ASSET PURCHASE AGREEMENT by and between VALLEY DRUG COMPANY and ROCHESTER DRUG COOPERATIVE, INC. dated as of December 22, 2005
Exhibit
10.1
EXECUTION
COPY
by
and between
VALLEY
DRUG COMPANY
and
ROCHESTER
DRUG COOPERATIVE, INC.
dated
as of
December
22, 2005
TABLE
OF CONTENTS
| Page(s) | ||||
|
2. Purchase
and Sale.
|
4
|
|||
|
2.1.
Purchase and Sale of Assets.
|
4
|
|||
|
2.2.
Excluded Assets.
|
4
|
|||
|
2.3.
Method of Conveyance.
|
5
|
|||
|
2.4
Assumed Obligations.
|
5
|
|||
|
2.5.
Excluded Obligations.
|
5
|
|||
|
2.6.
Lease Amendment; Sublease.
|
6
|
|||
|
3.
Purchase Price.
|
6
|
|||
|
3.1
Purchase Price.
|
6
|
|||
|
3.2.
Payment of Purchase Price.
|
6
|
|||
|
4.
Allocation of Purchase Price.
|
6
|
|||
|
5.
Representations and Warranties of Seller.
|
6
|
|||
|
5.1.
Corporate Organization.
|
7
|
|||
|
5.2.
Authorization.
|
7
|
|||
|
5.3.
No Violation.
|
7
|
|||
|
5.4.
Brokers and Finders.
|
7
|
|||
|
5.5.
Condition of Tangible Assets.
|
8
|
|||
|
5.6.
[Intentionally Omitted].
|
8
|
|||
|
5.7.
Absence of Specified Changes.
|
8
|
|||
|
5.8.
Title to Assets; Encumbrances.
|
8
|
|||
|
5.9.
Personal Property Leases.
|
8
|
|||
|
5.10.
Contracts and Commitments.
|
8
|
|||
|
5.11.
Litigation, Judgments and Decrees.
|
9
|
|||
|
5.12.
Consents and Approvals of Governmental Authorities and
Others.
|
9
|
|||
|
5.13
Compliance With Law; Necessary Authorizations.
|
9
|
|||
|
6.
Representations and Warranties of Buyer.
|
10
|
|||
|
6.1.
Organization.
|
10
|
|||
|
6.2.
Authorization.
|
10
|
|||
|
6.3.
No Violation.
|
10
|
|||
|
6.4.
Brokers and Finders.
|
11
|
|||
|
6.5.
Consents and Approvals of Governmental Authorities and
Others.
|
11
|
-i-
|
7.
Covenants Prior to Closing.
|
11
|
|||
|
7.1
Seller’s Covenants.
|
11
|
|||
|
7.2.
Buyer’s Covenants.
|
12
|
|||
|
7.3.
Risk of Loss.
|
13
|
|||
|
8.
Conditions to Closing.
|
14
|
|||
|
8.1.
Conditions to Seller’s Obligations to Close.
|
14
|
|||
|
8.2.
Conditions to Buyer’s Obligation to Close.
|
14
|
|||
|
9.
Closing.
|
15
|
|||
|
9.1.
Closing and Closing Date.
|
15
|
|||
|
9.2.
Seller’s Closing Documents.
|
15
|
|||
|
9.3.
Buyer’s Closing Documents.
|
15
|
|||
|
10.
Post-Closing Covenants.
|
16
|
|||
|
10.1.
Consummation of Transactions: Further Assurances.
|
16
|
|||
|
10.2.
Payments Due to Other Party.
|
16
|
|||
|
10.3.
Post-Closing Access.
|
16
|
|||
|
10.4.
Post-Closing Employment.
|
17
|
|||
|
10.5
Buyer Post-Closing Covenants
|
17
|
|||
|
10.6.
Assignment and Assumption of Real Property Lease.
|
18
|
|||
|
11.
Survival of Representations and Warranties;
Indemnification.
|
18
|
|||
|
11.1.
Survival of Representations and Warranties.
|
18
|
|||
|
11.2.
Indemnification by Buyer.
|
18
|
|||
|
11.3.
Buyer’s Maximum Liability.
|
19
|
|||
|
11.4.
Indemnification by Seller.
|
19
|
|||
|
11.5.
Seller’s Maximum Liability.
|
19
|
|||
|
11.6.
Indemnification Procedure.
|
19
|
|||
|
11.7.
Remedies Exclusive.
|
20
|
|||
|
11.8.
Successors.
|
20
|
-ii-
|
12.
Miscellaneous Provisions.
|
20
|
|||
|
12.1.
Public Announcements.
|
20
|
|||
|
12.2.
Dispute Resolution.
|
21
|
|||
|
12.3.
Construction.
|
21
|
|||
|
12.4.
Amendment.
|
21
|
|||
|
12.5.
Waiver of Compliance.
|
22
|
|||
|
12.6.
Expenses.
|
22
|
|||
|
12.7.
Notices.
|
22
|
|||
|
12.8.
Binding Effect; Assignment.
|
23
|
|||
|
12.9.
Governing Law.
|
23
|
|||
|
12.10.
Counterparts.
|
23
|
|||
|
12.11.
Headings.
|
23
|
|||
|
12.12.
Entire Agreement.
|
23
|
|||
|
12.13.
Third Parties.
|
24
|
|||
|
12.14.
Severability.
|
24
|
|||
|
12.15.
Termination.
|
24
|
-iii-
| Exhibit A: |
Form
of Lease Amendment
|
| Exhibit B: |
Form
of Sublease
|
| Exhibit C: |
Allocation
of Purchase Price
|
| Exhibit D: |
Form
of General Assignment and Xxxx of
Sale
|
| Exhibit E: |
Form
of Assumption Agreement
|
| Exhibit F: |
Form
of Assignment and Assumption of
Lease
|
-iv-
THIS
ASSET PURCHASE AGREEMENT (as it may be amended from time to time, this
“Agreement”) is made as of December 22, 2005, by and between VALLEY DRUG COMPANY
d/b/a Valley Drug North, a Ohio corporation having its principal place of
business in New Castle, Pennsylvania (“Seller”), and ROCHESTER DRUG COOPERATIVE,
INC., a New York corporation having its principal place of business in
Rochester, New York (“Buyer”).
