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STOCK PURCHASE AGREEMENT
by and between
R.A.B. Holdings, Inc.
and
McKesson Corporation
dated as of
February 21, 1997
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TABLE OF CONTENTS
I
DEFINITIONS
1.1 Definitions............................................................1
II
PURCHASE AND SALE OF SHARES
2.1 Sale and Transfer of Shares............................................8
2.2 Purchase Price.........................................................9
2.3 Purchase Price Adjustment..............................................9
III
THE CLOSING
3.1 Closing...............................................................12
3.2 Adjournment of Closing................................................13
IV
REPRESENTATIONS AND WARRANTIES OF SELLER
4.1 Organization..........................................................13
4.2 Capitalization........................................................13
4.3 Authorization; Validity of Agreement..................................14
4.4 No Violations; Consents and Approvals.................................14
4.5 Financial Statements..................................................15
4.6 Absence of Certain Changes............................................16
4.7 No Undisclosed Liabilities............................................16
4.8 Litigation; Compliance with Law.......................................16
4.9 Employee Benefit Plans; ERISA.........................................16
4.10 Real Property.........................................................18
4.11 Intellectual Property.................................................19
4.12 Computer Software.....................................................19
4.13 Material Contracts....................................................20
4.14 Taxes.................................................................21
4.15 Affiliated Party Transactions.........................................23
4.16 Environmental Matters.................................................23
4.17 No Brokers............................................................24
4.18 Receivables, Inventory and Payables...................................25
4.19 Letters of Credit.....................................................25
4.20 Entire Business.......................................................25
4.21 Unclaimed Funds.......................................................25
4.22 Pending Transactions..................................................25
4.23 Insurance.............................................................26
Page i
V
REPRESENTATIONS AND WARRANTIES OF PURCHASER
5.1 Organization..........................................................26
5.2 Authorization; Validity of Agreement..................................27
5.3 No Violations; Consents and Approvals.................................27
5.4 Sufficient Funds......................................................28
5.5 Litigation; Compliance with Law.......................................28
5.6 No Brokers............................................................28
5.7 Investigation by Purchaser............................................28
5.8 Prior Seller Representations; No Personal Liability...................29
5.9 Investment Intent.....................................................29
VI
COVENANTS
6.1 Conduct of the Business by the Company Pending the Closing............30
6.2 Access to Information.................................................32
6.3 Best Efforts..........................................................32
6.4 Consents..............................................................33
6.5 HSR Filings...........................................................33
6.6 Public Announcements..................................................34
6.7 Employee Agreements...................................................34
6.8 Employee Benefits.....................................................34
6.9 Notification of Certain Matters.......................................36
6.10 Tax Matters...........................................................37
6.11 Transfer of Intellectual Property.....................................44
6.12 Transitional Services Agreement.......................................44
6.13 Seller Confidentiality and Non-Solicitation Covenants.................44
6.14 Risk of Loss..........................................................45
6.15 Assignment of McKesson Rights.........................................46
6.16 Real Estate Matters...................................................46
6.17 Performance of McKesson Obligations...................................46
6.18 Insurance Matters.....................................................46
6.19 Further Assurances....................................................47
VII
CONDITIONS
7.1 Conditions to Seller's Obligations....................................48
7.2 Conditions to Purchaser's Obligations.................................49
VIII
DOCUMENTS TO BE DELIVERED AT THE CLOSING
8.1 Documents to be Delivered by Seller...................................50
8.2 Documents to be Delivered by Purchaser................................51
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IX
TERMINATION
9.1 Termination...........................................................51
9.2 Effect of Termination.................................................52
X
INDEMNIFICATION; REMEDIES
10.1 Survival; Right to Indemnification Not Affected by
Knowledge or Waivers................................................52
10.2 Indemnification by Seller.............................................53
10.3 Indemnification by Purchaser..........................................54
10.4 Time Limitations......................................................55
10.5 Limitations on Amount; Environmental Damages..........................56
10.6 Procedure for Indemnification--Third Party Claims.....................60
10.7 Procedure for Indemnification--Other Claims...........................61
10.8 Limitations on Application to Taxes...................................61
XI
MISCELLANEOUS
11.1 Fees and Expenses.....................................................61
11.2 Amendments............................................................62
11.3 Notices...............................................................62
11.4 Interpretation........................................................63
11.5 Headings; Schedules...................................................63
11.6 Counterparts..........................................................63
11.7 Entire Agreement......................................................63
11.8 Severability..........................................................63
11.9 Governing Law.........................................................63
11.10 Assignment............................................................63
11.11 Specific Performance; Submission to Jurisdiction......................64
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STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of
February 21, 1997, by and between R.A.B. Holdings, Inc., a Delaware
corporation ("Purchaser"), and McKesson Corporation, a Delaware corporation
("Seller").
RECITALS:
WHEREAS, Seller owns all of the issued and outstanding
capital stock of Millbrook Distribution Services Inc., an Indiana corporation
(the "Company"); and
WHEREAS, the Company is engaged in the business of
distributing specialty foods, health and beauty aids, over-the-counter
pharmaceuticals and general merchandise in the United States; and
WHEREAS, Purchaser desires to purchase from Seller all of
the issued and outstanding capital stock of the Company (the "Shares") upon
and subject to the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing and the
mutual representations, warranties, covenants and agreements set forth herein,
the parties hereto agree as follows:
I
DEFINITIONS
1.1 Definitions.
Term Defined in Section
---- ------------------
Adjusted November Balance Sheet 2.3(a)
Affiliate Transaction 4.15
Agreement Preamble
Approvals 4.10(d)
Arbitrator 2.3(g)
Closing 3.1
Closing Date Balance Sheet 2.3(f)
Closing Date 3.1
Company Recitals
Company Employee 6.8(d)
Confidentiality Agreement 6.2(b)
Consents 6.4
Contract 4.13(a)
Damages 10.2(a)
Date of Notice of Claim 10.6(c)
Dispute 2.3(g)
Dispute Notice 2.3(g)
Dispute Period 2.3(g)
Election 6.10(a)
Employment Agreements 6.7
Environmental Claim Notice 10.5(c)
Environmental Damages 10.5(c)
ERISA Affiliate 4.9(a)
Estimated Closing Date Balance Sheet 2.3(c)
Estimated Price Decrease 2.3(d)
Estimated Price Increase 2.3(d)
Estimated Purchase Price 2.2(b)
Final Purchase Price Decrease 2.3(f)
Final Purchase Price Increase 2.3(f)
Financial Statements 4.5
Fixed Amount 2.2(a)
Governmental Entity 4.4(b)
Income Tax Returns 4.14(a)(v)
Intellectual Property 4.11
Inventory Count 2.3(e)
IP Transfer Instruments 6.11
Leases 4.10(b)
Material Contracts 4.13(a)
Material Lease 4.10(b)
Material Leased Real Property 4.10(b)
McKesson Insurance Policies 4.23
Modified ADSP 6.10(b)
Net Asset Amount Exhibit 2.3(a)
Notice of Claim 10.6(a)
Notice Period 10.6(b)
Owned Real Property 4.10(a)
Plans 4.9(a)
Post-Closing Medical Expenses 6.8(e)
Purchase Price 2.2(a)
Purchase Price Adjustment 2.2(c)
Purchaser Preamble
Purchaser Indemnified Persons 10.2(a)
Purchaser's Closing Documents 8.2
Seller Preamble
Seller Disclosure Letter 4.2(b)
Seller Indemnified Persons 10.3
Seller's Closing Documents 8.1
Seller Tax Refunds 6.10(d)(ii)
Settlement Accountants 6.10(g)
Severance Agreements 6.7
Shares Recitals
Tax Audit 6.10(f)(i)
Tax Package 6.10(c)
Transfer Taxes 6.10(i)
Transitional Services Agreement 6.12
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"Accounting Principles and Procedures" shall mean the
accounting principles and procedures contained in Exhibit 2.3(b) as
supplemented, where such accounting principles and procedures do not address a
particular item or method of calculation, by GAAP; provided, however, that for
all purposes of Section 2.3, in the event of any conflict between any of the
accounting principles and procedures contained in Exhibit 2.3(b) and those
required by GAAP, the accounting principles and procedures set forth in
Exhibit 2.3(b) shall prevail.
"Affiliate," with respect to any Person, shall include (i)
any other person directly or indirectly controlling or controlled by or under
direct or indirect common control with such Person and (ii) in the case of the
Seller or the Company, their respective directors and officers. For purposes
of this definition, "control," when used with respect to any Person, means the
power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings that
correspond to the foregoing.
"Antitrust Law" means the ▇▇▇▇▇▇▇ Act, as amended, the
▇▇▇▇▇▇▇ Act, as amended, the HSR Act, the Federal Trade Commission Act, as
amended, and all other federal, state and foreign statutes, rules,
regulations, orders, decrees, administrative and judicial doctrines, and other
laws that are designed or intended to prohibit, restrict or regulate actions
having the purpose or effect of monopolization or restraint of trade.
"Business Day" means any day other than a Saturday, Sunday
or a day on which banking institutions in the State of New York are authorized
or obligated by law or executive order to close.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company Material Adverse Effect" means any event, condition
or circumstance that would, or would be reasonably likely to, have a material
adverse effect on the business, assets, results of operations or financial
condition of the Company, except for any such event, condition or circumstance
that constitutes a McKesson Obligation.
"Current Site" means any Site owned, leased, used or
operated by the Company as of the date hereof.
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"DOJ" means the Antitrust Division of the United States
Department of Justice.
"Environment" means all air, surface water, groundwater, or
land, including land surface or subsurface, including all fish, wildlife,
biota and all other natural resources.
"Environmental Claim" means any and all administrative or
judicial actions, suits, orders, claims, liens, notices, notices of
violations, investigations, complaints, requests for information, or
proceedings, whether criminal or civil, (collectively, "Claims") by any Person
(including, but not limited to, any Governmental Entity, Person and citizens'
group) based upon, relating to, alleging, asserting, or claiming any actual or
potential (i) violation of or liability under any Environmental Law, (ii)
violation of any Environmental Permit, or (iii) liability for investigatory
costs, cleanup costs, removal costs, remedial costs, response costs, natural
resource damages, property damage, personal injury, fines, or penalties
arising out of, based on, resulting from, or related to the presence, Release,
or threatened Release into the Environment, of any Hazardous Substances at any
location, including, but not limited to, any off-Site location to which
Hazardous Substances or materials containing Hazardous Substances were sent
for handling, storage, treatment, or disposal.
"Environmental Law" means any and all federal, state, local,
provincial and foreign, common (including, but not limited to, negligence,
nuisance, trespass, personal injury, or property damages related to or arising
out of the presence or Release of, or exposure to, a Hazardous Substance),
civil and criminal laws, statutes, ordinances, orders, codes, rules, or
regulations, and (with respect solely to the Company) judgments, decrees or
injunctions, relating to the protection of human health and the Environment,
and/or governing the handling, use, generation, treatment, storage,
transportation, disposal, manufacture, distribution, formulation, packaging,
labeling, or Release of Hazardous Substances, whether now existing or
subsequently amended or enacted, and the state analogies thereto, all as
amended or superseded from time to time.
"Environmental Permit" means any federal, state, local,
provincial, or foreign permits, licenses, approvals, consents or
authorizations required by any Governmental Entity under or in connection with
any Environmental Law and includes any and all orders, consent orders or
binding agreements issued or entered into by a Governmental Entity under any
applicable Environmental Law.
Page 4
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Former Site" means any Site that is not a Current Site,
including, but not limited to, any site owned, leased, used or operated by
▇▇▇▇▇▇ Drug and Sundry Company, Inc. or any predecessor thereof.
"FTC" means the Federal Trade Commission.
"GAAP" means generally accepted accounting principles in
effect in the United States of America at the time of any determination, and
which are applied on a consistent basis during the periods involved. Any
accounting term or other term used in this Agreement with respect to an
accounting matter shall have the meaning given to that term by GAAP, unless
otherwise defined herein or the context of this Agreement otherwise requires.
"Hazardous Substance" means petroleum, petroleum
hydrocarbons or petroleum products, petroleum by-products, radioactive
materials, asbestos or asbestos-containing materials, gasoline, diesel fuel,
pesticides, radon, urea formaldehyde, lead or lead-containing materials,
polychlorinated biphenyls; and any other chemicals, materials, substances or
wastes which are now or hereafter regulated as "hazardous substances,"
"hazardous materials," "hazardous wastes," "extremely hazardous wastes,"
"restricted hazardous wastes," "toxic substances," "toxic pollutants,"
"pollutants," "regulated substances," "solid wastes," or "contaminants" or
words of similar import, under any Environmental Law.
"HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements
Act of 1976, as amended, and the rules and regulations promulgated thereunder.
"Income Tax" means any federal, state, local or foreign Tax
(a) based upon, measured by or calculated with respect to net income, profits
or receipts (including, without limitation, capital gains Taxes and minimum
Taxes) or (b) based upon, measured by or calculated with respect to multiple
bases (including, without limitation, corporate franchise taxes) if one or
more of the bases on which such Tax may be based, measured by or calculated
with respect to, is described in clause (a), in each case together with any
interest, penalties or additions to such Tax.
"Insurance Risks" means all claims, risks, losses,
liabilities or damages arising out of or relating to the business or
operations of the Company that (i) would be covered under any McKesson
Insurance Policy without regard to
Page 5
any deductible, self-insurance retention or retained liability and without
regard to whether such McKesson Insurance Policy is a primary policy or an
umbrella policy or (ii) are required to be insured against under any
applicable federal, state or local law, such as by workers' compensation and
motor vehicle liability or casualty insurance, regardless of whether insured
under a McKesson Insurance Policy or self insured, in each case to the extent
the claim, risk, loss, liability or damage relates to or arises from an
occurrence prior to the Closing.
"Knowledge" of Seller, "known" to Seller, "best of
knowledge" of Seller, matters of which Seller is "aware" and language of
similar import shall mean all matters actually known or that should have been
known by any of the directors or officers of Seller or the Company, or the
in-house attorneys and senior accounting personnel of Seller and those
management employees of Seller responsible for employee benefits, insurance
matters and matters relating to Environmental Laws.
"Liens" means all mortgages, claims, charges, liens,
security interests, pledges, options, easements, rights of way, or other
encumbrances of any nature whatsoever.
"McKesson Obligations" means the following: (i) all
Environmental Claims and liabilities relating to or arising from any Former
Site, including, without limitation, any liability or obligation relating to
or arising out of the Site in Omaha, Arkansas (the "Arkwood Site") or the
Arkwood Site Consent Decree, (ii) any liability or obligation relating to or
arising out of, or any contribution required under, any McKesson Plan,
including, without limitation, all accrued benefits as of the Closing under
any of such McKesson Plans, except to the extent any such liability or
obligation is provided for on the Closing Date Balance Sheet (as such term is
hereinafter defined), (iii) any liability or obligation relating to or arising
out of unsettled intercompany transactions and/or transactions recorded in
intercompany accounts reflected on the Closing Date Balance Sheet (as such
term is hereinafter defined), (iv) any liability or obligation represented by
or in respect of outstanding drafts, checks and bankers acceptances, (v) any
liability or obligation relating to or arising out of any of the McKesson
Rights, (vi) all Insurance Risks, (vii) the Company's obligations as guarantor
of the Venturian Deferred Compensation Plan, (viii) any liability or
obligation relating to or arising out of any action, suit, proceeding or
investigation pending or threatened against the Company prior to Closing and
(ix) any and all amounts (including principal and accrued interest, if any)
owed by the Company, directly
Page 6
or indirectly, to holders of any Industrial Revenue Bonds outstanding on the
date hereof relating to the Ozark, Alabama and Harrison, Arkansas facilities.
"McKesson Plans" means those employee benefit plans
maintained by Seller in which any Company employee is a participant which are
identified as such in Section 4.9(a) of the Seller Disclosure Letter.
"McKesson Rights" means all items set forth in Section 6.15
of the Seller Disclosure Letter.
"Permitted Liens" means (i) those Liens set forth in Section
4.10 of the Seller Disclosure Letter, (ii) (A) easements, rights of way and
other imperfections of title and encumbrances that, in each case, do not
materially interfere with the operation of the Company's business or the use
or value of the property subject thereto, (B) Liens for water and sewage
charges and current Taxes not yet due and payable or being contested in good
faith by appropriate proceedings which shall suspend the collection thereof,
and (C) mechanics', carriers', workers', repairers', materialmen's,
warehousemen's and other similar Liens arising or incurred in the ordinary
course of business, in each case that do not materially interfere with the
operation of the Company's business, and (iii) Liens arising or resulting from
any action taken by Purchaser.
