commissions applicable to the securities registered by Holder and all fees and
disbursements of counsel for Holder.
"SECURITIES ACT" means the Securities Act of 1933, as amended, or any
similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"WARRANT" means the Warrant to purchase shares of Common Stock of
the Company issued to Holder pursuant to the Purchase Agreement.
"WARRANT SHARES" means the shares of Common Stock issuable upon
exercise of the Warrant.
Capitalized terms not otherwise defined in this Exhibit A are used in
this Exhibit A as defined in the Warrant to which this Exhibit A is attached and
forms a part.
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2. RESALE REGISTRATION.
Upon issuance of the Warrant the Company will use its best efforts to
(i) as soon as practicable and in any event within one (1) year following the
date of the Warrant, file a registration statement under the Securities Act
(including, without limitation, appropriate registration or qualification under
applicable blue sky or other state securities laws in up to 10 states to be
specified by the Holder) and (ii) effect, or cause the registration statement to
be declared effective by the Commission and appropriate blue sky regulators, if
necessary, as soon as practicable after such filing, such registration,
qualification, listing or compliance as would permit or facilitate the sale and
distribution of the Registrable Securities to the public by Holder. The Company
will not be deemed to be in violation of the terms hereof in the event the
Company notifies Holder that the registration statement will not be timely filed
or declared effective in accordance with this Exhibit A as a result of events
outside of the control of the Company, including, but not limited to, delays by
the Commission in declaring the same effective or requests by the Commission for
additional information concerning, or amendments to, the registration statement
prior to declaring the same effective, or delays by the Commission in declaring
the registration statement effective due to the requirements of Item 7 of Form
8-K under the Exchange Act, or the existence of any of the events described in
Section 4(b); provided, however, that the Company shall proceed in good faith to
effect such filing or to cause the registration statement to be declared
effective as soon as practicable after such event or events have abated.
Notwithstanding anything contained in clause (i) of this paragraph to the
contrary, if at the time the Warrant is issued the Commission shall not have
declared effective the Company's registration statement on Form S-3 (No. 33-
96240) (the "Existing Registration Statement"), the Company shall include the
Holder as a "Selling Stockholder" of the Registrable Securities in the Existing
Registration Statement.
The Company will not be obligated to take any action to effect any
such registration, qualification or compliance pursuant to this Section 2 in any
particular jurisdiction in which the Company would be required to execute a
general consent to service of process in effecting such registration,
qualification or compliance unless the Company is already subject to service in
such jurisdiction and except as may be required by the Securities Act.
3. EXPENSES OF REGISTRATION.
(a) REGISTRATION EXPENSES. All Registration Expenses incurred in
connection with all registrations pursuant to Section 2 hereof will be borne by
the Company.
(b) SELLING EXPENSES. Unless otherwise stated herein, all Selling
Expenses relating to securities registered on behalf of Holder pursuant to
Section 2 hereof will be borne by Holder.
4. REGISTRATION PROCEDURE.
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(a) DUTIES OF THE COMPANY. In the case of each registration,
qualification or compliance effected by the Company pursuant to this Exhibit
A, the Company will keep Holder advised in writing as to the initiation of
each registration, qualification and compliance and as to the completion
thereof. At its expense the Company will:
(i) Prepare and file with the Commission a registration
statement with respect to the Registrable Securities held by the Holder
(unless the Holder shall have elected not to include such Registrable
Securities in the Registration Statement or has not complied with his
obligations under Section 6 hereof) and use its best efforts to cause such
registration statement to become and remain effective for two years from
the date of acquisition from the Company of such Registrable Securities or
until the distribution described in the registration statement has been
completed, whichever is less, and if necessary, to supplement or amend the
Registration Statement if required by the Securities Act or by the rules
and regulations of the Commission thereunder; and
(ii) furnish to Holder and to the underwriters, if any, of the
securities being registered such reasonable number of copies of the
registration statement, preliminary prospectus, final prospectus and such
other documents as Holder or the underwriters may reasonably request in
order to facilitate the public offering of such securities.
(b) NOTICE TO HOLDER. Notwithstanding the existence of an
effective registration statement pursuant to Section 4(a)(i) of this Exhibit
A, the Company may notify Holder that Registrable Securities may not be
issued or sold pursuant to the registration statement if (i) the Company is
engaged in a public offering of an original issue of Common Stock or
securities convertible into Common Stock and provides written notice to
Holder that such issuances or sales are suspended as a result thereof during
the period beginning with the distribution of the preliminary prospectus and
ending thirty (30) days after the closing date or (ii) an event occurs which
requires the making of any changes in the registration statement or related
prospectus so that, in the case of the registration statement, such document
shall not contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading, and in the case of the prospectus, such
document shall not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make
the statements therein not misleading in light of the circumstances in which
they were made or (iii) the Board of Directors determines in its good faith
judgment because of the existence of, or in anticipation of, any acquisition
or divesture involving the Company or any of its subsidiaries, or because of
an adverse impact on any financing activity, or because of any other event or
condition of similar significance to the Company or any of its subsidiaries
it would be significantly disadvantageous (a "Disadvantageous Condition") to
the Company or any of its subsidiaries or its stockholders to permit sales of
the Registrable Securities pursuant to the registration statement. The
Company
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shall provide the Holder with a second notice as soon as possible after it
determines that sales of the Registrable Securities suspended pursuant to
this Section 4(b) are again permitted.
5. INDEMNIFICATION AND CONTRIBUTION.
(a) INDEMNIFICATION BY COMPANY. To the extent permitted by law,
the Company will indemnify each Holder, each of its officers and directors
and partners, and each person controlling such Holder within the meaning of
Section 15 of the Securities Act, with respect to which a registration,
qualification or compliance has been effected pursuant to this Exhibit A and
each underwriter, if any, and each person who controls any underwriter within
the meaning of Section 15 of the Securities Act, against all expenses,
claims, losses, damages or liabilities, joint or several (or actions in
respect thereof), including any of the foregoing incurred in settlement of
any litigation, commenced or threatened, arising out of any untrue statement
or alleged untrue statement of a material fact contained in any registration
statement (or any amendment thereto) pursuant to which Registrable Securities
were registered under the Securities Act, including all documents
incorporated therein by reference, or the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary to
make the statements therein not misleading, or arising out of any untrue
statement or alleged untrue statement of a material fact contained in any
prospectus, offering circular or similar document (or any amendment or
supplement thereto) incident to any such registration, qualification or
compliance, or the omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or any violation by
the Company of the Securitieslation promulgated thereunder or promulgated by
the NYSE applicable to the Company in connection with any such registration,
qualification or compliance, and the Company will reimburse each such Holder,
each of its officers and directors, and each person controlling such Holder,
each such underwriter and each person who controls any such underwriter for
any legal and any other expenses reasonably incurred in connection with
investigating, preparing or defending any such claim, loss, damage, liability
or action, PROVIDED that the Company will not be liable in any such case to
the extent that any such claim, loss, damage, liability or expense arises out
of or is based on any untrue statement or omission or alleged untrue
statement or omission, made in reliance upon and in conformity with written
information furnished to the Company by such Holder or controlling person
specifically for use therein.