WHEREAS,
among other things, Seller is engaged in, from its facility at 000 Xxxxx Xxxxx
Xxxx, Xxx Xxxxxx, Xxxxxxxxxxxx (the “Facility”), the wholesale pharmaceutical
products distribution business (the “Business”);
WHEREAS,
Buyer desires to purchase from Seller certain of the assets of the Business,
and
assume certain of Seller’s obligations and liabilities associated with the
Business, and Seller desires to sell such assets to Buyer and have Buyer assume
such obligations and liabilities, all in accordance with the terms and
conditions of this Agreement.
NOW,
THEREFORE, in consideration of the foregoing premises and the mutual covenants,
representations, warranties and agreements contained herein, and other good
and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by the parties, the parties hereby agree as follows:
1. Certain
Definitions.
For
purposes of this Agreement, the following terms shall have the following
meanings:
1.1 “Accounts
Receivable” all trade accounts receivable of Seller relating to the Business and
existing on the Closing Date.
1.2 “Action”
shall mean any action, claim, dispute, proceeding, suit or investigation of
any
nature whatsoever, or any appeal therefrom.
1.3 “Approval”
shall mean any approval, authorization, consent, certificate, license,
qualification, franchise, concession, order, grant or permit of or by, or
declaration, filing or registration with, any Governmental Authority or other
Person.
1.4 “Assets”
shall have the meaning given to that term in Section 2.1.
1.5 “Assigned
Contracts” shall have the meaning given to that term in Section
2.1(e).
1.6 “Assumed
Obligations” shall have the meaning given to that term in Section
2.4.
1.7 “Authorized
Distribution Agreement” means all agreements between Seller and pharmaceutical
product suppliers.
1.8 “Business”
shall have the meaning given to that term in the first Whereas clause
hereof.
-1-
1.9 "Closing”
shall have the meaning given to that term in Section 9.1.
1.10 “Closing
Date” shall have the meaning given to that term in Section 9.1.
1.11 “Collection
Period” shall have the meaning given to that term in Section
10.5(a).
1.12 “Customer
Data” shall have the meaning given to that term in Section 2.1(c).
1.13 “Customers”
means those customers of Seller identified in the Customer Data.
1.14 “Damages”
shall mean any claim, loss, deficiency, Liability, fine, charge, assessment,
penalty, reasonable cost or expense (including reasonable attorneys’ fees, costs
and expenses) or other damage.
1.15 “Disclosure
Schedule” shall mean the disclosure schedules delivered by Seller to Buyer
concurrently with the execution and delivery of this Agreement. Each matter
set
forth in the Disclosure Schedule (or any agreement, instrument or other
documents specifically referenced in the Disclosure Schedule) shall be arranged
in numbered paragraphs corresponding to the numbered sections of this Agreement
and shall be deemed to qualify the specific numbered sections of this Agreement
to which such sections of the Disclosure Schedule correspond (or to which they
are cross-referenced).
1.16 “Equipment”
shall have the meaning given to that term in Section 2.1(a).
1.17 “Excluded
Assets” shall have the meaning given to that term in Section 2.2.
1.18 “Facility”
shall have the meaning set forth in the First Whereas clause.
1.19 "Governmental
Authority” shall mean any foreign, federal, state, local or other governmental,
administrative or regulatory entity, authority, body, agency, court,
instrumentality, tribunal or similar Person.
1.20 "Holdback"
shall have the meaning set forth in Section 3.2.
1.21 “Knowledge”
with respect to Seller shall mean the actual knowledge of an officer of
Seller.
1.22 “Landlord”
shall have the meaning set forth in Section 2.6.
1.23 “Laws”
shall mean all ordinances, statutes, rules, regulations, codes, judgments,
orders, injunctions, writs or decrees of any governmental or political
subdivision, Governmental Authority or agency thereof, or any court or similar
body established by any such governmental or political subdivision, Governmental
Authority or agency thereof.
1.24 “Lease
Amendment” shall have the meaning set forth in Section 2.6.
1.25 “Liability”
shall mean any debt, liability, commitment or obligation of any kind, character
or nature whatsoever, whether known or unknown, secured or unsecured, accrued,
fixed, absolute or contingent, and whether due or to become due.
-2-
1.26 “Lien”
shall mean any lien, statutory lien, pledge, mortgage, security interest,
charge, encumbrance, easement, right of way, restrictive covenant, claim,
option, conditional sale contract or other title or interest retention agreement
of any kind or nature whatsoever, including any lease, escrow, security or
other
deposit, right of redemption, chattel mortgage or collateral security
arrangement.
1.27 “Losses”
shall have the meaning given to that term in Section 11.2.
1.28 “Motor
Vehicles” shall have the meaning given to that term in Section
2.1(b).
1.29 “Ordinary
Course” shall mean any transaction that constitutes a normal day-to-day business
activity of Seller in connection with the Business, conducted in a commercially
reasonable and businesslike manner and consistent with Seller’s past
practices.
1.30 “Person”
shall mean a corporation, association, general or limited partnership, limited
liability company, limited liability partnership, organization, business, joint
venture, individual, sole proprietorship, government or political subdivision
thereof or a governmental agency.
1.31 “Personal
Property Leases” shall have the meaning given to that term in Section
2.1(e).
1.32 “Preliminary
Customer Data” shall have the meaning given to that term in Section
7.2(f).
1.33 Real
Property Lease” means that certain commercial lease of the Facility dated
January 1, 2004, between Becan Development LLC, as landlord, and Seller, as
tenant.
1.34 Representative”
with respect to any Person shall mean any employee, officer, director,
stockholder, partner, accountant, attorney, investment banker, broker, finder,
investor, contractor, subcontractor, consultant or other authorized agent or
representative of such Person.
1.35 “Sublease”
shall have the meaning set forth in Section 2.6.