"Person" means an individual, partnership, joint venture,
trust, corporation, limited liability company or other entity (including,
without limitation, any government or political subdivision or any agency,
department or instrumentality thereof).
"Pre-Closing Period" means any taxable period ending on or
prior to the Closing Date.
"Purchaser Material Adverse Effect" means any event,
condition or circumstance that would, or would be reasonably likely to, have a
material adverse effect on the business, results of operations or financial
condition of Purchaser and its Subsidiaries, taken as a whole.
"Purchaser Plans" means employee benefit plans, as defined
in section 3(3) of ERISA, or such nonqualified employee benefit or deferred
compensation plans, stock option bonus or incentive plans or other employee
benefit or fringe benefit programs that may be in effect generally for
employees of Purchaser or its Subsidiaries from time to time.
"Release" means any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting,
Page 7
escaping, leaching, dumping, or disposing of a Hazardous Substance into the
Environment.
"Securities Act" means the Securities Act of 1933, as amended.
"Site" means any of the real properties currently or
previously owned, leased, used or operated by the Company, any predecessors of
the Company or any entities previously owned by the Company, including all
soil, subsoil, surface waters and groundwater thereat.
"Straddle Period" means any taxable period that begins before
and ends after the Closing Date.
"Subsidiary" of a Person means any entity of which the
securities or other ownership interests having ordinary voting power to elect
a majority of the board of directors or other persons performing similar
functions are at the time directly or indirectly owned by such Person or such
Person otherwise has the right to vote or to direct the vote of such
securities or other ownership interests.
"Tax Affiliate" means any entity that is a member of an
affiliated group of corporations (within the meaning of Section 1504(a) of the
Code) filing a consolidated U.S. federal Income Tax Return, and a group of
corporations filing a consolidated or combined Tax Return for state, local or
foreign Tax purposes (each, "a Consolidated Group"), if the Company could be
held liable for the Taxes of such entity or of such Consolidated Group.
"Taxes" means any and all taxes, charges, fees, levies or
other assessments, including, without limitation, income, gross receipts,
excise, real or personal property, sales, withholding, social security,
retirement, unemployment, occupation, use, service, net worth, payroll,
franchise, license, gains, customs, transfer and recording taxes, imposed by
any taxing authority, and shall include any interest, penalties or additions
to tax.
"Tax Return" means any report, return, document, declaration
or other information or filing required to be supplied to any taxing authority
with respect to Taxes.
II
PURCHASE AND SALE OF SHARES
2.1 Sale and Transfer of Shares. Subject to the terms and
conditions set forth in this Agreement, at the
Page 8
Closing, Seller will sell, convey, assign, transfer and deliver the Shares to
Purchaser, free and clear of all Liens (other than restrictions arising under
the Securities Act or any other applicable state securities laws) and
Purchaser will purchase, acquire and accept the Shares from Seller.
2.2 Purchase Price.
(a) Subject to the terms and conditions of this
Agreement, in consideration of the aforesaid sale, conveyance, assignment,
transfer and delivery of the Shares, Purchaser agrees to pay to Seller the
amount of $70,000,000 (the "Fixed Amount") in cash, subject to preliminary
adjustment at the Closing as provided in Section 2.3 on the basis of the
Estimated Closing Date Balance Sheet referred to in Section 2.3(c), and
subject to final adjustment after the Closing as provided in Section 2.2(c) on
the basis of the Closing Date Balance Sheet referred to in Section 2.3(f) (as
so adjusted, the "Purchase Price"). All payments pursuant to Sections 2.2 and
2.3 shall be made in immediately available funds by wire transfer to such bank
accounts as may be specified in writing by Seller or Purchaser to the other.
(b) On the Closing Date, Purchaser shall pay to
Seller an amount (the "Estimated Purchase Price") equal to the Fixed Amount,
plus (i) the Estimated Price Increase (as defined in Section 2.3(d)), if any,
or, alternatively, less (ii) the Estimated Price Decrease (as defined in
Section 2.3(d)), if any.
(c) Upon the determination of the Purchase
Price, as finally determined in accordance with Section 2.3(f) on the basis of
the Closing Date Balance Sheet, either (i) Purchaser shall pay to Seller the
amount of the Final Purchase Price Increase (as defined in Section 2.3(f)) or,
alternatively, (ii) Seller shall pay to Purchaser the amount of the Final
Purchase Price Decrease (as defined in Section 2.3(f)) (each such payment, a
"Purchase Price Adjustment").
2.3 Purchase Price Adjustment.
(a) Exhibit 2.3(a) sets forth an adjusted
balance sheet of the Company as of November 30, 1996 prepared in accordance
with and adjusted pursuant to the Accounting Principles and Procedures for
purposes of determining the "Net Asset Amount" of the Company at November 30,
1996 (the "Adjusted November Balance Sheet").
(b) Purchaser and Seller agree to accept the
Accounting Principles and Procedures for all purposes of this Section 2.3,
including, without limitation, for purposes of preparation of the Adjusted
November Balance Sheet, the
Page 9
Estimated Closing Date Balance Sheet and the Closing Date Balance Sheet.
(c) Not fewer than three Business Days before
the Closing Date, Seller shall deliver to Purchaser (i) a balance sheet (the
"Estimated Closing Date Balance Sheet") based upon the books and records of
the Company and prepared in accordance with and adjusted pursuant to the
Accounting Principles and Procedures and reflecting Seller's best estimate of
each of the items, and the amounts thereof, to be included on the Closing Date
Balance Sheet and (ii) a certificate of Seller, duly executed by an executive
officer of Seller, stating that the Estimated Closing Date Balance Sheet has
been prepared in good faith, has been prepared in accordance with and adjusted
pursuant to the Accounting Principles and Procedures, and reflects Seller's
best estimate of, and to the best Knowledge of Seller, fairly presents each of
the items, and the amounts thereof, to be included on the Closing Date Balance
Sheet.
(d) If the Net Asset Amount of the Company as
shown on the Estimated Closing Date Balance Sheet is greater than the Net
Asset Amount shown on the Adjusted November Balance Sheet, the payment of the
Fixed Amount to Seller on the Closing Date shall be increased, as a
preliminary adjustment to the Fixed Amount as provided in Section 2.2(b), by
the amount of such excess (the "Estimated Price Increase"). If the Net Asset
Amount of the Company as shown on the Estimated Closing Date Balance Sheet is
less than the Net Asset Amount as shown on the Adjusted November Balance
Sheet, the payment of the Fixed Amount to Seller on the Closing Date shall be
decreased, as a preliminary adjustment to the Fixed Amount as provided in
Section 2.2(b), by the amount of such deficiency (the "Estimated Price
Decrease").
(e) As of the close of business on the last day
of the fiscal month of the Company in which the Closing occurs, or at such
other time on such other date as near as practicable thereto as may be
mutually agreed to by the parties to avoid business disruptions, Purchaser
shall cause physical counts to be made of the inventory of the Company located
at the Company's Leicester, Massachusetts and Harrison, Arkansas facilities
(the "Inventory Count"), which shall be observed by representatives of the
accounting firm of Deloitte & Touche LLP (the costs of such physical inventory
to be shared equally by Purchaser and Seller). Seller's representatives shall
also be entitled to attend and observe the taking of the Inventory Count. Upon
completion of the Inventory Count (and any adjustment pursuant to the
immediately following sentence), Seller shall be provided with copies of the
relevant data relating to those counts for its review. The results of the
Inventory Count shall be
Page 10
adjusted to reflect the Company's inventory at the close of business on the
day immediately preceding the Closing Date using actual receipts and
shipments, and the valuation of inventory for purposes of the Closing Date
Balance Sheet shall be computed in accordance with the Accounting Principles
and Procedures and shall be based on the results of the Inventory Count as so
adjusted, plus (i) the amount shown in the Company's books and records in
accordance with the Company's perpetual inventory system at all locations
(other than the Company's Leicester, Massachusetts and Harrison, Arkansas
facilities) and (ii) "in-transit" inventory.
(f) Within forty-five (45) days following the
Closing Date, Seller shall deliver to Purchaser a special purpose balance
sheet of the Company as of 12:01 a.m. on the Closing Date prepared by Seller
with the cooperation of Purchaser (the "Closing Date Balance Sheet"). The
Closing Date Balance Sheet shall be prepared in accordance with and adjusted
by the Accounting Principles and Procedures and shall set forth the
calculation of the Net Asset Amount. In connection with the preparation of the
Closing Date Balance Sheet, each party shall provide the other and the other's
accountants and representatives full access to the Company's books, records,
facilities and employees within such party's control. If the Net Asset Amount
of the Company as reflected in the Closing Date Balance Sheet, is greater than
the Net Asset Amount as reflected in the Estimated Closing Date Balance Sheet,
the Estimated Purchase Price shall be increased, by a final adjustment to the
Estimated Purchase Price as provided in Section 2.2(c), by the amount of such
excess (the "Final Purchase Price Increase"). If the Net Asset Amount of the
Company as reflected in the Closing Date Balance Sheet is less than the Net
Asset Amount as reflected in the Estimated Closing Date Balance Sheet, the
Estimated Purchase Price shall be decreased, by a final adjustment to the
Estimated Purchase Price as provided in Section 2.2(c), by the amount of such
deficiency (the "Final Purchase Price Decrease").
(g) Purchaser shall have fifteen (15) Business
Days after receipt by it of the Closing Date Balance Sheet (the "Dispute
Period") to dispute any item, calculation or amount, or the method of
calculation of any item or amount, reflected therein (a "Dispute"). If Purchaser
does not give written notice of a Dispute (a "Dispute Notice") to Seller within
the Dispute Period, the Closing Date Balance Sheet shall be deemed to have been
accepted by Purchaser in the form in which it was delivered by Seller. In the
event that Purchaser does not agree with any item, calculation or amount, or the
method of calculation of any item or amount, reflected on the Closing Date
Balance Sheet, Purchaser shall
Page 11
give Seller a Dispute Notice within the Dispute Period, setting forth the
basis of its disagreement, and Seller and Purchaser shall, within fifteen (15)
days after receipt by Seller of such Dispute Notice, attempt to resolve such
Dispute and agree in writing upon the final Closing Date Balance Sheet. In the
event that Seller and Purchaser are unable to resolve any such Dispute within
the fifteen (15) day resolution period, then the national office of the
certified public accounting firm of Deloitte & Touche LLP or such other
national office of a certified public accounting firm or office as may be
mutually agreed upon by Seller and Purchaser (the "Arbitrator") shall be
employed as arbitrator hereunder to settle such Dispute as soon as reasonably
practicable. The parties agree that the Arbitrator shall decide only the
matters involved in the Dispute, and not any other matters, and that such
matters shall be decided in accordance with this Section 2.3. Any Arbitration
pursuant to this Section 2.3(g) shall be conducted in the national office of
Deloitte & Touche LLP or of such certified public accounting firm, in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association then existing and the Arbitrator's determination with respect to
any Dispute shall be final and binding on all parties and not subject to
appeal on any ground, and judgment on the arbitration award may be enforced in
any court having jurisdiction over the subject matter of the controversy.
Seller and Purchaser shall each pay one-half of the fees and expenses of the
Arbitrator for the services of the Arbitrator in the arbitration.
(h) In the event of a Purchase Price Adjustment,
an amount equal to the Purchase Price Adjustment together with interest on
such amount at a rate equal to the rate of interest announced from time to
time by Chase Manhattan Bank to be its prime or reference rate, from the
Closing Date to the payment date, shall be paid by either Purchaser to Seller,
or Seller to Purchaser, as the case may be, in immediately available funds by
wire transfer to such bank account as may be designated by Seller or
Purchaser, as the case may be. Such payment shall be made within ten (10) days
after the final determination of the Closing Date Balance Sheet.
III
THE CLOSING
3.1 Closing. The sale and transfer of the Shares by Seller
to Purchaser (the "Closing") shall take place at the offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇
Flattau & Klimpl, LLP, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ at
10:00 a.m.,
Page 12
local time, on March 31, 1997, or if the conditions to close set forth in
Article VII hereof have not been satisfied or waived by March 29, 1997, two
Business Days following the satisfaction and/or waiver of all conditions to
close set forth in Article VII (the "Closing Date"), unless another date or
place is agreed to in writing by the parties hereto.
3.2 Adjournment of Closing. Notwithstanding anything to
the contrary set forth in Section 3.1, the Purchaser, in its sole discretion,
shall be entitled to one reasonable postponement of the Closing based upon
such factors as Purchaser considers appropriate.
IV
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Purchaser as follows:
4.1 Organization. Each of Seller and the Company is a
corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation. The Company has all requisite
corporate power and authority to own, lease and operate its properties and to
carry on its business as it is now being conducted, except where failure to be
so existing and in good standing or to have such power and authority would not
in the aggregate have a Company Material Adverse Effect. The Company is duly
qualified or licensed to do business as a foreign corporation and is in good
standing in each jurisdiction in which the nature of the business conducted by
it makes such qualification or licensing necessary, except where the failure
to be so duly qualified, licensed and in good standing, to have such power and
authority or to be so qualified or licensed would not have a Company Material
Adverse Effect. Seller has heretofore delivered to Purchaser true, correct and
complete copies of the Company's Certificate of Incorporation and Bylaws, as
currently in effect.
4.2 Capitalization.
(a) The authorized capital stock of the Company
consists of 1,000 shares of Common Stock, par value $1.00 per share. The
Shares are the only shares of Common Stock issued and outstanding, and all of
the Shares are owned of record and beneficially by Seller, free and clear of
all Liens, and no shares of Common Stock are issued and held in the treasury
of the Company. All the Shares are duly authorized, validly issued, fully paid
and nonassessable.
Page 13
There are no existing (i) options, warrants, calls, preemptive rights,
subscriptions or other rights, convertible securities, agreements or
commitments of any character obligating the Company to issue, transfer or sell
any shares of capital stock, options, warrants, calls or other equity interest
of any kind whatsoever in the Company or securities convertible into or
exchangeable for such shares or equity interests, (ii) contractual obligations
of the Company to repurchase, redeem or otherwise acquire any capital stock or
equity interest of the Company or (iii) voting trusts, proxies or similar
agreements to which the Company or Seller is a party with respect to the
voting of the capital stock of the Company.
(b) Except as described in Section 4.2 of the
schedule delivered by Seller to Purchaser concurrently with the execution and
delivery of this Agreement, and which is incorporated by reference herein and
which is an integral part of this Agreement (the "Seller Disclosure Letter"),
the Company does not own any outstanding shares of capital stock (or
equivalent equity interests of entities other than corporations) of any
Person.
4.3 Authorization; Validity of Agreement. Seller has the
requisite corporate power and authority to execute, deliver and perform this
Agreement and to consummate the transactions contemplated hereby. The
execution, delivery and performance by Seller of this Agreement and the
consummation of the transactions contemplated hereby have been duly and
validly authorized by the Board of Directors of Seller, and no other corporate
proceedings on the part of Seller are necessary to authorize the execution,
delivery and performance of this Agreement by Seller and the consummation of
the transactions contemplated hereby. This Agreement has been duly executed
and delivered by Seller and, assuming due authorization, execution and
delivery of this Agreement by Purchaser, is a valid and binding obligation of
Seller, enforceable against Seller in accordance with its terms, except as
such enforceability may be subject to or limited by applicable bankruptcy,
insolvency, reorganization or other similar laws, now or hereafter in effect,
affecting the enforcement of creditors' rights generally, except that the
availability of equitable remedies, including specific performance, may be
subject to the discretion of the court before which any proceeding therefor
may be brought.
4.4 No Violations; Consents and Approvals.
(a) Except as set forth in Section 4.4(a) of the
Seller Disclosure Letter, the execution, delivery and performance of this
Agreement by Seller do not, and the consummation by Seller of the transactions
contemplated
Page 14
hereby will not, (i) violate any provision of the Certificate of Incorporation
or Bylaws of Seller, (ii) result in a violation or breach of, or constitute
(with or without due notice or lapse of time or both) a default (or give rise
to any right of termination, amendment, cancellation or acceleration) under,
any of the terms, conditions or provisions of any material note, bond,
mortgage, indenture, guarantee, other evidence of indebtedness, license,
contract, agreement or other instrument to which the Company, Seller or any of
its Subsidiaries is a party or by which any of them or any of their properties
or assets may be bound or otherwise subject or (iii) violate any order, writ,
judgment, injunction, decree, law, statute, rule or regulation applicable to
the Company, Seller or any of its Subsidiaries or any of their properties or
assets; except in the case of clauses (ii) or (iii) for violations, breaches
or defaults which (A) would not have a Company Material Adverse Effect, (B)
would not materially impair, hinder or adversely affect the ability of Seller
to perform any of its obligations under or as contemplated by this Agreement
or to consummate the transactions contemplated hereby or (C) become applicable
as a result of the business or activities in which Purchaser is or proposes to
be engaged or as a result of any acts or omissions by, or the status of any
facts pertaining to, Purchaser.