(b) INDEMNIFICATION BY HOLDERS. To the extent permitted, by law,
each Holder will, if Registrable Securities held by such Holder are included
in the securities as to which such registration, qualification or compliance
becomes effective, indemnify the Company, each of its directors and officers,
each underwriter, if any, of the Company's securities covered by such a
registration statement, each person who controls the Company or such
underwriter within the meaning of Section 15 of the Securities Act, and each
other such Holder, each of its officers and directors and each person
controlling such Holder within the
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meaning of Section 15 of the Securities Act, against all claims, losses,
damages and liabilities (or actions in respect thereof) described in the
indemnity contained in Section 5(a) hereof, and will reimburse the Company,
such Holders, and such directors, officers, persons, underwriters or control
persons for any legal or any other expenses reasonably incurred in connection
with investigating or defending any such claim, loss, damage, liability or
action, in, that such untrue statement (or alleged untrue statement) or
omission (or alleged omission) is made in such registration statement,
prospectus, offering circular or other document in reliance upon and in
conformity with written information furnished to the Company by such Holder
specifically for use therein. Notwithstanding the foregoing, the liability
of each Holder under this Section 5(b) will be limited in an amount equal to
such Holder's net sale proceeds, unless such liability arises out of or is
based on willful misconduct by such Holder.
(c) PROCEDURES. Each party entitled to indemnification under this
Section 5 (the "Indemnified Party") will give notice to the party required to
provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may
be sought, and will permit the Indemnifying Party to assume the defense of
any such claim or any litigation resulting therefrom, PROVIDED that counsel
for the Indemnifying Party, who will conduct the defense of such claim or
litigation, will be approved by the Indemnified Party (whose approval will
not unreasonably be withheld), and the Indemnified Party may participate in
such defense at such party's expense, and PROVIDED, FURTHER, that the failure
of any Indemnified Party to give notice as provided herein will not relieve
the Indemnifying Party of its obligations under this Exhibit A unless the
failure to give notice is materially prejudicial to an Indemnifying Party's
ability to defend such action and, PROVIDED, FURTHER, that the Indemnifying
Party will not assume the defense for matters as to which there is a conflict
of interest or separate and different defenses.
No Indemnifying Party, in the defense of any such claim or
litigation, will, except with the consent of each Indemnified Party, consent
to entry of any judgement or enter into any settlement which does not include
as an uified Party of a release from all liability in respect of such claim
or litigation.
(d) CONTRIBUTION. In order to provide for just and equitable
contribution in circumstances in which any of the indemnity provisions set
forth in this Section 6 are for any reason held to be unenforceable by the
indemnified parties although applicable in accordance with its terms, the
Company and the Holder shall contribute to the aggregate losses, liabilities,
claims, damages and expenses of the nature contemplated by such indemnity
agreement incurred by the Company and the Holder, as incurred; PROVIDED,
HOWEVER, that no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person that was not guilty of such fraudulent
misrepresentation. As between the Company and the Holder, such parties shall
contribute to
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such aggregate losses, liabilities, claims, damages and expenses of the
nature contemplated by such indemnity agreement in such proportion as shall
be appropriate to reflect the relative fault of the Company on the one hand,
and the Holder on the other hand, with respect to the statements or omissions
which resulted in such loss, liability, claim, damage or expense, or action
in respect thereof, as well as any other relevant equitable considerations.
The Company and the Holder agree that it would not be just and equitable if
contribution pursuant to this Section 6 were to be determined by pro rata
allocation or by any other method of allocation that does not take into
account the relevant equitable considerations. For purposes of this Section
6, each person, if any, who controls a Holder within the meaning of Section
15 of the Securities Act shall have the same rights to contribution as such
Holder, and each director of the Company, each officer of the Company who
signed the Registration Statement in question, and each person, if any, who
controls the Company within the meaning of Section 15 of the Securities Act
shall have the same rights to contribution as the Company.
6. INFORMATION BY HOLDERS. The Holder will furnish to the Company
such information regarding the Holder, the Registrable Securities held by it
and the distribution proposed by the Holder as the Company may request in
writing and as will be required in connection with any registration,
qualification or compliance referred to in this Exhibit A.
7. RULE 144 REPORTING. With a view to making available the benefits
of certain rules and regulation of the Commission which may at any time
permit the sale of the Registrable Securities to the public without
registration, the Company agrees to use its best efforts to:
(a) Make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act;
(b) Use its best efforts to file with the Commission in a timely
manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act (as any time after it has become subject to
such reporting requirements); and
(c) So long as Holder owns any Registrable Securities or the Warrant,
to furnish to Holder forthwith upon request a written statement by the Company
as to its compliance with the reporting requirements of said Rule 144 of the
Securities Act and the Exchange Act, upon which the Holder shall be entitled to
rely, a copy of the most recent annual or quarterly report of the Company, and
such other reports and documents of the Company and other information in the
possession of or reasonably obtainable by the Company as a Holder may reasonable
request in availing itself of any rule or regulation of the Commission allowing
a Holder to sell any such securities without registration.
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EXHIBIT D
AGGREGATE CONSIDERATION ALLOCATION
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EXHIBIT E
XXXX OF SALE
In consideration of Ten Dollars ($10.00) and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Xxxxxx Drug Company, Inc., a North Carolina corporation (the "Seller") does
hereby grant, bargain, sell, convey and transfer to Sunscript Pharmacy
Corporation, a New Mexico corporation ("Purchaser") all of its right, title
and interest in and to, all and singular, the Personal Property, the Motor
Vehicles, the Trade Name, the Intangible Property, the Inventory and
Operating Supplies, as each of those terms are defined in the Purchase and
Sale Agreement dated February ___, 1997 between Seller and Purchaser (the
"Purchase Agreement").