1.36 "Tax”
shall mean any foreign, federal, state or local income, gross receipts, license,
severance, occupational, premium, environmental (including taxes under Code
Section 59A), customs, duties, profits, disability, registration, alternative
or
add-on minimum, estimated, withholding, payroll, employment, unemployment
insurance, social security (or similar), excise, sales, use, value-added,
occupancy, franchise, real property, personal property, business, mercantile,
windfall profits, capital stock, stamp, transfer, workmen’s compensation or
other tax, fee or imposition of any kind whatsoever imposed by a Governmental
Authority, including any interest, penalties, additions, assessments or deferred
liability with respect thereto, whether disputed or not, and any Tax obligations
arising as a result of a Person’s failure to qualify or become authorized to do
business as a foreign corporation in any jurisdiction.
1.37 "Transfer”
shall mean transfer, sell, convey, assign or deliver.
1.38 "Transfer
Taxes” shall have the meaning given to that term in Section 2.3(c).
-3-
On
the
terms of and subject to the conditions set forth in this Agreement and on the
basis of the representations, warranties, covenants and agreements herein
contained, at the Closing (as hereinafter defined), Seller agrees to Transfer
to
Buyer, and Buyer agrees to purchase from Seller and accept delivery of, all
of
Seller’s right, title and interest in and to the following assets, which are
used in connection with the Business, other than the Excluded Assets (as
hereinafter defined), all as the same shall exist as of the date hereof
(collectively, the “Assets”):
(c) those
certain customer lists and related customer data now owned by Seller and used
in
connection with the Business, that (subject to Section 7.1(e) below) are
specifically set forth on Schedule
2.1(c)
(collectively, the “Customer Data”); and
(d) all
rights of Seller under the leases of personal property that are set forth on
Schedule
2.1(d)
(the
“Personal Property Leases”); and
(e) all
of
Seller’s right, title and interest in and to the non-pharmaceutical supply
contracts and customer purchase orders of the Business for which goods have
yet
to be shipped on the Closing Date relating to the Business, all of which is
set
forth on Schedule
2.1(e) (the “Assigned Contracts”);
and
(f) all
office equipment, office supplies and office furniture used in connection with
the Business and located at the Facility; and
(g) all
rights of Seller relating to the Business with respect to leasehold improvements
and fixtures located at the Facility.
Seller
is
not selling, and Buyer is not purchasing and shall not acquire any right, title
or interest of Seller in or to, any assets of Seller other than the Assets.
The
assets of Seller relating to the Business which will not be transferred to
Buyer
shall include, without limitation, the following assets of Seller (the “Excluded
Assets”):
(a) all
cash
and cash equivalents in hand, in banks or in transit for the account of Seller
and all marketable securities of Seller;
-4-
(c) all
inventory;
(d) all
insurance policies maintained by Seller in respect of the Business;
(f) Authorized
Distribution Agreements;
(g) any
stock
or other equity interests in a subsidiary or other Person owned by
Seller;
(h) vendor
credits and chargebacks in favor of Seller;
(i) trademarks
and tradenames and other intellectual property owned by Seller; and
(j) certain
leasehold improvements and other fixtures and improvements to the Facility
which
are owned by the landlord under the Real Property Lease.
2.4 Assumed
Obligations.
At
the
Closing, Buyer shall, and Seller shall cause Buyer to, assume only all of the
Liabilities and obligations of Seller relating to periods from and after the
Closing Date (the “Assumed Obligations”) under:
(a) the
Personal Property Leases and Assigned Contracts, which are specifically
identified in Schedules
2.1(d) and (e),
and are
assigned to Buyer at Closing.
Other
than the Assumed Obligations, Buyer shall not assume or be responsible for
any
Liabilities, including any obligations, debts or commitments, of
Seller.
-5-
2.6. Lease
Amendment; Sublease.
Seller
and Becan Development, LLC (the “Landlord”) have, in anticipation of the
Closing, entered into a written amendment to the Real Property Lease in the
form
attached hereto as Exhibit
A
providing, among other matters, for an initial term of five (5) years with
two
(2) successive five-year renewal options at Buyer’s option and a purchase option
in favor of Buyer, exercisable not before the expiration of the third year
of
the initial five year term, at the property’s fair market value at the time of
exercise of the option (the “Lease Amendment”). As of the Closing Date, Seller
and Buyer shall enter into a written sublease of the Facility pursuant to which
Seller shall sublease the Facility to Buyer under the terms of the Real Property
Lease, so amended by the Lease Amendment (the “Sublease”), which Sublease shall
be substantially in the form set forth on Exhibit
B.
3. Purchase
Price.
3.1 Purchase
Price.
The
aggregate consideration to be paid by Buyer to Seller for the Assets to be
Transferred by Seller to Buyer pursuant to this Agreement, shall be the sum
of
(i) SIX HUNDRED FIFTY-FIVE THOUSAND AND NO/100 U.S. DOLLARS ($655,000),
plus
(ii)
assumption of the Assumed Obligations, subject to the Holdback (the “Purchase
Price”). As of the date hereof, Buyer is depositing with Seller the sum of Two
Hundred Fifty Thousand US Dollars to be held pending, and which shall be
credited against payment of the Purchase Price at, the Closing (the "Deposit").
To the extent that the Closing shall not occur within the period set forth
in
Section 9.1 or this Agreement is terminated pursuant to Section 12.15, Seller
shall return the Deposit to Buyer within three (3) business days following
Buyer's demand.
The
Purchase Price shall be calculated and paid in the following
manner:
At
the
Closing, Buyer shall pay to Seller, by wire transfer of immediately available
funds to an account identified in writing by Seller to Buyer, a sum equal to
$405,000, against which the Deposit shall be credited as having been paid to
Seller. At the Closing, Buyer shall be entitled to withhold from the Purchase
Price a sum equal to $250,000 (the "Holdback") until the satisfaction of the
requirements and consummation of the transactions contemplated by Section
10.6.
4. Allocation
of Purchase Price.