(b) Except as set forth in Section 4.4(b) of the
Seller Disclosure Letter, no filing or registration with, notification to, or
authorization, consent or approval of, any court, legislative, executive or
regulatory authority or agency (a "Governmental Entity") or any other Person
is required in connection with the execution, delivery and performance of this
Agreement by Seller or the consummation by Seller of the transactions
contemplated hereby, except for (i) filings with the FTC and with the DOJ
pursuant to the HSR Act, and (ii) such other consents, approvals, orders,
authorizations, notifications, registrations, declarations and filings the
failure of which to be obtained or made would not have a Company Material
Adverse Effect, and do not materially impair, hinder or adversely affect the
ability of Seller to perform any of its obligations under or as contemplated
by this Agreement or to consummate the transactions contemplated hereby.
4.5 Financial Statements. Attached as Exhibit 4.5 are (i)
the balance sheet of the Company as of March 31, 1996 and the related income
statement and statement of cash flows of the Company for the fiscal year then
ended and (ii) the balance sheets of the Company as of September 30, 1996 and
November 30, 1996 and the related income statements of the Company for the
six- and eight-month periods then ended (collectively, the "Financial
Statements"). The Financial
Page 15
Statements have been prepared from and are in agreement with the books and
records of the Company. Except as disclosed in Exhibit 4.5, the Financial
Statements present fairly in all material respects, when considered in
relation to the consolidated financial statements of the Seller, the financial
position and results of operations and, where appropriate, cash flows, of the
Company for the periods then ended in conformity with generally accepted
accounting principles.
4.6 Absence of Certain Changes. Except as (a) disclosed in
the Financial Statements, (b) disclosed in Section 4.6 of the Seller
Disclosure Letter or (c) expressly required by this Agreement, (i) since March
31, 1996 no event which would result in a Company Material Adverse Effect has
occurred and (ii) since September 30, 1996 the Company has not taken any
action that, if taken after the date hereof, would constitute a violation or
breach of any of the provisions set forth in Section 6.1(a) through (o)
hereof.
4.7 No Undisclosed Liabilities. Except for liabilities and
obligations incurred in the ordinary course of business that are reflected on
the Financial Statements or the Seller Disclosure Letter or will be reflected
in the Closing Date Balance Sheet, since March 31, 1996 the Company has not
incurred any, and there are no, liabilities or obligations, contingent or
otherwise, that would be required to be disclosed, reflected or reserved
against in a balance sheet of the Company (including the related notes thereto
where appropriate) prepared in accordance with generally accepted accounting
principles.
4.8 Litigation; Compliance with Law. Except as set forth in
Section 4.8 of the Seller Disclosure Letter, there is no action, suit or
proceeding pending or, to the best Knowledge of Seller, any investigation
pending or, to the best Knowledge of Seller, any action, suit or proceeding
threatened, which in any way involves or affects the Company, by or before any
court, Governmental Entity or arbitration panel or any other Person that could
or would have a Company Material Adverse Effect. The business and operations
of the Company are not being conducted in violation of any applicable law,
ordinance, rule, regulation, decree or order of any court or Governmental
Entity or other regulatory authority, or arbitration panel, except for
violations that, individually or in the aggregate, would not have a Company
Material Adverse Effect.
4.9 Employee Benefit Plans; ERISA.
(a) Section 4.9(a) of the Seller Disclosure Letter
lists each "employee benefit plan" (as defined in
Page 16
section 3(3) of ERISA), and all other material employee benefit(including,
without limitation, any non-qualified plans), bonus, deferred compensation,
incentive, stock option (or other equity-based), severance, change in control
and fringe benefit plans maintained for the benefit of, or contributed to by
the Company or any trade or business, whether or not incorporated (an "ERISA
Affiliate"), that would be deemed a "single employer" within the meaning of
section 4001 of ERISA, for the benefit of any employee or former employee of
the Company (the "Plans"). Seller has heretofore delivered to Purchaser true,
correct and complete copies of each of the Plans, including all amendments to
date.
(b) Each of the Plans that is subject to ERISA
complies with ERISA and the applicable provisions of the Code, and has been
administered in accordance with ERISA and, where applicable, the Code, except
for any such violations that would not have a Company Material Adverse Effect.
Each of the Plans intended to be "qualified" within the meaning of section
401(a) of the Code has been determined by the Internal Revenue Service to be
so qualified and Seller knows of no fact or set of circumstances that would
materially adversely affect such qualification prior to and including the
close of business on the day immediately preceding the Closing Date. Except as
set forth in Section 4.9(b) of the Seller Disclosure Letter, none of the Plans
is subject to Title IV of ERISA. No "reportable event", as such term is
defined in section 4043(b) of ERISA (for which the 30 day notice requirement
to the Pension Benefit Guaranty Board has not been waived) has occurred with
respect to any Plan, except where the occurrence of any such event would not
have a Company Material Adverse Effect. There are no pending or, to the best
Knowledge of Seller, threatened claims (other than routine claims for
benefits), actions, suits or proceedings by, on behalf of or against any of
the Plans or any trusts related thereto or against Seller or the Company in
respect of the Plans, except for any such claims, actions, suits or
proceedings that would not reasonably be likely to have a Company Material
Adverse Effect.
(c) Except as set forth in Section 4.9(c) of the
Seller Disclosure Letter, no Plan provides benefits, including, without
limitation, death or medical benefits (whether or not insured), with respect
to any employees or former employees of the Company beyond their retirement or
other termination of service (other than (i) coverage mandated by applicable
law, (ii) death benefits or retirement benefits under any "employee pension
plan," as that term is defined in section 3(2) of ERISA, or (iii) benefits the
full cost of which is borne by the current or former employee (or his or her
beneficiary).
Page 17
(d) No Plan has incurred an "Accumulated Funding
Deficiency" (as defined in section 302(a) of ERISA or Section 412(a) of the
Code), whether or not waived.
(e) Except as set forth in Section 4.9(e) of the
Seller Disclosure Letter, none of the Company or any ERISA Affiliate has
incurred or would incur a "withdrawal" or "partial withdrawal", as defined in
sections 4203 and 4205 of ERISA, from any Plan that has resulted or would
result in a withdrawal liability of the Company or any ERISA Affiliate under
such Plan, except where the occurrence of any such event would not have a
Company Material Adverse Effect.
4.10 Real Property.
(a) Section 4.10 of the Seller Disclosure Letter
sets forth a list of all real property owned by the Company (the "Owned Real
Property"). The Company owns the Owned Real Property in fee subject to no
Liens, except for Permitted Liens.
(b) Section 4.10 of the Seller Disclosure Letter
sets forth a list (including, without limitation, all amendments) of all
leases and subleases under which the Company is tenant or subtenant (the
"Leases"), that, in any 12-month period, requires total lease or rent payments
by the Company of more than $50,000 (each such Lease, a "Material Lease"),
including the date of the Material Lease, the premises demised thereunder, the
name of the lessee and lessor, the commencement date and expiration date of
such Material Lease and the annual rent payable by the lessee under such
Material Lease. As used herein, the term "Material Leased Real Property" shall
mean the real property demised by Material Leases.
(c) Seller has heretofore delivered to Purchaser
true, correct and complete copies of the Material Leases. The Material Leases
are in full force and effect and are enforceable in accordance with their
respective terms, except as such enforceability may be subject to or limited
by bankruptcy, insolvency, reorganization or other similar laws, now or
hereafter in effect, affecting the enforcement of creditors' rights generally.
Except as set forth in Section 4.10(b) of the Seller Disclosure Letter, the
Material Leases have not been amended. The Company has not assigned, pledged
or otherwise transferred, and has not sublet the premises demised by, any
Material Lease. The Company is in possession of the premises demised by the
Material Leases. To Seller's best Knowledge, no event has occurred or failed
to occur which, with the giving of notice or the passage of time or both,
would constitute a default under any Material Lease. As of the date of this
Agreement, no lessor or lessee under
Page 18
any Material Lease has exercised any option or right to (i) cancel or
terminate such Material Lease or shorten the term thereof, (ii) lease
additional premises, (iii) reduce or relocate the premises demised by such
Material Lease or (iv) purchase any property.
(d) All licenses, permits and permanent
certificates of occupancy (the "Approvals"), if any, needed by the Company or,
to the Knowledge of Seller, any third party in connection with the
construction, use, occupancy and maintenance of any Owned Real Property or any
Material Leased Real Property are in full force and effect in accordance with
the respective terms thereof and none of the Approvals have been amended,
assigned, pledged or otherwise transferred, except where the failure of any of
the Approvals to be in full force and effect or any such amendment,
assignment, pledge or transfer would not have a Company Material Adverse
Effect.
(e) The Owned Real Property and the Material
Leased Real Property, including, without limitation, all building systems,
structural components, and building equipment, are in good condition and
repair, normal wear and tear excepted, and there exist no defects in the same,
except for such defects that would not have a Company Material Adverse Effect.
4.11 Intellectual Property. Section 4.11 of the Seller
Disclosure Letter lists all material trademarks, trade names, service marks,
service names, ▇▇▇▇ registrations, logos, assumed names and copyright
registrations, patents and all applications therefor which are owned by the
Company or any other Person and used by the Company in the operations of the
Company, as currently conducted (collectively, the "Intellectual Property", it
being understood that such term does not include computer software programs
used by the Company in the operations of the Company) and, as of the date
hereof, there are no pending or threatened claims of which Seller has been
given written notice by any Person relating to the Company's use of any
Intellectual Property. Except as set forth in Section 4.11 of the Seller
Disclosure Letter, the Company has such ownership and use (free and clear of
all Liens) of or rights by license, lease or other agreement to use (free and
clear of all Liens) the Intellectual Property as are necessary to permit the
Company to conduct the Company's business and its operations as currently
conducted and the Company is not obligated to pay any royalty or similar fee
to any Person in connection with the Company's use or license of any of the
Intellectual Property.
4.12 Computer Software. The Company has such title or such
rights by license, lease or other agreement to
Page 19
the computer software programs, including, without limitation, application
software, which are used by the Company and which are material to the conduct
of its business and operations as currently conducted, as are necessary to
permit the conduct of its business and operations as currently conducted,
except (i) as set forth in Section 4.12 of the Seller Disclosure Letter and
(ii) for computer software programs owned, licensed or leased by Seller and to
be used by Seller in providing services to the Company pursuant to the
Transitional Services Agreement.
4.13 Material Contracts.
(a) Section 4.13 of the Seller Disclosure Letter
sets forth, as of the date hereof, a true, complete and correct list of every
contract, agreement, loan, lease, license, guarantee, understanding or
commitment (any such item, a "Contract") that (i) provides for aggregate
future payments by the Company or to the Company of more than $100,000 and has
an unexpired term exceeding one year and may not be canceled upon 60 days
notice without any liability, penalty or premium (excluding purchase orders
and invoices arising in the ordinary course of business); (ii) was entered
into by the Company with Seller or a stockholder, officer, director or
significant employee of the Company or Seller (other than those identified in
Section 4.9 of the Seller Disclosure Letter); (iii) is a collective bargaining
or similar agreement; (iv) guarantees or indemnifies or otherwise causes the
Company to be liable or otherwise responsible for the obligations or
liabilities of any other Person or provides for a charitable contribution by
the Company; (v) involves an agreement with any bank, finance company or
similar organization; (vi) restricts the Company from engaging in any business
or activity anywhere in the world; (vii) is an employment agreement,
consulting agreement or similar arrangement with any employee of the Company
or any other Person (other than those identified in Section 4.9 of the Seller
Disclosure Letter); or (viii) any joint venture agreement to which the Company
is a party (the foregoing, collectively, "Material Contracts"). For purposes
hereof, Material Contracts shall not include Material Leases, plans or
agreements in respect of computer software programs owned, licensed or leased
by Seller and to be used by Seller in providing services to the Company
pursuant to the Transitional Services Agreement. Seller has heretofore
provided true, complete and correct copies of all Material Contracts to
Purchaser.
(b) Except as set forth in Section 4.13 of the
Seller Disclosure Letter, (i) there is not, and, to the best of Seller's
Knowledge, as of the date hereof, there has not been, claimed or alleged by
any Person with respect to
Page 20
any Material Contract, any existing default, or event that with notice or
lapse of time or both would constitute a default or event of default, on the
part of the Company or, to the best of Seller's Knowledge, on the part of any
other party thereto, except such defaults, events of default and other events
that would not result in a Company Material Adverse Effect and (ii) no
consent, approval, authorization or waiver from, or notice to, any
Governmental Entity or other Person is required in order to maintain in full
force and effect any of the Material Contracts, other than such consents and
waivers that have been obtained and are unconditional and in full force and
effect and such notices that have been duly given.
4.14 Taxes. Except as set forth in Section 4.14 of the
Seller Disclosure Letter:
(a) (i) each of Seller and the Company has (A)
duly and timely filed with the appropriate governmental authorities
all material Tax Returns required to be filed by it and such Tax
Returns are true, correct and complete in all material respects, and
(B) duly and timely paid in full, or provision for such payment has
been recorded on the books and records of the Company in accordance
with GAAP for the payment of, all Taxes due with respect to the
Company;
(ii) the Company has complied in all material
respects with all applicable laws, rules and regulations relating to
the payment and withholding of Taxes;
(iii) no federal, state, local or foreign
audits or other administrative proceedings or court proceedings are
presently pending, proposed or threatened (in each case in writing)
with regard to any Taxes or Tax Returns of the Company;
(iv) there are no Liens for Taxes upon any
property or assets of the Company, except for Permitted Liens;
(v) all Tax Returns with respect to Income
Taxes ("Income Tax Returns"), and any state and local sales, use,
highway use, and real or personal property Tax Returns of or
including the Company, and any other Tax Return of or including the
Company showing thereon as due for the period of such Tax Return
Taxes of at least $25,000, have been examined by the Internal Revenue
Service or the appropriate state or local taxing authority (or the
applicable statutes of limitation for the assessment of such Taxes
for such periods have ex-
Page 21
pired) for all periods through the taxable year ended March 31, 1992;
(vi) with respect to the Company, (i) there
are no pending requests for rulings from any Taxing authority, (ii)
there are no outstanding subpoenas or requests for information by any
Taxing authority with respect to Taxes, and (iii) there are no
material proposed reassessments by any Taxing authority of any
property owned or leased by the Company;
(vii) there are no agreements in effect to
extend (i) the time to file any Tax Return of the Company or (ii) the
period of limitations for the assessment or collection of any Taxes
for which the Company would be liable;
(viii) neither the Company nor any Tax
Affiliate has, and Seller has not on behalf of the Company, entered
into any closing agreement, within the meaning of Section 7121 of the
Code or any analogous provision of applicable state or local Tax law,
which closing agreement could affect any Taxes for which the Company
could be liable after the Closing Date;
(ix) all deficiencies of Taxes other than
Income Taxes asserted or proposed in writing or, to the Knowledge of
the Seller, otherwise asserted or proposed with respect to the
Company or any predecessor of the Company as a result of any audit,
examination, investigation or similar proceeding by any taxing
authority have been paid or adequate provision therefor has been made
on the Financial Statements;
(x) the Company is a member of a U.S.
consolidated return filing group of which Seller is the common
parent; and
(xi) there are no powers of attorney in
effect relating to Taxes of the Company that relate to Taxes for any
Post-Closing Period.
(b) Section 4.14(b) of the Seller Disclosure
Letter sets forth a list of states, territories and other jurisdictions
(whether foreign or domestic) in which the Company has filed Income,
franchise, sales and use and property (real, personal and intangible) Tax
Returns for taxable periods ending after March 31, 1991; and except as set
forth thereon, no taxing authority in a jurisdiction where the Company does
not file Tax Returns has made a claim or assertion in writing that the Company
is subject to Tax by such jurisdiction.
