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EXHIBIT 99.1
ASSET PURCHASE AGREEMENT
BY AND AMONG
SECURE PHARMACY PLUS, INC.,
▇▇▇▇▇▇▇▇▇▇▇ OPERATING COMPANY, L.L.C.,
▇▇▇▇▇▇▇▇▇▇▇ LICENSING COMPANY, LLC,
▇▇▇▇▇▇▇▇▇▇▇ DRUG OF CALIFORNIA, L.P.
AND
▇▇▇▇▇▇▇▇▇▇▇ DRUG OF HAWAII, L.P.
FOR PURCHASE AND SALE OF
STADTLANDERS CORRECTIONS DIVISION
DATED AS OF SEPTEMBER 20, 2000
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TABLE OF CONTENTS
(NOT A PART OF THE AGREEMENT)
1. PURCHASE AND SALE OF ASSETS..............................................1
1.1. Purchase And Sale Of Assets.......................................1
1.1.1. Leased Real Property.....................................1
1.1.2. Tangible Personal Property...............................1
1.1.3. Inventories And Supplies.................................2
1.1.4. Contract Rights..........................................2
1.1.5. Intellectual Property....................................2
1.1.6. Governmental Licenses, Permits and Approvals.............2
1.1.7. Computer Software........................................2
1.1.8. Business Data............................................2
1.1.9. Web Sites................................................3
1.1.10. Claims...................................................3
1.1.11. Other Assets.............................................3
1.2. Excluded Assets...................................................3
1.2.1. Ordinary Course of Business Dispositions; ProCare/CVS
Transaction..............................................3
1.2.2. Cash.....................................................3
1.2.3. Nonassignable Permits....................................3
1.2.4. Rights Under This Agreement..............................3
1.2.5. Minute Books and Stock Ledger............................3
1.2.6. Accounts Receivable......................................4
1.2.7. Employee Benefit Plans...................................4
1.2.8. Prepaid Expenses.........................................4
1.2.9. Inter- or Intra-Company Receivables......................4
1.3. Conveyance........................................................4
2. PURCHASE PRICE...........................................................4
2.1. Closing Payment....................................................4
2.2. Purchase Price Adjustment..........................................4
2.3. Method of Payment..................................................7
2.4. Allocation.........................................................7
3. ASSUMPTION OF LIABILITIES................................................7
3.1. Assumed Liabilities................................................7
3.2. Purchaser's Obligations............................................7
3.3. Excluded Liabilities...............................................8
3.4. Breach of Representations..........................................8
3.5. Insurance..........................................................8
4. REPRESENTATIONS AND WARRANTIES...........................................9
4.1. Representations and Warranties of Sellers..........................9
4.1.1. Corporate Organization...................................9
4.1.2. Authorization and Effect of Agreement....................9
4.1.3. No Restrictions Against Sale of the Assets...............9
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4.1.4. Financial Statements.......................................10
4.1.5. No Material Adverse Change Relating to the Business........10
4.1.6. Compliance with Laws.......................................10
4.1.7. Assets used in the Business................................10
4.1.8. Assets other than Real Property............................11
4.1.9. Real Property..............................................11
4.1.10. Insurance..................................................11
4.1.11. Intellectual Property......................................12
4.1.12. Litigation; Decrees........................................12
4.1.13. Contract Rights............................................12
4.1.14. Employee Contracts, Union Agreements and Benefit Plans.....14
4.1.15. Labor Relations............................................15
4.1.16. Divisional Personnel.......................................17
4.1.17. No Undisclosed Liabilities.................................17
4.1.18. Environmental Protection...................................17
4.1.19. Tax Matters................................................19
4.1.20. Brokers' and Finders' Fees.................................20
4.1.21. Licenses and Permits.......................................20
4.1.22. Books and Records..........................................20
4.1.23. [Intentionally omitted.]...................................20
4.1.24. Major Suppliers and Customers..............................20
4.1.25. Inventory..................................................21
4.1.26. Pharmaceutical Regulation..................................21
4.2. Representations, Warranties And Certain Covenants of Purchaser......22
4.2.1. Corporate Organization.....................................22
4.2.2. Authorization And Effect Of Agreement......................23
4.2.3. No Restrictions Against Purchase Of The Assets.............23
4.2.4. Brokers' and Finders' Fees.................................23
5. COVENANTS.................................................................23
5.1. Employees...........................................................23
5.2. Transfer Taxes......................................................24
5.3. Press Release.......................................................24
5.4. Pharmacy Licenses...................................................25
6. CLOSING DELIVERIES........................................................25
6.1. Deliveries of Sellers...............................................25
6.1.1. Transfer Documents.........................................25
6.1.2. Certificates...............................................25
6.1.3. Consents Under Key Agreements..............................25
6.1.4. Power of Attorney..........................................25
6.1.5. Termination Statements.....................................25
6.1.6. Employment Agreements......................................25
6.1.7. Non-Competition Agreements.................................25
6.1.8. Accounts Receivable Collection Agreement...................26
6.1.9. Transition Services Agreement..............................26
6.1.10. BBC Guaranty...............................................26
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6.2. Deliveries of Purchaser.............................................26
6.2.1. Instruments Of Assumption..................................26
6.2.2. Purchase Price.............................................26
6.2.3. Certificates...............................................26
6.2.4. Prime Vendor Contract......................................26
6.2.5. ASG Guaranty...............................................26
7. THE CLOSING...............................................................26
7.1. The Closing.........................................................26
8. SURVIVAL AND INDEMNIFICATION..............................................27
8.1. Survival............................................................27
8.1.1. Survival of Representations And Warranties.................27
8.1.2. Survival of Covenants......................................27
8.2. Limitations On Indemnification; Right of Offset.....................27
8.2.1. With Respect To Certain Representations And Warranties.....27
8.2.2. With Respect To Sellers' Obligations.......................27
8.3. Indemnification.....................................................27
8.3.1. Indemnification By Sellers.................................27
8.3.2. Indemnification By Purchaser...............................28
8.3.3. Cumulative Rights..........................................28
8.3.4. Indemnity Payment; Indemnitee; Indemnifying Party..........28
8.4. Defense of Claims...................................................28
8.4.1. Third Party Claims.........................................28
8.4.2. Direct Claims..............................................30
8.4.3. Failure to Give Timely Notice..............................30
8.4.4. Subrogation................................................30
8.4.5. Payment....................................................30
8.4.6. Limitation on the Scope of Indemnification.................31
9. OTHER POST-CLOSING COVENANTS..............................................31
9.1. General Post-Closing Matters........................................31
9.1.1. Post-Closing Notifications.................................31
9.1.2. Access.....................................................31
9.1.3. Guarantees, Etc............................................32
9.1.4. Rights of Endorsement......................................32
9.2. Nonassignable Contracts.............................................32
9.2.1. Nonassignability...........................................32
9.2.2. Sellers To Use Reasonable Efforts..........................32
9.2.3. If Waivers Or Consents Cannot Be Obtained..................32
9.2.4. Obligation of Purchaser To Perform.........................33
9.2.5 Certain Fees and Expenses..................................33
10. MISCELLANEOUS PROVISIONS..................................................33
10.1. Notices.............................................................33
10.2. Expenses............................................................34
10.3. Successors And Assigns..............................................34
10.4. Waiver..............................................................34
10.5. Entire Agreement....................................................35
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10.6. Amendments, Supplements, Etc.......................................35
10.7. Rights Of The Parties..............................................35
10.8. Further Assurances.................................................35
10.9. Bulk Sales.........................................................36
10.10. Transfer...........................................................36
10.11. Governing Law......................................................36
10.12. Execution in Counterparts..........................................36
10.13. Titles And Headings................................................36
10.14. Certain Interpretive Matters And Definitions.......................36
10.15. Cross-References...................................................37
10.16. Severability.......................................................37
10.17. Arbitration........................................................37
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TABLE OF SCHEDULES
Schedule 1.1.1 Leased Real Property
Schedule 1.1.2 Tangible Personal Property
Schedule 1.1.5 Intellectual Property
Schedule 1.1.6 Permits
Schedule 1.1.7A Owned Software
Schedule 1.1.7B Licensed Software
Schedule 1.2.3 Non-Assignable Permits
Schedule 2.2(b) Inventory Methodology and Costing
Schedule 2.4 Purchase Price Allocation
Schedule 3.1 Assumed Software Liabilities
Schedule 4.1.1 Corporate Organization
Schedule 4.1.3 Restrictions on Sale
Schedule 4.1.4 Financial Statements
Schedule 4.1.5 Material Adverse Changes
Schedule 4.1.6 Violations of Law
Schedule 4.1.7 Excluded Assets
Schedule 4.1.8 Liens
Schedule 4.1.10 Insurance Matters
Schedule 4.1.12 Litigation
Schedule 4.1.13 Contracts
Schedule 4.1.14(a) Employee Benefit Plans
Schedule 4.1.15 Labor Relations Matters
Schedule 4.1.16 Divisional Personnel
Schedule 4.1.18(b) Environmental Matters
Schedule 4.1.19(b) Tax Matters
Schedule 4.1.21 Permits
Schedule 4.1.24 Suppliers and Customers
Schedule 4.1.25 Inventory Claims
Schedule 4.1.26 Pharmaceutical Regulation
Schedule 4.2.3 Purchaser's Restrictions
Schedule 6.1.1 Transfer Documents
Schedule 6.1.4 Form of Power of Attorney
Schedule 6.1.5 Required Termination Statements
Schedule 6.1.6(a) Form of Employment Agreement for ▇▇▇▇ ▇▇▇▇▇▇▇
Schedule 6.1.6(b) Form of Employment Agreement for ▇▇▇▇▇ ▇▇▇▇▇▇
Schedule 6.1.6(c) Form of Employment Agreement for ▇▇▇▇▇ ▇▇▇▇▇
Schedule 6.1.7 Form of Noncompetition Agreement
Schedule 6.1.8 Form of Accounts Receivable and Payable Management
Agreement
Schedule 6.1.9 Form of Transition Services Agreement
Schedule 6.1.10 Form of BBC Guaranty
Schedule 6.2.1 Assumption Instruments
Schedule 6.2.4 Form of Prime Vendor Contract
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Schedule 6.2.5 Form of ASG Guaranty
Schedule 9.1.3 Seller Guarantees
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TABLE OF DEFINED TERMS
Term Page
---- ----
Accounts Receivable Collection Agreement...................................25
Affiliate..................................................................37
Agreement...................................................................1
Ancillary Documents.........................................................8
Apportioned Amounts.........................................................5
Arbitrator..................................................................5
ASG.........................................................................1
ASG Guaranty...............................................................26
Assets......................................................................1
Assumed Liabilities.........................................................7
Assumed Liability Claim....................................................27
Assumption Instruments.....................................................26
BBC.........................................................................1
BBC Guaranty...............................................................26
Business....................................................................1
Business Data...............................................................3
Closing....................................................................26
Closing Date...............................................................26
Code........................................................................6
Consents...................................................................32
Contracts...................................................................2
DEA.........................................................................7
Direct Claim...............................................................30
Division....................................................................1
Employee Benefit Plans.....................................................14
Environmental Laws.........................................................17
ERISA......................................................................14
ERISA Affiliate............................................................15
Estimated Purchase Price Increase...........................................4
Estimated Purchase Price Reduction..........................................4
Excluded Assets.............................................................3
FDA........................................................................21
Final Purchase Price Adjustment Schedule....................................5
Financial Statements........................................................9
FMLA.......................................................................15
GAAP........................................................................9
Governmental Agency........................................................37
Hazardous Substances.......................................................17
Indemnifiable Losses.......................................................28
Indemnifying Party.........................................................29
Indemnitee.................................................................29
Indemnity Payment..........................................................29
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Insurance.................................................................8
Intellectual Property Rights..............................................2
Inventory.................................................................2
Inventory Valuation.......................................................5
Key Agreements...........................................................25
Key Licenses.............................................................25
Laws.....................................................................37
Leased Real Property......................................................1
License Fee Amount........................................................5
Licensed Software........................................................11
Licenses.................................................................19
Liens....................................................................10
NLRB.....................................................................15
OSHA.....................................................................16
Patent and Trademark Rights..............................................11
Permits...................................................................2
Permitted Liens..........................................................10
Pharmaceutical Products..................................................20
Pre-Billed Amounts........................................................5
Preliminary Purchase Price Adjustment Schedule............................4
Proprietary Software.....................................................11
Purchase Price............................................................4
Purchase Price Increase...................................................5
Purchase Price Reduction..................................................5
Purchaser.................................................................1
Records..................................................................31
Related Person...........................................................20
Retained A/P Amount.......................................................5
Securities Act...........................................................37
Sellers...................................................................1
Sellers' Guarantees......................................................32
Software.................................................................11
Subsidiary...............................................................37
Tangible Personal Property................................................2
Taxes....................................................................18
Third Party Claim........................................................29
Transfer..................................................................1
Upfront Collection Fee....................................................5
Transfer Documents.......................................................24
WARN Act.................................................................16
Work-in-Process Amount....................................................5
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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "Agreement") is made and
entered into as of the 20th day of September, 2000, by and among SECURE PHARMACY
PLUS, INC., a Tennessee corporation ("Purchaser"), ▇▇▇▇▇▇▇▇▇▇▇ OPERATING
COMPANY, L.L.C., a Delaware limited liability company, ▇▇▇▇▇▇▇▇▇▇▇ LICENSING
COMPANY, LLC, a Delaware limited liability company, ▇▇▇▇▇▇▇▇▇▇▇ DRUG OF
CALIFORNIA, L.P., a Delaware limited partnership, and ▇▇▇▇▇▇▇▇▇▇▇ DRUG OF
HAWAII, L.P., a Delaware limited partnership (collectively, the "Sellers");
RECITALS
A. Sellers, through Stadtlanders Corrections Division (the
"Division"), presently conduct the business of providing pharmaceutical services
to correctional facilities in several states (the "Business").
▇. ▇▇▇▇▇▇▇ desire to sell and assign to Purchaser, and
Purchaser desires to purchase and assume from Sellers, the assets and specified
liabilities of the Business on the terms and subject to the conditions set forth
in this Agreement.
C. America Service Group Inc., a Delaware corporation ("ASG")
and the parent corporation of Purchaser, has guaranteed all obligations of
Purchaser pursuant to this Agreement.
▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Corporation, a New Jersey corporation
("BBC") and the parent corporation of Sellers, has guaranteed all obligations of
Sellers pursuant to this Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
1. PURCHASE AND SALE OF ASSETS
1.1. Purchase And Sale Of Assets. On the terms and subject to the
conditions hereof, at the Closing (as hereinafter defined), Sellers will sell,
transfer, convey, assign and deliver ("Transfer") to Purchaser, and Purchaser
will purchase and accept from Sellers, all of Sellers' right, title and interest
in and to the assets and properties, associated with the Division described in
this Section 1.1 (the "Assets"):
1.1.1. Leased Real Property. Subject to Section 9.2, all
rights and incidents of interest of Sellers as of the Closing in and to the real
property leases listed on Schedule 1.1.1 and all of Sellers' rights in and to
the real property leased by Sellers pursuant thereto, including all buildings,
structures, fixtures and improvements located thereon to the extent subject to
such leases (the "Leased Real Property");
1.1.2. Tangible Personal Property. All furniture, fixtures,
equipment, vehicles, office supplies, advertising materials and other tangible
personal property (other than Inventory (as hereinafter defined)), (including
without limitation, all transportation, laboratory, testing,
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office, computing, data processing and telecommunications equipment) held or
owned by Sellers as of the Closing which is used primarily in the Business,
including, without limitation, those items of tangible personal property
described on Schedule 1.1.2 (collectively, the "Tangible Personal Property");
1.1.3. Inventories And Supplies. All pharmaceutical and
medical supplies owned by Sellers for resale in connection with the Business as
of the close of business on the day prior to the Closing Date (collectively,
"Inventory").
1.1.4. Contract Rights. Subject to Section 9.2, all rights
and incidents of interest of Sellers as of the Closing in and to all personal
property leases, licenses, agreements, proposals or other contracts or
contractual rights or obligations, including any security deposits provided by
the Sellers with respect thereto (collectively "Contracts") of Sellers which
relate primarily to the Business, including, without limitation, (i) those
Contracts which are listed on Schedule 4.1.13 (unless indicated to the contrary
thereon), or are of a type which would have been listed on Schedule 4.1.13
except that they provide for payments in an amount less than the applicable
amount set forth in Section 4.1.13 and (ii) any non-disclosure letters executed
by Sellers and certain other potential purchasers of the Division, to the extent
assignable by Sellers, true and complete copies of which will be delivered to
Purchaser prior to Closing.
1.1.5. Intellectual Property. The right to use the trade name
"StadtRelease" for a period of six months following the Closing, and all trade
secrets (including customer and supplier lists), personnel and marketing
databases, know-how, manuals, processes, techniques and any and all applications
for any of the foregoing, together with any and all rights to use any or all of
the foregoing, and any and all goodwill associated with any of the foregoing
(collectively, "Intellectual Property Rights") of Sellers used primarily in the
Business, including without limitation, those listed or described on Schedule
1.1.5.
1.1.6. Governmental Licenses, Permits and Approvals. All
rights and incidents of interest of Sellers as of Closing in and to all
transferable licenses, permits and approvals ("Permits") issued to Sellers by
any Governmental Agency (as hereinafter defined) relating primarily to the
Business and in effect as of the Closing, including without limitation, those
listed or described on Schedule 1.1.6.
1.1.7. Computer Software. All computer software programs owned
by any Seller and used primarily in the Business, including those items listed
on Schedule 1.1.7A, and a license, as described in Section 6.1.7, to use all
other computer software programs licensed to any Seller and used primarily in
the Business, including those items listed on Schedule 1.l.7B.
1.1.8. Business Data. The original documents representing all
current and historical information, files, correspondence, records, marketing
data and plans related to the Business, including, without limitation, all
client financial information and all client reports in both hard and electronic
form, all books and records, pending proposals and any lists of historical,
current and potential customers, personnel and supplies of the Business
(collectively, the "Business Data").
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1.1.9. Web Sites. All rights and incidents of interest of
Sellers in and to all world wide web or Internet sites and domain names related
primarily to the Business, including, without limitation
▇▇▇.▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇.
1.1.10. Claims. All claims, causes of action, choses in
action, rights of recovery, rights of setoff and guarantees, including without
limitation, any rights to the payment of rebates, any liens, mechanic's liens or
any rights to payment or warranties or to enforce payment or warranties in
connection with work performed for the Division or goods delivered to the
Division on or prior to the Closing Date, and any and all claims to insurance
proceeds due or to become due under any Seller's applicable insurance policies
in connection with any Assumed Liabilities.
1.1.11. Other Assets. All other tangible or intangible
properties and assets that are carried on the books of the Division that are
owned or held by Sellers wherever located and that are used primarily in the
Business as of the Closing, whether or not of a type falling within any of the
categories of assets or properties described in Subsections 1.1.1 to 1.1.10,
other than the Excluded Assets.
1.2. Excluded Assets. Notwithstanding anything contained in this
Agreement to the contrary, and with the exception of any rights of the Purchaser
with respect to any transition services provided by Sellers, the following
properties, assets and rights (the "Excluded Assets") will not be included in
the Assets:
1.2.1. Ordinary Course of Business Dispositions; ProCare/CVS
Transaction. All of the properties and assets which shall have been transferred
or disposed of by Sellers or any Affiliate of Sellers prior to the Closing in
the ordinary course of business without violation of this Agreement, or which
are being sold to ProCare Pharmacy, Inc. or its affiliates pursuant to an Asset
Purchase Agreement dated July 3, 2000.
1.2.2. Cash. All cash or cash equivalents of Sellers on hand,
in lock boxes in financial institutions or elsewhere.
1.2.3. Nonassignable Permits. Any Permits that are incapable
of being Transferred with or without the consent, approval, novation or waiver
of a third person or entity (including without limitation of a Governmental
Agency), if the Transfer or attempted Transfer of such would constitute a breach
of such Permit or a violation of any Law (as hereinafter defined) and if such
consent, approval, novation or waiver is not obtained, including, without
limitation, the Permits listed or described on Schedule 1.2.3.
1.2.4. Rights Under This Agreement. All consideration received
and rights of Sellers under this Agreement and other agreements between the
parties entered into in connection with the transactions contemplated hereby.
1.2.5. Minute Books and Stock Ledger. The corporate minute
books and stock ledger records of Sellers.
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1.2.6. Accounts Receivable. Any right, title and interest of
Sellers in and to any accounts and other receivables related to the Business, to
the extent attributable to invoices sent or goods shipped or services performed
prior to the close of business on the day prior to the Closing Date.
1.2.7. Employee Benefit Plans. All Employee Benefit Plans
(as hereinafter defined), including, without limitation, all assets held
pursuant to such Employee Benefit Plans.
1.2.8. Prepaid Expenses. Any prepaid expenses.
1.2.9. Inter- or Intra-Company Receivables. Any receivables
related to any transactions between or among the Sellers.
1.3. Conveyance. Subject to the provisions of Article 6 and Section
9.2, at the Closing Sellers will Transfer to Purchaser good and marketable title
to the Assets, in each case free and clear of any Liens other than Permitted
Liens (each as hereinafter defined).
2. PURCHASE PRICE
2.1. Closing Payment. In consideration of the Transfer of the Assets
and the other undertakings of Sellers hereunder, (i) Purchaser will pay to
Sellers at Closing $6,250,000 U.S. Dollars, plus the amount of the Estimated
Purchase Price Increase or less the amount of the Estimated Purchase Price
Reduction (each as hereinafter defined), as the case may be (the "Purchase
Price") and (ii) Purchaser will assume the Assumed Liabilities.
2.2. Purchase Price Adjustment.
(a) Not later than 5:00 p.m. Nashville time on September 18,
2000, the parties shall agree on the approximate amount of the
Purchase Price Increase (as hereinafter defined) or the Purchase
Price Reduction (as hereinafter defined), as the case may be. Such
estimated amount is hereinafter referred to as the "Estimated
Purchase Price Increase" or the "Estimated Purchase Price Reduction,"
as the case may be. If Purchaser and Sellers are unable to reach an
agreement regarding the Estimated Purchase Price Increase or Reduction,
as the case may be, Purchaser and Sellers agree that the Closing
shall nevertheless occur and that Purchaser shall pay to Seller an
amount equal to $6,250,000 U.S. Dollars, plus the amount of the
Purchase Price Increase estimated by Purchaser or less the amount of
the Purchase Price Reduction estimated by Purchaser, as the case may
be, and Purchaser shall place in escrow an amount of money equal to
the difference between the amount estimated by Sellers and the amount
estimated by Purchaser (which deposit shall constitute partial payment
of the Purchase Price).
(b) As promptly as practical following the Closing Date,
Sellers will provide to Purchaser a schedule (the "Preliminary
Purchase Price Adjustment Schedule") setting forth the following
valuations as of the close of business on the day prior to the Closing
Date: (i) the total collections by the Division with respect to
services not yet performed or products not yet delivered by the
Division (the "Pre-Billed Amounts"); (ii) the revenue attributable
to customer contracts with respect to which
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invoices have not been sent (the "Work-in-Process Amount"); (iii)
the pro rata share of the amounts previously paid by Sellers with
respect to real property taxes and assessments, leases with respect
to leased real and personal property, utilities, service and
maintenance contracts and other contracts included in the Assets, to
the extent that the same relate to periods after the Closing Date
and any security deposits with respect to leased property (the
"Apportioned Amounts"); (iv) the estimated amount of the accounts
payable of the Division as of the close of business on the day prior
to the Closing Date (the "Retained A/P Amount"); and (v) the estimated
net book value of the Inventory on hand as of the close of business
on the day prior to the Closing Date calculated in accordance with
the procedures set forth in Schedule 2.2(b) (the "Inventory
Valuation"). The excess, if any, of (i) the sum of the Pre-Billed
Amounts, the Retained A/P Amount, the fee payable to Purchaser pursuant
to Section 3.1 of that certain Accounts Receivable and Payable
Management Agreement ($175,000) (the "Upfront Collection Fee") and
the amount attributable to unpaid software license fees ($82,500)
(the "License Fee Amount") over (ii) the sum of the Work-in-Process
Amount, the Apportioned Amounts and the Inventory Valuation shall
constitute a "Purchase Price Reduction." The excess, if any, of (i)
the sum of the Work-in-Process Amount, the Apportioned Amounts and
the Inventory Valuation over (ii) the sum of the Pre-Billed Amount,
the Retained A/P Amount, the Upfront Collection Fee and the License
Fee Amount shall constitute a "Purchase Price Increase."
(c) Sellers shall deliver the Preliminary Purchase Price
Adjustment Schedule to Purchasers as promptly as practical after
Closing. Purchaser shall have 20 calendar days following receipt of
the Preliminary Purchase Price Adjustment Schedule during which to
notify Sellers of any dispute of any item contained in the
Preliminary Purchase Price Adjustment Schedule, which notice shall
set forth in reasonable detail the basis for such dispute. During
such 20-day period, the Sellers shall give the Purchaser and its
accountants access on reasonable notice to all books, records,
personnel and work papers of the Sellers that relate to the preparation
of the Preliminary Purchase Price Adjustment Schedule. If the
Purchaser does not notify the Sellers of any dispute within such 20
calendar-day period, the Preliminary Purchase Price Adjustment
Schedule shall be deemed to be the "Final Purchase Price Adjustment
Schedule". The Purchaser and the Sellers shall cooperate in good
faith to resolve any dispute as promptly as possible, and upon such
resolution, the Final Purchase Price Adjustment Schedule shall be
prepared in accordance with the agreement of the Purchaser and the
Sellers. If the Purchaser and the Sellers are unable to resolve any
dispute regarding the Preliminary Purchase Price Adjustment Schedule
within 15 calendar days (or such longer period as the Purchaser and
the Sellers shall mutually agree in writing) of notice of a dispute,
the Purchaser and the Sellers shall engage a mutually agreeable "Big
5" accounting firm, other than Ernst & Young LLP (the "Arbitrator")
to determine the Final Purchase Price Adjustment Schedule and such
determination shall be final and binding on the parties. If the
parties are unable to agree upon an accounting firm to serve as the
Arbitrator, a representative of Ernst & Young LLP selected by
Purchaser and a representative of the Sellers' independent accounting
firm selected by Sellers shall select a "Big 5" accounting firm
(other than themselves) to be such Arbitrator. The Arbitrator shall
use commercially
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reasonable efforts to complete its work within 30 calendar days of
its engagement. The expenses of the Arbitrator shall be shared equally
by Purchaser and Sellers.
(d) Within five business days after the determination of the
Final Purchase Price Adjustment Schedule, and absent any dispute
regarding the Estimated Purchase Price Increase or Reduction, as the
case may be, Purchaser shall pay Sellers an amount equal to (x) the
amount by which the Purchase Price Increase as set forth on the Final
Purchase Price Adjustment Schedule exceeds the Estimated Purchase
Price Increase or (y) the amount by which the Estimated Purchase
Price Reduction exceeds the Purchase Price Reduction set forth on
the Final Purchase Price Adjustment Schedule, or Sellers shall pay
Purchaser an amount equal to (x) the amount by which the Estimated
Purchase Price Increase exceeds the Purchase Price Increase shown on
the Final Purchase Price Adjustment Schedule or (y) the amount by
which the Purchase Price Reduction as set forth on the Final
Purchase Price Adjustment Schedule exceeds the Estimated Purchase
Price Reduction. In the event a dispute regarding the Estimated
Purchase Price results in a deposit of funds into escrow, then
within five (5) business days after the determination of the Final
Purchase Price Adjustment Schedule, the Purchaser or the Sellers
shall pay the other the amount determined as follows:
(A) (i) if the Purchase Price Increase set forth on the Final
Purchase Price Adjustment Schedule exceeds the amount estimated by
Purchaser; (ii) if the amount of the Purchase Price Reduction
estimated by Purchaser exceeds the amount of the Purchase Price
Reduction set forth on the Final Purchase Price Adjustment Schedule;
or (iii) if Purchaser estimated a Purchase Price Reduction and the
Final Purchase Price Adjustment Schedule sets forth a Purchase Price
Increase, Purchaser shall pay Sellers (which payment may be made in
whole or in part by the disbursement of the amount placed in escrow
to Sellers, with any remainder being returned to Purchaser) an amount
equal to the excess of (x) the Purchase Price Increase set forth on
the Final Purchase Price Adjustment Schedule over the amount of the
Purchase Price Increase or Purchase Price Reduction, as the case may
be, estimated by Purchaser or (y) the Purchase Price Reduction
estimated by Seller over the Purchase Price Reduction set forth on
the Final Purchase Price Adjustment Schedule; or
(B) (i) if the Purchase Price Reduction set forth on the Final
Purchase Price Adjustment Schedule exceeds the amount estimated by
Purchaser; (ii) if the Purchase Price Increase estimated by Purchaser
exceeds the Purchase Price Increase set forth on the Final Purchase
Price Adjustment Schedule; or (iii) if Purchaser estimated a Purchase
Price Increase and the Final Purchase Price Adjustment Schedule sets
forth a Purchase Price Reduction, the amount placed in escrow shall
be paid to Purchaser and Sellers shall pay Purchaser an amount equal
to the excess of (x) the Purchase Price Reduction set forth on the
Final Purchase Price Adjustment Schedule over the amount of the
Purchase Price Increase or Reduction, as the case may be, estimated
by Purchaser or (y) the Purchase Price Increase set forth on the
Final Purchase Price Adjustment Schedule; and
(C) Interest on the amount placed in escrow shall be disbursed
to Purchaser or Sellers in proportion to the respective amounts
disbursed to them.