The
Purchase Price shall be allocated among the Assets being purchased hereunder
in
accordance with Section 1060 of the Internal Revenue Code of 1986, as amended
(the “Code”), and the regulations promulgated thereunder. Such allocation shall
be set forth on Exhibit C
hereto.
Seller
hereby represents and warrants to Buyer as follows:
-6-
Seller
is
a corporation duly organized, validly existing and in good standing under the
Laws of the State of Ohio. Seller has requisite corporate power and authority
to
own the Assets and carry on the Business as the same is now being
conducted.
Seller
has all requisite corporate power and authority to execute, deliver and perform
its obligations under this Agreement and to carry out the transactions
contemplated hereby. Seller has taken all necessary corporate action required
by
Law, Seller’s Certificate of Incorporation, as amended, By-Laws, as amended, or
otherwise to be taken by Seller to authorize Seller’s execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby.
This Agreement has been, and the instruments of transfer, assignment and
conveyance, and other agreements, referred to in Section 8 will be, duly and
validly executed and delivered by Seller, and this Agreement constitutes, and
such instruments and other agreements will constitute, legal, valid and binding
obligations of Seller enforceable against Seller in accordance with their terms,
except that such enforcement may be subject to: (a)
bankruptcy, insolvency, reorganization, moratorium or other similar Laws now
or
hereafter in effect relating to creditor’s rights, and (b)
general
principles of equity.
Except
as
set forth in Section 5.3
of the Disclosure Schedule,
neither
the execution and delivery of this Agreement by Seller nor the consummation
by
Seller of the transactions contemplated hereby will violate any provision of
the
Certificate of Incorporation, as amended, or the By-Laws, as amended, of Seller,
or be in conflict with, or constitute a material default under, or result in
the
termination or invalidity of, or accelerate the performance required by, or
cause the acceleration of the maturity of any of the Assumed Obligations, or
result in the creation or imposition of any Lien upon any of the Assets, whether
under any agreement or commitment to be assumed by Buyer pursuant to this
Agreement to which Seller is a party or by which Seller is bound or to which
any
of the Assets is subject or otherwise, or violate any Law of any Governmental
Authority applicable to any of the Assets, or to the best of Seller’s knowledge,
Seller.
Except
as
set forth in Section
5.4 of the Disclosure Schedule,
no
Person has been authorized by Seller, or by anyone acting on behalf of Seller,
or any of its officers, directors, employees or trustees, to act as a broker,
finder or in any other similar capacity in connection with the transactions
contemplated by this Agreement in such a manner as to give rise to any valid
claim against Buyer or Seller for any broker’s or finder’s fee or commission or
similar type of compensation and Seller shall be solely responsible for paying
any broker’s, or finder’s fee or commission or similar type of compensation
arising out of the matters described in Section
5.4 of the Disclosure Schedule.
-7-
Except
as
set forth in Section
5.5 of the Disclosure Schedule,
the
Assets consisting of tangible personal property are in good working condition
and good repair, ordinary wear and tear excepted, are suitable for immediate
use
in the Ordinary Course of Business and are free from latent and patent defects.
No such item of tangible personal property is in need of repair or replacement
other than as part of a routine maintenance in the Ordinary Course of Business.
All Assets consisting of tangible personal property used in Seller’s Business
are in the possession of Seller.
Except
as
set forth in Section 5.7
of the Disclosure Schedule,
since
December 2, 2005, there has not been (i) any material adverse change in the
Business; (ii) any damage or destruction or property loss whether or not covered
by insurance, materially and adversely affecting the Business or any of the
Assets; (iii) any sale or other disposition of any of the Assets other than
sales or dispositions made in the Ordinary Course; (iv) any entry by Seller
into
any material commitment or transaction with respect to the Business other than
those commitments and transactions entered into in the Ordinary Course, or
those
contemplated by this Agreement; (v) any release or waiver of any material right
or claim of Seller with respect to any of the Assets or the Business, (vi)
any
mortgage, pledge or imposition of a Lien or other encumbrance on any of the
Assets.
Except
for the Personal Property Leases and as set forth on Section
5.8 of the Disclosure Schedule,
Seller
has good and marketable title to all of the Assets, free and clear of any
mortgage, pledge, Lien, security interest, or other encumbrance. Seller has
a
valid leasehold interest in the Real Property Lease, except for defects in
title, easements, restrictive covenants and similar encumbrances that
individually or in the aggregate have not and would not reasonably be expected
to interfere in any material respect with the use or occupancy thereof or any
portion thereof in the operation of the Seller’s Business as currently conducted
thereon.
(a) Except
as
set forth in Section
5.9 of the Disclosure Schedule,
(i)
each of the Personal Property Leases is valid, binding and enforceable in
accordance with its terms, and is in full force and effect; and (ii) there
are
no existing material defaults on the part of Seller or, to the best of Seller’s
knowledge, any other party under any Personal Property Lease.
(b) Seller’s
interest in each of the Personal Property Leases is free and clear of all Liens
or other encumbrances.
-8-
(a) Seller
is
and has been in compliance with all applicable terms and requirements of each
Assigned Contract,
(b) to
the
knowledge of Seller, each other Person that has or had any obligation or
liability under any Assigned Contract is, and at all times during the term(s)
of
such Assigned Contracts, has been, in full compliance with all applicable terms
and requirements of such contract,
(c)
no
event
has occurred or circumstance exists that (with or without notice or lapse of
time) may contravene, conflict with or result in a breach of, or give Seller
or
another Person the right to declare a default or exercise any remedy under,
or
to accelerate the maturity or performance of, or payment under, or to cancel,
terminate or modify, any Assigned Contract,
(d) no
event
has occurred or circumstance exists under or by virtue of any Assigned Contract
that (with or without notice or lapse of time) would cause the creation of
any
Lien affecting any of the Assets.
5.11. Litigation,
Judgments and Decrees.
Except
as
set forth in Section 5.12
of the Disclosure Schedule,
no
Approval of, or notice to, any Governmental Authority or any other Person is
required of Seller in connection with the execution, delivery and performance
by
Seller of this Agreement or the consummation by Seller of the transactions
contemplated hereby.