Page 22
(c) Seller has provided to Purchaser all audit
reports relating to each adjustment, if any, to Taxes of the Company of
$25,000 or more made by any taxing authority with respect to any taxable
period ended after March 31, 1991.
4.15 Affiliated Party Transactions. Except as set forth in
Section 4.15 of the Seller Disclosure Letter, no contracts or agreements in
which the amount involved either alone or together with all similar items
exceeds $100,000 are in effect as of the date hereof, or have been in effect
at any time since December 31, 1993, between the Company, on the one hand, and
Seller or its Affiliates or any other Affiliates of the Company, on the other
hand (such contracts or agreements, "Affiliate Transactions").
4.16 Environmental Matters. Except as set forth in Section
4.16 of the Seller Disclosure Letter:
(a) the Company has obtained and holds, and is
in compliance with all Environmental Laws and Environmental Permits except as
would not have a Company Material Adverse Effect or materially hinder or
impair the business and operations of the Company as presently conducted;
(b) no Current Site is a treatment, storage or
disposal facility, as defined in and regulated under the Resource Conservation
and Recovery Act, 42 U.S.C. Section 6901 et seq., is or, to Seller's Knowledge,
ever was listed or is proposed for listing on the National Priorities List
pursuant to the Comprehensive Environmental Response, Compensation and Liability
Act, 42 U.S.C. Section 9601 et seq., or on any similar state list of sites
requiring investigation or cleanup;
(c) the Company has not received any notice or
entered into any written agreement with respect to any Current Site from or
with any Governmental Entity or Person that remains pending or outstanding
alleging that the Company is not in compliance with any Environmental Law
except as would not have a Company Material Adverse Effect or materially
hinder or impair the business and operations of the Company as presently
conducted;
(d) there has been no Release of a Hazardous
Substance at, from, in, to, on or under any Current Site or at any other
property to which it is alleged the Company is liable, and no Hazardous
Substances are present in, on, about or, to Seller's Knowledge, migrating to
or from any Current Site that could reasonably be expected to give rise to an
Environmental Claim against the Company except as would not have a Company
Material Adverse Effect or materially hinder
Page 23
or impair the business and operations of the Company as presently conducted;
(e) there are no pending or outstanding corrective
actions requested, required or being conducted by any Governmental Entity for
the investigation, remediation or cleanup of any Current Site, and there have
been no such corrective actions, whether still pending or otherwise, that
would have a Company Material Adverse Effect or materially hinder or impair
the business and operations of the Company as presently conducted;
(f) there are no outstanding past or pending, or
to Seller's Knowledge threatened Environmental Claims against the Company, and
the Seller is not aware of any facts or circumstances relating to any Current
Site that could reasonably be expected to form the basis for any Environmental
Claim against the Company except as would not have a Company Material Adverse
Effect or materially hinder or impair the business and operations of the
Company as presently conducted;
(g) the Company has not transported or arranged
for the treatment, storage, handling, disposal, or transportation of any
Hazardous Substance to any off-Site location from any Current Site that could
reasonably be expected to result in an Environmental Claim against the Company
except as would not have a Company Material Adverse Effect or materially
hinder or impair the business and operations of the Company as presently
conducted;
(h) to Seller's Knowledge, there are no (i)
underground storage tanks, active or abandoned, (ii) polychlorinated biphenyl
containing equipment, or (iii) asbestos containing material at any Current
Site; and
(i) there have been no environmental
investigations, studies, audits, tests, reviews or other analyses (which have
been reduced to writing) conducted by, on behalf of, and which are otherwise
in the possession of the Company or Seller with respect to any Current Site or
any transportation, handling or disposal of any Hazardous Substance which have
not been delivered to or made available to Purchaser prior to execution of
this Agreement.
4.17 No Brokers. Seller has not employed any broker or
finder or incurred any liability for any brokerage or investment banking fees,
commissions, finders' fees or other similar fees in connection with the
transactions contemplated by this Agreement, except for ▇▇▇▇▇ ▇▇▇▇▇▇
Incorporated, whose fees shall be borne solely by Seller.
Page 24
4.18 Receivables, Inventory and Payables. All accounts
receivable, inventory and accounts payable of the Company have arisen, and as
of the Closing Date will have arisen, from bona fide transactions in the
ordinary course of business consistent with past practice.
4.19 Letters of Credit. Except as set forth in Section 4.19
of the Seller Disclosure Letter, the Company has no outstanding letters of
credit (whether documentary, standby or otherwise), or any obligation or
responsibility in respect of an outstanding letter of credit (whether
documentary, standby or otherwise) of any other Person, or any obligation in
respect of any account party agreement or other similar financial arrangement
with respect to any such letter of credit, or any obligation to cause any
letter of credit to be issued. Seller has heretofore delivered to Purchaser
true, correct and complete copies of each letter of credit listed or described
in Schedule 4.19 of the Seller Disclosure Letter, and all underlying or
related documentation.
4.20 Entire Business. Except as set forth in Section 4.20
of the Seller Disclosure Letter and for computer software programs owned,
licensed or leased by Seller and to be used by Seller in providing services to
the Company pursuant to the Transitional Services Agreement, the assets,
properties and rights owned, leased or licensed by the Company, or used in
connection with the business or operations of the Company, and that will be
owned, leased or licensed by the Company as of the Closing Date, constitute
substantially all of the properties and assets necessary to the Company in
connection with the operation and conduct by the Company of its business as
now operated and conducted.
4.21 Unclaimed Funds. Except as disclosed in Section 4.21
of the Seller Disclosure Letter, there are no liabilities or obligations with
respect to any unclaimed funds or other property of any kind that at any time
in the past have been turned over by the Company to Seller or any other Person
that are subject to any recovery by any state or other Governmental Entity or
any other Person (including, without limitation, the owner or purported owner
of such funds or other property) pursuant to any escheat or other law.
4.22 Pending Transactions. Except as set forth in Section
4.22 of the Seller Disclosure Letter, as of the date hereof, there is no
contract, agreement or, to the Knowledge of Seller, outstanding proposal with
any customer or vendor pursuant to which the Company is or would be required
to advance $100,000 or more to such customer or vendor. To the Knowledge of
the Seller and as of the date hereof, there are no outstanding proposals to
current or prospective new
Page 25
customers regarding the establishment of a new business relationship that
would provide any pricing, discount, rebate or other term unusual in amount or
percentage and that would be detrimental or adverse to the business or
operations of the Company.
4.23 Insurance. Section 4.23 of the Seller Disclosure
Letter sets forth a summary of the insurance policies (including the carrier,
the expiration date, the amounts and lines of coverage) currently maintained
by Seller, including, without limitation, any umbrella or excess liabilities
policies, which relate to, or in any way provide coverage for, the Company,
its business or operations or for which the Company is an insured or which
would provide coverage to the Company had the Company been included among
Seller's Subsidiaries entitled to coverage under the applicable policy, but
excluding from the foregoing any insurance policies providing coverage for
acts or omissions of directors and officers of Seller or the Company in their
capacities as such (such policies, together with all such policies maintained
by Seller during the past three (3) years, collectively, the "McKesson
Insurance Policies"). All McKesson Insurance Policies not summarized in
Section 4.23 of the Seller Disclosure Letter contained substantially the same
limits of liability and coverage as the corresponding policy summarized in
said Section 4.23. Seller has heretofore delivered to Purchaser true, correct
and complete copies of the McKesson Insurance Policies summarized in Section
4.23 of the Seller Disclosure Letter.
V
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Seller as follows:
5.1 Organization. Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of Delaware and has all
requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as it is now being conducted except
where failure to be so existing and in good standing or to have such power and
authority would not in the aggregate have a Purchaser Material Adverse Effect.
Purchaser is duly qualified or licensed to do business as a foreign
corporation and is in good standing in each jurisdiction in which the nature
of the business conducted by it makes such qualification or licensing
necessary, except where the failure to be so duly qualified, licensed and in
good standing, to have such power and authority or to be so
Page 26
qualified or licensed would not have a Purchaser Material Adverse Effect.
Purchaser has heretofore delivered to Seller true, correct and complete copies
of its Certificate of Incorporation and Bylaws as currently in effect.
5.2 Authorization; Validity of Agreement. Purchaser has the
requisite corporate power and authority to execute, deliver and perform this
Agreement and to consummate the transactions contemplated hereby. The
execution, delivery and performance by Purchaser of this Agreement and the
consummation of the transactions contemplated hereby have been duly and
validly authorized by the Board of Directors of Purchaser, and no other
corporate proceedings on the part of Purchaser are necessary to authorize the
execution, delivery and performance of this Agreement by Purchaser and the
consummation of the transactions contemplated hereby. This Agreement has been
duly executed and delivered by Purchaser and, assuming due authorization,
execution and delivery of this Agreement by Seller, is a valid and binding
obligation of Purchaser enforceable against Purchaser in accordance with its
terms, except as such enforceability may be subject to or limited by
applicable bankruptcy, insolvency, reorganization, or other similar laws, now
or hereafter in effect, affecting the enforcement of creditors' rights
generally, except that the availability of equitable remedies, including
specific performance, may be subject to the discretion of the court before
which any proceeding therefor may be brought.
5.3 No Violations; Consents and Approvals.
(a) The execution, delivery and performance of
this Agreement by Purchaser do not, and the consummation by Purchaser of the
transactions contemplated hereby will not, (i) violate any provision of the
certificate of incorporation or Bylaws of Purchaser, (ii) result in a
violation or breach of, or constitute (with or without due notice or lapse of
time or both) a default (or give rise to any right of termination,
cancellation or acceleration) under, any of the terms, conditions or
provisions of any material note, bond, mortgage, indenture, guarantee, other
evidence of indebtedness, license, contract, agreement or other instrument to
which Purchaser is a party or by which the Purchaser or any of its properties
or assets may be bound or otherwise subject or (iii) violate any order, writ,
judgment, injunction, decree, law, statute, rule or regulation applicable to
Purchaser, or any of its properties or assets; except in the case of clauses
(ii) and (iii) for violations, breaches or defaults which (A) would not have a
Purchaser Material Adverse Effect, or (B) would not materially impair, hinder
or adversely affect the ability of Purchaser to perform any of its obligations
under or as
Page 27
contemplated by this Agreement or to consummate the transactions contemplated
hereby.
(b) No filing or registration with, notification
to, or authorization, consent or approval of, any Governmental Entity is
required in connection with the execution, delivery and performance of this
Agreement by Purchaser or the consummation by Purchaser of the transactions
contemplated hereby, except (i) filings with the FTC and with the DOJ pursuant
to the HSR Act, and (ii) such other consents, approvals, orders,
authorizations, notifications, registrations, declarations and filings the
failure of which to be obtained or made would not have a Purchaser Material
Adverse Effect, and do not materially impair, hinder or adversely affect the
ability of Purchaser to perform any of its obligations under or as
contemplated by this Agreement or to consummate the transactions contemplated
hereby.
5.4 Sufficient Funds. Purchaser has sufficient funds
available, in cash or pursuant to existing credit agreements or binding
commitments in effect on the date of this Agreement, to purchase all the
Shares for the Purchase Price set forth in Section 2.2 hereof and to perform
all of its obligations hereunder.
5.5 Litigation; Compliance with Law. There is no action,
suit or proceeding pending or, to the best knowledge of Purchaser, any
investigation pending or, to the best knowledge of Purchaser, any action, suit
or proceeding threatened, which in any way involves or affects Purchaser, by
or before any court, Governmental Entity or arbitration panel or any other
Person that would have a Purchaser Material Adverse Effect. The business and
operations of Purchaser are not being conducted in violation of any applicable
law, ordinance, rule, regulation, decree or order of any court or Governmental
Entity, except for violations that, individually or in the aggregate, would
not have a Purchaser Material Adverse Effect.
5.6 No Brokers. Purchaser has not employed any broker or
finder or incurred any liability for any brokerage or investment banking fees,
commissions, or finders' fees or other similar fees in connection with the
transactions contemplated by this Agreement.
5.7 Investigation by Purchaser. Purchaser has conducted a
review and analysis of the business, assets, condition and operations of the
Company and acknowledges that Seller has provided Purchaser access to certain
of the properties, premises and records of the Company for this purpose;
provided, however, this Section 5.7 shall not limit,
Page 28
restrict, modify or otherwise have any effect on any of the rights or remedies
of Purchaser under this Agreement or the Transitional Services Agreement.
5.8 Prior Seller Representations; No Personal Liability.
(a) Purchaser acknowledges that none of Seller,
its Subsidiaries or any of their respective directors, officers, employees,
affiliates, agents or representatives makes any representation or warranty,
either express or implied, as to the accuracy or completeness of any of the
information provided or made available to Purchaser or its agents or
representatives prior to the execution of this Agreement and the delivery of
the Seller Disclosure Letter which is being made concurrently with the
execution and delivery of this Agreement, except as to such documents and
agreements specifically referred to in this Agreement as being delivered (as
to which Seller represents and warrants the accuracy and completeness thereof)
or made available by Seller to Purchaser prior to the date hereof.
(b) Purchaser agrees, to the fullest extent
permitted by applicable law, that none of Seller, its Subsidiaries or any of
their respective directors, officers, employees, affiliates, controlling
persons, agents or representatives shall have any liability or responsibility
whatsoever to Purchaser, its directors, officers, employees, affiliates,
controlling persons, agents or representatives on any basis (including,
without limitation, in contract or tort, under federal or state securities
laws or otherwise) based upon any information provided or made available, or
statements made, to Purchaser or its directors, officers, employees,
affiliates, controlling persons, agents or representatives (or any omissions
therefrom) in connection with the transactions contemplated hereby, except
(solely with respect to Seller) to the extent expressly set forth in this
Agreement, the Seller Disclosure Letter or the Transitional Services
Agreement.
5.9 Investment Intent. The Shares will not be taken by
Purchaser with a view to the public distribution thereof, and will not be
transferred, except in a transaction registered or exempt from registration
under the Securities Act.
Page 29
VI
COVENANTS
VI.1 Conduct of the Business by the Company Pending the
Closing. During the period from the date hereof to the Closing, unless
Purchaser shall otherwise agree in writing, except as required by applicable
law, or as otherwise expressly provided for by this Agreement, Seller shall
cause the Company to conduct its businesses in the ordinary course, consistent
with past practice, and in such a manner that would not have a Company
Material Adverse Effect. Without limiting the generality of and in addition to
the foregoing, and except as set forth in the Seller Disclosure Letter hereto
or as otherwise provided in this Agreement, prior to the Closing, Seller will
cause the Company not to, without the prior written consent of Purchaser (in
the case of items (f), (m), (n) and (o) below, such consent not to be
unreasonably withheld or delayed):
(a) amend its certificate of incorporation or
bylaws;
(b) authorize for issuance, issue, sell, deliver
or agree or commit to issue, sell or deliver (whether through the issuance or
granting of options, warrants, commitments, subscriptions, rights to purchase
or otherwise) any stock of any class or any other securities;
(c) split, combine or reclassify any shares of its
capital stock, declare, set aside or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in respect of
its capital stock or redeem or otherwise acquire any of its securities;
(d) (i) incur or assume any indebtedness other than
trade payables incurred in the ordinary course of business; (ii) assume,
guarantee, endorse or otherwise become liable or responsible (whether
directly, contingently or otherwise) for any material obligations of any other
Person; or (iii) make any loans, advances or capital contributions to, or
investments in, any other Person (other than customary loans or advances to
employees in accordance with past practices);
(e) enter into, adopt or amend any bonus, profit
sharing, compensation, severance, termination, stock option, stock
appreciation right, restricted stock, performance unit, pension, retirement,
deferred compensation, employment, severance or other employee benefit
agreements, trusts, plans, funds or other arrangements of or for the benefit
or welfare of any Company Employee (as such term is
Page 30
hereinafter defined), or (except for normal increases in the ordinary course
of business that are consistent with past practices) increase in any manner
the compensation or fringe benefits of any Company Employee or pay any benefit
not required by any existing plan and arrangement (including, without
limitation, the granting of stock options, stock appreciation rights, shares
of restricted stock or performance units);
(f) acquire, sell, lease, transfer or dispose of
any of its properties or assets, except in the ordinary course of business and
consistent with past practice, or any properties or assets that are material,
individually or in the aggregate, to the Company's business or operations or
enter into any Material Contract or any commitment that would result in a
Material Contract or enter into any Affiliate Transaction other than in the
ordinary course of business and consistent with past practice;
(g) except as may be required by law, take any
action to terminate or materially amend any of its employee benefit plans with
respect to or for the benefit of Company Employees;
(h) modify any policy or procedure with respect to
credit to customers or collection of receivables or make any proposal with
respect thereto (provided that Purchaser's consent with respect to any
proposal shall not be unreasonably withheld or delayed) to any prospective
customer;
(i) pay, discharge or satisfy before it is due any
claim or liability of the Company, or fail to pay any such item in a timely
manner, given the Company's prior practices;
(j) cancel any debts or waive any claims or rights
of substantial value;
(k) except to the extent required by applicable
law, change any accounting principle or method or make any election for
foreign, federal, state or local income Tax purposes;
(l) take or suffer any action that would result in
the creation, or consent to the imposition, of any Lien on any of the
properties or assets of the Company;
(m) make any capital expenditure or commitment for
additions to property, plant, equipment or other capital assets in excess of
$50,000;
Page 31
(n) except in the ordinary course of the Company's
business consistent with past practice, amend, waive, surrender or terminate or
agree to the amendment, waiver, surrender or termination of any Material
Contract, Material Lease or Approval;
(o) except in the ordinary course of the Company's
business consistent with past practice, exercise any right or option under any
Lease or extend or renew any Material Contract or Material Lease; or
(p) enter into any contract, agreement, commitment
or arrangement to do, or take, or agree in writing or otherwise to take or
consent to, any of the foregoing actions.