TO HAVE AND TO HOLD, all and singular, the Personal Property, the Motor
Vehicles, the Trade Name, the Intangible Property, the Inventory and the
Operating Supplies hereby sold, assigned, transferred and conveyed to
Purchaser, its successors and assigns, to and for its own use and benefit,
all of which are sold, conveyed and delivered "AS IS" "WHERE IS" as of the
date of this Xxxx of Sale except as otherwise set forth in the Purchase
Agreement. Except as otherwise set forth in the Purchase Agreement, There
are no warranties of any kind, express or implied, AND THERE ARE NO
REPRESENTATIONS OR WARRANTIES OF MERCHANTABILITY OR FITNESS AS TO A
PARTICULAR USE.
Seller hereby represents and warrants to Purchaser that Seller is the
owner of the Personal Property, the Inventory and the Operating Supplies,
that Seller has full right, power and authority to sell the same and to make
this Xxxx of Sale and that the same is not encumbered in any manner except as
specifically set forth in Attachment 1 hereto.
Dated this _____ day of February, 1997.
XXXXXX DRUG COMPANY, INC.
By:
------------------------
Its:
-----------------------
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EXHIBIT F
ASSIGNMENT AND ASSUMPTION AGREEMENT
This Agreement is made and entered into effective as of the ____ day of
February, 1997 by and between Xxxxxx Drug Company, Inc., a North Carolina
corporation ("Assignor") and Sunscript Pharmacy Corporation., a New Mexico
corporation ("Sunscript").
RECITALS
A. By Purchase and Sale Agreement dated February ___, 1997 (the "Purchase
Agreement") by and among Sunscript, as Purchaser, and Assignor, as Seller,
Sunscript acquired from Assignor certain assets related to its pharmaceutical
business operations in the State of North Carolina (the "Pharmacy Business"),
including, but not limited to, Seller's right, title and interest in and to
those contracts with the customers of the Pharmacy Business which are listed in
Attachment I hereto (the "Rx Contracts"), the Receivables, the Contracts and the
Trade Payables (as those terms are defined in the Purchase Agreement).
B. Under the terms of the Purchase Agreement, the Rx Contracts, the
Receivables, the Contracts and the Trade Payables are to be assigned to and
assumed by Sunscript as of the Closing Date (as defined in the Purchase
Agreement).
C. Assignor and Sunscript are desirous of documenting the terms and
conditions under which said assignment and assumption will occur.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants of the parties set forth herein, IT IS HEREBY AGREED AS FOLLOWS:
AGREEMENT
1. ASSIGNMENT. As of the Closing Date Assignor does hereby sell, assign,
transfer and convey to Sunscript all of Assignor's right, title and interest in
and to and does hereby delegate to Sunscript all of Assignor's duties and
obligations under the Rx Contracts, the Receivables, the Contracts and the Trade
Payables; provided, however, nothing herein shall be construed as imposing any
liability on Sunscript with respect to the Rx Contracts or the Contracts as a
result of the acts or omissions of Assignor thereunder prior to the Closing Date
(as defined in the Purchase Agreement) or as imposing any liability on Assignor
with respect to the Rx Contracts or the Contracts as a result of the acts or
omissions of Sunscript thereunder from and after the Closing Date.
2. ASSUMPTION. From and after the Closing Date, Sunscript does hereby
accept the sale, assignment, transfer and conveyance of Assignor's right, title
and interest in and to and does hereby assume Assignor's duties and obligations
with respect to the Rx Contracts, the Receivables, the Contracts and the Trade
Payables; provided, however, nothing herein shall be
A-10
construed as imposing any liability on Sunscript with respect to the Rx
Contracts or the Contracts as a result of the acts or omissions of Assignor
thereunder prior to the Closing Date (as defined in the Purchase Agreement)
or as imposing any liability on Assignor with respect to the Rx Contracts and
the Contracts as a result of the acts or omissions of Sunscript thereunder
from and after the Closing Date.
3. GOVERNING LAW/AMENDMENT. This Agreement shall be governed by and
construed in accordance with the laws of the State of North Carolina and may
not be amended or modified except by written instrument signed by the parties
hereto.
4. COUNTERPARTS. This Agreement may be executed in counterparts, each of
which shall be deemed to be an original, but all of which taken together
shall constitute but one and the same instrument. Delivery of an executed
counterpart of a signature page to this Agreement via telephone facsimile
transmission shall be effective as delivery of a manually executed
counterpart of this Agreement.
5. ATTORNEYS' FEES. In the event of a dispute among the parties hereto
with respect to the subject matter hereof, the prevailing party in any such
dispute shall be entitled to collect from the other its reasonable attorneys'
fees and costs.
6. ENTIRETY. This Agreement and any Exhibits hereto and the documents
executed in furtherance hereof or in conjunction herewith, including, but not
limited to, the Purchase Agreement, represent the entire agreement of the
parties with respect to the subject matter hereof, it being understood and
agreed that nothing herein shall affect the rights and obligations of
Assignor and Sunscript under the Purchase Agreement.
7. NOTICES. Any notice, request or other communication to be given by
either party hereunder shall be in writing and shall be sent to the parties
and in the manner specified in the Purchase Agreement.
8. SEVERABILITY. Should any one or more of the provisions hereof be
deemed to be invalid or unenforceable said determination shall not affect the
validity or enforceability of the remaining terms hereof.
9. CAPTIONS. The captions in this Agreement have been inserted for
convenience of reference only and shall not be construed to define or to
limit any of the terms or conditions hereof.
[SIGNATURE PAGE FOLLOWS.]
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IN WITNESS WHEREOF, the parties hereby execute this Agreement as of the day
and year first set forth above.
XXXXXX DRUG COMPANY, INC.
By:___________________________________
Its:__________________________________
SUNSCRIPT PHARMACY CORPORATION
By:__________________________________
Its:__________________________________
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EXHIBIT G
PERSONAL PROPERTY INVENTORY
A-13
EXHIBIT H
LIENS AND ENCUMBRANCES
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EXHIBIT I
EMPLOYEE SCHEDULE
A-15
EXHIBIT J
RX CONTRACTS
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EXHIBIT K
AR AGING REPORTS
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EXHIBIT L
LITIGATION
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EXHIBIT M
INSURANCE
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EXHIBIT N
XXXXXX EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as of
this ____ day of February, 1997 by and between Sunscript Pharmacy Corporation, a
New Mexico corporation ("Sunscript"), and Xxxxxxx Xxxxxx ("Employee").