(a) In
connection with the Business, Seller has, except as set forth in Section 5.13(a)
of the Disclosure Schedule,
in all
material respects duly complied and is presently in all material respects duly
complying with all applicable Laws, Approvals, judgments and decrees of all
federal, state, local Governmental
Authorities.
(b) Seller
has duly obtained all material Approvals necessary for the conduct of the
Business as conducted on or before the date hereof; each of the foregoing is
in
full force and effect.
-9-
5.14 Relationships
with Customers.
The
relationships of the Seller with each of its Customers are good commercial
working relationships, and except as set forth on Section
5.14 of the Disclosure Schedule,
none of
the Customers has notified Seller that it has cancelled or otherwise terminated,
or threatened in writing to cancel or otherwise terminate, its relationship
with
the Seller within the last six (6) months. Section
5.14 of the Disclosure Schedule
sets
forth the names of the twenty (20) largest Customers of Seller based on the
net
dollar value of purchases by such customers during the preceding twelve (12)
months. Seller has not received any written notice that any such customer may
cancel or otherwise materially and adversely modify its relationship with Seller
or limit its purchases from Seller, either as a result of the transactions
contemplated hereby or otherwise.
Buyer
represents and warrants to Seller as follows:
Buyer
is
a corporation duly organized, validly existing and in good standing under the
Laws of the State of New York. Buyer has full power and authority to carry
on
its business as it is now being conducted and to own, lease and operate its
properties and assets as and in the places where such business is now conducted
and where such properties and assets are now owned, leased or
operated.
Buyer
has
all requisite power and authority to execute, deliver and perform its
obligations under this Agreement and to carry out the transactions contemplated
hereby. Buyer has taken all necessary action required by Law, Buyer’s
Certificate of Incorporation or Bylaws or otherwise to be taken by Buyer to
authorize Buyer’s execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby. This Agreement has been duly and
validly executed and delivered by Buyer and constitutes a valid and binding
agreement of and upon Buyer enforceable against Buyer in accordance with its
terms, except that such enforcement may be subject to: (a)
bankruptcy, insolvency, reorganization, moratorium or other similar Laws now
or
hereafter in effect relating to creditor’s rights, and (b)
general
principles of equity.
Neither
the execution and delivery of this Agreement by Buyer nor the consummation
by
Buyer of the transactions contemplated hereby will violate any provision of
the
Certificate of Incorporation or Bylaws of Buyer, or be in conflict with, or
give
rise to a right to accelerate any obligation under, any agreement or instrument
to which Buyer is a party or by which its assets are bound or affected, or
violate any Law of any Governmental Authority applicable to Buyer.
-10-
6.5. Consents
and Approvals of Governmental Authorities and Others.
No
Approval of, or notice to, any Governmental Authority or any other Person is
required of Buyer in connection with the execution, delivery and performance
by
Buyer of this Agreement or the consummation by Buyer of the transactions
contemplated hereby.
7.1 Seller’s
Covenants.
Seller
hereby covenants that, except as otherwise consented to in writing by Buyer,
from and after the date hereof until the Closing or the earlier termination
of
this Agreement:
-11-
(d) Confidentiality.
Seller
agrees to hold confidential and not to disclose to any Person (i) that
discussions have taken place regarding the sale of the Business or that this
Agreement has been entered into, (ii) any proprietary information received
from
Buyer, or made available to Seller and its representatives by Buyer, relating
to
Buyer, the Business or the Assets, including, without limitation, all financial,
business and operating information in whatever form or medium as such may exist
(“Buyer Proprietary Information”). All such Buyer Proprietary Information shall
be used by Seller only for the purpose of evaluating the transaction
contemplated by this Agreement. In the event the transaction contemplated by
this Agreement shall not occur for any reason, Seller will promptly upon request
of Buyer return to Buyer all Buyer Proprietary Information as may be in the
possession or control of Seller or its Representatives, and shall continue
to be
bound by the covenant of confidentiality set forth in this Section
7.1(d).
(e) Customer
Information.
Seller
agrees that as of the date hereof it shall provide Buyer, in the form of
Schedule
2.1(c),
with an
abridged list of Customers, listing only the name and address of each Customer
(the “Preliminary Customer Data”), which list shall be supplemented as of the
Closing by Seller’s delivery of all the Customer Data. Seller is providing the
Preliminary Customer Data to Buyer on the date hereof in reliance on Buyer’s
covenant to use such Preliminary Customer Data solely for purposes of assisting
in the post-Closing transition in accordance with Section 7.2(f) and Buyer’s
covenant to consummate the transactions proposed by this Agreement on the terms
and conditions set forth herein.
Buyer
hereby covenants that, except as otherwise consented to in writing by Seller,
from and after the date hereof until the Closing or the earlier termination
of
this Agreement:
(d) Confidentiality.
Buyer
agrees to hold confidential and not to disclose to any Person (i) that
discussions have taken place regarding the sale of the Business or that this
Agreement has been entered into, (ii) any proprietary information received
from
Seller, or made available to Buyer and its representatives by Seller, relating
to Seller, the Business or the Assets, including, without limitation, all
financial, business and operating information (including, but not limited to,
any information provided or obtained during the Buyer’s due diligence
investigation of Seller and the Business, or otherwise obtained pursuant to
Section 7.4 below) in whatever form or medium as such may exist (“Seller
Proprietary Information”). All such Seller Proprietary Information shall be used
by Buyer only for the purpose of evaluating the transaction contemplated by
this
Agreement. In the event the transaction contemplated by this Agreement shall
not
occur for any reason, Buyer will promptly upon request of Seller return to
Seller all Seller Proprietary Information as may be in the possession or control
of Buyer or its Representatives, and shall continue to be bound by the covenant
of confidentiality set forth in this Section 7.2(d).
-12-
(e) Interview
of Seller Employees.
Notwithstanding the permission granted by Seller for Buyer to conduct interviews
of Seller’s employees at the Facility commencing as of the start of business on
Tuesday, December 27, 2005, in no event shall Buyer extend an offer of
employment to any such employee of Seller, or accept any offer from any such
employee to be employed by Buyer, until the Closing shall have occurred.