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2.3. Method of Payment. All payments from one party to another under
this Agreement shall be made by wire transfer of immediately available federal
funds to an account designated in writing by the person or entity to receive
such payment at least two business days prior to the applicable payment date.
2.4. Allocation. For purposes of determining both Purchaser's basis in
the Assets and Sellers' gain or loss with respect to the transactions
contemplated by this Agreement pursuant to Section 1060 of the Internal Revenue
Code of 1986, as amended from time to time (the "Code"), and the Treasury
Regulations promulgated thereunder, certain of the Assets will be valued in
accordance with Schedule 2.4. Purchaser and Sellers will use such values
(subject to such changes as may be hereafter agreed to by Purchaser and Sellers
in writing) in preparing and filing their respective Forms 8594 with the
Internal Revenue Service with respect to the transactions contemplated by this
Agreement.
3. ASSUMPTION OF LIABILITIES
3.1. Assumed Liabilities. As partial consideration for the purchase of
the Assets, Purchaser shall assume as of the Closing Date the following
liabilities of the Sellers to the extent arising on or after the Closing Date:
(i) all obligations of Sellers pursuant to the real property leases listed on
Schedule 1.1.1 to the extent that the same are disclosed on the face of such
real property lease or otherwise disclosed to Purchaser in writing at the time
of the execution of this Agreement; (ii) all obligations of Sellers pursuant to
the Contracts to the extent that the same are disclosed on the face thereof or
otherwise disclosed to Purchaser in writing at the time of the execution of this
Agreement, including, without limitation, the obligation of the applicable
Seller to pay all amounts unpaid on the Closing Date with respect to the sorter
equipment recently installed in the Division's Franklin, Tennessee headquarters;
(iii) all obligations of Sellers pursuant to the Permits to the extent disclosed
to Purchaser in writing at the time of the execution of this Agreement; (iv) all
obligations of Sellers pursuant to any customer proposals outstanding on the
Closing Date to the extent that the same are disclosed on the face thereof or
otherwise disclosed to Purchaser in writing at the time of the execution of this
Agreement; (v) the obligations of BBC with respect to the Division set forth in
the Transition Support Agreement, by and between BBC and ProCare Pharmacy, Inc.;
and (vi) the obligations of Sellers to pay license fees with respect to Sellers'
unlicensed use of the software products named on Schedule 3.1 prior to the
Closing Date (collectively, the "Assumed Liabilities"). Except to the extent
specified in the previous sentence, Purchaser shall not assume any liability or
obligation of Sellers whatsoever, and Sellers shall retain responsibility for
all liabilities and obligations accrued or incurred prior to the close of
business on the day prior to the Closing Date, whether known or unknown, and all
liabilities and obligations arising from Sellers' operation of the Business
prior to the close of business on the day prior to the Closing Date, whether or
not accrued or whether or not disclosed. Sellers agree to pay and settle all of
such liabilities and obligations (other than the Assumed Liabilities) in a
timely manner
3.2. Purchaser's Obligations. Purchaser hereby assumes and agrees to
pay, discharge or perform, as appropriate, when due, the Assumed Liabilities.
Purchaser shall also be responsible for any claim, loss, liability, damage, cost
or expense which arises out of the conduct of the Business by Purchaser on or
subsequent to the Closing Date.
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3.3. Excluded Liabilities. Except for the Assumed Liabilities, in no
event shall Purchaser assume, agree to pay, satisfy or discharge or otherwise
have any responsibility for any liabilities or obligations of Sellers, and
Assumed Liabilities shall not include any liabilities or obligations in respect
of the following: (i) for accrued salary, severance pay, paid time off,
officers' incentive sales bonuses, any other bonuses and the like related to
employee compensation for any period or portion of a period prior to the Closing
Date; (ii) for Taxes (as hereinafter defined) of Sellers or any prior owner of
the Business of any kind or for any period; (iii) any liability or obligation of
Sellers whatsoever which accrued at any time prior to the Closing Date, whether
or not such liability or obligation arises prior or subsequent to the Closing
Date, including, without limitation, any distributions payable, debt or notes
payable (including, without limitation, bank overdrafts), insurance related
liabilities (whether known or unknown), including workers' compensation claims
(asserted or unasserted, whether or not reported and whether or not reserved
for, and including liability for the payment of deductible amounts), and
litigation or claims (including, without limitation, EEOC and employment
practices claims); (iv) any liability or obligation of Sellers relating to or
arising from Sellers' breach of, default under or failure to comply with, at any
time prior to the Closing Date, whether or not such liability or obligation
arises prior or subsequent to the Closing Date, any Assumed Liability or
Sellers' failure in a timely manner to pay or perform any other liability or
obligation which accrued at any time prior to the Closing Date, whether or not
such liability or obligation arises prior to or subsequent to the Closing Date;
(v) any liability or obligation of Sellers (whether or not such liability or
obligation arises prior to or subsequent to the Closing Date) arising solely out
of or with respect to any third party or governmental claim pending on the
Closing Date or thereafter initiated based on or arising out of the operation of
the Business prior to the Closing Date, including, without limitation, any
liability or obligation of Sellers relating to any investigation by any
governmental agency of any of the Division's facilities or operations that is
pending on the Closing Date; (vi) any liability or obligation of Sellers
relating to the breach of any Law (including, without limitation, Environmental
Laws (as hereinafter defined) and labor laws); (vii) any liability or obligation
of Sellers under or relating to any Employee Benefit Plan (including, without
limitation, any employment agreements outstanding with Sellers), whether or not
such liability or obligation arises prior to or subsequent to the Closing Date;
(viii) any liability or obligation of Sellers arising out of or incurred in
connection with the negotiation, preparation and execution of this Agreement and
the transactions contemplated hereby and any fees and expenses of counsel,
accountants, brokers, financial advisors or other experts of Sellers; and (ix)
except for the Assumed Liabilities, any other claim, loss, liability,
obligation, damage, cost or expense of Sellers.
3.4. Breach of Representations. Subject to Article 8, nothing in
Section 3.1 shall limit Purchaser's right to indemnification for the breach by
Sellers of any of its representations and warranties contained herein.
3.5. Insurance. With respect to any loss, liability or damage relating
to, resulting from or arising out of the conduct of the Business of Sellers
prior to the Closing Date for which Purchaser may be liable pursuant to Section
3.1 and for which Sellers would be entitled to assert, or cause any other person
or entity to assert, a claim for recovery under any policy of insurance
maintained by or for the benefit of Sellers ("Insurance"), at the request of
Purchaser, Sellers will use reasonable efforts to assert, or to assist Purchaser
to assert, one or more claims under such
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Insurance covering such loss, liability or damage, provided that all of Sellers'
or any of Sellers' Affiliates' costs and expenses incurred with respect to third
parties in connection with the foregoing are promptly reimbursed by Purchaser.
Notwithstanding Section 3.1, Sellers will be deemed, solely for the purpose of
asserting claims for Insurance pursuant to the immediately preceding sentence,
to have retained liability for such loss, liability or damage to the extent of
the policy limits of the applicable policy of Insurance.
4. REPRESENTATIONS AND WARRANTIES
4.1. Representations and Warranties of Sellers. Sellers, jointly and
severally, represent and warrant to Purchaser as follows:
4.1.1. Corporate Organization. Schedule 4.1.1 sets forth a
complete and accurate list for Sellers of their respective names and
jurisdictions of organization. Each Seller is a corporation or limited liability
company, as the case may be, duly organized, validly existing and in good
standing under the Laws of the State of its organization and has all requisite
corporate power and authority and all Permits necessary to own, lease or
otherwise hold the Assets and to carry on the Business as presently conducted.
Insofar as is related to the Business, each Seller is duly licensed and
qualified to do business as a foreign corporation or other entity and is in good
standing in each jurisdiction listed in Schedule 4.1.1.
4.1.2. Authorization and Effect of Agreement. Sellers have all
requisite power and authority to execute and deliver this Agreement and all of
the other agreements, certificates and other documents delivered or to be
delivered on or after the date hereof and at or prior to the Closing in
connection with the transactions contemplated hereby (the "Ancillary Documents")
to which each is or will be a party, and to consummate the transactions
contemplated hereby and thereby. The execution and delivery by Sellers of this
Agreement and the Ancillary Documents to which each is or will be a party and
the consummation by Sellers of the transactions contemplated hereby and thereby
to be consummated by the Sellers have been duly authorized by all necessary
corporate action on the part of Sellers, including, without limitation, all
requisite approval by the stockholders of the Sellers pursuant to the Articles
of Incorporation or By-Laws or other organizational documents of Sellers or
otherwise. This Agreement and the Ancillary Documents to which each Seller is or
will be a party have been or will be, as the case may be, duly executed and
delivered by each Seller and constitute or will constitute, as the case may be,
valid and binding obligations of Sellers, enforceable in accordance with their
respective terms, except as enforceability may be limited by bankruptcy,
insolvency or other similar Laws of general application affecting the
enforcement of creditors' rights or by general principles of equity limiting the
availability of equitable remedies (whether applied in a proceeding at law or
equity).
4.1.3. No Restrictions Against Sale of the Assets. The
execution and delivery by the Sellers of this Agreement and the Ancillary
Documents to which each Seller is or will be a party do not, and the performance
by each Seller of the transactions contemplated hereby and thereby to be
performed by it will not, conflict with, or result in any violation of, or
constitute a default (with or without notice or lapse of time, or both) under,
any provision of the organizational documents of any Seller or any Contract,
Permit or Law applicable to the Division, the Business or the Assets, or give
rise to any right by any third party to terminate or
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accelerate the performance or payment under any Contract, other than any such
conflicts, violations, defaults or rights (i) which are listed or described on
Schedule 4.1.3 or (ii) which individually or in the aggregate do not have a
material adverse effect on the business, financial condition or results of
operations of the Business. Except as listed or described on Schedule 4.1.3, no
material consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Agency is required to be obtained
or made by or with respect to any Seller in connection with the execution and
delivery by the Sellers of this Agreement or the Ancillary Documents to which
each Seller is or will be a party or the consummation by it of the transactions
contemplated hereby and thereby to be consummated by the Sellers.
4.1.4. Financial Statements. Attached hereto as Schedule 4.1.4
are true and complete copies of the unaudited financial statements of the
Division, consisting of: (i) the pro forma balance sheet of the Division
together with the related statement of income of the Division for the fiscal
year ended September 30, 1999 and (ii) the pro forma statement of income of the
Division for the period ended on August 31, 2000 (collectively, the "Financial
Statements.") The Financial Statements referred to above are correct and
complete, in all material respects, and present fairly, in all material
respects, the financial position of the Business and the results of its
operations as of and for the periods indicated, subject to year-end audit
adjustments which are solely of a normal, recurring and immaterial nature. The
Financial Statements are based on the books and records of the Business, which
have been kept, and such Financial Statements have been prepared, in accordance
with generally accepted accounting principles ("GAAP"), consistently applied.
The monthly pro forma financial statements for the Division for each month in
the period of January through July, 2000 provided to Purchaser were prepared on
a basis consistent with the Financial Statements.
4.1.5. No Material Adverse Change Relating to the Business.
Except as described on Schedule 4.1.5, since August 31, 2000, the Business has
been conducted in the ordinary course and Sellers have not (a) suffered,
individually or in the aggregate, any material adverse change in the business,
financial condition or results of operations of the Business; (b) suffered any
damage, destruction or casualty loss which individually or in the aggregate
materially and adversely affects the business, financial condition or results of
operations of the Business; (c) incurred or discharged any material obligation
or liability except in the ordinary course of business; or (d) entered into any
material transaction or made any material expenditures or commitments not in the
ordinary course of its business consistent with past practice except as
specified in or contemplated by other sections of this Agreement.
4.1.6. Compliance with Laws. Except as listed or described on
Schedule 4.1.6, the Business is not being conducted in violation of, and none of
Sellers nor any of Sellers' Affiliates has received any notice of any current
violation of, any applicable Law, other than violations which do not,
individually or in the aggregate, have a material adverse effect on the
business, financial condition or results of operations of the Business.
4.1.7. Assets used in the Business. Except for the Excluded
Assets, the Assets constitute all of the material assets and properties used
primarily in the conduct of the Business as presently conducted. Except for the
Excluded Assets, there are no assets or properties used in the conduct of the
Business as presently conducted which, individually or in the aggregate, are
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material to the conduct of the Business, or necessary for its operation, or
customarily used in the Business, and are not included in the Assets. Except for
the Excluded Assets and except as set forth on Schedule 4.1.7, the Assets
include all assets and properties reflected in any account set forth on the
Schedule of Balance Sheet Accounts and all assets and properties from which any
income of the Business was derived, other than assets and properties disposed of
by Sellers or any Affiliate of Sellers since August 31, 2000, in the ordinary
course of business without violation of this Agreement, including Section 5.6.
4.1.8. Assets other than Real Property. Sellers have good and
marketable title to the Assets free and clear of all mortgages, liens, security
interests, imperfections of title or other encumbrances (collectively, "Liens"),
except for (a) Liens that are listed or described on Schedule 4.1.8, (b)
mechanics', carriers', workmen's, repairmen's or other like Liens arising or
incurred in the ordinary course of business and (c) Liens for real estate taxes,
assessments and other similar governmental charges which are not currently due
and payable or which may thereafter be paid without penalty or which are being
contested in good faith. The Liens referred to in clauses (b) and (c) of the
exception in the immediately preceding sentence are hereinafter referred to as
"Permitted Liens". Except as set forth on Schedule 4.1.8, all Tangible Personal
Property is in good operating condition, having been maintained in accordance
with the practices followed by comparable businesses, and is reasonably adequate
for the operation of the Business as presently conducted, normal wear and tear
excepted.