RECITALS
A. By Purchase and Sale Agreement dated February ___, 1997 (the
"Purchase Agreement") by and among Sunscript and Xxxxxx Drug Company, Inc., a
North Carolina corporation (collectively, the "Seller"), Sunscript acquired from
the Seller certain assets related to its pharmaceutical business operations in
the State of North Carolina (the "Pharmacy Business").
B. Prior to the closing of the transaction provided for in the Purchase
Agreement, Employee was involved in the operations of the Pharmacy Business.
C. In order to ensure a smooth transition of operational responsibility
for the Pharmacy Businesses, Sunscript is desirous of retaining the services of
Employee to serve as the Director of Pharmaceutical Services for Sunscript dba
Tar Heel Consultants.
D. Employee is desirous of continuing to be associated with the Pharmacy
Business and has agreed to accept employment with Sunscript as the Director of
Pharmaceutical Services for Sunscript dba Tar Heel Consultants.
E. Sunscript and Employee are desirous of documenting the terms and
conditions of said employment relationship.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants of the parties set forth herein, IT IS HEREBY AGREED AS FOLLOWS:
AGREEMENT
1. EMPLOYEE RESPONSIBILITIES. Effective as of the Commencement Date (as
defined below), Sunscript hereby retains Employee and Employee hereby agrees to
serve, as the Director of Pharmaceutical Services for Sunscript dba Tar Heel
Consultants. In his capacity as the Director of Pharmaceutical Services for
Sunscript dba Tar Heel Consultants, Employee shall report to the Southeastern
Regional Vice President of Sunscript. While employed by Sunscript, Employee
shall be responsible for performing the responsibilities set forth in Exhibit A
as the same may be reasonably modified, extended or curtailed, from time to
time, at the direction of Sunscript, provided that said responsibilities remain
at all times consistent with the duties of Employee's title. Employee shall
devote such time as shall be necessary to properly carry out and
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perform the services described herein, and shall faithfully and diligently
serve Sunscript's interests; provided, however, that Employee's
responsibilities and hours of work shall not be increased without the consent
of Employee.
2. COMPENSATION. In consideration for the services provided hereunder,
Sunscript shall pay to Employee the following:
a. BASE SALARY. During the Term of this Agreement (as defined
below), Employee shall receive an annual base salary of $90,000 (the "Base
Salary"), which shall be payable in equal bi-weekly installments or on such
other basis as Sunscript and Employee shall agree (less any applicable local,
state and federal withholding taxes).
b. ADDITIONAL COMPENSATION. In addition to his Base Salary,
Employee shall be entitled to those benefits described in Exhibit B as the same
may be amended from time to time by Sunscript during the Term to reflect any
changes in such benefits paid or provided to full-time employees of Sunscript
with the same or similar positions as Employee and to such additional time off
without pay as Employee may deem to be appropriate or desirable provided that
such time off does not interfere with the performance of his responsibilities
under this Agreement.
c. EXPENSES. Sunscript shall pay or reimburse Employee for all of
his out of pocket expenses reasonably incurred in performing the services
provided for under this Agreement, including, but not limited to, overnight
delivery charges, secretarial services, long distance telephone and facsimile
charges and travel expenses (including airfare, hotels, car rental expenses,
mileage charges when Employee's own vehicle is used and meals) all in accordance
with Sunscript's expense reimbursement policy. Payment shall be due after
Sunscript's receipt of Employee's invoice or expense report therefor and in
accordance with Sunscript's expense reimbursement policy, a copy of which has
been provided to Employee as of the date hereof and the receipt of which
Employee does hereby acknowledge.
3. TERM. The term of this Agreement shall be for a period of thirty-
six (36) months commencing on the date of this Agreement (the "Commencement
Date") unless sooner terminated as provided herein (the "Term").
4. TERMINATION.
a. FOR CAUSE BY SUNSCRIPT. This Agreement may be terminated prior to the
expiration of the Term by Sunscript for cause. For purposes hereof, the term
"cause" shall refer to any act or practice by Employee deemed to be a material
breach by Employee of his obligations hereunder, including, without limitation,
the following:
i. Misrepresentation, deceit, fraud or dishonesty by Employee in
connection with his performance hereunder;
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ii. Employee's failure or refusal to competently perform his duties
hereunder including the refusal to implement reasonable directives of
Sunscript;
iii. Any intentional or negligent act or omission by Employee which
materially injures the business, goodwill or reputation of Sunscript;
iv. Employee's violation of any provisions of federal Medicare or Medicaid
law or state law, where such violation is punishable as a felony; or
v. Any other material breach by Employee of any of his obligations
hereunder.
Notwithstanding the foregoing, Sunscript shall not be permitted to
terminate this Agreement for any of the foregoing causes until such time as
Sunscript has notified Employee in writing of the nature of the cause and, if
the cause is of a nature which is curable, has given Employee thirty (30) days
following Employee's receipt of said notice within which to cure such matter, to
the reasonable satisfaction of Sunscript. In the event Employee fails to cure
said matter within said thirty (30) day period, this Agreement shall be deemed
automatically terminated at the end of said thirty (30) day period.
b. FOR CAUSE BY EMPLOYEE. This Agreement may be terminated by Employee
for cause effective thirty (30) days after Sunscript's receipt of written notice
thereof from Employee. For purposes hereof, the term "cause" shall refer to a
material breach by Sunscript of any of its obligations under this Agreement,
including, without limitation, the following:
i. A material limitation or expansion of Employee's duties and powers
under this Agreement;
ii. The imposition of obligations on Employee which would require Employee
to perform his obligations hereunder or to otherwise take any action
which would be in violation of applicable state or federal law; or
iii. Any other material breach by Sunscript of any of its obligations
hereunder.