(f) Limited
Use of Preliminary Customer Data.
Buyer
agrees to use the Preliminary Customer Data solely for purposes of assisting
in
the transition of the Business to Seller following the Closing, including,
but
not limited to, establishing routing information for the Customers for use
following the Closing. Buyer covenants that prior to the Closing it shall not,
without Seller’s prior written consent, use the Preliminary Customer Data for
any purpose competitive with the Business of Seller, including, but not limited
to, communicating directly or indirectly with the Customers using any method
or
medium. Buyer acknowledges that the Preliminary Customer Data is proprietary
information of Seller and is of a special, unique, unusual and extraordinary
character, which gives it a peculiar value, and that a breach by Buyer of the
provisions of this Section 7.2(f) cannot reasonably or adequately be compensated
in damages in an action at law; and such a breach of the provisions contained
in
this Section 7.2(f) shall cause Seller irreparable injury and damage. Buyer
acknowledges that any use of the Preliminary Customer Data in violation of
this
Section 7.2(f) would be extremely detrimental to Seller. By reason thereof,
Buyer agrees that Seller shall be entitled, in addition to any other remedies
it
may have under this Agreement or otherwise, to preliminary and permanent
injunctive and other equitable relief to prevent a breach or curtail any breach
or threatened breach of this Agreement by Buyer; provided, however, that no
specification in this Agreement of a specific legal or equitable remedy shall
be
construed as a waiver or prohibition against the pursuing of other legal or
equitable remedies in the event of such a breach.
Prior
to
the Closing, the risk of loss or damage to, or destruction of, any or all of
the
Business or any or all of the Assets, other than as a result of Buyer’s acts or
gross negligence, shall remain with Seller.
-13-
The
obligation of Seller to consummate and effect the sale of the Assets pursuant
to
this Agreement shall be subject to the following conditions, unless waived
by
Seller:
(d) Buyer
shall execute and deliver the Sublease.
The
obligation of Buyer to consummate and effect the purchase of the Assets pursuant
to this Agreement shall be subject to the following conditions, unless waived
by
Buyer:
(d) Seller
shall have executed and delivered to Buyer all documents necessary to convey
effectively title to the Assets to Buyer as contemplated by this
Agreement.
-14-
(e) All
liens, encumbrances, claims against title, mortgages, and security interests
of
any type shall have been removed on all Assets.
(f) Seller
shall execute and deliver the Sublease.
The
delivery of title to the Assets and payment of the consideration in the manner
contemplated by this Agreement (the “Closing”) shall take place as of 10:00 a.m.
EST on December 27, 2005; or at such other time and date as may be mutually
agreed upon by the parties, but in no event later than fifteen (15) days after
the date hereof (the “Closing Date”), at the such other place(s) as may be
mutually agreed upon by the parties.
At
the
Closing, Seller will deliver to Buyer, in form and substance reasonably
satisfactory to Buyer, (x) all consents and certificates required and obtained
prior to the Closing under the Assigned Contracts; and (y) appropriate documents
to effect or evidence the sale, conveyance, assignment and transfer to Buyer
of
the Assets as contemplated hereby and necessary to place Buyer, its officers,
agents and employees in full possession and enjoyment of all Assets as
contemplated hereby, including the following:
(b) duly
issued and valid titles to the Motor Vehicles, duly transferred to
Buyer.
At
the
Closing, Buyer will:
-15-
(d) such
other documents as Seller shall reasonably request.
Seller
and Buyer agree that if subsequent to the Closing Date either of them shall
receive any payment due to the other, each shall promptly remit the same to
the
other.
Buyer
shall give Seller and its authorized representatives such reasonable access,
during normal business hours and upon prior notice, to the records and other
written information regarding the Business that Buyer purchased as part of
the
Assets, as Seller may reasonably request. Buyer shall store such Records for
at
least three (3) years after the Closing Date, and shall notify Seller prior
to
destruction thereof so that Seller may take possession of such items at Seller’s
sole cost and expense.
-16-
10.4. Post-Closing
Employment.
Buyer
shall have no obligation to offer employment to any employees of the Seller,
but
shall have the right to offer employment to any employees of Seller who are
in
engaged in the Business. Buyer shall have no liability, and Seller shall be
solely responsible for, any and all severance pay, back pay, vacation pay or
bonuses owed by Seller to any Seller employee hired by Buyer. In the event
Buyer
does offer employment to any employees of Seller who are engaged in the
Business, Buyer shall promptly notify Seller of all such employees who accept
an
offer of employment from Buyer.
Buyer
shall have the obligation to offer and provide health care coverage to former
Seller employees hired by Buyer in accordance with Buyer's existing plans,
policies and practices for similarly situated employees of Buyer, including
any
obligations to provide health care continuation coverage under the provisions
of
Section 4980B of the Code (COBRA). Seller shall not have any obligation to
offer
or provide health care continuation coverage under COBRA to such employees
hired
by Buyer.
10.5 Customer
Orders from and after the Closing.
Seller
agrees that any orders received by Seller from Customers from and after the
time
of the Closing shall be considered orders placed with Buyer and Seller shall
immediately provide Buyer with sufficient information as shall be necessary
to
permit Buyer to fill such orders and to invoice such Customers as if such orders
had been placed directly with Buyer. Buyer agrees that it shall fill such orders
and invoice such customers under such terms and conditions as Seller shall
have
offered to such ordering Customers. Any payments received by Seller with respect
to orders placed as described in this Section 10.5 shall be subject to the
provisions of Section 10.2.
10.5 Buyer
Post-Closing Covenants
-17-
(b) Short-Term
Co-Occupation of Facility.