4.1.9. Real Property. Except for the Leased Real Property,
Sellers do not own any fee or leasehold or other interests in any real property
used in the conduct of the Business or necessary for the continued conduct of
the Business as presently conducted. Schedule 1.1.1 lists the present lessor and
lessee under each lease of the Leased Real Property. The condition of the Leased
Real Property is such that it will not materially adversely affect the
operations of the Business on or from such Leased Real Property. All of the
improvements on land intended to be included in the Assets are in good operating
condition, having been maintained in accordance with the practices followed by
comparable businesses, in view of the purpose for which such improvements are
being used, free of any material structural or engineering defects known to
Sellers, normal wear and tear excepted.
4.1.10. Insurance. Schedule 4.1.10 sets forth a list and
description, including policy numbers, names and addresses of insurers and
expiration dates, of all material policies of fire, liability and other forms of
insurance in effect as of the date hereof maintained by Sellers or any of
Sellers' Affiliates with respect to the Business or the Assets (all of which (or
similar policies) will be maintained in effect until the Closing). All such
policies are in full force and effect and all premiums due and payable in
respect thereof have been paid. Since the respective dates of such policies, no
notice of cancellation or non-renewal with respect to any such policy has been
received by Sellers. Schedule 4.1.10 sets forth a list of all pending claims and
the status as of the date of this Agreement of all deductibles with respect to
all such policies as of the date of this Agreement, and loss runs since January
1, 1999, with respect to such policies. No insurance coverage or insurance
policy, or any interest therein, relating to the Business or the Assets will be
conveyed by Sellers to Purchaser in connection with the consummation of the
transactions contemplated by this Agreement.
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4.1.11. Intellectual Property.
(a) There are no material United States and foreign
patents, trademarks, trade names, service marks, copyrights or
applications therefor (hereinafter the "Patent and Trademark Rights")
owned by Sellers and used primarily in the Business. To the knowledge of
Sellers, the Business as now conducted does not conflict with and has not
been alleged to conflict with any patents, trademarks, trade names,
service marks or copyrights of others.
(b) Schedules 1.1.7A and 1.1.7B set forth a complete and
correct list of (i) all computer software programs that are proprietary to
Sellers (the "Proprietary Software") and used primarily in the Business;
(ii) all computer software programs licensed to Sellers that are material
to the conduct of the Business (other than "off-the-shelf" software
licensed to Sellers) (the "Licensed Software" and together with the
Proprietary Software, collectively, the "Software"); (iii) all agreements
relating to Licensed Software; and (iv) all agreements relating to the use
by third parties of any Software. Sellers own or possess valid license
rights to all Licensed Software. There are no infringement suits, actions
or proceedings pending or, to the knowledge of Sellers, threatened against
Sellers with respect to any Software. To the knowledge of the Sellers,
there are no infringement suits, actions or proceedings pending or
threatened against the owner of any Licensed Software. Sellers' license,
sublicense, agreement or permission covering the Licensed Software is (i)
legal, valid, binding and enforceable and is in full force and effect and
(ii) has not been breached by any Sellers or, to the knowledge of the
Sellers, the third-party. Subject to receipt of any consents described in
Section 4.1.3 that are applicable to the Licensed Software, the
consummation of the transactions contemplated hereby will not result in
the loss or impairment of Sellers' right to use any Licensed Software that
is material to the operations of the Business following the Closing.
4.1.12. Litigation; Decrees. Except as listed or described on
Schedule 4.1.12, there are no lawsuits, claims, administrative or other
proceedings and investigations pending or, to the knowledge of Sellers,
threatened by, against or affecting Sellers or any of Sellers' Affiliates,
arising out of or relating to the conduct of the Business or otherwise which, if
determined adversely, could, individually or in the aggregate, reasonably be
expected to have a material adverse effect on the business, financial condition
or results of operations of the Business. Sellers are not aware of any facts or
circumstances that could be reasonably expected to give rise to any such suits,
claims, investigations or proceedings. Except as set forth on Schedule 4.1.12,
no Seller is in default under any judgment, order or decree to which any Seller
is a party, or that, to Sellers' knowledge, is applicable to the conduct of the
Business or the Assets. There is no material condemnation proceeding pending or,
to the knowledge of Sellers, threatened against any of the Real Property.
4.1.13. Contract Rights. Except as listed or described on
Schedule 1.1.1, 4.1.13, or 4.1.14, no Seller is a party to or bound by any
Contract relating to the Business that is of a type described below:
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(a) Any written employment or consulting Contract (other than an
Employee Benefit Plan (as hereinafter defined)) with an Employee that is
not terminable at will by a Seller and that will require aggregate future
payments in excess of $50,000 in the case of any one Contract or $100,000
in the aggregate for all Contracts of such type;
(b) Any collective bargaining or other Contract with any labor
union;
(c) Any Contract for capital expenditures or the acquisition,
construction or modification of fixed assets which requires aggregate
future payments of $50,000 or more in the case of any one Contract or
$100,000 or more in the aggregate for all Contracts of such type;
(d) Any Contract (other than a Contract of the type referred to in
clause (a) or (c) of this Section 4.1.13) (i) for the purchase of
Inventory or (ii) for the purchase, maintenance or acquisition of
materials, supplies, merchandise, equipment or other property or services
(including consulting services) that, in the case of clause (ii), is not
terminable at will and requires aggregate future payments or expenses in
excess of $100,000;
(e) Any Contract for the sale of Inventory to customers and/or the
provision of services to customers in connection with the Business (i)
entered into in the ordinary course and for an amount of $50,000 or more,
(ii) not entered into in the ordinary course of business or (iii) which is
for a term of 12 months or more;
(f) Any purchase order not terminable at will by a Seller and
requiring aggregate future payments of $50,000 or more;
(g) Any service contract not terminable at will by a Seller and for
an amount of $50,000 or more;
(h) Any Contract relating to clean-up, abatement or other actions in
connection with the remediation of any existing environmental liabilities
or relating to the performance of any environmental audit or study;
(i) Any Contract not terminable at will by a Seller and granting to
any person a right at such person's option to purchase or acquire any
asset or property of the Business (or any interest therein) with a value
in excess of $50,000 in the case of any one Contract or $100,000 in the
aggregate for all Contracts of such type;
(j) Any license or royalty Contract providing for aggregate future
payments in excess of $50,000 in the case of any one Contract or $100,000
in the aggregate for all Contracts of such type;
(k) Any Contract with any independent contractor or other agent
having a remaining term in excess of one year and which by its terms is
not terminable without penalty on 90 calendar days' or less notice;
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(l) Any lease under which a Seller (i) is a lessee of, or holds or
uses, any machinery, equipment, vehicle or other tangible personal
property owned by a third party or (ii) is a lessor of, or makes available
for use by any third party, any tangible personal property owned by a
Seller, in either such case which lease requires aggregate annual payments
in excess of $100,000;
(m) Any Contract with any manufacturer, supplier or customer with
respect to discounts or allowances or extended payment terms, except for
Sellers' standard discount terms;
(n) Any Contract that would restrict the Purchaser from conducting
the Business;
(o) Any Contract giving any party the right to renegotiate prices or
require a reduction in prices or the repayment of any amount previously
paid and involving potential payments in excess of $50,000 in the case of
any one Contract or $100,000 in the aggregate for all such Contracts; and
(p) Any other Contract which involves future payment or performance
valued at $100,000 or more.
True and complete copies of all the Contracts required to be listed on
Schedule 4.1.13 or any other Schedule hereto (including, without limitation,
Schedules 1.1.1 and 4.1.14) have been furnished or made available to Purchaser.
Except as set forth on Schedule 1.1.1 or 4.1.13, (i) Sellers and (to the
knowledge of Sellers) the other parties thereto, have performed in all material
respects all obligations required to be performed by them to date under the
Contracts (including without limitation those listed on Schedule 1.1.1, Schedule
4.1.13 or on any other Schedule hereto) and are not (with or without the lapse
of time or the giving of notice, or both) in breach or default in any respect
thereunder, except for such failures to perform, breaches and defaults which,
individually or in the aggregate, do not, and, insofar as reasonably can be
foreseen, in the future will not, have a material adverse effect on the
business, financial condition or results of operations of the Business, and (ii)
all Contracts required to be listed on Schedule 4.1.13 or on any other Schedule
hereto (including, without limitation, Schedule 1.1.1) are valid, in full force
and effect and enforceable in accordance with their respective terms, except
where the failure thereof does not individually or in the aggregate have a
material adverse effect on the business, financial condition or results of
operations of the Business.
4.1.14. Employee Contracts, Union Agreements and Benefit Plans.
(a) Except as set forth on Schedule 4.1.14(a), there are no material
Employee Benefit Plans (as hereinafter defined) that cover current or
former employees or independent contractors of the Division. Except as
described on Schedule 4.1.14(a), the transactions contemplated by this
Agreement will not result in any additional or accelerated payments to, or
increase the vested interest of, any current or former officer, employee
or director of the Division or their dependents under any Employee Benefit
Plan. Except as set forth on Schedule 4.1.14(a), all of the Employee
Benefit Plans that
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cover current or former employees of the Division are currently in effect.
All Employee Benefit Plans that cover current or former employees of the
Division and that are welfare plans providing or offering benefits to
retirees or are retirement plans intended to be qualified under Section
401(a) of the Code are identified as such on Schedule 4.1.14(a). Sellers
do not and Sellers' "ERISA Affiliates" (as hereinafter defined) do not
maintain, contribute to, or participate in, or have within the past six
months contributed to, or participated in a multiemployer plan within the
meaning of "ERISA" (as hereinafter defined) Section 4001(a)(3). No fact
exists that could subject Purchaser to any liability after the Closing
under Title IV of ERISA in connection with an Employee Benefit Plan.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended. "Employee Benefit Plans" means any plans, programs, agreements,
arrangements, commitments, policies or understandings of any kind that
provide compensation, remuneration or benefits of any kind or description
whatsoever (whether current or deferred and whether paid in cash or in
kind) in any way, including all employment, consulting or collective
bargaining contracts, and deferred compensation, pension (as defined in
Section 3(2) of ERISA), multiemployer (as defined in Section 3(37)(A) of
ERISA), profit sharing, thrift, stock ownership, severance, stock
appreciation rights, bonus, stock option, stock purchase or other
nonqualified or compensation commitments, arrangements or plans, including
all welfare plans (as defined in Section 3(1) of ERISA), of or pertaining
to the present or former officers, directors, independent contractors or
employees (including retirees), or their dependents, of Sellers and any
ERISA Affiliate or any predecessors in interest thereto, that are
currently in effect or as to which any Sellers, or any ERISA Affiliate,
has any ongoing liability or obligation whatsoever. "ERISA Affiliate"
means each trade or business (whether or not incorporated) that together
with the Sellers is treated as a single employer pursuant to Sections
414(b),(c),(m) or (o) of the Code.
(b) Each Employee Benefit Plan intended to be qualified under
Section 401(a) of the Code has, as currently in effect, been determined to
be so qualified by the IRS and, to the knowledge of Sellers, has been
maintained in compliance in all material respects with its terms and
continues to satisfy the requirements for such qualification.
(c) To the knowledge of Sellers, no action, suit, proceeding,
hearing or investigation with respect to the administration or investment
of assets of any Employee Benefit Plan intended to be qualified under
Section 401(a) of the Code that covers employees of the Division (other
than routine claims for benefits) is pending or threatened, and no, to the
knowledge of Sellers, audit or investigation by any domestic or foreign
governmental or law enforcement agency is pending or has been proposed
with respect to any Employee Benefit Plan that covers employees of the
Division.
4.1.15. Labor Relations.
(a) Except as set forth on Schedule 4.1.15, (i) the employees of the
Business have not been and are not represented by a labor organization
which was either National Labor Relations Board ("NLRB") certified or
voluntarily recognized; (ii) no Seller has been and is not a signatory to
a collective bargaining agreement with any labor
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organization that relates in any way to the Business; (iii) no
representation election petition has been filed by employees of the
Business or is pending with the NLRB and, to Sellers' knowledge, no union
organizing campaign involving employees of the Business has occurred or is
in progress; (iv) no NLRB unfair labor practice claims relating to the
Business have been filed and/or are presently pending against any Seller
or any labor organization representing the employees of the Business; (v)
no grievance or arbitration demand, whether or not filed pursuant to a
collective bargaining agreement, is pending against any Seller with
respect to the employees of the Business; (vi) to Sellers' knowledge, no
hand billing, picketing, work stoppage (sympathetic or otherwise), or
other "concerted action" involving the employees of the Business has
occurred or is in progress; (vii) no breach of contract and/or denial of
fair representation claim relating to the Business is pending against any
Seller and/or any labor organization representing the employees of the
Business; (viii) no claim for unpaid wages or overtime or for child labor
or record keeping violations is pending under the Fair Labor Standards
Act, ▇▇▇▇▇-▇▇▇▇▇ Act, ▇▇▇▇▇-▇▇▇▇▇▇ Act or Service Contract Act or any
other federal, state, local or foreign law, regulation or ordinance with
respect to the Business; (ix) no discrimination and/or retaliation claim
has been filed or is pending against any Seller under the 1866 or 1964
Civil Rights Acts, the Equal Pay Act, the Age Discrimination in Employment
Act, as amended, the Americans with Disabilities Act, the Family and
Medical Leave Act ("FMLA"), the Fair Labor Standards Act, ERISA or any
other federal law or any comparable state fair employment practices act or
foreign law regulating discrimination in the workplace with respect to the
Business; (x) if any Seller is a federal or state contractor obligated to
develop and maintain an affirmative action plan, no discrimination claim,
show cause notice, conciliation proceeding, sanctions or debarment
proceeding has been filed or is pending with Office of Federal Contract
Compliance Programs or any other federal agency or any comparable state or
foreign agency or court and no desk audit or on-site review is in progress
with respect to the Business; (xi) no citation has been issued or
threatened by the Occupational Safety and Health Administration ("OSHA")
against any Seller with respect to the Business and no notice of contest
or OSHA administrative enforcement proceeding involving any Seller has
been filed since January 1, 1999, or is pending with respect to the
Business; (xii) no workers' compensation or retaliation claim has been
filed or is pending against any Seller with respect to the Business;
(xiii) to Sellers' knowledge, no group of the Division's employees has any
plans to terminate his or its employment; (xiv) no citation of the Sellers
has occurred since January 1, 1999, and no enforcement proceeding has been
initiated, threatened, or is pending under Federal or foreign immigration
law; and (xv) except for the transactions contemplated by this Agreement,
no Seller has taken any action that would constitute a "mass layoff" or
"plant closing" within the meaning of the Worker Adjustment and Retraining
Notification Act (the "WARN Act") or otherwise trigger notice requirements
or liability under any local or state plant closing notice law. Each
Seller is in compliance with respect to the Division in all material
respects with all federal, state and local laws respecting employment and
employment practices, terms and conditions of employment, wages and hours,
and is not engaged in any unfair labor or unlawful employment practice.