Notwithstanding the foregoing, Employee shall not be permitted to terminate
this Agreement for any of the foregoing causes until such time as Employee has
notified Sunscript in writing of the nature of the cause and, if the cause is of
a nature which is curable, has given Sunscript thirty (30) days following
Sunscript's receipt of said notice within which to cure such matter, to the
reasonable satisfaction of Employee. In the event Sunscript fails to cure said
matter within said thirty (30) day period, this Agreement shall be deemed
automatically terminated at the end of said thirty (30) day period.
c. PAYMENT FOLLOWING TERMINATION . Effective as of the date of any
termination pursuant to this Section 4, all payments due under Section 2 shall
cease and terminate (excluding,
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however, any employee benefits, including Employee's Base Salary, which have
accrued and/or reimbursable expenses which have been properly incurred, prior
to the effective date of said termination).
5. DEATH OR DISABILITY. In the event of the death of Employee or in
the event Employee suffers a physical or mental disability which, in the
reasonable opinion of Sunscript, renders him permanently unable to perform his
duties under this Agreement, this Agreement shall automatically terminate. If
this Agreement is terminated as a result of the death or disability of Employee,
all payments due under Section 2 shall cease and terminate (excluding, however,
any employee benefits which have accrued and/or reimbursable expenses which have
been properly incurred, prior to the effective date of said termination).
Employee shall be deemed to be permanently disabled in the event he is deemed to
be disabled within the meaning of Sunscript's disability insurance policy under
which coverage is provided to Employee or, if no such coverage is provided, in
the event he is determined by an independe(90) consecutive days.
6. NON-DISCLOSURE. During the Term of this Agreement, Employee will have
access to certain information not generally known or available to the public or
the competitors of Sunscript relating to the business, customers, sales data,
policies and procedures, marketing strategies and other proprietary and
confidential material of Sunscript ("Confidential Information"). Confidential
Information shall not include information which becomes generally known or
available to the public through no fault of Employee. This Confidential
Information constitutes a valuable asset of Sunscript, access to and knowledge
of which are essential to the performance of Employee's duties. Employee
acknowledges and agrees that all such Confidential Information is and shall
remain the exclusive property of the entity to which it relates. Employee
agrees that, except as directed by Sunscript or as may be required by law,
Employee will not at any time, during or after the term of this Agreement, use
or disclose to any person, directly or indirectly, for any purpose other than
for the benefit of any such entities, any Confidential Information, whether
prepared by Employee or otherwise coming into Employee's possession or control,
without the prior written permission of Sunscript.
7. POSSESSION. Employee agrees that upon termination of this Agreement,
or upon request by Sunscript, Employee shall turn over to Sunscript all
documents, files, office supplies and any other material or work product in his
possession or control which were created pursuant to or derived from Employee's
services to Sunscript.
8. NON-COMPETITION. Employee recognizes and agrees that Sunscript has
many substantial, legitimate business interests that can be protected only by
Employee agreeing not to compete with Sunscript under certain circumstances.
These interests include, without limitation, Sunscript's contacts and
relationships with its customers, Sunscript's reputation and goodwill in the
industry, the financial and other support afforded by Sunscript, and Sunscript's
rights in its Confidential Information. Employee therefore agrees that during
the Term of this Agreement and for a period of two years thereafter, Employee
will not, directly or indirectly without the
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prior written consent of Sunscript, engage in any of the following activities
anywhere in the State of North Carolina:
a. Own, operate or manage a business which engages in the institutional
long-term care pharmacy business in competition with the Pharmacy Business;
b. Work as an employee, employer, independent contractor or consultant
for or with, or provide services as an employee, independent contractor or
consultant under the terms of a verbal or written agreement to, any person or
entity that is engaged in the institutional pharmacy business in competition
with the Pharmacy Business;
c. Solicit, acquire or conduct any institutional pharmacy business from
or with any of Sunscript's customers (as defined below);
d. Solicit or induce any of the employees or independent contractors of
Sunscript to terminate their employment or contractual relationships with
Sunscript; or
e. Serve as an officer or director of, or hold a majority interest in,
any entity engaged in any of the foregoing prohibited activities.
For purposes of this paragraph, Sunscript's customers shall include (i) during
the Term hereof, those long term care facilities, health care providers and
individuals to whom Sunscript provides services or has proposals to provide
services pending and (ii) for the two year period after the term hereof, those
long term care facilities, health care providers and individuals to whom
Sunscript was providing services, or had proposals outstanding for the provision
of services, at the time of the termination of this Agreement. Notwithstanding
the foregoing, Employee shall not be deemed to be in violation of this Agreement
if he engages in the institutional pharmacy business or another related health
care business as long as such business is not in direct competition with, the
Pharmacy Business and provided he does not solicit or do business with any of
Sunscript's customers or solicit any of the employees or independent contractors
of Sunscript.
The restrictive covenant contained in this Section 8 shall terminate in the
event (i) Employee terminates this Agreement for any reason other than cause (as
defined in Section 4(b) herein) or (ii) Sunscript terminates this Agreement for
any reason other than cause (as defined in Section 4(a) herein); provided,
however, in the event the termination of employment is contested by either
party, the restrictive covenant shall not terminate until such contest is
resolved by a final, non-appealable determination by a court of competent
jurisdiction.
9. SAVING PROVISION. Sunscript and Employee agree and stipulate that the
non-disclosure agreement set out above is fair and reasonably necessary for the
protection of the business, goodwill, Confidential Information, and other
protectable interests of Sunscript in light of all of the facts and
circumstances of the relationship between Employee and Sunscript. In the
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event a court of competent jurisdiction should decline to enforce those
provisions, they shall be deemed to be modified to restrict Employee to the
maximum extent which the court shall find enforceable; however, in no event
shall the above provisions be deemed to be more restrictive to Employee than
those contained herein.
10. INJUNCTIVE RELIEF. Employee acknowledges that the breach or
threatened breach of any of the non-disclosure covenants or other agreements
contained herein would give rise to irreparable injury to Sunscript which injury
would be inadequately compensable in money damages. Accordingly, Sunscript may
seek and obtain a restraining order and/or injunction prohibiting the breach or
threatened breach of any provision, requirement or covenant of this Agreement,
in addition to and not in limitation of any other legal remedies which may be
available. Employee further acknowledges, agrees and stipulates that, in the
event of the termination of this Agreement, Employee's experience and
capabilities are such that Employee can obtain employment in business activities
not in violation of the provisions above, and that the enforcement of a remedy
hereunder by way of injunction shall not prevent Employee from earning a
reasonable livelihood. Employee further acknowledges and agrees that the
agreements set out above are necessary for the protection of Sunscript's
legitimate business interests and are reasonable in scope and content.