6.2 Access to Information.
(a) Between the date of this Agreement and the
Closing, during normal business hours, Seller will give Purchaser and its
authorized representatives reasonable access to all offices and other facilities
of the Company and to all books and records of the Company and of Seller, with
respect to the Company, and the Company and Seller, as applicable, will permit
Purchaser to make such inspections and to make copies of such books and records
as it may reasonably require and will cause its officers and the Company and its
officers to furnish Purchaser with such financial and operating data and other
information as Purchaser may from time to time reasonably request. Purchaser and
its authorized representatives will conduct all such inspections in a manner
which will minimize any disruptions of the business and operations of the
Company.
(b) Purchaser and Seller agree that the provisions
of the confidentiality agreement between Seller and Purchaser, dated November
1, 1996 (the "Confidentiality Agreement") shall remain binding and in full
force and effect until the Closing, that the information contained herein, in
the Seller Disclosure Letter and provided to Purchaser or its authorized
representatives pursuant hereto shall be subject to the Confidentiality
Agreement as "Information" (as defined therein) until the Closing and that,
for that purpose and to that extent, the terms of the Confidentiality
Agreement are incorporated herein by reference.
6.3 Best Efforts. Subject to the terms and conditions
herein provided, each of the parties hereto agrees to use its reasonable best
efforts to take, or cause to be taken, all action, and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
Page 32
regulations to consummate and make effective the transactions contemplated by
this Agreement.
6.4 Consents. Seller and Purchaser shall cooperate, and use
their respective best efforts, in as timely a manner as is reasonably
practicable, to make all filings with, and obtain all licenses, permits,
consents, approvals, authorizations, qualifications and orders from, all
Governmental Entities and other Persons necessary or required to be obtained
for Purchaser and Seller, as applicable, to consummate the transactions
contemplated by this Agreement (collectively, the "Consents"). Each of the
parties hereto will furnish to the other party such necessary information and
reasonable assistance as such other persons may reasonably request in
connection with the foregoing and will provide the other party with (i) copies
all filings made by such party with any Governmental Entity or other Person or
any other information supplied by such party in connection with this Agreement
and the transactions contemplated hereby and (ii) all consents obtained from
any party to any Contract or any Material Lease and any Approval with respect
to any Material Leased Real Property and the Owned Real Property.
6.5 HSR Filings.
(a) In addition to and without limiting the
agreements of the parties contained in Section 6.4, hereof, Seller and
Purchaser will (i) take promptly all actions necessary to make the filings
required of them or any of their Affiliates under the HSR Act, (ii) comply at
the earliest practicable date with any request for additional information or
documentary material received by Seller or Purchaser, as applicable, or any of
their Affiliates from the FTC or DOJ pursuant to the HSR Act,(iii) cooperate
with each other in connection with any filing under the HSR Act and in
connection with resolving any investigation or other inquiry concerning the
transactions contemplated by this Agreement commenced by either the FTC or DOJ
or states attorneys general and (iv) use all commercially reasonable efforts
to resolve such objections, if any, as may be asserted with respect to the
transactions contemplated by this Agreement under any Antitrust Law.
(b) Each of Seller and Purchaser shall promptly
inform the other party of any material communication received by such party
from the FTC, DOJ or any other Governmental Entity regarding any of the
transactions contemplated hereby, and of any understandings, undertakings or
agreements (oral or written) such party proposes to make or enter into with
the FTC, DOJ or any other Governmental Entity in connection with the
transactions contemplated hereby.
Page 33
6.6 Public Announcements. Purchaser and Seller will consult
with each other and obtain the other's consent, which consent shall not be
unreasonably withheld or delayed, before issuing any press release or
otherwise making any public statements with respect to the transactions
contemplated hereby and shall not issue any such press release or make any
such public statement prior to such consultation and obtaining such consent,
except if the issuance of any such press release or the making of any such
public statement prior to such consultation and obtaining such consent is
required by applicable law or any securities exchange listing agreement to
which Seller is a party.
6.7 Employee Agreements. Purchaser agrees to cause the
Company, to honor and be bound by the terms of the employment agreements (the
"Employment Agreements") and severance agreements (the "Severance Agreements")
with officers of the Company listed on Section 6.7 of the Seller Disclosure
Letter. Seller has heretofore delivered to Purchaser true, correct and
complete copies of such Employment Agreements and Severance Agreements.
6.8 Employee Benefits.
(a) For a period of eighteen (18) months
immediately following the Closing, Purchaser shall, or shall cause the Company
to, continue to maintain, for the benefit of employees and officers of the
Company, employee benefit plans (as defined in section 3(3) of ERISA) which
are comparable in the aggregate to those provided to them under the active
employee benefit plans provided by the Company or Seller for the benefit of
employees of the Company immediately prior to the Closing, other than plans or
parts of plans providing for contributions in Seller, Purchaser or Company
stock, ESOPs or other Seller, Purchaser or Company stock or equity related
plans. Anything to the contrary contained herein notwithstanding, Purchaser
shall cause the Company to assume, to indemnify Seller, and to hold Seller
harmless from and against, any and all obligations and liabilities reflected
on the Closing Date Balance (to the extent required to be so reflected by the
Accounting Principles and Procedures) under the terms of the Mass
Merchandisers, Inc. Deferred Compensation Plan, the Mass Merchandisers, Inc.
Employee Supplemental Retirement Plan and the NAPCO Industries Plan, dated
January 1982.
(b) Purchaser or the Company may provide the
benefits referred to in the first sentence of Section 6.8(a) under newly
established plans of Purchaser or the Company or under existing employee
benefit plans that are maintained by Purchaser or the Company prior to the
Closing.
Page 34
(c) Except to the extent specifically provided in
this Agreement, effective as of the Closing Date, each Company Employee (as
such term is hereinafter defined) shall cease to be a participant in each of
the employee benefit plans sponsored or maintained by Seller; provided,
however, that Seller shall, upon the reasonable request of Purchaser, provide
information necessary and appropriate to assist Purchaser in establishing
successor employee benefit plans for the benefit of such Company Employees.
(d) "Company Employees" shall mean the employees
of the Company as of the Closing Date, excluding any such employees receiving
disability benefits (whether long-term or short-term) as of the Closing Date;
provided, however, that with respect to any such employee receiving short-term
disability benefits as of the Closing Date who returns to full-time employment
with the Company prior to the expiration of his or her short-term disability
benefits, Purchaser shall cause the Company to make an appropriate payment, if
necessary, to Seller to reimburse Seller for benefits paid as a result of not
treating such employee as a Company Employee from and after the Closing Date;
provided that any employee of the Company who is on short-term disability as
of the Closing Date and does not return to the employ of the Company shall not
be a Company Employee for purposes hereof.
(e) Purchaser shall cause the Company to assume,
to indemnify Seller, and to hold Seller harmless from and against any and all
obligations and liabilities arising under health, medical, hospitalization,
drug prescription and dental benefit insurance plans with respect to any and
all health, medical, hospitalization, drug prescription and dental benefit
expenses incurred by the Company with respect to claims of Company Employees,
after the Closing Date, including any such expenses arising after the Closing
in connection with injuries or claims first incurred prior to the Closing Date
("Post-Closing Medical Expenses"). To the extent that any Post-Closing Medical
Expenses are paid by Seller or any employee benefit plan of Seller, Seller
shall notify the Company of the payment of such expenses and the Company shall
reimburse Seller for such expenses as soon as is reasonably practicable
following such notification.
(f) For purposes of all employee benefit plans,
programs and arrangements maintained by or contributed to by Purchaser and its
Subsidiaries (including, without limitation, the Company following the
Closing), Purchaser shall, or shall cause its Subsidiaries to, cause each such
plan, program or arrangement to treat the prior service with the Company of
each Company Employee (to the same extent such service is recognized under
analogous plans, programs or
Page 35
arrangements of the Company or Seller prior to the Closing) as service
rendered to Purchaser or its Subsidiaries, as the case may be, for all
purposes including, without limitation, eligibility to participate,
eligibility to receive benefits (including the application of waiting periods
in respect of preexisting conditions or any other waiting periods under the
Company's welfare plans) and vesting thereunder. Company Employees shall also
be given credit for any deductible, copayments or similar amounts paid in
respect of the plan year in which the Closing occurs, to the extent that,
following the Closing, they participate in any other plan for which
deductibles, copayments or similar amounts are required. Purchaser shall not
impose any preexisting condition or waiting period limitation under any
applicable Purchaser plan that is greater than that which would otherwise be
applicable to a Company Employee under an analogous plan prior to the Closing.
(g) Nothing contained in this Section 6.8 shall
confer on any Company Employee or other Person any third party beneficiary
rights or constitute any Company Employee or other Person a third party
beneficiary of any of the terms or provisions hereof.
6.9 Notification of Certain Matters. Seller shall give
prompt notice to Purchaser and Purchaser shall give prompt notice to Seller,
of (i) the occurrence or nonoccurrence of any event the occurrence or
nonoccurrence of which would cause any representation or warranty contained in
this Agreement (including the Seller Disclosure Letter) to be untrue or
inaccurate in any material respect at the Closing, (ii) the occurrence or
nonoccurrence of any event the occurrence or nonoccurrence of which would
cause any representation or warranty contained in this Agreement (including
the Seller Disclosure Letter) to be untrue or inaccurate in any material
respect at the Closing, but for the fact that such representation or warranty
is dated as of the date of this Agreement, and (iii) any material failure of
the Seller or Purchaser, as the case may be, to comply with or satisfy any
covenant, warranty, obligation, condition or agreement to be observed,
complied with or satisfied by it hereunder; provided, however, that the
qualification by the use of the word "material" of the obligation to provide
prompt notice pursuant to the foregoing shall not apply to any representation,
covenant, warranty, obligation, condition or agreement that is itself
qualified by a materiality qualification, including, without limitation, a
Company Material Adverse Effect.
Page 36
6.10 Tax Matters.
(a) With respect to the Company, Seller and
Purchaser shall jointly make the election provided for by Section 338(h)(10)
of the Code and Section 1.338(h)(10)-1 of the Treasury Regulations and any
comparable election under state or local tax law (the "Election"). As soon as
practicable after the Closing, with respect to such Election, Seller and
Purchaser shall mutually prepare a Form 8023-A, with all attachments, and
Seller shall sign such Form 8023-A. Also, Purchaser and Seller shall cooperate
with each other to take all actions necessary and appropriate (including
filing such additional forms, returns, elections, schedules and other
documents as may be required) to effect and preserve such Election in
accordance with the provisions of Section 1.338(h)(10)-1 of the Treasury
Regulations (or any comparable provisions of state or local tax law) or any
successor provisions.
(b) With respect to the Election, Purchaser shall
in good faith determine the modified Aggregate Deemed Sales Price (the "modified
ADSP") and allocate the modified ADSP reasonably among the assets of the Company
and the covenants contained in Section 6.13 pursuant to Treasury Regulation
Section 1.338(h)(10)-1. Purchaser shall provide to Seller a schedule and
supporting material reflecting such allocation. Purchaser agrees that Purchaser
shall consult with Seller in the determination of the purchase price allocation
hereunder. The parties shall take no action inconsistent with, or fail to take
any action necessary for the validity of, the Election, and shall adopt and
utilize the asset values determined from such reasonable allocation for the
purpose of all Tax Returns filed by them, and shall not voluntarily take any
position inconsistent therewith upon examination of any Tax Return, in any
refund claim, in any litigation or otherwise with respect to such Tax Returns.
(c) Seller and Purchaser shall and shall cause
their respective affiliates to provide the requesting party with such
assistance and documents as may be reasonably requested by such party in
connection with (i) the preparation of any Tax Returns of the Company, (ii)
the conduct of any Tax Audit relating to liability for or refunds or
adjustments with respect to Taxes, and (iii) any other Tax-related matter that
is a subject of this Agreement. Such cooperation shall be provided to the
requesting party promptly upon its request. Such cooperation and assistance
shall include, without limitation, providing all information, records and
other documents relating to Taxes with respect to the Pre-Closing Periods and
Straddle Periods, preserving all such information until after the expiration
of any applicable statute of limitations (including extensions), and making
em-
Page 37
ployees available to provide additional information or explanation of any
material provided hereunder or to testify at proceedings relating to such Tax
Audit. Purchaser shall, within 90 days following the Closing Date prepare and
provide to Seller a package of tax information materials (the "Tax Package")
relating to the tax items of the Company for the taxable years ending March
31, 1997, and on the Closing Date, if later, which Tax Package shall, to the
extent permissible under applicable law, be completed in accordance with past
practice, including past practice as to providing the information, schedules,
work papers and other documentation, and as to the method of computation of
separate taxable income or other relevant measures of income. Notwithstanding
the foregoing sentence, the Tax Package for the taxable year ending March 31,
1997 shall be provided to Seller no later than August 31, 1997.
(d) (i) For purposes of this Agreement, (x) the
amount of Taxes attributable to the pre-closing portion of a Straddle
Period shall be determined based on an interim closing of the books as
of the close of the Closing Date, except that the amount of any such
Taxes that are imposed on a periodic basis shall be determined by
reference to the relative number of days in the pre-closing and
post-closing portions of such Straddle Period; and (y) the taxable
year of any partnership or other pass-through entity in which the
Company is partner or other beneficial interest holder shall be
deemed to terminate on the Closing Date.
(ii) Purchaser shall cause the Company to
join, for all Pre-Closing Periods for which the Company is required
or eligible to do so, in all consolidated, combined or unitary
federal, state or local Income Tax or franchise Tax Returns of Seller
(or any Tax Affiliate) for all Pre-Closing Periods ("Seller Tax
Returns"), and shall, in each jurisdiction where this is required or
permissible under applicable law, cause the taxable year of the
Company to terminate as of the Closing Date. Seller shall cause to be
prepared and timely filed all such Seller Tax Returns and shall cause
to be timely paid all Taxes shown to be due on such Seller Tax
Returns.
(iii) Purchaser shall or shall cause the
Company to prepare and timely file all Income Tax Returns of the
Company for all Pre-Closing Periods, other than those Tax Returns
referred to in Section 6.10(d)(ii), which Income Tax Returns have not
been filed as of the Closing Date, and all Income Tax Returns of the
Company relating to a Straddle Period, and shall cause to be timely
paid all Taxes shown to be due on
Page 38
such Tax Returns. No later than ten days prior to the due date for
the filing of each Income Tax Return referred to in this Section
6.10(d)(iii), Seller shall pay to the Company the amount of Taxes
shown as due thereon; provided, however, that in the case of an
Income Tax Return for a Straddle Period, Seller shall only be
required to pay the Company the portion of such Taxes that is
attributable to the pre-closing portion of such Straddle Period
determined in accordance with Section 6.10(d)(i). Seller shall fully
cooperate with Purchaser and the Company and shall provide assistance
to Purchaser and the Company in accordance with past practice in the
preparation of the Income Tax Returns referred to in this Section
6.10(d)(iii).