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(b) Sellers have made all filings required by the Occupational
Safety and Health Act, Executive Order 11246 and other similar federal,
state and local laws, regulations and orders, including all filings with
the Equal Employment Opportunity Commission and any other filings relating
to affirmative action or similar programs with respect to the Business.
Sellers have previously delivered or made available to Purchaser all
material reports and filings made or filed by them with respect to such
matters.
4.1.16. Divisional Personnel. Schedule 4.1.16 sets forth the names,
locations of service, salary or rate of pay and classification of all personnel
employed with respect to the Business as of the date of this Agreement. Schedule
4.1.16 sets forth the date and amount of the last salary or rate of pay increase
for each such person whose 1999 annual compensation exceeded $25,000. No Seller
has received a claim from any Governmental Agency to the effect that such Seller
has improperly classified as an independent contractor any person listed on
Schedule 4.1.16, or any similarly situated person.
4.1.17. No Undisclosed Liabilities. No Seller and no Affiliate of
Seller has any liability, obligation or commitment of any nature (absolute,
accrued, contingent or otherwise) in respect of the Assets or the Business
except (i) a liability which is fully reflected as a liability or reserved for
in an account included on the Financial Statements at August 31, 2000, to the
extent required by generally accepted accounting principles, (ii) a liability
which has been incurred in the ordinary course of business consistent with past
practice and without violation of this Agreement, since August 31, 2000, and
(iii) a liability which is disclosed in a Schedule hereto. The terms
"liability," "obligation" and "commitment" as used in this Section 4.1.17 shall
have the meanings accorded to them by generally accepted accounting principles.
4.1.18. Environmental Protection.
(a) Definitions. For purposes of this Agreement, the following
terms shall have the following meanings:
"Environmental Laws" means federal, state and local statutes,
ordinances, regulations and codes, and other applicable Laws
relating to pollution, protection of the environment, public health
and safety, or pharmacy practice as amended or reauthorized,
including without limitation, the Comprehensive Environmental
Response Compensation and Liability Act of 1980, as amended (42
U.S.C. ss. 9601 et seq.); the Resource Conservation and Recovery
Act, as amended (42 U.S.C. ss. 6901 et seq.); the Toxic Substances
Control Act, as amended (15 U.S.C. ss. 2601 et seq.); the Controlled
Substances Act, as amended (21 U.S.C. ss. 801 et seq.); the
Controlled Substances Import and Export Act (21 U.S.C. ss. 951 et
seq.) and any applicable state pharmacy practice laws; and the
Federal Food, Drug and Cosmetic Act (21 U.S.C. ss. 301 et seq.) and
any equivalent state laws.
"Hazardous Substances" means, without limitation, any
explosive or radioactive material, asbestos, wastewater and sludges
derived from wastewater, urea formaldehyde foam insulation,
polychlorinated biphenyls, petroleum and petroleum based products,
methane, hazardous waste, toxic or
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hazardous substances or related materials, or any controlled
substances, as defined in the Environmental Laws.
(b) Except as set forth on Schedule 4.1.18(b):
(i) Sellers are in compliance in all material respects
with all applicable Environmental Laws with respect to the
properties, assets (including the Assets) and operations
comprising the Business.
(ii) Sellers have obtained and adhered, in all material
respects, to all permits and other approvals, necessary to
conduct the Business as presently conducted and to store,
dispose of and otherwise handle Hazardous Substances and, to
Sellers' knowledge have reported, to the extent required by
Environmental Laws, all past and present sites owned, leased
or operated by them where Hazardous Substances have been
treated, stored or disposed.
(iii) Except in accordance with applicable Environmental
Laws: (i) no Hazardous Substance has been released (as that
term is defined in the applicable Environmental Laws) by
Sellers at or on any of the property owned, leased or operated
by Sellers in the Business during the period in which Sellers
have owned, leased or operated such property, and (ii) to the
knowledge of Sellers, no Hazardous Substance has ever been
released at or on any of the property owned, leased or
operated in the Business by Sellers.
(iv) Sellers have not received any written notice, claim
or request for information relating to any on-site or off-site
locations to which any of them has transported Hazardous
Substances or arranged for the transportation of Hazardous
Substances, alleging that any of them is liable for any
clean-up cost, remedial work, damage to natural resources or
personal injury.
(v) There is no claim for violation of any Environmental
Law pending or, to the knowledge of Sellers, threatened
against Sellers with respect to the Business.
(vi) Sellers have made available to Purchaser accurate
and complete copies of all documents in their possession or
under their control pertaining to all of the matters described
in paragraphs (i) through (v) of this Section 4.1.18(b),
including all environmental audits or assessments prepared by
and for Sellers or, to Sellers' knowledge, any governmental
authority or any third party (including any financial
institution).
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4.1.19. Tax Matters.
(a) For purposes of this Agreement, "Taxes" shall mean all taxes
(including any taxes attributable to any Seller ceasing to be a member of
an affiliated group as defined in Section 1504(a) of the Code),
assessments, charges, duties, fees, levies or other governmental charges
(including interest, penalties or additions associated therewith),
including federal, state, city, county, foreign or other income,
franchise, capital stock, real property, personal property, tangible,
withholding, FICA, unemployment compensation, disability, transfer, sales,
use, excise, gross receipts and all other taxes of any kind for which
Sellers may have any liability imposed by the United States or any state,
county, city, country or foreign government or subdivision or agency
thereof, whether disputed or not.
(b) Except as otherwise disclosed on Schedule 4.1.19(b), (i) all
returns, including estimated returns and reports of every kind, with
respect to income and franchise Taxes to the extent imposed on Sellers
with respect to the Business, which are due to have been filed in
accordance with any applicable law, have been duly filed or extensions
have been duly granted therefor, (ii) all income and franchise Taxes,
deposits or other payments for which Sellers may have any liability
through the Effective Date with respect to the Business, have been paid in
full or are accrued as liabilities for such Taxes on the books and records
of Sellers (excluding any part of such accrual established to reflect
timing differences between book and tax income); (iii) the amounts so paid
on or before the Effective Date, together with any amounts accrued as
liabilities for income and franchise Taxes (whether accrued as currently
payable or deferred Taxes but excluding any part of any such accrual
established to reflect timing differences between book and tax income) on
the books of Sellers with respect to the Business will be adequate to
satisfy all liabilities for such Taxes of Sellers through the Effective
Date, including such Taxes accruable upon income earned through the
Effective Date; (iv) there are not now any extensions of time in effect
with respect to the dates on which any returns or reports of income and
franchise Taxes with respect to the Business were or are due to be filed;
(v) all deficiencies asserted as a result of any examination of any return
or report of income and franchise Taxes with respect to the Business have
been paid in full, accrued on the books of Sellers or finally settled, and
no issue has been raised in any such examination which, by application of
the same or similar principles, reasonably could be expected to result in
a proposed deficiency for any other period not so examined; (vi) no claims
have been asserted and, to the knowledge of Sellers, no proposals or
deficiencies for any income or franchise Taxes with respect to the
Business are being asserted, proposed or threatened, and no audit or
investigation of any return or report of such Taxes is currently underway,
pending or, to the knowledge of Sellers, threatened; (vii) to the
knowledge of Sellers, no claims have been asserted and no proposals or
deficiencies for any Taxes other than income or franchise Taxes with
respect to the Business are being asserted, proposed or threatened, and no
audit or investigation of any return or report of such Taxes is currently
underway, pending or threatened; (viii) there are no outstanding waivers
or agreements by Sellers for the extension of time for the assessment of
income or franchise Taxes with respect to the Business or deficiency
thereof; (ix) there are no Liens for income or franchise Taxes with
respect to
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the Business upon the Assets, except such Liens for current such Taxes not
yet due, nor are there any such Liens which, to the knowledge of Sellers,
are pending or threatened; and (x) to the knowledge of Sellers, there are
no Liens for Taxes other than income and franchise taxes with respect to
the Business, except for current Liens for such Taxes not yet due, nor are
there any such Liens which are pending or threatened.
4.1.20. Brokers' and Finders' Fees. Other than the engagement of
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., no Seller nor anyone acting on behalf of any Seller, has
done anything to cause or incur any liability to any party for any brokers' or
finders' fees or the like in connection with this Agreement or any transaction
contemplated hereby.
4.1.21. Licenses and Permits. Schedule 4.1.21 contains a true and
complete list of all material notifications, licenses, permits (including,
without limitation, environmental, construction, operation, pharmacy, and
controlled substance permits), franchises, certificates, approvals, exemptions,
classifications, registrations and other similar documents and authorizations,
and applications therefor (collectively, the "Licenses") necessary to the
conduct of the Business or the lack of which would individually or in the
aggregate have a material adverse effect on the business, financial condition or
results of operations of the Business. The Sellers own or possess all Licenses
that are necessary to enable the Division to carry on the Business as presently
conducted. All such Licenses are valid, binding, and in full force and effect.
The execution, delivery and performance of this Agreement and the consummation
of the transactions contemplated hereby will not adversely affect any such
License (subject to the receipt of any consent necessary). Sellers have taken
all necessary action to maintain each such License, except where the failure to
so act is not likely to have a material adverse effect. No loss or expiration of
any such License is pending or reasonably foreseeable (other than expiration
upon the end of any term) or, threatened.
4.1.22. Books and Records. All the books, records and accounts included
in the Assets are in all material respects true and complete, are maintained in
all material respects in accordance with all Laws applicable to the Business,
and accurately present and reflect in all material respects the transactions of
the Business and the dispositions of the assets of the Business.
4.1.23. [Intentionally omitted.]
4.1.24. Major Suppliers and Customers. Schedule 4.1.24 sets forth a
list of each supplier of goods or services to, and each customer of, the
Division to whom Sellers paid or billed in the aggregate more than $50,000
during the 12-month period ended August 31, 2000, together with, in each case,
the amount paid or billed during such period. Except as set forth on Schedule
4.1.24, no Seller has suffered any change in its relationship with any of such
suppliers or customers which could reasonably be expected to have a material
adverse effect on the revenues projected for such customer during Sellers'
fiscal year 2000 as set forth on Schedule 4.1.24. Except as set forth on
Schedule 4.1.24, no Seller has knowledge that the consummation of the
transactions contemplated hereunder will have any adverse effect on its business
relationship with any such customer, which, if such adverse effect occurred,
could reasonably be expected to result in the loss of $50,000 or more of
revenues from such customer during the 12-month period following the Closing
Date. Except as set forth on Schedule 4.1.24,
▇▇
▇▇
▇▇▇▇ of the officers or directors of any Seller, nor, to any Sellers' knowledge,
any Related Person (as hereinafter defined), has any material financial interest
in any supplier or customer of the Division. "Related Person" means, with
respect to any director or officer of any Seller, a lineal ancestor or
descendant of such director or officer, the spouse of such director or officer
and any entity, partnership or joint venture in which such director or officer,
or any of the other persons referred to in this sentence, owns 10% or more of
the equity interests.
4.1.25. Inventory. All Inventory reflected on the balance sheet of the
Business as of August 31, 2000 was acquired and has been maintained in the
ordinary course of business; is of good and merchantable quality; consists
substantially of a quality, quantity and condition usable, or saleable within
six months in the ordinary course of business; is valued at the lower of cost or
market on a weighted average basis and otherwise in accordance with GAAP and
consistent with past practices; and is not subject to any material write-down or
write-off for which an appropriate reserve was not included in the balance sheet
of the Business as of August 31, 2000. Except as described on Schedule 4.1.25
hereto, no Seller is under any liability or obligation with respect to the
return of inventory in the possession of its customers. Except as listed and
described on Schedule 4.1.25 hereto, no Seller has any obsolete or slow-moving
inventory used in connection with the Business (i.e., inventory which, based
upon the historical sales rate of such items could not reasonably be expected to
be sold within six (6) months) or inventory which is not fit for the purpose for
which it is intended to be used. Since August 31, 2000, no inventory item of any
Seller used in connection with the Business has been sold or disposed of except
in the ordinary course of business.
4.1.26. Pharmaceutical Regulation. Except as set forth on Schedule
4.1.26, with respect to the Division:
(a) The Sellers possess currently valid registrations, licenses and
other permits from the DEA, relevant state boards of pharmacy, and any
other relevant agencies to receive, store, and dispense pharmaceutical
products, including pharmaceutical products regulated as controlled
substances (collectively, the "Pharmaceutical Products"), at and from the
Division's facilities.
(b) The Sellers have provided or made available to the Purchaser all
Form FDA-483, Establishment Inspection Reports, or other regulatory agency
forms, reports or correspondence received during the last five years
describing inspectional observations by the Food and Drug Administration
("FDA"), DEA, relevant state boards of pharmacy, and any other agencies
related to the Division's pharmacy activities.
(c) The Sellers have provided or made available to the Purchaser all
responses to documents identified in paragraph (b) submitted to FDA, DEA,
relevant state boards of pharmacy, or any other agencies related to the
Division's pharmacy activities during the last five years.
(d) The Sellers have provided or made available to the Purchaser all
warning letters, letters of admonition, other regulatory letters, notices
of violation, notices of hearing or adverse findings received by such
Company during the last five years identifying potential violations of, or
deviations from laws or regulations administered by
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FDA, DEA, state boards of pharmacy, or any other agencies related to the
Division's pharmacy activities.
(e) The Sellers have provided or made available to the Purchasers
all responses to documents identified in paragraph (d) submitted to FDA,
DEA, relevant state boards of pharmacy, or any other agencies related to
the Division's pharmacy activities during the last five years.
(f) The Sellers perform internal regulatory compliance audits on a
regular basis with respect to the Division and have implemented any
corrective actions recommended by such reports, except to the extent that
the failure to implement such corrective actions would not have a material
adverse effect on the operations of the Business.
(g) The Sellers have had one or more regulatory audits by an outside
auditor with respect to the Division during the last five years and have
provided or made available to the Purchaser any written information
regarding these audits.
(h) The Sellers are in compliance with FDA, DEA, relevant state
board of pharmacy, and other agency regulations related to the Division's
pharmacy activities, including, but not limited to, requirements for the
receipt, security, inventory, and dispensing of pharmaceutical products
and recordkeeping and reporting requirements.
(i) The Sellers have signed, up-to-date, written policies that
reflect the actual FDA, DEA, and state regulatory compliance procedures
with respect to the Division.
(j) The Sellers have no knowledge of any acts that furnish a
reasonable basis for a warning letter or other regulatory letter, other
adverse regulatory communication or action, or civil or criminal
investigation or action.