11. ENFORCEMENT. The provisions of this Agreement shall be enforceable
notwithstanding the existence of any claim or cause of action against Sunscript
by Employee, whether predicated on this Agreement or otherwise.
12. GOVERNING LAW. The Agreement shall be construed in accordance with
the laws of the State of North Carolina.
13. LEGAL EXPENSE. The prevailing party in any action to enforce this
Agreement shall be entitled to recover from the other party reasonable sums as
attorney fees and expenses in connection with such action, including appeal.
14. WAIVER OF BREACH. The waiver of any breach of any provision of this
Agreement or failure to enforce any provision hereof shall not operate or be
construed as a waiver of any subsequent breach by any party.
15. MODIFICATION. This Agreement may be modified, supplemented and/or
amended only by a writing that is signed by both Sunscript and Employee.
16. ENTIRETY. This Agreement, including any exhibits hereto, as it may be
amended pursuant to the terms hereof, represents the complete and final
agreement of the parties and shall control over any other statement,
representation or agreement by Sunscript (E.G., as may appear in employment or
policy manuals). This Agreement supersedes any prior negotiations or
discussions between the parties.
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17. SURVIVAL. The provisions of this Agreement relating to
confidentiality and non-competition shall survive the termination of this
Agreement.
18. CAPTIONS. The captions of this Agreement are for convenience of
reference only and shall not be deemed to define or limit any of the terms
hereof.
19. BINDING EFFECT. This Agreement shall be binding upon and shall inure
to the benefit of the parties hereto and their heirs, successors, personal
representatives and assigns.
20. FURTHER ASSURANCES. The parties to this Agreement shall execute and
deliver any documents or instruments in addition to those described in this
Agreement which are necessary or appropriate to carry out the terms hereof.
21. INDEMNIFICATION. Each of Sunscript and Employee agrees to indemnify,
defend and hold the other harmless from and against any and all costs, expenses
and liability, including, but not limited to, reasonable attorneys fees, which
it or he may incur in the event of a breach by the other party of its
obligations hereunder or arising from the acts or omissions of the other party
in performing its obligations hereunder.
22. AUTHORITY. Sunscript does hereby represent and warrant that it has
full power and authority to enter into this Agreement and to carry out the terms
hereof and that the same has been duly authorized by the Board of Directors of
Sunscript and that the person executing the same on behalf of Sunscript has been
duly authorized to act in the name and on behalf of Sunscript.
23. COUNTERPARTS. This Agreement may be executed in two or more
counterparts each of which shall be deemed an original for all purposes and all
of which, when taken together, shall constitute one agreement.
[SIGNATURE PAGE FOLLOWS.]
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IN WITNESS HEREOF, the undersigned have executed this Agreement as of the
day and year first set forth above.
SUNSCRIPT PHARMACY CORPORATION
By____________________________
Its_________________________
______________________________
XXXXXXX XXXXXX
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EXHIBIT A TO EMPLOYMENT AGREEMENT
RESPONSIBILITIES
The duties and responsibilities of Employee shall include, but not be
limited to, the following:
Position Summary: The primary purpose of this position is to direct the
day to day function of the pharmacy operations in accordance with current state,
federal and local standards, guidelines and regulations as delineated in the
attached position description. The Director of Pharmacy has direct supervisory
responsibility for all staff members.
Other Responsibilities: The duties and responsibilities of Xxxxxxx Xxxxxx
shall include, but not be limited to, the following:
1. Client Retention.
2. Operational Support and Development for pharmacy activities.
3. Financial operational support.
4. Representation of Sunscript in a positive light to the long term care
industry, the pharmacy industry and the community in general.
5. Consultant Pharmacist services and public relations duties to current
clients.
6. Assist Regional Marketing Director in identifying and securing new
business.
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EXHIBIT B TO EMPLOYMENT AGREEMENT
ADDITIONAL COMPENSATION/BENEFITS
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EXHIBIT O
SHAREHOLDER NON-COMPETE AGREEMENT
THIS AGREEMENT (the "Agreement") is made and entered into as of this ____
day of February, 1997 by and between Sunscript Pharmacy Corporation, a New
Mexico corporation ("Sunscript") and __________ ("Shareholder").
RECITALS
A. By Purchase and Sale Agreement dated February ___, 1997 (the
"Purchase Agreement") by and among Sunscript ("Sunscript") and Xxxxxx Drug
Company, Inc., a North Carolina corporation (the "Seller"), Sunscript acquired
from the Seller certain assets related to its pharmaceutical business operations
in Pink Hill, North Carolina (the "Pharmacy Business").
B. Prior to the closing of the transaction provided for in the Purchase
Agreement, Shareholder was a shareholder in Seller and was involved in the
operations of the Pharmacy Business.
C. In order to ensure that there is value to Sunscript in the transaction
provided for in the Purchase Agreement, Shareholder has agreed that for a
specified period of time and in a specified geographic region, he will not
complete with Sunscript in the business previously operated by Seller and that
he will not disclose any confidential information concerning Seller which may be
in his possession as a result of his prior relationship with Seller.
D. Sunscript and Shareholder are desirous of documenting the terms and
conditions of said non-competition and non-disclosure agreements.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants of the parties set forth herein, IT IS HEREBY AGREED AS FOLLOWS:
AGREEMENT
1. NON-COMPETITION. Shareholder recognizes and agrees that Sunscript has
many substantial, legitimate business interests that can be protected only by
Shareholder agreeing not to compete with Sunscript under certain circumstances.
These interests include, without limitation, Sunscript's contacts and
relationships with its customers, Sunscript's reputation and goodwill in the
industry, the financial and other support afforded by Sunscript, and Sunscript's
rights in its Confidential Information. Shareholder therefore agrees that for a
period of [fifteen (15) years (in the case of Xxxxxxx Xxxxxx)] [two (2) years
(in the case of each of Xxxxxxx X. Xxxxxx and Xxxxxxxxx X. Xxxxxx)] after the
date hereof, Shareholder will not, directly or indirectly without the prior
written consent of Sunscript, engage in any of the following activities anywhere
in the States of North Carolina, South Carolina and Virginia:
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a. Own, operate or manage a business which engages in the
institutional long-term care pharmacy business in competition with the Pharmacy
Business;
b. Work as an employee, employer, independent contractor or
consultant for or with, or provide services as an employee, independent
contractor or consultant under the terms of a verbal or written agreement to,
any person or entity that is engaged in the institutional pharmacy business in
competition with the Pharmacy Business;
c. Solicit, acquire or conduct any institutional pharmacy business
from or with any of Sunscript's customers (as defined below);
d. Solicit or induce any of the employees or independent contractors
of Sunscript to terminate their employment or contractual relationships with
Sunscript; or
e. Serve as an officer or director of, or hold a majority interest
in, any entity engaged in any of the foregoing prohibited activities.