(iv) Purchaser shall or shall cause the
Company to prepare and timely file all Tax Returns of the Company for
all Pre-Closing Periods and Straddle Periods, other than those Tax
Returns referred to in Section 6.10(d)(ii) and (iii), which Tax
Returns have not been filed as of the Closing Date, and shall cause
to be timely paid all Taxes shown as due thereon. No later than ten
days prior to the due date for the filing of each Tax Return referred
to in this Section 6.10(d)(iv), Seller shall pay to the Company the
excess, if any, of (A) the amount of Taxes shown as due on such Tax
Returns (in the case of a Tax Return for a Straddle Period, the
amount of such Taxes attributable to the pre-closing portion of such
Straddle Period), over (B) the amount, if any, specifically accrued
with respect to such particular Tax on the Closing Date Balance
Sheet.
(v) The Tax Returns referred to in Section
6.10(d)(ii), (iii) and (iv) shall be prepared in a manner consistent
with past practice, unless a contrary treatment is required by an
intervening change in applicable law. Seller shall cause a pro forma
federal Income Tax Return for the Company, together with the relevant
workpapers and other information, and a state Income Tax information
statement showing income, deductions and other tax items and the
Company apportionment factor for each appropriate state, to be made
available to Purchaser for its review no later than 20 days prior to
the due date for filing the Seller Tax Returns to which such pro
forma Income Tax Returns and information statements relate (taking
into account proper extensions). Purchaser shall cause any Tax Return
that is required to be filed by Purchaser or the Company under
Section 6.10(d)(iii) or (iv), together with all relevant workpapers
and other information, to be made available to Seller for its review
and approval
Page 39
no later than 20 days prior to the due date for the filing of such
Tax Return (taking into account proper extensions), such approval not
to be required where Purchaser and the Company have prepared such Tax
Returns in accordance with past practice (including without
limitation, as to accounting methods and methods of measuring sales,
income, property values or other relevant items), or a contrary
treatment is required by an intervening change in the applicable law.
(e) (i) Without duplication, Seller shall
indemnify, defend and hold the Purchaser Indemnified Persons harmless
from and against any and all Damages which may be suffered or
incurred by them in respect of or relating to, directly or indirectly
(i) Taxes of or attributable to the Company with respect to all
Pre-Closing Periods, (ii) Taxes of or attributable to the Company
with respect to the pre-closing portion of any Straddle Period, (iii)
Taxes payable by the Company with respect to any Pre-Closing Period
or Straddle Period by reason of the Company being severally liable
for the Tax of any Tax Affiliate pursuant to Treasury Regulation
Section 1.1502-6 or any analogous state or local Tax law; (iv) any
amount required to be paid by the Company, under an indemnification
agreement or on a transferee liability theory, in respect of any
Taxes of any Person, which indemnification agreement or application
of transferee liability theory relates to an acquisition, disposition
or similar transaction occurring on or prior to the Closing Date; (v)
to the extent not included in the other clauses of this Section
6.10(e), Taxes payable by reason of the Election; (vi) to the extent
not included in the other clauses of this Section 6.10(e), any other
Taxes imposed upon or payable by the Company by reason of or
attributable to the breach of any representation, warranty or
covenant under this Agreement; and (vii) to the extent not included
in other clauses of Section 6.10(e), Taxes payable by reason of any
transactions contemplated by Sections 6.15 and 6.17 of this Agreement
(relating to the retention of McKesson Rights and McKesson
Obligations); provided, however, that in the case of Taxes other than
Income Taxes, Seller shall be required to indemnify Purchaser
pursuant to this Section 6.10(e) only if and to the extent that (A)
Purchaser's and the Company's total aggregate costs or payments
attributable to Taxes other than Income Taxes (including without
limitation, all amounts shown as due on the Tax Returns filed
pursuant to the first sentence of Section 6.10(d)(iv)) plus the total
aggregate amount of Damages attributable to or resulting from such
Taxes exceed (B) the sum of (1) the total aggregate amount of Taxes
other than Income Taxes
Page 40
accrued on the Closing Date Balance Sheet plus (2) the total
aggregate amount previously reimbursed to Purchaser or the Company by
Seller for Taxes other than Income Taxes pursuant to the last
sentence of Section 6.10(d)(iv) and this Section 6.10(e).
(ii) Without duplication, Purchaser shall
indemnify, defend and hold the Seller Indemnified Persons harmless
from and against any and all Damages which may be suffered or
incurred by them in respect of or relating to, directly or indirectly
(i) Taxes of or attributable to the Company with respect to all
post-closing periods, (ii) Taxes of or attributable to the Company
with respect to the post-closing portion of any Straddle Period, and
(iii) any liability for Taxes attributable to breach by Purchaser of
any covenant relating to Taxes under this Agreement.
(iii) Any payment required to be made
pursuant to this Section 6.10(e) shall be made within ten days after
written request therefor.
(f) (i) Each of Seller and Purchaser shall notify
the other party in writing within 30 days of receipt of written
notice of any pending or threatened examination, audit or other
administrative or judicial proceeding (a "Tax Audit") that could
reasonably be expected to result in an indemnification obligation
under this Agreement of such other party pursuant to this Agreement.
If the recipient of such notice of a Tax Audit fails to provide such
notice to the other party it shall not be entitled to indemnification
for any Taxes arising in connection with such Tax Audit, but only to
the extent, if any, that such failure or delay shall have adversely
affected the indemnifying party's ability to defend against, settle,
or satisfy any action, suit, or proceeding against it, or any damage,
loss, claim, or demand for which the indemnified party is entitled to
indemnification hereunder.
(ii) If a Tax Audit relates to any period
ending on or prior to the Closing Date or to any Taxes for which the
Seller is liable in full hereunder, Seller shall at its expense
control the defense and settlement of such Tax Audit. If such Tax
Audit relates to any period beginning after the Closing Date or to
any Taxes for which Purchaser is liable in full hereunder, Purchaser
shall at its expense control the defense and settlement of such Tax
Audit. The party not in control of the defense shall have the right
to observe the conduct of any Tax Audit at its own expense, including
through its own counsel and other professional experts.
Page 41
Purchaser and Seller shall jointly represent the Company in any Tax
Audit relating to a Straddle Period, and fees and expenses related to
such representation shall be paid equally by Purchaser and Seller.
(iii) Notwithstanding Section 6.10(f)(ii),
to the extent that an issue raised in any Tax Audit controlled by one
party or jointly controlled could materially affect the liability for
Taxes of the other party, the controlling party shall not, and
neither party in the case of joint control shall, enter into a final
settlement without the consent of the other, which consent shall not
be unreasonably withheld. Where a party withholds its consent to any
final settlement, that party may continue or initiate further
proceedings, at its own expense, and the liability of the party that
wished to settle (as between the consenting and the non-consenting
party) shall not exceed the liability that would have resulted from
the proposed final settlement (including interest, additions to tax
and penalties that have accrued at that time), and the non-consenting
party shall indemnify the consenting party for any such excess.
(g) In the event that a dispute arises between
Seller and Purchaser as to the amount of Taxes or indemnification or any other
matter relating to Taxes, the parties shall attempt in good faith to resolve
such dispute, and any agreed upon amount shall be paid to the appropriate
party. If such dispute is not resolved 15 days thereafter, the parties shall
submit the dispute to the national office of the certified accounting firm of
Deloitte & Touche LLP (the "Settlement Accountants") for resolution, which
resolution shall be final, conclusive and binding on the parties.
Notwithstanding anything in this Agreement to the contrary, the fees and
expenses of the Settlement Accountants in resolving the dispute shall be borne
equally by Seller and Purchaser. Any payment required to be made as the result
of the resolution of the dispute by the Settlement Accountants shall be made
within ten days after such resolution, together with any interest determined
by the Settlement Accountants to be appropriate.
(h) Any Tax sharing agreement or contract between
the Company and any other Person shall be terminated on, and effective as of,
the Closing Date, and no Person shall have any rights or obligations under
such Tax sharing agreement or contract after such termination, and no such
rights or obligations shall be included in the Closing Date Balance Sheet.
Page 42
(i) Purchaser shall (A) cause to be prepared and
timely filed all Tax Returns relating to excise, sales, use, real or personal
property transfer Taxes, recording fees and charges and all other similar
charges and transfer Taxes imposed by any taxing authority upon or by reason
of the transactions to be effected pursuant to this Agreement (the "Transfer
Taxes"), and (B) cause all such Transfer Taxes to be duly and timely paid in
full. The Transfer Taxes shall be borne equally by Seller and Purchaser.
Purchaser shall cause each such Transfer Tax Return, together with all
relevant work papers and other information, to be made available to Seller for
its review and approval no later than 20 days prior to the due date for the
filing of such Transfer Tax Return (taking into account proper extensions) to
the extent practicable. Seller shall pay to Purchaser its share of the
Transfer Taxes due and payable not later than 10 days prior to the due date
for payment of such Transfer Taxes (taking into account proper extensions) to
the extent practicable.
(j) Subject to the last sentence of this
Section 6.10(j), any refunds or credits of the Taxes of the Company (but only
to the extent of the amount in excess of any refunds or credits accrued on the
Closing Date Balance Sheet) plus any interest received with respect thereto
from the applicable taxing authorities for any Pre-Closing Period (including
without limitation, refunds or credits arising from amended returns filed
after the Closing Date) shall be for the account of Seller and, if received by
Purchaser or the Company, shall be paid by Purchaser or the Company to Seller
within ten days after Purchaser receives such refund or after the relevant Tax
Return is filed in which the credit is applied against Purchaser or the
Company's liability for Taxes for a period which begins after the Closing
Date, net of any Taxes Purchaser or the Company is required to pay on account
of the receipt of such refund or credit (including a reasonable estimate of
resulting future Tax costs.) Seller shall not apply for any refund that will
have a material and adverse effect on any post-closing period Tax Return
without the consent of Purchaser. Any refunds or credits of Taxes of the
Company for any Straddle Period shall be apportioned between Seller and
Purchaser in the same manner as the liability for such Taxes is apportioned
pursuant to Section 6.10(d)(i). Notwithstanding any other provision of this
Section 6.10(j), with respect to each Tax Return of the Company other than a
consolidated, combined or unitary federal, state, or local franchise or Income
Tax Return, a refund or credit of Tax shall be for the account of (or
apportioned to) Seller only if such refund or credit by itself exceeds
$25,000.
(k) Notwithstanding anything to the contrary in
this Agreement, the representations and warranties
Page 43
contained in Section 4.14 and the covenants of the parties contained in this
Section 6.10 shall survive the Closing until the date 90 days after the
expiration of the applicable statute of limitations including extensions.
6.11 Transfer of Intellectual Property. At or prior to the
Closing, Seller shall cause all Intellectual Property, and any registrations
thereof, owned by or held in the name of Seller or any of its Affiliates, to
be transferred and assigned to the Company pursuant to instruments of
assignment and transfer reasonably acceptable to Purchaser (the "IP Transfer
Instruments").
6.12 Transitional Services Agreement. At the Closing,
Seller shall enter into the transitional services agreement with the Company
in the form of Exhibit 6.12 attached hereto (the "Transitional Services
Agreement").
6.13 Seller Confidentiality and Non-Solicitation Covenants.
(a) Seller agrees that for a period of two (2)
years following the Closing Date (the "Restrictive Period") Seller will keep
secret and retain in confidence, and will not publish or disclose to any third
Person, any Confidential Information. In addition, from the date hereof
through the end of the Restrictive Period, Seller will keep secret and retain
in confidence, and will not disclose, any Confidential Information obtained by
Seller after the date hereof to any of Seller's sales or marketing personnel
or other personnel performing similar functions. Notwithstanding the
foregoing, Seller may disclose Confidential Information (A) to its agents and
other representatives who need to know such Confidential Information to
perform their duties on behalf of Seller; provided, however, that Seller shall
require such agents and representatives to maintain such Confidential
Information in confidence in accordance with the provisions of this Section
6.13(a) and Seller shall be responsible for any breach of such obligation and
(B) (i) as required by applicable law, judicial or regulatory subpoena or any
securities exchange listing agreement to which Seller is a party; (ii) to the
extent such Confidential Information has been disclosed by a third party
(through no fault of Seller); or (iii) to the extent such Confidential
Information is or becomes otherwise publicly available (through no fault of
Seller).
(b) For purposes of this Agreement, Confidential
Information shall mean confidential information relating to the Company's
business, including, without limitation, the Company's research and
development plans or projects, data and reports; computer material such as
programs, instructions
Page 44
and printouts; formulas; product testing information; business improvements;
processes, marketing and selling; strategic business plans; budgets;
unpublished financial statements; licenses, pricing, pricing strategy and cost
data; information regarding the compensation of Company employees; the
identities of the clients and customers; the identities of contact persons at
customers; the particular preferences, likes, dislikes and needs of customers
and contact persons with respect to products, pricing, sales calls, timing,
sales terms, service plans, methods, practices, strategies, forecasts,
know-how, and other marketing techniques; the identities of key accounts, the
identities of the suppliers and contractors, and all information about those
supplier and contractor relationships such as contact person(s), pricing and
other terms. Notwithstanding the foregoing the term "Confidential Information"
shall not include information that Seller has in its possession as a result of
the operation or conduct of Seller's business (other than as a result of
Seller's ownership of the Company), including, without limitation, as a result
of joint sales or marketing efforts by Seller and the Company.
(c) During the Restrictive Period, Seller shall
not, and shall not permit any Person in which Seller holds any interest giving
Seller effective control (whether by vote, management or otherwise) or any of
their respective directors, officers, employees or agents to, directly or
indirectly, solicit the employment of any employee or consultant of the
Company; provided, however, that the foregoing shall not apply to any general
solicitation by Seller not directed specifically to the Company or the
Company's employees or consultants.
(d) Seller acknowledges and agrees the provisions
of this Section 6.13 are reasonable and necessary for the protection of
Purchaser and the Company and Purchaser and the Company will be irreparably
damaged if such provisions are not specifically enforced, the loss of which
cannot be reasonably or adequately compensated in damages. Accordingly,
Purchaser and the Company shall be entitled to injunctive and other equitable
relief (without requirement of posting of a bond or other security) for the
purpose of restraining any breach or threatened breach of the Seller from
violating these provisions in addition to any other remedy or relief to which
Purchaser or the Company may be entitled under applicable law or otherwise.
6.14 Risk of Loss.
(a) If prior to the Closing any portion of any
Owned Real Property or any portion of any Material Leased
Page 45
Real Property shall be taken (or any public announcement shall be made of an
intent to take) by condemnation, eminent domain or similar means or shall be
damaged or destroyed by fire or other casualty, and as a result thereof, a
Company Material Adverse Effect has or would occur, Purchaser shall have the
right to terminate this Agreement by giving notice to Seller within ten (10)
days following receipt of the notice provided for in Section 6.14(c).
(b) If prior to the Closing any portion of any
Owned Real Property or any portion of any Material Leased Real Property shall
be taken (or any public announcement shall be made of an intent to take) by
condemnation, eminent domain or similar means or shall be damaged or destroyed
by fire or other casualty, and as a result thereof, a Company Material Adverse
Effect would not occur, Seller shall promptly pay to Purchaser all
condemnation proceeds and any amounts paid or payable with respect to any such
event that constitutes an Insurance Risk; provided, however, that Seller shall
not be obligated to make any such payment to Purchaser to the extent, and only
to the extent, that the Closing Date Balance Sheet fully reflects the value of
any such event.
(c) Seller shall give Purchaser prompt written
notice of any such taking, public announcement, damage or destruction.
6.15 Assignment of McKesson Rights. At or prior to the
Closing, the Company shall convey, assign and otherwise transfer to Seller,
all of the Company's right, title and interest in the McKesson Rights.
6.16 Real Estate Matters. Seller agrees to use commercially
reasonable efforts to (i) assist Purchaser in its efforts to obtain title
insurance with respect to the Owned Real Property and Material Leased Real
Property and (ii) obtain an estoppel certificate from each of the lessors of
the Material Leased Real Property; provided, however, that neither Seller nor
the Company shall be required to make any payments or incur any liabilities in
connection with any of the foregoing.
6.17 Performance of McKesson Obligations. After the
Closing, Seller shall timely and fully perform and does hereby fully assume
each of the McKesson Obligations, it being acknowledged and agreed that
Purchaser and the Company shall not have any responsibility, liability or
obligation for or in respect of any of the McKesson Obligations.
6.18 Insurance Matters.
Page 46
(a) To the extent that all or any portion of any
Insurance Risk is covered under an applicable McKesson Insurance Policy, prior
to requesting Seller to satisfy such Insurance Risk pursuant to Section 6.17
of this Agreement, Purchaser shall cooperate with Seller, at Seller's cost and
expense, in making any claim under any applicable McKesson Insurance Policy
pursuant to Section 6.18(b) hereof.