4.2. Representations, Warranties And Certain Covenants of Purchaser.
Purchaser represents and warrants to and covenants with Sellers as follows:
4.2.1. Corporate Organization. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Tennessee and has all requisite corporate power and authority and possesses all
material Permits necessary to own, lease or otherwise hold its properties and
assets and to carry on its business as presently being conducted. Purchaser has
all requisite corporate power and authority (i) to purchase, own, hold or lease
the Assets it is purchasing, (ii) to assume, pay and satisfy the Assumed
Liabilities and (iii) to carry on the Business upon the consummation of the
transactions contemplated hereby. Purchaser will, at or before the Closing,
deliver to Sellers complete and correct copies of (i) Purchaser's Charter and
all amendments thereto (certified by the Secretary or Assistant Secretary of
Purchaser) and (ii) its By-Laws and all amendments thereto (certified by the
Secretary or an Assistant Secretary of Purchaser).
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4.2.2. Authorization And Effect Of Agreement. Purchaser has all
requisite corporate power and authority to execute and deliver this Agreement
and the Ancillary Documents to which it is or will be a party and to consummate
the transactions contemplated hereby and thereby. The execution and delivery by
Purchaser of this Agreement and the Ancillary Documents to which it is or will
be a party and the consummation by Purchaser of the transactions contemplated
hereby and thereby to be consummated by it have been duly authorized by all
necessary corporate action on the part of Purchaser. This Agreement and the
Ancillary Documents to which Purchaser is or will be a party have been or will
be, as the case may be, duly executed and delivered by Purchaser and constitute
valid and binding obligations of Purchaser, enforceable in accordance with their
respective terms, except as enforceability may be limited by bankruptcy,
insolvency or other similar Laws of general application affecting the
enforcement of creditors' rights or by general principles of equity limiting the
availability of equitable remedies (whether applied in a proceeding in equity or
at law).
4.2.3. No Restrictions Against Purchase Of The Assets. Except as set
forth in Schedule 4.2.3, the execution and delivery by Purchaser of this
Agreement and the Ancillary Documents to which Purchaser is or will be a party
do not, and the performance by Purchaser of the transactions contemplated hereby
and thereby to be performed by it will not, conflict with, or result in any
violation of, or constitute a default (with or without notice or lapse of time,
or both) under, any provision of the Charter or By-Laws of Purchaser or any
Contract, Permit or Law applicable to Purchaser or its assets, other than any
such conflicts, violations or defaults which individually or in the aggregate do
not have a material adverse effect on the business, financial condition or
results of operations of Purchaser. Except as set forth in Schedule 4.2.3, no
material consent, approval order or authorization of, or registration,
declaration or filing with, any Governmental Agency is required to be obtained
or made by or with respect to Purchaser in connection with the execution and
delivery of this Agreement or the consummation by it or the transactions
contemplated hereby and thereby to be consummated by it.
4.2.4. Brokers' and Finders' Fees. Neither Purchaser, nor anyone
acting on behalf of Purchaser, has done anything to cause or incur any liability
to any party for any brokers' or finders' fees or the like in connection with
this Agreement or any transaction contemplated hereby.
5. COVENANTS
5.1. Employees.
(a) Purchaser shall offer employment, commencing as of the Closing
Date, on an at will basis, to all employees of the Business who are
actively employed, or are on an approved leave of absence, on the Closing
Date (the "Employees") at the same rate of base compensation and at a
comparable job title with the Business as in effect immediately prior to
the Closing Date. Each such Employee who accepts such offer of employment
is hereinafter referred to as a "Hired Employee." All Hired Employees
shall be eligible to participate in the employee benefit plans, programs
and policies, and fringe benefits of Purchaser on the same basis (after
application of paragraph (c) below) as such plans, programs, policies and
benefits are offered to similarly situated employees of Purchaser.
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(b) Sellers shall release all Employees as of the Closing Date to
accept employment by Purchaser as provided under paragraph (a) above.
Sellers shall pay such Employees all amounts due them with respect to
earned and accrued salaries, wages and bonuses to the extent attributable
to service with Sellers prior to the Closing Date. Sellers shall also pay
each Employee his or her Accrued Paid Time Off, if any. "Accrued Paid Time
Off" means for such purpose all accrued unused vacation, holiday, sick and
personal time of an Employee as of the Closing Date, determined in
accordance with Sellers' paid-time off policy.
(c) Purchaser shall credit all Hired Employees for all service with
Sellers prior to the Closing Date for purposes of eligibility under all
employee benefit plans, programs and policies, and fringe benefits of
Purchaser and for purposes of vesting in the Purchaser's pension plan (as
defined in Section 3(2) of ERISA), subject to the applicable pension plan
break-in-services rules under the Code and ERISA. Purchaser shall pay
Hired Employees all amounts due them with respect salaries, wages and
bonuses (under any bonus plan adopted by Purchaser with respect to the
Hired Employees) to the extent attributable to service with Purchaser on
and after the Closing Date.
(d) Sellers shall be responsible for the payment of severance pay,
if any, pursuant to any applicable employee related contract, agreement,
plan or policy, attributable to the termination of any Employee.
(e) Sellers shall provide the Purchaser with all services and
compensation information for periods prior to the Closing Date for
employees of the Business who are hired by the Purchaser that is necessary
or appropriate for Purchaser to cover such employees under Purchaser's
employee benefit plans.
5.2. Transfer Taxes. Any real property transfer or gains taxes, recording
fees or any other taxes payable as a result of the sale of the Assets or any
other action contemplated by this Agreement will be paid by Purchaser. Purchaser
and Sellers will cooperate in the preparation, execution and filing of all
returns, questionnaires, applications, or other documents regarding any real
property transfer or gains, sales, use, transfer, value added, stock transfer
and stamp taxes, any transfer, recording, registration and other fees, and any
similar taxes which become payable in connection with the transfer of the Assets
that are required or permitted to be filed on or before the Closing. Except as
provided above, (a) Purchaser will pay its own fees, costs and expenses incurred
in connection with this Agreement and the transactions contemplated by this
Agreement, including, the fees, costs and expenses of its financial advisors,
accountants and counsel and (b) Sellers will pay the fees, costs and expenses of
Sellers incurred in connection with this Agreement and the transactions
contemplated by this Agreement, including, the fees, costs and expenses of
Sellers' financial advisors, accountants and counsel.
5.3. Press Release. On the Closing Date, the Purchaser and the Seller
shall be permitted to release a mutually agreed upon press release with respect
to the consummation of the transactions contemplated by this Agreement.
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5.4. Pharmacy Licenses. Sellers agree to use their commercially reasonable
efforts to aid the Purchaser in obtaining all authorizations, consents, orders
and approvals of Government Agencies after the Closing Date and to take all
reasonable actions to avoid the entry of any order or decree by any Governmental
Agency against the Purchaser with respect to such necessary government consents
after the Closing Date.
6. CLOSING DELIVERIES
6.1. Deliveries of Sellers. Sellers shall deliver all of the following
documents at Closing:
6.1.1. Transfer Documents. Sellers shall have delivered to Purchaser
the bills of sale, assignments, deeds and other instruments of transfer (the
"Transfer Documents") in substantially the form set forth in Schedule 6.1.1,
relating to the Assets, which (as to the Leased Real Property and the leases
relating thereto) shall be in recordable form to the extent that recordation
thereof is necessary or desirable, in Purchaser's judgment, to effect the
Transfer of such Assets, Transferring to Purchaser good and marketable title to
the Assets, in each case free of any Liens other than Permitted Liens.
6.1.2. Certificates. Sellers shall have delivered certified evidence of
corporate actions taken in connection with the execution, delivery and
performance by Sellers of this Agreement and the Ancillary Documents to which
Sellers are a party and an incumbency certificate of each Seller.
6.1.3. Consents Under Key Agreements. Sellers shall have delivered all
consents, approvals, novations, authorizations, exemptions or waivers from
parties to the Contracts listed on Schedule 6.1.3 (collectively, the "Key
Agreements") to the extent required for the consummation of the transactions
contemplated hereunder without any violation or breach thereof or default,
termination or acceleration occurring thereunder.
6.1.4. Power of Attorney. The Sellers shall have delivered to the
Purchaser a power of attorney substantially in the form attached hereto as
Schedule 6.1.4.
6.1.5. Termination Statements. Sellers shall have delivered to
Purchaser UCC-3 Termination Statements, or other appropriate instruments of
termination, in form and substance satisfactory to Purchaser, with respect to
each UCC financing statement or other lien or encumbrance referred to on
Schedule 6.1.5.
6.1.6. Employment Agreements. Messrs. ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ and
▇▇▇▇▇ ▇▇▇▇▇ shall have entered into employment agreements in favor of Purchaser
in substantially the forms set forth in Schedules 6.1.6(a), (b) and (c).
6.1.7. Non-Competition Agreements. The Sellers and the Affiliates of
Sellers named therein shall have entered into noncompetition agreements in favor
of Purchaser in substantially the form set forth in Schedule 6.1.7.
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6.1.8. Accounts Receivable Collection Agreement. The Purchaser and
Sellers shall have entered into the agreement with respect to the collection by
Purchaser of Sellers' accounts receivable and payment by Purchaser, on behalf of
Sellers, of their accounts payable (the "Accounts Receivable and Payable
Management Agreement") substantially in the form set forth in Schedule 6.1.8.
6.1.9. Transition Services Agreement. The Purchaser and Sellers shall
have entered into an agreement with respect to the provision of certain
transition services by Sellers to Purchaser (the "Transition Services
Agreement") substantially in the form set forth in Schedule 6.1.9.
6.1.10. BBC Guaranty. Sellers shall deliver to Purchaser a guaranty
from BBC, the parent corporation of the Sellers guaranteeing all obligations of
the Sellers pursuant to this Agreement (the "BBC Guaranty"), substantially in
the form set forth on Schedule 6.1.10.
6.2. Deliveries of Purchaser. Purchaser shall deliver all of the following
documents at Closing:
6.2.1. Instruments Of Assumption. There shall have been delivered to
Sellers by Purchaser the instruments of assumption (the "Assumption
Instruments"), in substantially the form set forth in Schedule 6.2.1.
6.2.2. Purchase Price. Purchaser shall have delivered to Sellers the
Purchase Price, in the manner specified in Section 2.3 and all other payments
required by Section 2.
6.2.3. Certificates. Sellers shall have received certified evidence of
corporate actions taken in connection with the execution, delivery and
performance by Purchaser of this Agreement and the Ancillary Documents to which
Purchaser is or will be a party and an incumbency certificate of Purchaser.
6.2.4. Prime Vendor Contract. The Purchaser and the Sellers shall enter
into a prime vendor contract substantially in the form set forth in Schedule
6.2.4.
6.2.5. ASG Guaranty. Purchaser shall deliver to Seller a guaranty from
ASG, the parent corporation of the Purchaser, guaranteeing all obligations of
the Purchaser pursuant to this Agreement (the "ASG Guaranty"), substantially in
the form set forth on Schedule 6.2.5.
7. THE CLOSING
7.1. The Closing. The consummation of the purchase and sale of the Assets
and the assumption of the Assumed Liabilities contemplated hereby (the
"Closing") will take place on September 20, 2000, or such other date (but not
later than September 29, 2000) and time as the parties may mutually agree (the
"Closing Date"). The Closing shall be effective as of 12:01 a.m. Nashville time
on the Closing Date. The Closing will take place at the offices of King &
▇▇▇▇▇▇▇▇, ▇▇▇▇ Avenue of the Americas, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇.
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8. SURVIVAL AND INDEMNIFICATION
8.1. Survival.
8.1.1. Survival of Representations And Warranties. Each of the
representations and warranties contained herein or in any Ancillary Document
(except as otherwise specifically provided in such Ancillary Document) will
survive and remain in full force and effect until March 31, 2002, except for (i)
representations and warranties made in Sections 4.1.14 [Employee Contracts,
Union Agreements and Benefit Plans]; 4.1.15 [Labor Relations]; 4.1.18
[Environmental Protection]; and 4.1.19 [Tax Matters]; which shall remain in
effect for the applicable statute of limitations period and (ii) the Excluded
Representations (as hereinafter defined), which shall survive the Closing and
remain in effect indefinitely. The term "Excluded Representations" shall mean
and include the representations and warranties of Sellers made in Sections 4.1.1
[Corporate Organization]; 4.1.2 [Authorization and Effect of Agreement]; 4.1.3
[No Restrictions Against Sale of the Assets]; and 4.1.21 [Brokers' and Finders'
Fees].
8.1.2. Survival of Covenants. Unless a specified period is set forth in
this Agreement (in which event such specified period will control), all
covenants contained in this Agreement will survive the Closing and remain in
effect indefinitely.
8.2. Limitations On Indemnification; Right of Offset.
8.2.1. With Respect To Certain Representations And Warranties. No
Indemnitee (as hereinafter defined) will be entitled to make a claim against an
Indemnifying Party (as hereinafter defined) pursuant to Section 8.3.1 or 8.3.2
unless and until the aggregate amount of claims which may be asserted for
Indemnifiable Losses (as hereinafter defined) pursuant to such Sections exceeds
$100,000, and in the event the Indemnifiable Losses exceed $100,000, Purchaser
shall be entitled to indemnification from Sellers of all Indemnifiable Losses;
provided, however, that the foregoing limitation shall not apply to (i) claims
made with respect to the Excluded Representations; (ii) claims by Purchaser
related to Sellers' breach of its covenant set forth in the third sentence of
Section 3.1; (iii) claims by Sellers related to Purchaser's breach of its
covenant set forth in Section 3.2; or (iv) claims asserted pursuant to clauses
(iii), (iv) or (vi) of Section 8.3.1.
8.2.2. With Respect To Sellers' Obligations. Notwithstanding any other
provision of this Agreement, the indemnification obligations of Sellers under
Section 8.3.1(i), other than indemnification obligations arising by reason of
Sellers' breach of its covenant set forth in the third sentence of Section 3.1,
shall not exceed the Purchase Price in the aggregate; provided, however, that
such limitation on Sellers' liability shall not apply to Indemnifiable Losses
(as hereinafter defined) resulting from Sellers' fraud or willful breach.