For purposes of this paragraph, Sunscript's customers shall include those long
term care facilities, health care providers and individuals to whom Sunscript
provides services or has proposals outstanding for the provision of services at
the time of the solicitation or inducement thereof by Shareholder in violation
of the terms of this Agreement.
2. NON-DISCLOSURE. Shareholder acknowledges and agrees that prior to the
consummation of the transaction provided for in the Purchase Agreement,
Shareholder had access to certain information not generally known or available
to the public or the competitors of Seller relating to the business, customers,
sales data, policies and procedures, marketing strategies and other proprietary
and confidential material of Seller ("Confidential Information"). Confidential
Information shall not include information which becomes generally known or
available to the public through no fault of Shareholder. This Confidential
Information constitutes a valuable asset of Sunscript. Shareholder acknowledges
and agrees that all such Confidential Information is and shall remain the
exclusive property of the entity to which it relates. Shareholder agrees that,
except as directed by Sunscript or as may be required by law, Shareholder will
not at any time, during or after the term of this Agreement, use or disclose to
any person, directly or indirectly, for any purpose other than for the benefit
of any such entities, any Confidential Information, whether prepared by
Shareholder or otherwise coming into Shareholder's possession or control,
without the prior written permission of Sunscript.
3. SAVING PROVISION. Sunscript and Shareholder agree and stipulate that
the non-disclosure agreement set out above is fair and reasonably necessary for
the protection of the business, goodwill, Confidential Information, and other
protectable interests of Sunscript in light of all of the facts and
circumstances of the relationship between Shareholder and Sunscript. In the
event a court of competent jurisdiction should decline to enforce those
provisions, they shall be deemed to be modified to restrict Shareholder to the
maximum extent which the court shall
A-30
find enforceable; however, in no event shall the above provisions be deemed
to be more restrictive to Shareholder than those contained herein.
4. INJUNCTIVE RELIEF. Shareholder acknowledges that the breach or
threatened breach of any of the non-disclosure covenants or other agreements
contained herein would give rise to irreparable injury to Sunscript which injury
would be inadequately compensable in money damages. Accordingly, Sunscript may
seek and obtain a restraining order and/or injunction prohibiting the breach or
threatened breach of any provision, requirement or covenant of this Agreement,
in addition to and not in limitation of any other legal remedies which may be
available. Shareholder further acknowledges, agrees and stipulates that,
Shareholder's experience and capabilities are such that Shareholder can obtain
employment in business activities not in violation of the provisions above, and
that the enforcement of a remedy hereunder by way of injunction shall not
prevent Shareholder from earning a reasonable livelihood. Shareholder further
acknowledges and agrees that the agreements set out above are necessary for the
protection of Sunscript's legitimate business interests and are reasonable in
scope and content.
5. ENFORCEMENT. The provisions of this Agreement shall be enforceable
notwithstanding the existence of any claim or cause of action against Sunscript
by Shareholder, whether predicated on this Agreement or otherwise.
6. GOVERNING LAW. The Agreement shall be construed in accordance with
the laws of the State of North Carolina.
7. LEGAL EXPENSE. The prevailing party in any action to enforce this
Agreement shall be entitled to recover from the other party reasonable sums as
attorney fees and expenses in connection with such action, including appeal.
8. WAIVER OF BREACH. The waiver of any breach of any provision of this
Agreement or failure to enforce any provision hereof shall not operate or be
construed as a waiver of any subsequent breach by any party.
9. MODIFICATION. This Agreement may be modified, supplemented and/or
amended only by a writing that is signed by both Sunscript and Shareholder.
10. ENTIRETY. This Agreement, including any exhibits hereto, as it may be
amended pursuant to the terms hereof, represents the complete and final
agreement of the parties and shall control over any other statement,
representation or agreement by Sunscript. This Agreement supersedes any prior
negotiations or discussions between the parties.
11. CAPTIONS. The captions of this Agreement are for convenience of
reference only and shall not be deemed to define or limit any of the terms
hereof.
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12. BINDING EFFECT. This Agreement shall be binding upon and shall inure
to the benefit of the parties hereto and their heirs, successors, personal
representatives and assigns.
13. FURTHER ASSURANCES. The parties to this Agreement shall execute and
deliver any documents or instruments which are necessary or appropriate to carry
out the terms hereof.
14. INDEMNIFICATION. Each of Sunscript and Shareholder agrees to
indemnify, defend and hold the other harmless from and against any and all
costs, expenses and liability, including, but not limited to, reasonable
attorneys fees, which it or he may incur in the event of a breach by the other
party of its obligations hereunder or arising from the acts or omissions of the
other party in performing its obligations hereunder.
15. AUTHORITY. Sunscript does hereby represent and warrant that it has
full power and authority to enter into this Agreement and to carry out the terms
hereof and that the same has been duly authorized by the Board of Directors of
Sunscript and that the person executing the same on behalf of Sunscript has been
duly authorized to act in the name and on behalf of Sunscript.
16. COUNTERPARTS. This Agreement may be executed in two or more
counterparts each of which shall be deemed an original for all purposes and all
of which, when taken together, shall constitute one agreement.
IN WITNESS WHEREOF, the undersigned have executed this Agreement effective
as of the day and year first set forth above.
SUNSCRIPT PHARMACY CORPORATION
By:________________________________
Its:_________________________________
[SHAREHOLDER]
____________________________________
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EXHIBIT P
WARRANT ACKNOWLEDGMENT LETTER
A-34
EXHIBIT Q
SUBLEASE AGREEMENT
THIS SUBLEASE AGREEMENT (the "Agreement"), dated February ___, 1997 is
hereby entered into by and between XXXXXXX XXXXXX, an individual, resident in
the state of North Carolina, (hereinafter called Sublessor), and SUNSCRIPT
PHARMACY CORPORATION, a New Mexico corporation, (hereinafter referred to as
Sublessee).