(b) For so long as any claim can be made under any
McKesson Insurance Policy for any Insurance Risk, Seller shall make such claim
(or permit the Company to make such claim) so as to provide the Company with
all of the protections and/or benefits under the McKesson Insurance Policies
for such occurrences.
(c) Nothing in this Section 6.18 shall relieve or
limit Seller of its obligations pursuant to Section 6.17 with respect to any
Insurance Risk.
6.19 Further Assurances.
(a) In connection with the performance of the
McKesson Obligations, upon the request from time to time of Seller after the
Closing and at the sole cost and expense of Seller but without further
consideration, Purchaser shall, and shall cause the Company to, (i) provide
Seller and Seller's representatives and authorized agents with reasonable
access upon reasonable notice during normal business hours to copies of all of
the books and records of the Company relevant to the performance of the
McKesson Obligations, which Purchaser shall retain for such period of time as
indemnification may be available pursuant to Article X, (ii) make such
personnel of the Company reasonably available to meet with Seller and Seller's
representatives and authorized agents at such times and places as may be
reasonably requested by Seller to assist Seller in the defense of any action,
suit, proceeding or investigation pending or threatened in writing against the
Company prior to Closing and (iii) do each and every other thing as may be
reasonably requested by Seller in connection with Seller's performance of the
McKesson Obligations; provided, however, that in connection with the foregoing
(x) any out-of-pocket costs and expenses reasonably incurred by Purchaser or
the Company shall be borne by Seller; (y) the Company shall not be required to
perform in such a manner as is unreasonably disruptive of the Company's
business or operations; and (z) the Company shall not be required to disclose
to Seller or Seller's representatives or agents confidential or proprietary
information unrelated to Seller's performance of the McKesson Obligations or
information protected by attorney-client privilege.
Page 47
(b) Subject to the terms and conditions herein
provided, upon the request from time to time of Purchaser after the Closing,
Seller shall execute and deliver such instruments, certificates and other
documents and take all such other action as Purchaser may reasonably request
in order to consummate and make effective the transactions contemplated by
this Agreement.
VII
CONDITIONS
7.1 Conditions to Seller's Obligations. The obligations of
Seller to consummate the transactions contemplated hereby are subject to the
satisfaction or waiver by Seller (any such waiver to be evidenced in writing),
at or prior to the Closing, of the following conditions:
(a) The representations and warranties of
Purchaser contained in this Agreement shall be true and correct in all
material respects (without reference to any materiality qualifications
contained therein, including, without limitation, reference to any Purchaser
Material Adverse Effect) as of the date made and as of the Closing Date as if
made on and as of the Closing Date (except to the extent that any
representation or warranty is made expressly as of a specific date, in which
case such representation or warranty shall be true and correct as of such
specified date), except if the failure of such representations and warranties
to be true and correct as of any of such dates would not, individually or in
the aggregate, have a Company Material Adverse Effect;
(b) Purchaser shall have performed in all
material respects its obligations under this Agreement required to be
performed by it at or prior to the Closing pursuant to the terms hereof;
(c) Seller shall have received a certificate of
the President, an Executive Vice President, a Senior Vice President or the
Chief Financial Officer of Purchaser as to the satisfaction of the conditions
set forth in Section 7.1(a) and (b) hereof;
(d) Any applicable waiting period applicable to
the consummation of the transactions contemplated hereby under the HSR Act
shall have expired or been terminated;
(e) There shall be no order, decree or
injunction of a court of competent jurisdiction or other
Page 48
governmental entity that prevents the consummation of the transactions
contemplated by this Agreement;
(f) Seller shall have received the opinion of
▇▇▇▇▇▇ ▇▇▇▇▇▇ Flattau & Klimpl, LLP, counsel to Purchaser, substantially in the
form of Exhibit 7.1(f) attached hereto;
(g) Seller shall have received Purchaser's Closing
Documents (as defined below) in form and substance reasonably satisfactory to
Seller and its counsel; and
(h) Seller shall have received the Consents set forth
in Exhibit 7.1(h).
7.2 Conditions to Purchaser's Obligations. The obligations
of Purchaser to consummate the transactions contemplated hereby are subject to
the satisfaction or waiver by Purchaser (any such waiver to be evidenced in
writing), at or prior to the Closing, of the following conditions:
(a) The representations and warranties of Seller
contained in this Agreement shall be true and correct in all material respects
(without reference to any materiality qualifications contained therein,
including, without limitation, reference to any Company Material Adverse
Effect) as of the date made and as of the Closing Date as if made on and as of
the Closing Date (except to the extent that any representation or warranty is
made expressly as of a specific date, in which case such representation or
warranty shall be true and correct as of such specified date), except if the
failure of such representations and warranties to be true and correct as of
any of such dates would not, individually or in the aggregate, have a Company
Material Adverse Effect;
(b) Seller shall have performed in all material
respects each of its obligations under this Agreement required to be performed
by it at or prior to the Closing pursuant to the terms hereof;
(c) Purchaser shall have received a certificate
of the President, a Vice President or the Chief Financial Officer of Seller as
to the satisfaction of the conditions set forth in Section 7.2(a) and (b)
hereof;
(d) Any applicable waiting period applicable to
the consummation of the transactions contemplated hereby under the HSR Act
shall, have expired or been terminated;
(e) There shall be no order, decree or injunction
of a court of competent jurisdiction or other
Page 49
governmental entity that prevents the consummation of the transactions
contemplated by this Agreement;
(f) Purchaser shall have received Seller's Closing
Documents (as defined below) in form and substance reasonably satisfactory to
Purchaser and its counsel;
(g) Purchaser shall have received (i) the opinion
of Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇, counsel to Seller, substantially in
the form of Exhibit 7.2(g)(i) attached hereto and (ii) the opinion of the
General Counsel or an Associate General Counsel of Seller substantially in the
form of Exhibit 7.2(g)(ii) attached hereto;
(h) Seller shall have delivered to Purchaser an
affidavit, in form reasonably satisfactory to Purchaser, described in section
1445(b)(2) of the Code;
(i) No Company Material Adverse Effect shall have
occurred since March 31, 1996; and
(j) Purchaser shall have received all Consents
required to be obtained by Seller in order for Seller to consummate the
transactions contemplated hereby.
VIII
DOCUMENTS TO BE DELIVERED AT THE CLOSING
8.1 Documents to be Delivered by Seller. At the Closing,
Seller shall deliver, or cause to be delivered, to Purchaser the following
("Seller's Closing Documents"):
(a) stock certificates representing the Shares,
duly endorsed in blank or accompanied by stock transfer powers and with all
requisite stock transfer tax stamps attached;
(b) the Transitional Services Agreement duly executed
by Seller and the Company;
(c) the certificate referred to in Section 7.2(c);
(d) the legal opinions referred to in Section 7.2(g);
(e) copies of any Consents referred to in Section 7.2(j);
Page 50
(f) the IP Transfer Instruments referred to in
Section 6.11; and
(g) the affidavit referred to in Section 7.2(h).
8.2 Documents to be Delivered by Purchaser. At the
Closing, Purchaser shall deliver to Seller the following ("Purchaser's Closing
Documents"):
(a) the payment referred to in Section 2.2(b);
(b) the certificate referred to in Section 7.1(c);
(c) the legal opinion referred to in Section 7.1(f); and
(d) copies of any Consents referred to in Section 7.1(h).
IX
TERMINATION
9.1 Termination. Notwithstanding anything herein to the
contrary, this Agreement may be terminated at any time prior to the Closing:
(a) By mutual written consent of Purchaser and
Seller;
(b) By Purchaser, on the one hand, or Seller, on
the other hand, if the Closing shall not have occurred on or before May 31,
1997;
(c) By Purchaser, on the one hand, or Seller, on
the other hand, if any court of competent jurisdiction in the United States or
other United States governmental body shall have issued an order, decree or
ruling or taken any other action restraining, enjoining or otherwise
prohibiting the transactions contemplated hereby and such order, decree,
ruling or other action shall have become final and nonappealable;
(d) By Purchaser, if (i) there has been a material
violation or breach by Seller of any agreement, representation or warranty of
Seller contained in this Agreement (including without limitation, the Seller
Disclosure Letter but without reference to any materiality
Page 51
qualifications contained in this Agreement, including, without limitation,
reference to any Company Material Adverse Effect), which material violation or
breach is not curable or, if curable, is not cured within thirty (30) days
after written notice of such violation or breach is given by Purchaser to
Seller, and such violation or breach has not been waived by Purchaser or (ii)
there has been any Company Material Adverse Effect;
(e) By Seller, if there has been a material
violation or breach by Purchaser of any agreement, representation or warranty
of Purchaser contained in this Agreement (without reference to any materiality
qualifications contained in this Agreement, including, without limitation,
reference to any Purchaser Material Adverse Effect), which material violation
or breach is not curable or, if curable, is not cured within thirty (30) days
after written notice of such violation or breach is given by Seller to
Purchaser and such violation or breach has not been waived by Seller; or
(f) By Purchaser pursuant to the terms of Section
6.14.
9.2 Effect of Termination. In the event of the termination
of this Agreement as provided in Section 9.1, written notice thereof shall
forthwith be given to the other party or parties specifying the Section of
this Agreement pursuant to which such termination is made, and upon any such
permitted termination this Agreement shall forthwith terminate and become null
and void, without liability on the part of Purchaser or Seller except as set
forth in Sections 6.2(b) and 11.1 hereof, which will not be affected by such
termination.
X
INDEMNIFICATION; REMEDIES
10.1 Survival; Right to Indemnification Not Affected by
Knowledge or Waivers.
(a) All representations, warranties, covenants
and obligations of the parties contained in this Agreement and in any document
or instrument executed and delivered in connection herewith shall survive the
Closing (subject to Sections 10.4 and 10.8), regardless of any investigation
made by the parties hereto.
(b) Except as expressly set forth below, the
right to indemnification, payment of Damages or other remedy
Page 52
based on any representation, warranty, covenant or obligation of a party
hereunder shall not be affected by any investigation conducted with respect
to, or any knowledge acquired (or capable of being acquired) at any time,
whether before or after the execution and delivery of this Agreement or the
Closing Date, with respect to the accuracy or inaccuracy of or compliance
with, any such representation, warranty, covenant or obligation. The foregoing
notwithstanding, if the Closing occurs, no claim for indemnification may be
asserted by Purchaser against Seller under Section 10.2(a)(i) for breach of
any representation or warranty if the facts, claims and circumstances giving
rise to such claim were actually known to either ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ or
▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ before the Closing. Except as expressly set forth in
the immediately preceding sentence, the waiver of any condition to a party's
obligation to consummate the transactions contemplated hereunder, where such
condition is based on the accuracy of any representation or warranty, or on
the performance of or compliance with any covenant or obligation, will not
affect the right to indemnification, payment of Damages, or other remedy based
on such representation, warranty, covenant or obligation.
10.2 Indemnification by Seller.
(a) Seller shall indemnify and hold harmless
Purchaser, the Company, and each of their respective representatives,
employees, officers, directors, stockholders, controlling persons and
Affiliates (collectively, the "Purchaser Indemnified Persons") for, and will
pay to the Purchaser Indemnified Persons the amount of, any loss, liability,
claim, damage (including, without limitation, incidental and consequential
damages), expense (including, without limitation, interest, penalties, costs
of investigation and defense and the reasonable fees and expenses of attorneys
and other professional experts) or diminution of value, whether or not
involving a third-party claim (collectively, "Damages"), directly or
indirectly, arising from or in connection with or attributable to:
(i) any representation or warranty made by
Seller in this Agreement (including, without limitation, the Seller
Disclosure Letter) or any of Seller's Closing Documents, that is, or
was at the time made, false or inaccurate, or any breach of, or
misrepresentation with respect to, any such representation or
warranty;
(ii) any breach by Seller of any covenant,
agreement or obligation of Seller contained in this Agreement; and
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(iii) any and all McKesson Obligations.
(b) Anything to the contrary notwithstanding,
none of the Purchaser Indemnified Persons shall be deemed to have suffered or
incurred any Damages to the extent, if any, that such loss or expense was
included as a liability in the computation of the adjustment to the Purchase
Price pursuant to Section 2.3 hereof; provided that nothing shall prejudice
any Purchaser Indemnified Person from pursuing rights pursuant to Section
10.2(a) by reason of having first sought an adjustment to the Purchase Price
pursuant to Section 2.3 hereof.
(c) Purchaser acknowledges and agrees that
after the Closing, except with respect to any breach by Seller of a covenant,
agreement or obligation to be performed or complied with by Seller following
the Closing (including, without limitation, Seller's obligations under Section
6.17), Purchaser's sole and exclusive remedy with respect to any and all
claims relating to the subject matter of this Agreement shall be pursuant to
the indemnification provisions set forth in this Section 10.2. In furtherance
of the foregoing, Purchaser, for itself and on behalf of any Purchaser
Indemnified Person, hereby waives, to the fullest extent permitted under
applicable law, any and all rights, claims and causes of action it may have
against Seller arising under or based upon any federal, state or local
statute, law, ordinance, rule or regulation; provided, however, that such
acknowledgment, agreement and waiver shall (i) be of no force or effect with
respect to any willful misconduct that results in a breach of any
representation, warranty, covenant, agreement or obligation by Seller
(provided, further, that the limitation on damages set forth in Section
10.5(b) shall apply with full force and effect in all circumstances,
including, without limitation, in respect of any claim of willful misconduct
by Seller) and (ii) not in any way limit or restrict the Seller's liability or
obligations under the Transitional Services Agreement.
10.3 Indemnification by Purchaser. Purchaser shall indemnify
and hold harmless Seller, the Company, and each of their respective
representatives, employees, officers, directors, stockholders, controlling
persons and Affiliates (collectively, the "Seller Indemnified Persons") for,
and will pay to the Seller Indemnified Persons the amount of any Damages,
directly or indirectly, arising from, attributable to or in connection with:
(i) any representation or warranty made by
Purchaser in this Agreement or in any of Purchaser's Closing
Documents, that is, or was at the time made, false or inaccurate, or
any breach of, or
Page 54
misrepresentation with respect to, any such representation or
warranty;
(ii) any breach by Purchaser of any
covenant, agreement or obligation of Purchaser contained in this
Agreement; and
(iii) the Leicester, Massachusetts
facility lease guaranty.
10.4 Time Limitations.
(a) If the Closing occurs, Seller shall have no
liability (for indemnification or otherwise) with respect to the matters
described in clauses (i) or (ii) of Section 10.2(a) (other than with respect
to (x) the representations and warranties in Sections 4.2 and 4.16 as provided
below, (y) any covenant, agreement or obligation contained in this Agreement
to be performed by Seller following the Closing, and (z) any willful
misconduct that results in a breach of any representation, warranty, covenant,
agreement or obligation by Seller, as to which the time limitations set forth
herein shall not apply) unless, on or before the date that is the 19-month
anniversary of the Closing Date, Purchaser notifies Seller of a claim
specifying the factual basis of that claim in reasonable detail to the extent
then known by Purchaser. A claim with respect to representations and
warranties in Section 4.2, or with respect to any covenant, agreement or
obligation contained in this Agreement to be performed by Seller following the
Closing or with respect to any of the McKesson Obligations may be made at any
time without any time limitation; a claim with respect to the representations
and warranties in Section 4.16 may be made at any time prior to the date that
is the seventh anniversary of the Closing Date. Any claim relating to a
breach, alleged breach or non-performance of Seller's obligations set forth in
Section 6.17, including, without limitation, Seller's obligations under
Section 10.2(a)(iii), shall not be limited in time for any reason whatsoever,
including, without limitation, by reason of the fact that a breach of one or
more representations and warranties hereunder may have occurred as a result of
the same facts and circumstances.
(b) If the Closing occurs, Purchaser will have no
liability (for indemnification or otherwise) with respect to the matters
described in clauses (i) or (ii) of Section 10.3 (other than with respect to
any covenant, agreement or obligation contained in this Agreement to be
performed by Purchaser following the Closing) unless, on or before the
19-month anniversary of the Closing Date, Seller notifies Purchaser of a claim
specifying the factual basis of that claim in reasonable detail to the extent
then known by
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Seller. A claim with respect to Purchaser's obligations under clause (iii) of
Section 10.3 shall not be limited in time for any reason whatsoever.