8.3. Indemnification.
8.3.1. Indemnification By Sellers. Subject to Sections 8.1, 8.2 and
8.4, Sellers will, jointly and severally, indemnify, defend and hold harmless
Purchaser, its Affiliates and their respective directors, officers, employees,
agents and representatives from and against any and all claims, demands or suits
(by any person or entity, including without limitation any
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Governmental Agency), losses, liabilities, actual or punitive damages, fines,
penalties, obligations, payments, costs and expenses, paid or incurred, whether
or not relating to, resulting from or arising out of any Third Party Claim (as
hereinafter defined), including without limitation the costs and expenses of any
and all investigations, actions, suits, proceedings, demands, assessments,
judgments, remediation, settlements and compromises relating thereto and
reasonable fees and expenses of attorneys and other experts in connection
therewith (individually and collectively, "Indemnifiable Losses") relating to,
resulting from or arising out of any of the following: (i) the inaccuracy as of
the Closing of any of the representations or warranties of Sellers contained in
this Agreement or any Ancillary Document; (ii) any breach by Sellers of any
covenant of Sellers contained in this Agreement or in any Ancillary Document;
(iii) any liability associated with a violation of the WARN Act which occurs as
a result of the transactions contemplated by this Agreement; (iv) any liability
or obligation associated with any investigation by any governmental agency of
any of the Division's facilities or operations that is pending on the Closing
Date; (v) any liability other than an Assumed Liability, including, without
limitation, Sellers' failure or alleged failure to pay or satisfy any liability
for which it is responsible hereunder other than an Assumed Liability; and (vi)
any liability, cost or expense incurred by Purchaser with respect to any Lien
imposed on the Assets with respect to Taxes of Sellers or any prior owner of the
Business of any kind or for any period.
8.3.2. Indemnification By Purchaser. Subject to Sections 8.1, 8.2 and
8.4, Purchaser will indemnify, defend and hold harmless Sellers, each of
Sellers' Affiliates and their respective directors, officers, employees, agents
and representatives from and against any and all Indemnifiable Losses relating
to, resulting from or arising out of any of the following: (i) the inaccuracy as
of the Closing of any of the representations or warranties of Purchaser
contained in this Agreement or any Ancillary Document; (ii) any breach by
Purchaser of any covenant of Purchaser contained in this Agreement or in any
Ancillary Document; (iii) any Assumed Liability, including, without limitation,
Purchaser's failure or alleged failure to pay or satisfy any Assumed Liability;
and (iv) any liability or obligation relating to the Business incurred after the
Closing.
8.3.3. Cumulative Rights. The rights of Purchaser under each of the
clauses of Section 8.3.1 and the rights of Sellers under each of the clauses of
Section 8.3.2 are not mutually exclusive.
8.3.4. Indemnity Payment; Indemnitee; Indemnifying Party. For purposes
of this Agreement, (i) "Indemnity Payment" means any amount of Indemnifiable
Losses required to be paid pursuant to this Section 8.3, (ii) "Indemnitee" means
any person or entity entitled to indemnification under this Agreement, and (iii)
"Indemnifying Party" means any person or entity that may be required to provide
indemnification under this Agreement.
8.4. Defense of Claims.
8.4.1. Third Party Claims.
(a) If any Indemnitee receives notice of the assertion of any claim
or of the commencement of any action or proceeding by any entity that is
not a party to this Agreement or an Affiliate of such a party (a "Third
Party Claim") against such
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Indemnitee, against which an Indemnifying Party is obligated to provide
indemnification under this Agreement, the Indemnitee will give such
Indemnifying Party reasonably prompt written notice thereof, but in any
event in sufficient time to permit the Indemnifying Party to defend
against the Third Party Claim. Such notice will describe the Third Party
Claim in reasonable detail, and will indicate the estimated amount, if
reasonably practicable, of the Indemnifiable Loss that has been or may be
sustained by the Indemnitee. The Indemnifying Party will have the right to
participate in or, by giving written notice to the Indemnitee no later
than 30 calendar days after receipt of the above-described notice of such
Third Party Claim, to elect to assume the defense of any Third Party Claim
at such Indemnifying Party's own expense and by such Indemnifying Party's
own counsel (reasonably satisfactory to the Indemnitee), and the
Indemnitee will cooperate in good faith in such defense. If the
Indemnifying Party elects to assume the defense, the Indemnitee will have
the right to participate in the defense of any Third Party Claim assisted
by counsel of its own choosing and at its expense, provided that, if the
named parties to any such proceeding (including any impleaded parties)
include both the Indemnifying Party and the Indemnitee and the
Indemnifying Party proposes that the same counsel represent both the
Indemnitee and the Indemnifying Party, the Indemnitee shall have the right
to retain its own counsel at the cost and expense of the Indemnifying
Party, if representation of both parties by the same counsel would be
inappropriate due to actual or potential conflicts of interest between
them that are material. If the Indemnitee has not received written notice
within such 30 calendar day period that the Indemnifying Party has elected
to assume the defense of such Third Party Claim, the Indemnitee may, at
its option, elect to settle or assume such defense, assisted by counsel of
its own choosing, and the Indemnifying Party will be liable for all costs,
expenses, settlement amounts or other Indemnifiable Losses paid or
incurred in connection therewith.
(b) If, within the 30 calendar days set forth above, an Indemnitee
receives written notice from an Indemnifying Party that such Indemnifying
Party has elected to assume the defense of any Third Party Claim as
provided in Section 8.4.1(a), the Indemnifying Party will not be liable
for any legal expenses subsequently incurred by the Indemnitee in
connection with the defense thereof (except as provided in paragraph (a)
above); provided, however, that if the Indemnifying Party fails to take
reasonable steps necessary to defend diligently such Third Party Claim
within 30 calendar days after receiving written notice from the Indemnitee
that the Indemnitee believes the Indemnifying Party has failed to take
such steps, the Indemnitee may, at its option, elect to settle or assume
its own defense, assisted by counsel of its own choosing, and the
Indemnifying Party will be liable for all costs, expenses, settlement
amounts or other Indemnifiable Losses paid or incurred in connection
therewith.
(c) Without the prior written consent of the Indemnitee, the
Indemnifying Party will not enter into any settlement of any Third Party
Claim or cease to defend against such claim, if pursuant to or as a result
of such settlement or cessation, injunctive or other equitable relief
would be imposed against the Indemnitee. Without the prior written consent
of the Indemnitee, which will not be unreasonably withheld, the
Indemnifying Party will not enter into any settlement of any Third Party
Claim or cease to defend against such claim, if such settlement or
cessation would lead to liability or
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create any financial or other obligation on the part of the Indemnitee for
which the Indemnitee is not entitled to indemnification hereunder or is
not in fact indemnified therefor. The Indemnifying Party shall not consent
to the entry of any judgment or enter into any settlement that does not
include as an unconditional term thereof the giving by the claimant or
plaintiff to each Indemnitee of a release from all liability in respect of
such claim. The Indemnifying Party shall not be entitled to control, and
the Indemnitee shall be entitled to have sole control over, the defense or
settlement of any claim to the extent that claim seeks an order,
injunction or other equitable relief against the Indemnitee which, if
successful, could materially interfere with the business, operations,
assets, condition (financial or otherwise) or prospects of the Indemnitee
(and the cost of such defense shall constitute an amount for which the
Indemnitee is entitled to indemnification hereunder). Except under the
circumstances described above in this paragraph (c), the Indemnifying
Party shall have the right to control the defense and settlement of any
claims the defense of which it has assumed in accordance with this Section
8.4.1.
8.4.2. Direct Claims. Any claim by an Indemnitee for indemnification
other than indemnification against a Third Party Claim (a "Direct Claim") will
be asserted by giving the Indemnifying Party reasonably prompt written notice
thereof, and the Indemnifying Party will have a period of 30 calendar days
within which to respond in writing to such Direct Claim. If the Indemnifying
Party does not so respond within such 30 calendar day period, the Indemnifying
Party will be deemed to have rejected such claim, in which event the Indemnitee
will be free to pursue such remedies as may be available to the Indemnitee under
this Article VIII.
8.4.3. Failure to Give Timely Notice. A failure to give timely notice
as provided in this Section 8.4 will not affect the rights or obligations of any
party hereunder except and only to the extent that, as a result of such failure,
any party which was entitled to receive such notice was deprived of its right to
recover any payment under its applicable insurance coverage or was otherwise
directly and materially prejudiced as a result of such failure.
8.4.4. Subrogation. If the amount of any Indemnifiable Loss, at any
time subsequent to the making of an Indemnity Payment, is reduced by recovery,
settlement or otherwise under or pursuant to any insurance coverage, or pursuant
to any claim, recovery, settlement or payment by or against any other entity,
the amount of such reduction, less any costs, expenses or premiums incurred in
connection therewith, will promptly be repaid by the Indemnitee to the
Indemnifying Party. The Indemnifying Party will, to the extent of any Indemnity
made by it, be subrogated to all rights of the Indemnitee against any third
party that is not an Affiliate of the Indemnitee in respect of the Indemnifiable
Loss to which the Indemnity Payment relates. Without limiting the generality or
effect of any other provision hereof, each such Indemnitee and Indemnifying
Party will duly execute upon request all instruments reasonably necessary to
evidence and perfect the above-described subrogation rights.
8.4.5. Payment. With regard to Third Party Claims for which
indemnification is payable hereunder, such indemnification shall be paid by the
Indemnifying Party promptly upon (i) the entry of a judgment against the
Indemnitee and the expiration of any applicable appeal period or (ii) the entry
of an unappealable judgment or final appellate decision against the Indemnitee.
Notwithstanding the foregoing, provided that there is no dispute as to whether
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Indemnitee is entitled to indemnification hereunder, expenses of the Indemnitee
for which the Indemnifying Party is responsible shall be reimbursed on a current
basis by the Indemnifying Party.
8.4.6. Limitation on the Scope of Indemnification. Notwithstanding
anything to the contrary set forth in this Section 8, no Indemnitee shall be
entitled to indemnification with respect to punitive damages, except in the case
of fraud or willful misconduct of the Indemnifying Party.
9. OTHER POST-CLOSING COVENANTS
9.1. General Post-Closing Matters.
9.1.1. Post-Closing Notifications. Purchaser and Sellers will, and will
cause their respective Affiliates to, comply with any applicable post-Closing
notification or other requirements of any Law of any Governmental Agency having
jurisdiction over the Business.
9.1.2. Access.
(a) On the Closing Date or as soon thereafter as practicable, but in
no event later than 15 calendar days after the Closing Date, Sellers will
deliver or cause to be delivered to Purchaser all original agreements,
documents, books, records and files in the possession of Sellers and their
Affiliates relating to the Business or the Assets (collectively, "Records"),
or any other asset or property included in the Assets, to the extent not
then located on the Leased Real Property, subject to the following
exception: Purchaser recognizes that certain Records may contain only
incidental information relating to the Business or may primarily relate to
Sellers or the businesses of Sellers other than the Business or may be
required by Law to be retained by Sellers and that Sellers and their
Affiliates may retain such Records and instead deliver copies of the
Records required to be retained by Law and appropriately excised copies of
the other Records.
(b) After the Closing, upon reasonable notice given in accordance
with this Agreement, Purchaser and Sellers will give, or cause to be
given, to the representatives, employees, counsel and accountants of the
other access, during normal business hours, to Records relating to periods
prior to the Closing, and will permit such persons to examine and copy
such Records to the extent reasonably requested by the other party in
connection with the preparation of Tax and financial reporting matters
(including without limitation any return or report relating to state or
local real property transfer or gains taxes), audits, legal proceedings,
governmental investigations and other business purposes; provided, however,
that nothing herein will obligate any party to take actions that would
unreasonably disrupt the normal course of its business, violate the terms
of any Contract to which it is a party or to which it has released any of
its proprietary, confidential or classified information. Purchaser will
use reasonable efforts to ensure that such information and assistance can
be provided to Sellers in the event that Purchaser disposes of any portion
of the Business.
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9.1.3. Guarantees, Etc. Schedule 9.1.3 sets forth a list of guarantees,
letters of credits and other agreements guaranteeing or securing liabilities and
obligations relating to the Business under which Sellers or any of their
Affiliates have any liability and which constitute Assumed Liabilities
(collectively, the "Sellers' Guarantees"). Purchaser will cooperate with Sellers
(each Party acting at its own expense) to obtain and have issued replacements
for each of the Sellers' Guarantees and to obtain any amendments, novations,
releases, waivers, consents or approvals necessary to release Sellers and each
of their Affiliates from all liability thereunder, in each case as promptly as
practicable.
9.1.4. Rights of Endorsement. After the Closing Date, Purchaser shall
have the right and authority to endorse, without recourse, the name of Sellers
on any check or any other evidence of indebtedness received by Purchaser on
account of any Assets transferred by Sellers pursuant hereto, and Sellers shall
deliver to Purchaser at the Closing letters of instruction sufficient to permit
Purchaser to deposit such checks or other evidence of indebtedness in bank
accounts in the name of Purchaser. In addition, any payment received by Sellers
or any of its Affiliates in respect of the Assets shall be remitted to Purchaser
within 15 days of receipt by Sellers and any payment received by Purchaser in
respect of Excluded Assets shall be remitted to Sellers within 15 days of
receipt by Purchaser.
9.2. Nonassignable Contracts.
9.2.1. Nonassignability. Without limiting the generality or effect of
any provision of Articles 6, 8 or 9, to the extent that any Contract or lease
with respect to Leased Real Property to be Transferred pursuant to the terms of
Section 1.1.4 is not capable of being Transferred without the consent, approval,
novation or waiver (collectively, the "Consents") of a third person or entity
(including without limitation a Governmental Agency), or if such Transfer or
attempted Transfer would constitute a breach thereof or a violation of any Law,
nothing in this Agreement will constitute a Transfer or an attempted Transfer
thereof.
9.2.2. Sellers To Use Reasonable Efforts. Notwithstanding anything
contained in this Agreement to the contrary, but without limiting the generality
or effect of Articles 6, 8 or 9, Sellers will not be obligated to Transfer to
Purchaser any of its rights and obligations in and to any of the Contracts or
leases referred to in Section 9.2.1 without first having obtained all of the
Consents necessary for such Transfers.
9.2.3. If Waivers Or Consents Cannot Be Obtained. To the extent that
the Consents referred to in Section 9.2.2 are not obtained by Sellers, Sellers
will, during the one-year period commencing with the Closing Date or such longer
period as Purchaser may desire (but, as to any particular Contract or lease, not
longer than the term thereof), (a) use reasonable efforts, with costs and
expenses of Sellers related thereto (other than the obligations of Sellers under
the Contract required to be paid by Purchaser pursuant to Section 9.2.4) to be
borne by Sellers, to provide to Purchaser the benefits (and the burdens) of any
Contract or lease to the extent relating to the Business, (b) cooperate in any
reasonable and lawful arrangement designed to provide such benefits (and
burdens) to Purchaser, without incurring any obligation to any other person or
entity other than to provide such benefits to Purchaser, and (c) enforce, at the
request of Purchaser, for the account of Purchaser, any rights of Sellers
arising from any such Contract or lease (including without limitation the right
to elect to terminate in accordance with the terms
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thereof upon the advice of Purchaser). Purchaser agrees to cooperate with
Sellers in connection with the foregoing. At the end of such one-year period (or
such longer period as Purchaser may desire), Sellers will have no further
obligations hereunder with respect to any such Contract or lease and the failure
to obtain any necessary Consent with respect thereto will not be a breach of
this Agreement; provided that nothing contained in this Section 9.2 shall affect
the liability of Sellers, if any, pursuant to this Agreement if it has failed to
disclose the need for such Consent or to use its reasonable efforts in
accordance with the provisions hereof to obtain such Consent.