For a
period of fifteen (15) days following the Closing (or as may be extended by
mutual agreement of Buyer and Seller), Buyer shall permit Seller to co-occupy
the Facility for purposes of completing the transfer of Seller’s remaining
Business operations to Seller’s corporate facilities and to allow for the
distribution by Seller of any of its inventories, provided
that
such transition and distribution activities by Seller shall not unreasonably
detract from Buyer’s ability to conduct its business operations at the Facility
during such period. Seller shall use best efforts to remove all controlled
substance inventory of Seller from the Facility promptly following Closing
and
in any event within such fifteen day period. Seller shall segregate its
inventory from Buyer’s inventory. From and after such 15-day period, for an
additional forty-five (45) days, Seller may store any remaining over-the-counter
inventory separately within the Facility on such storage racking as Buyer shall
direct. Additionally, to facilitate the removal and/or storage of Seller's
remaining inventory, during such fifteen day period from and after the Closing
Buyer shall, if requested by Seller, furnish to Seller the labor of such
then-former employees of Seller as Buyer shall have employed,
materials, tools, supplies and equipment reasonably necessary for such purposes.
Seller shall pay to Buyer for such services at the then-applicable hourly rate
for all such employees for each hour worked during such period.
10.6. Assignment
and Assumption of Real Property Lease.
To
the
extent that the Landlord obtains the consent of the Pennsylvania Industrial
Development Authority and National City Bank to the Lease Amendment and the
assignment and assumption of the Real Property Lease between Seller and Buyer
not more than sixty (60) days from and after the Closing Date, Seller shall
be
obligated to assign the Real Property Lease, as amended by the Lease Amendment,
to Buyer, and Buyer shall be obligated to assume the Real Property Lease from
Seller (which assignment and assumption shall be evidenced by an Assignment
and
Assumption of Lease in substantially the form of Exhibit
F)
and
concurrent with such assignment and assumption, Buyer shall pay the Holdback
to
Seller by wire transfer of immediately available funds to an account identified
in writing by Seller to Buyer.
11. Survival
of Representations and Warranties; Indemnification.
All
representations and warranties contained in this Agreement shall survive the
Closing for a period of twelve (12) months after the Closing Date.
-18-
Buyer
agrees to indemnify, defend and hold harmless Seller from, against and in
respect of any or all losses, costs, obligations, liabilities, settlement
payments, awards, judgments, fines, penalties, actions, damages, expenses,
deficiencies or other charges (collectively “Losses”), asserted against, imposed
upon or incurred by Seller, directly arising out of the breach of (i) any of
the
representations or warranties of Buyer made in or pursuant to this Agreement
during the survival period set forth in Section 11.1, (ii) Buyer’s failure to
perform any of the Assumed Obligations under Section 2.4 to the extent Seller’s
liability therefore has not been satisfied, extinguished or substituted by
Buyer
or (iii) all Liabilities arising out of Buyer’s ownership and operation of the
Assets following the Closing.
Anything
else contained in this Agreement to the contrary notwithstanding, the maximum
liability of Buyer in the aggregate for all claims under this Section 11 shall
not exceed One Hundred Thousand U.S. Dollars ($100,000).
Seller
agrees to indemnify, defend and hold harmless Buyer from, against and in respect
of any and all Losses asserted against, imposed upon or incurred by Buyer,
directly arising out of (i) the breach of any of the representations, warranties
or covenants of Seller made in or pursuant to this Agreement during the survival
period set forth in Section 11.1, (ii) all Excluded Obligations, or (iii) all
Liabilities arising out of Seller’s ownership and operation of the Business
prior to the Closing including, without limitation, with respect to Taxes,
and
(iv) any noncompliance with any bulk sale laws or fraudulent transfer law in
respect of the contemplated transactions.
Anything
else contained in this Agreement to the contrary notwithstanding, the maximum
liability of Seller in the aggregate for all claims shall not exceed One Hundred
Thousand U.S. Dollars ($100,000).
-19-
This
Section 11 sets forth the exclusive and entire post-closing remedy of the
Parties against one another in respect to any Losses or claims arising out
of or
related to the transactions contemplated by this Agreement and the limitations
contained in this Section 11 apply to all claims, actions and Losses covered
in
substance by this Section 11, regardless of form, whether based on contract,
tort, statute or any other theory or basis of liability, and whether of a legal,
equitable or other nature.
The
merger, consolidation, liquidation, dissolution or winding up of, or any similar
transaction with respect to, the Indemnifying Party shall not affect in any
manner the obligations of the Indemnifying Party pursuant to this
Section 11 or any other term or provision of this Agreement, and the
Indemnifying Party covenants and agrees to make adequate provision for its
Liabilities and obligations hereunder in the event of any such
transaction.
-20-
Except
as
required by applicable Law, judicial order or stock exchange rule, none of
the
parties hereto, any of their respective affiliates, successors or assigns,
or
any of the Representatives of any of them shall issue any press release or
make
any public announcement or disclosure with respect to this Agreement or the
transactions contemplated hereby without the prior written consent of the other
party or parties hereto, which consent shall not be unreasonably withheld or
delayed. Neither party hereto nor any of its Representatives will, without
the
prior written consent of the other party, disclose to any other Person any
information that has been made available in connection with this Agreement
(other than information which has been published or made publicly available
other than by unauthorized disclosure of a party).
Buyer
and
Seller agree to submit any disputes arising under this Agreement to an
arbitration panel conducting a binding arbitration in Hartford, Connecticut,
in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association in effect on the date of such arbitration, and judgment upon the
award rendered by the arbitrator or arbitrators may be entered in any court
having jurisdiction thereof. The award of the arbitrators shall be final and
shall be the sole and exclusive remedy between the parties regarding any claims,
counterclaims, issue or accounting presented to the arbitration panel. The
parties hereto further agree that the arbitration panel shall consist of one
(1) person mutually acceptable to Buyer and Seller, provided
that if
the parties cannot agree on an arbitrator within fifteen (15) days of filing
a
notice of arbitration, the arbitration panel shall consist of three (3) persons,
one selected by the Buyer, one selected by Seller and one selected by the
arbitrators so selected by the parties hereto, or if the parties hereto cannot
agree, selected by the manager of the principal office of the American
Arbitration Association in Hartford, Connecticut. All fees and expenses of
the
arbitration, including a transcript if either party requests, shall be borne
equally by the parties. Any action to enforce or vacate the arbitrator’s award
shall be governed by the Federal Arbitration Act, if applicable, and otherwise
by applicable state law. If either Buyer or Seller pursues any claim, dispute
or
controversy against the other in a proceeding other than the arbitration
provided for herein, the responding party shall be entitled to dismissal or
injunctive relief regarding such action and recovery of all costs, losses and
attorney’s fees related to such action.