10.5 Limitations on Amount; Environmental Damages.
(a) Seller shall have no liability (for
indemnification or otherwise) with respect to the matters described in clauses
(i) or (ii) of Section 10.2(a) (other than the representations and warranties
in Section 4.2 of this Agreement as set forth in the proviso to this sentence)
until the total amount of all Damages with respect to such matters exceeds
$750,000, and then Seller will be responsible only for all such Damages in
excess of $750,000; provided, however, that, anything to the contrary
notwithstanding, Seller shall be responsible from and including the first
dollar of Damages with respect to (w) any matter in Section 10.5(c), (x) any
matter in connection with the representations and warranties in Section 4.2,
(y) any matter resulting from the willful misconduct of Seller and (z) any
matter relating to Section 6.17, including, without limitation, Seller's
obligations under Section 10.2(a)(iii).
(b) Anything to the contrary notwithstanding,
Seller shall have no liability with respect to the matters described in
clauses (i) or (ii) of Section 10.2(a) for and to the extent that the
aggregate amount of all Damages with respect to such matters exceeds
$25,000,000; provided, however, that, anything to the contrary
notwithstanding, Seller shall be responsible for Damages without regard to
such $25,000,000 ceiling with respect to (x) any matter in connection with the
representations and warranties in Section 4.2, and (y) any matter relating to
Section 6.17, including, without limitation, Seller's obligations under
Section 10.2(a)(iii).
(c) (i) Seller shall have no liability (for
indemnification or otherwise) for Damages with respect to the matters
described in Section 4.16, except to the extent, and only to the extent, that
such liabilities constitute a breach of Seller's representations and
warranties set forth in Section 4.16 or relate to or arise from any
Environmental Claim with respect to a Current Site based on an event or
occurrence prior to the Closing (including, without limitation, any Damages
relating to or arising from the full restoration of any of the Company's
property, plant, equipment or other assets that were affected by any
remediation or other action by Seller, or in the event that Seller does not
elect to assume control, by the Company) ("Environmental Damages"). The
procedures set forth in Section 10.6 shall govern as to any claim by any
Purchaser Indemnified Person for indemnification under this Section
Page 56
10.5(c); provided, however, that any notice of such a claim given to Seller
shall include at the time such notice is made a writing from the applicable
Person or Governmental Entity asserting the claim and such copies of any
summons, complaint or other pleading served on the Purchaser Indemnified
Parties, or any invoice, billing, independent consultant's report or certified
laboratory test data relating to such claim as Purchaser may have (an
"Environmental Claim Notice"). Upon receipt of an Environmental Claim Notice,
Seller shall thereupon be entitled to assume control immediately of any and
all investigations, remediations and other actions related to addressing or
responding to all conditions and circumstances underlying such Environmental
Claim Notice. Seller shall consult with Purchaser regarding the impact of any
such investigations, remediations or other actions undertaken by or for Seller
on the business or operations of the Company. In controlling such
investigations, remediations and other actions, Seller shall use reasonable
efforts not to disrupt the business or operations of the Company or the
ability of the Company to utilize its properties and assets. Liability for
Environmental Damages shall be allocated to and between Seller and Purchaser
as follows:
(A) Seller and Purchaser shall be
responsible for 90 percent and 10 percent, respectively, of
Environmental Damages noticed in Environmental Claim Notices
given to Seller in accordance herewith from the Closing to
and including the first anniversary of the Closing Date;
(B) Seller and Purchaser shall be
responsible for 83 1/3 percent and 16 2/3 percent,
respectively, of Environmental Damages noticed in
Environmental Claim Notices given to Seller in accordance
herewith from and including the day immediately following the
first anniversary of the Closing Date to and including the
second anniversary of the Closing Date;
(C) Seller and Purchaser shall be
responsible for 76 2/3 percent and 23 1/3 percent,
respectively, of Environmental Damages noticed in
Environmental Claim Notices given to Seller in accordance
herewith from and including the day immediately following the
second anniversary of the Closing Date to and including the
third anniversary of the Closing Date;
(D) Seller and Purchaser shall be
responsible for 70 percent and 30 percent, respectively, of
Environmental Damages noticed in
Page 57
Environmental Claim Notices given to Seller in accordance
herewith from and including the day immediately following the
third anniversary of the Closing Date to and including the
fourth anniversary of the Closing Date;
(E) Seller and Purchaser shall be
responsible for 63 1/3 percent and 36 2/3 percent,
respectively, of Environmental Damages noticed in
Environmental Claim Notices given to Seller in accordance
herewith from and including the day immediately following the
fourth anniversary of the Closing Date to and including the
fifth anniversary of the Closing Date;
(F) Seller and Purchaser shall be
responsible for 56 2/3 percent and 43 1/3 percent,
respectively, of Environmental Damages noticed in
Environmental Claim Notices given to Seller in accordance
herewith from and including the day immediately following the
fifth anniversary of the Closing Date to and including the
sixth anniversary of the Closing Date;
(G) Seller and Purchaser shall be
responsible for 50 percent and 50 percent, respectively, of
Environmental Damages noticed in Environmental Claim Notices
given to Seller in accordance herewith from and including
the day immediately following the sixth anniversary of the
Closing Date to and including the seventh anniversary of the
Closing Date; and
(H) Seller shall have no responsibility or
liability for any claim for indemnification under this
Section 10.5(c), notice of which is first given to Seller on
or after the day immediately following the seventh
anniversary of the Closing Date.
(ii) Seller shall be responsible only for
that portion of Environmental Damages set forth in subsections (A)
through (G) of Section 10.5(c)(i) above, and shall not be responsible
for any additional Environmental Damages, except to the extent that
such Environmental Damages constitute a McKesson Obligation.
Notwithstanding the foregoing, any matter remaining outstanding
pursuant to an Environmental Claim Notice shall be subject to the
respective allocations set forth in subsections (i)(A)-(H), above, so
long as the respective matter for which the claim was made or the
remediation
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action necessary to be taken in connection therewith remains open or
not fully satisfied.
(iii) Any payment made by Seller for
Environmental Damages shall not obligate Seller to conduct any other
or additional testing or remediation; nor shall any provision herein
prevent Seller from seeking reimbursement or contribution from any
other party liable therefor. Any recovery from third parties realized
by Seller as reimbursement or contribution shall be apportioned
between Seller and Purchaser, as appropriate, in accordance with the
claim period set forth in subsections (A)-(G) of Section 10.5(c)(i)
above to which the recovery applies.
(d) Anything to the contrary notwithstanding,
Seller shall have no liability with respect to Environmental Damages,
inclusive of any other Damages for which Seller is responsible, in excess of
$30,000,000 except for matters covered by clause (i) of the defined term
McKesson Obligation for which no such limitation on liability shall be
applicable. Except for those matters which are retained as McKesson
Obligations pursuant to Section 6.17: (i) the provisions set forth in
subsection (c) above shall be the exclusive remedy of the Purchaser
Indemnified Persons against Seller with respect to any Environmental Damages;
and (ii) the Purchaser Indemnified Persons agree to waive and release, to the
fullest extent permitted under applicable law, Seller from any and all rights,
claims and causes of action that the Purchaser Indemnified Persons may have
against Seller with respect to any Environmental Damages, or pertaining to or
arising under any Environmental Laws, whether now or hereafter in effect,
relating in any way to the business and operations of the Company.
(e) Anything to the contrary notwithstanding,
the limitations set forth in Section 10.5(a), (b), (c) and (d) shall not apply
to the Purchase Price Adjustment pursuant to Section 2.3. Anything to the
contrary notwithstanding, no limitation of any kind shall apply either to the
performance of Seller's obligations under 6.17 or to Seller's obligation to
indemnify the Purchaser Indemnified Persons for Damages pursuant to Section
10.2(a)(iii).
(f) Notwithstanding the foregoing, if Seller
fully performs its obligations pursuant to Section 6.17 hereof and the facts
and circumstances giving rise to such obligation could also be the basis of a
claim for indemnification pursuant to Section 10.2(a)(i), then no Purchaser
Indemnified Person shall be entitled to seek indemnification pursuant to
Section 10.2(a) with respect to such facts and circumstances.
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10.6 Procedure for Indemnification--Third Party Claims.
(a) Promptly after receipt by an indemnified party
under Section 10.1 or 10.2 of written notice (the "Notice of Claim") of the
commencement of any action, suit or proceeding against it, or written threat
thereof, such indemnified party will, if a claim is to be made against an
indemnifying party under either of said Sections, as applicable, give notice
to the indemnifying party of the commencement of such action, suit or
proceeding, or threat thereof. The indemnified party shall furnish to the
indemnifying party in reasonable detail such information as the indemnified
party may have with respect to such indemnification claims (including copies
of any summons, complaint or other pleading which may have been served on it
and any written claim, demand, invoice, billing or other document evidencing
or assenting the same). Subject to the limitations set forth in this Section
10.6(a), no failure or delay by the indemnified party in the performance of
the foregoing shall reduce or otherwise affect the obligation of the
indemnifying party to indemnify and hold the indemnified party harmless except
to the extent that such failure or delay shall have materially and adversely
affected the indemnifying party's ability to defend against, settle or satisfy
any action, suit or proceeding or claim for which the indemnified party is
entitled to indemnification hereunder.
(b) If the claim or demand set forth in the
Notice of Claim given by the indemnified party is a claim or demand asserted
by a third party, the indemnifying party shall have thirty (30) days after the
Date of Notice of Claim to notify the indemnified party in writing of its
election to defend such third party claim or demand on behalf of the
indemnified party (the "Notice Period"); provided, however that the
indemnified party is authorized to file any motion, answer or other pleading
that may be reasonably necessary or appropriate to protect its interests
during the Notice Period with the prior consent of the indemnifying party,
which consent shall not be unreasonably withheld or delayed. If the
indemnifying party elects to defend such third party claim or demand, the
indemnified party shall make available to the indemnifying party and its
agents and representatives all records and other materials which are
reasonably required in the defense of such third party claim or demand and
shall otherwise cooperate with, and assist the indemnifying party in the
defense of, such third party claim or demand (provided that such cooperation
and assistance shall not require the indemnified party to incur any
out-of-pocket expenses), and so long as the indemnifying party is diligently
defending such third party claim in good faith, the indemnified party shall
not pay, settle or compromise such third party claim or
Page 60
demand. If the indemnifying party elects to defend such third party claim or
demand, the indemnifying party shall have the right to control the defense of
such third party claim or demand, at the indemnifying party's own expense. If
the indemnifying party does not elect to defend such third party claim or
demand or does not defend such third party claim or demand in good faith, the
indemnified party shall have the right, in addition to any other right or
remedy it may have hereunder at the indemnifying party's expense, to defend
such third party claim or demand.
(c) The term "Date of Notice of Claim" shall mean
the date the Notice of Claim is effective pursuant to Section 11.3 of this
Agreement.
10.7 Procedure for Indemnification--Other Claims. A claim for
indemnification for any matter not involving a third-party claim may be
asserted by notice to the party from whom indemnification is sought.
10.8 Limitations on Application to Taxes. Notwithstanding
anything to the contrary in this Agreement, other than 10.2(a) (but only to
the extent that it defines "Damages" and "Purchaser Indemnified Persons") and
this Section 10.8, the provisions of this Article X shall not apply in any
manner to indemnification with respect to Taxes (including, without
limitation, the limitations set forth in Sections 10.4 and 10.5), and Section
6.10 shall be the only provision that applies with respect to such
indemnification. Subject to the aforesaid definition of "Damages" and
"Purchaser Indemnified Persons," should there be any conflict between the
provisions of Section 6.10 and this Article X with respect to any issue or
matter relating to indemnification for Taxes, the provision of Section 6.10
shall be controlling and binding on the parties.
XI
MISCELLANEOUS
11.1 Fees and Expenses. Except as otherwise contemplated by,
or expressly provided for in, this Agreement, all costs and expenses incurred
in connection with this Agreement and the consummation of the transactions
contemplated hereby shall be paid by the party incurring such expenses, and
the Company shall not pay any of the costs of this Agreement or the
transactions contemplated hereby incurred on behalf of Seller (including, but
not limited to, the fees and expenses of the attorneys, tax and accounting
advisors and investment bankers for Seller).
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11.2 Amendments. This Agreement can be amended, supplemented
or modified, any provision hereof may be waived, only by written instrument
making specific reference to this Agreement signed by each of the parties
hereto.
11.3 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given upon (a) transmitter's
confirmation of a receipt of a facsimile transmission, (b) confirmed delivery
by a standard overnight carrier or when delivered by hand or (c) the
expiration of five Business Days after the day when mailed in the United
States by certified or registered mail, postage prepaid, addressed at the
following addresses (or at such other address for a party as shall be
specified by like notice).
(a) if to the Seller, to:
McKesson Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
with a copy to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
(b) if to Purchaser, to:
R.A.B. Holdings, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
with copies to:
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇ ▇▇▇▇▇▇ Flattau & Klimpl, LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
and
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
▇▇▇▇▇▇, ▇▇▇▇▇ & Bockius LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Page 62
11.4 Interpretation. When a reference is made in this
Agreement to Sections, such reference shall be to a Section of this Agreement
unless otherwise indicated. Whenever the words "include", "includes" or
"including" are used in this Agreement. they shall be deemed to be followed by
the words "without limitation". The phrase "made available" when used this
Agreement shall mean that the information referred to has been made available
by the party to whom such information is to be made available.
11.5 Headings; Schedules. The headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Any matter disclosed pursuant to
the Seller Disclosure Letter shall be deemed to be disclosed for all purposes
under this Agreement, but such disclosure shall not be deemed to be an
admission or representation as to the materiality of the item so disclosed.
11.6 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original but all of which
shall be considered one and the same agreement.
11.7 Entire Agreement. This Agreement (including the Seller
Disclosure Letter), together with the Confidentiality Agreement, the
Transitional Services Agreement and the other agreements and documents
delivered pursuant to this Agreement, constitute the entire agreement of the
parties with respect to the subject matter hereof, and collectively they
supersede all other prior or contemporaneous negotiations, commitments,
agreements and understandings (whether written or oral), between the parties
with respect to the subject matter hereof.
11.8 Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void, unenforceable or against its regulatory
policy, the remainder of the terms, provisions, covenants and restrictions of
this Agreement shall remain in full force and effect and shall in no way be
affected, impaired or invalidated.
11.9 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware without giving
effect to the principles of conflicts of law thereof.
11.10 Assignment. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by either of the
parties hereto (whether by
Page 63
operation of law or otherwise) without the prior written consent of the other
party, except that Purchaser may assign its rights to purchase the Shares to
any of its Affiliates, provided that Purchaser shall remain liable for all its
obligations hereunder regardless of any such assignment. Subject to the
preceding sentence, this Agreement will be binding upon, inure to the benefit
of and be enforceable by, the parties and their respective successors and
assigns, and except to the extent necessary to enforce the provisions of
Sections 6.7 and 6.8, the provisions of this Agreement are not intended to
confer upon any person other than the parties hereto any rights or remedies
hereunder.
11.11 Specific Performance; Submission to Jurisdiction. The
parties hereto agree that irreparable damage would occur in the event that any
of the provisions of this Agreement are not performed in accordance with its
specific terms or is otherwise breached. It is accordingly agreed that the
parties hereto shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and
provisions of this Agreement in any state or federal court sitting in the
State of Delaware, this being in addition to any other remedy to which they
are entitled at law or in equity. In addition, each of the parties hereto (i)
agrees that the state or federal courts sitting in the State of Delaware shall
have exclusive jurisdiction over any claim or dispute in any way relating to,
arising out of or in connection with the subject matter of this Agreement or
any of the transactions contemplated by this Agreement, (ii) consents to
submit itself to the personal jurisdiction of any state or federal court
sitting in the State of Delaware in the event of any claim or dispute relating
to, arising out of or in connection with the subject matter of this Agreement
or any of the transactions contemplated by this Agreement (provided that such
consent to jurisdiction is solely with respect to any such claim or dispute),
(iii) agrees that it will not attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from any such court and (iv)
agrees that it will not bring any action relating to, arising out of or in
connection with the subject matter of this Agreement or any of the
transactions contemplated by this Agreement in any court other than a state or
federal court sitting in the State of Delaware.
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IN WITNESS WHEREOF, Purchaser and Seller have caused this
Agreement to be signed by their respective officers thereunto duly authorized
as of the date first written above.
R.A.B. HOLDINGS, INC.
By:
--------------------------------------
Name:
Title:
McKESSON CORPORATION
By:
--------------------------------------
Name:
Title:
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