9.2.4. Obligation of Purchaser To Perform. Provided (and for so long
as) Sellers obtain the benefits of such Contract or lease for Purchaser,
Purchaser will perform the obligations of Sellers under or in connection with
any Contract or lease referred to in Section 9.2 (to the extent permitted
thereunder) for the benefit of the other party or parties thereto.
9.2.5. Certain Fees and Expenses. Notwithstanding anything to the
contrary set forth in this Agreement, Sellers shall reimburse Purchaser for
one-half of any amount required to be paid by Purchaser to the lessor of the
Hanover, Maryland facility as a condition to the lessor's consent to the
assignment of the lease of such facility to the Purchaser
10. MISCELLANEOUS PROVISIONS
10.1. Notices. All notices and other communications required or permitted
hereunder will be in writing and, unless otherwise provided in this Agreement,
will be deemed to have been duly given when delivered in person or when sent by
facsimile (confirmed in writing by mail simultaneously dispatched) if sent on a
business day and otherwise on the next business day or one business day after
having been dispatched by a nationally recognized overnight courier service to
the appropriate party at the address specified below or three business days
after having been deposited in the United States mail, if sent by certified or
registered mail, return receipt requested, postage prepaid:
(a) If to Purchaser, to:
America Service Group Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇
General Counsel
with a copy to:
King & Spalding
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile No.: 404-572-5100
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
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(b) If to Sellers to:
Stadtlanders Pharmacy
Bergen ▇▇▇▇▇▇▇▇ Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ PC
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
or to such other address or addresses as any party may from time to time
designate as to itself by like notice.
10.2. Expenses. Except as otherwise expressly provided herein, whether
or not a Closing shall occur, the parties shall each bear its own expenses
incurred in connection with the consummation of the transactions contemplated by
this Agreement and the Ancillary Documents or incident to the Transfer of the
Assets and the assumption of the Assumed Liabilities contemplated by this
Agreement, including without limitation all expenses required in connection with
the delivery of the Transfer Documents provided for in Section 6.1.2 and the
Assumption Instruments provided for in Section 6.2.2, and all expenses required
to comply with the procedures required by Section 9.1.
10.3. Successors And Assigns. This Agreement will be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns, but will not be assignable or delegable by any party without
the prior written consent of the other parties, except that Purchaser may assign
all of its rights hereunder to any Affiliate of Purchaser that is a direct or
indirect wholly owned subsidiary of ASG, Purchaser's parent corporation;
provided, however, that such assignment shall not relieve Purchaser of any of
its obligations or liabilities hereunder or ASG of any of its obligations or
liabilities under its guaranty of Purchaser's obligations hereunder.
Notwithstanding anything herein to the contrary, in the event that Purchaser
Transfers the Business, Purchaser may assign to the transferee all or any rights
which Purchaser may have with respect to Sellers' covenants which are contained
herein or in any Ancillary Document and are to be performed by Sellers after the
Closing; provided, however, that such assignment shall not relieve Purchaser of
any of its obligations or liabilities hereunder or ASG of any of its obligations
or liabilities under its guaranty of Purchaser's obligations hereunder; and
provided, further, however, that such transferee shall agree in writing to
assume Purchaser's obligations hereunder and under any such Ancillary Document.
10.4. Waiver. Purchaser and Sellers, by written notice to the other,
may (a) extend the time for performance of any of the obligations or other
actions of the other under this
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Agreement, (b) waive any inaccuracies in the representations or warranties of
the other contained in this Agreement or in any Ancillary Documents, (c) waive
compliance with any of the conditions or covenants of the other contained in
this Agreement, or (d) waive or modify performance of any of the obligations of
the other under this Agreement; provided, however, that no such party may,
without the prior written consent of such other party, make or grant such
extension of time, waiver of inaccuracies or compliance or waiver or
modification of performance with respect to its own obligations,
representations, warranties, conditions or covenants hereunder and provided,
further, however, that the Closing shall be deemed to constitute the waiver by
the Purchaser and Sellers of the conditions to their respective obligations to
consummate the transactions contemplated by this Agreement, which waiver shall
be without prejudice to the right of Purchaser or Sellers to assert a claim
against the other for any Indemnifiable Loss. Except as provided in the
immediately preceding sentence, no action taken pursuant to this Agreement will
be deemed to constitute a waiver of compliance with any representations,
warranties, covenants or agreements contained in this Agreement. No waiver of
any breach will operate or be construed as a waiver of any subsequent breach,
whether of a similar or dissimilar nature. No delay on the part of any party in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof.
10.5. Entire Agreement. This Agreement (together with the Schedules and
Exhibits hereto) supersedes any other agreement, whether written or oral, that
may have been made or entered into by Purchaser or Sellers (or by any director,
officer or representative thereof) relating to the matters contemplated hereby,
other than the Confidentiality Agreement (which will survive the execution,
delivery and/or termination of this Agreement unless and until the Closing
occurs). This Agreement (together with the Confidentiality Agreement, dated July
17, 2000, by and between BBC and ASG, and the Exhibits and Schedules hereto)
constitute the entire agreement by and among such parties and their Affiliates
except as expressly set forth herein.
10.6. Amendments, Supplements, Etc. This Agreement may be amended or
supplemented at any time by additional written agreements, as may mutually be
determined by the parties hereto.
10.7. Rights Of The Parties. Except as expressly provided in Sections 8.3,
11.3 and 11.9, nothing expressed or implied in this Agreement is intended or
will be construed to confer upon or give any person or entity other than the
parties hereto and their respective Affiliates any rights or remedies under or
by reason of this Agreement or any transaction contemplated hereby.
10.8. Further Assurances.
(a) After the Closing, Sellers will from time to time, at
Purchaser's request and without further cost to Purchaser, execute and
deliver to Purchaser such other instruments of conveyance and transfer and
take such other action as Purchaser may reasonably request so as more
effectively to transfer the Assets to Purchaser free of Liens other than
Permitted Liens. In the event that Sellers fail to execute any such
document or take any such action, Sellers hereby appoint Purchaser as
their lawful attorney-in-fact for purposes of executing such documents and
taking such actions. This appointment is irrevocable and coupled with an
interest.
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(b) After the Closing, Purchaser will from time to time, at Sellers'
request and without further cost to Sellers, execute and deliver to
Sellers such other instruments of assumption and take such other action as
Sellers may reasonably request so as more effectively to assume the
Assumed Liabilities.
10.9. Bulk Sales. Purchaser waives compliance by Sellers with the
provisions of the so-called bulk sales Law of any jurisdiction, if applicable.
Without limiting the generality of Section 8.3.1 but subject to Article 8,
Sellers will, jointly and severally, indemnify and hold harmless Purchaser and
its Affiliates, directors, officers, employees, agents and representatives from
and against any Indemnifiable Losses relating to, resulting from or arising out
of any non-compliance by Sellers with any applicable bulk sales Law.
10.10. Transfer. Purchaser and Sellers will cooperate and take such action
as may be reasonably requested by the other in order to effect an orderly
transfer of the Assets and the Business with a minimum of disruption to the
operations and employees of the Business and of the other businesses of Sellers.
10.11. Governing Law. The validity, performance and enforcement of this
Agreement and all Ancillary Documents, unless expressly provided to the
contrary, shall be governed by the Laws of the State of Tennessee, without
giving effect to the principles of conflicts of law thereof, except that with
respect to matters regarding the transfer of right, title to and interest in any
Contract or Permit, the Laws governing such Contract or Permit shall govern,
without giving effect to the principles of conflicts of law thereof.
10.12. Execution in Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same agreement.
10.13. Titles And Headings. Titles and headings to sections herein are
inserted for convenience of reference only, and are not intended to be a part of
or to affect the meaning or interpretation of this Agreement.
10.14. Certain Interpretive Matters And Definitions.
(a) Unless the context otherwise requires, (i) all references to
Sections, Articles, Exhibits or Schedules are to the Sections, Articles,
Exhibits or Schedules of or to this Agreement, (ii) each accounting term
not otherwise defined in this Agreement has the meaning assigned to it in
accordance with GAAP, (iii) "or" is disjunctive and (iv) words in the
singular include the plural and vice versa.
(b) No provision of this Agreement will be interpreted in favor of,
or against, any of the parties hereto by reason of the extent to which any
such party or its counsel participated in the drafting thereof.
(c) As used in this Agreement, (i) the term "Subsidiary" has the
meaning given to that term in Rule 1-02 of Regulation S-X under the
Securities Act of 1933, as amended (the "Securities Act"); (ii) the term
"Affiliate" has the meaning given
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to the term in Rule 405 under the Securities Act, and will include without
limitation any Subsidiary; (iii) the term "Governmental Agency" means the
United States or any state, local or foreign government, or any
subdivision, agency or authority of any thereof; and (iv) the term "Laws"
means all federal, state and local laws, codes, and ordinances and all
rules and regulations promulgated by any Governmental Agency thereunder.
(d) Notwithstanding anything to the contrary contained herein, for
purposes of this Agreement, the term "knowledge of Sellers" or variations
thereof shall mean the actual knowledge of ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇.
10.15. Cross-References. If a document or matter is disclosed in any
Exhibit or Schedule to this Agreement in connection with a representation or
warranty made herein, it shall be deemed to be disclosed with respect to the
same matter addressed elsewhere in this Agreement but only if the reference
provides fair disclosure of the matter in question.
10.16. Severability. If any provision of this Agreement or the application
of any such provision to any person or circumstance shall be held invalid,
illegal or unenforceable in any respect by a court of competent jurisdiction,
such invalidity, illegality or unenforceability shall not affect any other
provision hereof.
10.17. Arbitration. Any controversy or claim arising out of or relating to
this Agreement or any Ancillary Document (other than a dispute that is subject
to Section 2.2 of this Agreement which shall be resolved in accordance with
Section 2.2) shall be settled by arbitration in accordance with the following
provisions:
(a) Disputes Covered. The agreement of the parties to arbitrate
covers all disputes of every kind relating to or arising out of this
Agreement, any Ancillary Document or any of the transactions contemplated
by this Agreement. Disputes include actions for breach of contract with
respect to this Agreement or the Ancillary Document, as well as any claim
based on tort or any other causes or action relating to the transactions
contemplated by this Agreement such as claims based on an allegation of
fraud or misrepresentation and claims based on a federal or state statute.
In addition, the arbitrators selected according to procedures set forth
below shall determine the arbitrability of any matter brought to them, and
their decision shall be final and binding on the parties.
(b) Forum. The forum for the arbitration shall be Washington, D.C.
(c) Law. The governing law for the arbitration shall be the law of
the State of Tennessee, without reference to its conflicts of laws
provisions.
(d) Selection. There shall be three arbitrators, unless the parties
are able to agree on a single arbitrator. In the absence of such agreement
within ten days after the initiation of an arbitration proceeding, the
Representative shall select one arbitrator and the Purchaser shall select
one arbitrator, and those two arbitrators shall then select within ten
days a third arbitrator. If those two arbitrators are unable to select a
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third arbitrator within such ten day period, a third arbitrator shall be
appointed by the commercial panel of the American Arbitration Association.
The decision in writing of at least two of the three arbitrators shall be
final and binding upon the parties.
(e) Administration. The arbitration shall be administered by the
American Arbitration Association.
(f) Rules. The rules of arbitration shall be the Commercial
Arbitration Rules of the American Arbitration Association, as modified by
any other instructions that the parties may agree upon at the time, except
that each party shall have the right to conduct discovery in any manner
and to the extent authorized by the Federal Rules of Civil Procedure as
interpreted by the federal courts. In the event of any conflict between
those rules and the provisions of this Section, the provisions of this
Section shall prevail.
(g) Substantive Law. The arbitrators shall be bound by and shall
strictly enforce the terms of this Agreement and may not limit, expand or
otherwise modify its terms. The arbitrators shall make a good faith effort
to apply substantive applicable law, but an arbitration decision shall not
be subject to review. The arbitrators shall be bound to honor claims of
privilege or work product doctrine recognized at law, but the arbitrators
shall have the discretion to determine whether any such claim of privilege
or work product doctrine applies.
(h) Decision. The arbitrators' decision shall provide a reasoned
basis for the resolution of each dispute and for any award. The
arbitrators shall not have power to award punitive damages, except in the
case of fraud or willful misconduct.
(i) Expenses. Each party shall bear its own fees and expenses with
respect to the arbitration and any proceeding related thereto and the
parties shall share equally the fees and expenses of the American
Arbitration Association and the arbitrators.
(j) Remedies; Award. The arbitrators shall have power and authority
to award any remedy or judgment that could be awarded by a court of law in
the State of Tennessee. The award rendered by arbitration shall be final
and binding upon the parties, and judgment upon the award may be entered
in any court of competent jurisdiction in the United States.
* * *
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
PURCHASER: SELLERS:
SECURE PHARMACY PLUS, INC. ▇▇▇▇▇▇▇▇▇▇▇ OPERATING COMPANY, L.L.C.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇ By: /s/ Milan A. Sawdei
--------------------------- ---------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇ Name: Milan A. Sawdei
------------------------ -------------------------------
Title: President Title: Executive Vice President,
------------------------ ------------------------------
Chief Legal Officer and
------------------------------
Secretary
------------------------------
▇▇▇▇▇▇▇▇▇▇▇ LICENSING COMPANY, LLC
By: /s/ Milan A. Sawdei
----------------------------------
Name: Milan A. Sawdei
--------------------------------
Title: Executive Vice President,
------------------------------
Chief Legal Officer and
------------------------------
Secretary
------------------------------
▇▇▇▇▇▇▇▇▇▇▇ DRUG OF CALIFORNIA, L.P.
By: /s/ Milan A. Sawdei
----------------------------------
Name: Milan A. Sawdei
--------------------------------
Title: Executive Vice President,
------------------------------
Chief Legal Officer and
------------------------------
Secretary
------------------------------
▇▇▇▇▇▇▇▇▇▇▇ DRUG OF HAWAII, L.P.
By: /s/ Milan A. Sawdei
----------------------------------
Name: Milan A. Sawdei
--------------------------------
Title: Executive Vice President,
------------------------------
Chief Legal Officer and
------------------------------
Secretary
------------------------------
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