12.3. Construction.
Unless
the context of this Agreement otherwise clearly requires, references to the
plural include the singular, references to the singular include the plural,
references to any gender include the other genders, the terms “include” or
“including” are not limiting and has the respective inclusive meaning
represented by the phrases “include without limitation” and “including without
limitation;” and the term “or” has the inclusive meaning represented by the
phrase “and/or.” The terms “hereof,”“herein,”“hereunder” and similar terms in
this Agreement refer to this Agreement as a whole and not to any particular
provision of this Agreement. All Section, clause, Exhibit and Schedule
references herein are to this Agreement unless otherwise specified. The terms
“warrant” and “warranty” shall have the same meanings, respectively, as
“represent” and “representation” and shall not impose on any Person any
obligation to maintain a particular set of facts or conditions.
-21-
Neither
this Agreement, nor any of the terms or provisions hereof, may be amended,
modified, supplemented or waived except by a written instrument signed by all
of
the parties hereto (or, in the case of a waiver, by the party or parties
granting such waiver).
Any
failure of Seller, on the one hand, or Buyer, on the other hand, to comply
with
any obligation, covenant, agreement or condition herein may be expressly waived
in writing by an authorized officer of Buyer or Seller, respectively, but such
waiver or failure to insist upon strict compliance with any such obligation,
covenant, agreement or condition shall not operate as a waiver of, or estoppel
with respect to, any subsequent or other failure.
Whether
or not the transactions contemplated by this Agreement are consummated, each
of
the parties hereto shall pay the fees and expenses of their own respective
counsel, accountants and other experts, and each shall pay all other expenses
it
incurs incident to the negotiation, preparation, execution and consummation
of
this Agreement. The provisions of this Section 12.6.
shall
survive any termination of this Agreement.
All
notices, requests, demands and other communications required or permitted
hereunder shall be in writing and shall be deemed to have been duly given
(i)
upon
delivery if delivered by hand; (ii)
upon
receipt if mailed by express, certified or registered mail, with postage
prepaid, in the continental United States; or (iii)
upon
receipt if sent by a nationally recognized overnight courier service that
regularly maintains records of items picked up and delivered;
|
If
to Seller:
|
Xxxxxxx
X. Xxxxxxxxxx, X.Xx.
President
and CEO
DrugMax,
Inc.
000
Xxxxxxxxxx Xxxxxx
Xxxxxxxxxx,
XX 00000
Fax:
(000) 000-0000
|
|
|
|
|
with
a copy to:
|
Xxxx
X. Xxxxx, Xx., Esq.
Xxxxxxxx
& Xxxx LLP
000
Xxxxxxxx Xxxxxx
Xxxxxxxx,
XX 00000-0000
Fax:
000-000-0000
|
or
to
such other Person or address as Seller shall furnish to Buyer in
writing.
-22-
|
If
to Buyer:
|
Rochester
Drug Cooperative, Inc.
00
Xxx Xxxx Xxxxx
Xxxxxxxxx,
Xxx Xxxx 00000
Attn:
Xxxxxxxx X. Xxxx III
|
|
|
|
|
with
a copy to:
|
Xxxxx
X. Xxxx, Esq.
Xxxxxxxx
Xxxxxxxxx PC
One
Oxford Centre
301
Grant Street, 20th Fl
Xxxxxxxxxx,
XX 00000
Fax:
(000)
000-0000
|
or
to
such other Person or address as Buyer shall furnish to Seller in
writing.
This
Agreement and all of the provisions hereof shall be binding upon and inure
to
the benefit of the parties hereto and their respective administrators, legal
representatives, successors and permitted assigns, but neither this Agreement
nor any of the rights, interests or obligations hereunder shall be assigned
or
assignable by any of the parties hereto without the prior written consent of
the
other party. Any attempted assignment in violation of this Agreement shall
be
null and void.
This
Agreement shall be governed by and construed and enforced in accordance with
the
Laws of the State of Connecticut, without regard to its principles of conflict
or choice of Law.
This
Agreement may be executed in two or more counterparts (including by way of
facsimile), each of which shall be deemed an original, but all of which together
shall constitute the same instrument.
The
headings of the sections of this Agreement are inserted for convenience only
and
shall not constitute a part or affect in any way the meaning or interpretation
of this Agreement.
-23-
Nothing
in this Agreement, express or implied, is intended or shall be construed to
confer upon or give to any Person other than the parties hereto, and their
respective affiliates, successors or permitted assigns, any rights or remedies
under or by reason of this Agreement.
The
invalidity of any one or more of the words, phrases, sentences, clauses,
sections or subsections contained in this Agreement shall not affect the
enforceability of the remaining portions of this Agreement or any part hereof,
and, if any one or more of the words, phrases, sentences, clauses, sections
or
subsections contained in this Agreement shall be declared invalid by a court
of
competent jurisdiction, this Agreement shall be construed to most closely
effectuate the intentions of the parties and to be valid.
THE
NEXT
PAGE IS THE SIGNATURE PAGE
-24-
IN
WITNESS WHEREOF, the parties hereto here executed, or caused to be executed,
this Agreement on the date first written above.
| SELLER: | ||
| VALLEY DRUG COMPANY | ||
| |
|
|
| By | /s/ Xxxxxxx X. Xxxxxxxxxx | |
|
Name: Xxxxxxx X. Xxxxxxxxxx |
||
| Title: President & CEO | ||
| BUYER: | ||
| ROCHESTER DRUG COOPERATIVE, INC. | ||
| |
|
|
| By | /s/ Xxxxxxxx X. Xxxx III | |
|
Name: Xxxxxxxx X. Xxxx III |
||
| Title: CEO | ||