W I T N E S S E T H:
Sublessor previously entered into a Commercial Lease dated September 1,
1992 (the Master Lease)(attached hereto as Exhibit "A") with Xxxxx Xxxxxx
Xxxxxxx (Owner), for real property and improvements situated in the City of Pink
Hill, County of Lenoir, State of North Carolina, described as 000 X. Xxxxxxxx,
Pink Hill and now known as 000 X. Xxxxxxxx, Pink Hill (the "Premises").
For valuable consideration, including the mutual covenants set forth below,
Sublessor and Sublessee now agree as follows:
1. SUBLEASE OF PREMISES
Sublessor does hereby sublease to Sublessee and Sublessee does hereby
sublease from Sublessor, the Premises during the "Term", as that term is defined
below. The sublease of the Premises shall be on all of the same terms and
conditions as provided for in the Master Lease, but excluding any provision of
the Master Lease which is directly contradicted by this Sublease. Accordingly,
for the purposes of this Sublease, wherever in the Master Lease the word
"Lessor" is used, it shall be deemed to mean the Sublessor herein and wherever
in the Master Lease the word "Lessee" is used, it shall be deemed to mean the
Sublessee herein. The Master Lease is hereby incorporated herein by this
reference as though fully set forth herein.
2. RENT
A. Throughout the Term of the Sublease, Sublessee shall pay to
Sublessor as rent for the right to use and occupy the Premises the amounts set
forth in the Master Lease.
B. The rent provided for in this Section 2 shall be due and payable
to Sublessor on the first day of each month throughout the Term of this
Sublease; provided, however, that Sublessor acknowledges and agrees that
Sublessor shall be obligated to pay the rent due under the Master Lease without
regard to whether or not the rent due under this Sublease has been paid as and
when due.
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C. In the event Sublessee pays the rent due hereunder and Sublessor
fails to pay the rent due under the Master Lease, Sublessee shall have the
right, but not the obligation, to pay such rent on behalf of Sublessor and to
deduct the same from any future rental payments due hereunder.
D. Nothing herein shall be construed as relieving Sublessor of its
obligation to pay the rent due under the Master Lease or to fulfill any other
obligations thereunder which cannot lawfully be delegated to Sublessee.
3. TERM
The term of this Sublease ("Term") shall commence on February ___,
1997, and shall continue thereafter for a period commensurate with the term
provided for in the Master Lease.
4. USE
The Premises shall be used as office space and storage by Sublessee
for the purpose of conducting the same type of business as Sublessor has
conducted on the Premises since the commencement of the term of the Master
Lease, and for no other use or purpose without the prior written consent of
Sublessor and Master Lessor. Sublessor agrees not to unreasonably withhold its
consent so long as the Master Lessor consents to any change in lease.
5. GENERAL PROVISIONS
A. FURTHER ASSURANCES. Each of the parties hereto agrees to execute
and deliver any and all further agreements, documents or instruments necessary
to effectuate this Sublease and the transactions referred to herein or
contemplated hereby or reasonably requested by the other party to perfect or
evidence their rights hereunder.
B. NOTICES. Any notice, request or other communication to be given
by any party hereunder shall be in writing and shall be sent by registered or
certified mail, postage prepaid, by overnight courier guaranteeing overnight
delivery or by facsimile transmission, to the following address:
To Sublessor: Mr. Xxxxxxx Xxxxxx
Tar Heel Consultants
Xxxxxx Drug Company, Inc.
000 Xxxx Xxxxxxxx
P. O. Xxx 000
Xxxx Xxxx, XX 00000
Phone: 000-000-0000
Facsimile: 000-000-0000
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with copy to: Xxxxx Xxx Xxxxxx, Esq.
Parker, Poe, Xxxxx & Xxxxxxxxx L.L.P.
0000 Xxxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Phone: 000-000-0000
Facsimile: 704-334-4706
To Sublessee: Sunscript Pharmacy Corporation
000 Xxx Xxxx, XX
Xxxxxxxxxxx, XX 00000
Phone: 000-000-0000
Facsimile: 000-000-0000
Attn: Xxxx X. Xxxxxxxx
with copy to: Xxxxx X. Xxxxxxxxx, Esq.
The Xxxxxxxxx Group
0000 Xxxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, XX 00000
Phone: 000-000-0000
Facsimile: 206-623-1738
Notice shall be deemed given three (3) business days after deposit in the
mail, on the next day if sent by overnight courier and on receipt if sent by
facsimile.
C. PAYMENT OF EXPENSES. Each party hereto shall bear its own legal,
accounting and other expenses incurred in connection with the preparation and
negotiation of this Sublease and the consummation of the transaction
contemplated hereby, whether or not the transaction is consummated.
D. ENTIRE AGREEMENT; AMENDMENT; WAIVER. This Sublease, together
with the other agreements referred to herein and executed in conjunction
herewith, constitute the entire understanding between the parties with respect
to the subject matter hereof, superseding all negotiations, prior discussions
and preliminary agreements. This Sublease may not be modified or amended except
in writing signed by the parties hereto. No waiver of any term, provision or
condition of this Sublease in any one or more instances, shall be deemed to be
or be construed as a further or continuing waiver of any such term, provision or
condition of this Sublease. No failure to act shall be construed as a waiver of
any term, provision, condition or rights granted hereunder.
E. JOINT VENTURE; THIRD PARTY BENEFICIARIES. Nothing contained
herein shall be construed as forming a joint venture or partnership between the
parties hereto with respect to
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the subject matter hereof. The parties hereto do not intend that any third
party shall have any rights under this Sublease.
F. CAPTIONS. The section headings contained herein are for
convenience only and shall not be considered or referred to in resolving
questions of interpretation.
G. COUNTERPARTS. This Sublease may be executed in two or more
counterparts, including by facsimile signature, with original signature
delivered thereafter, and all such counterparts taken together shall
constitute a single original agreement.
H. GOVERNING LAW. This Sublease shall be governed by and
construed in accordance with the laws of the State of North Carolina.
IN WITNESS WHEREOF, the parties hereby execute this Sublease as of the
day and year first set forth above.
"SUBLESSOR" "SUBLESSEE"
XXXXXXX XXXXXX SUNSCRIPT PHARMACY CORPORATION,
a New Mexico corporation
________________________
By: ______________________
Its: ______________________
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EXHIBIT A
"MASTER LEASE"
A-39
