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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report: August 13, 1996
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(Date of earliest event reported)
NCS HEALTHCARE, INC.
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(Exact name of Registrant as specified in its charter)
Delaware 0-027602 34-1816187
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(State or other jurisdiction (Commission (I.R.S. employer
of incorporation) file number) identification no.)
3201 Enterprise Parkway, Suite 220, Beachwood, Ohio 44122
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (216) 514-3350
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Item 2. Acquisition or Disposition of Assets.
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On August 13, 1996, NCS HealthCare, Inc., a Delaware corporation (the
"Company"), directly or through its wholly owned subsidiary acquired the
business of four related companies in Oklahoma. NCS HealthCare of Oklahoma,
Inc., an Oklahoma corporation and a wholly owned subsidiary of the Company
("NCS/Oklahoma"), acquired substantially all of the assets of Thrifty Medical
of Tulsa, L.L.C., an Oklahoma limited liability company ("Thrifty Tulsa"),
pursuant to an Asset Purchase Agreement dated as of August 13, 1996, by and
among NCS/Oklahoma, Thrifty Medical, Willis V. Smith and Charles Oliver (the
"Thrifty Tulsa Agreement"). NCS/Oklahoma acquired Northside Pharmacy, Inc., an
Oklahoma corporation ("Northside Pharmacy"), pursuant to an Agreement of Merger
by and among Northside Pharmacy, Willis V. Smith, Charles Oliver, the Willis
Vernon Smith Unitrust dated August 8, 1996, NCS/Oklahoma and the Company (the
"Northside Merger Agreement"). The Company acquired all of the outstanding
capital stock of Thrifty Medical Supply, Inc. an Oklahoma corporation ("Thrifty
Supply") pursuant to a Stock Purchase Agreement dated as of August 13, 1996 by
and among the Willis Vernon Smith Unitrust dated August 8, 1996, Charles
Oliver, Willis V. Smith and the Company (the "Thrifty Supply Agreement").
Thrifty Tulsa, Northside Pharmacy and Thrifty Supply are collectively referred
to as Thrifty Medical Systems. Copies of the Thrifty Tulsa Agreement, the
Northside Merger Agreement and the Thrifty Supply Agreement are filed as
Exhibits hereto.
Thrifty Medical Systems provides a broad array of health care
services to more than 6,000 residents of long-term care facilities.
As consideration for the assets of Thrifty Tulsa, the
Company (i) paid an aggregate of $4,963,200 in cash and assumed indebtedness,
and (ii) issued 3,393 shares of its Class A Common Stock. As consideration for
Northside, the Company (i) paid approximately $1,183,000 in cash, notes and
assumed indebtedness, and (ii) issued 64,738 shares of its Class A Common
Stock. As consideration for the capital stock of Thrifty Supply, the Company
paid approximately $1,350,000 in cash, notes and assumed indebtedness. The
value of the Class A Common Stock issued in connection with these transactions
was determined based on the average closing price of the Company's Class A
Common Stock on The Nasdaq Stock Market, Inc. for the ten trading days ending
on the sixth trading day preceding the closing.
In connection with the purchase of Thrifty Medical Systems,
NCS/Oklahoma entered into an Employment Agreement with Willis V. Smith. This
Agreement provides that Mr. Smith will be employed for a period of five years
and agreed that he will not, for a period of seven years, directly or indirectly
compete with NCS/Oklahoma. A copy of the Employment Agreement is filed as an
Exhibit hereto.
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In connection with the purchase of Thrifty Medical Systems,
NCS/Oklahoma entered into an Employment Agreement with Gail Benjamin. This
Agreement provides that Ms. Benjamin will be employed for a period of five years
and agreed that she will not, for a period of seven years, directly or
indirectly compete with NCS/Oklahoma. A copy of the Employment Agreement is
filed as an Exhibit hereto.
In connection with the purchase of Thrifty Medical Systems,
NCS/Oklahoma entered into an Employment Agreement with Charles Oliver. This
Agreement provides that Mr. Oliver will be employed for a period of five years
and agreed that he will not, for a period of seven years, directly or indirectly
compete with NCS/Oklahoma. A copy of the Employment Agreement is filed as an
Exhibit hereto.
The Company utilized its available cash to make the cash
payments in connection with this transaction.
Other than the Employment Agreements set forth above, there
are no material relationships between Thrifty Medical Services and the Company
or any of their affiliates, directors or officers.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
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(a) Financial Statements of Businesses Acquired.*
(b) Pro Forma Financial Information.*
(c) Exhibits.
<TABLE>
<CAPTION>
Sequential
Exhibit No. Description Page No.
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<S> <C> <C>
2.1 Asset Purchase Agreement, dated August 13, 1996,
by and among Thrifty Medical of Tulsa, L.L.C.,
an Oklahoma limited liability company, Willis V.
Smith, Charles Oliver and NCS HealthCare of
Oklahoma, Inc., an Oklahoma corporation.
2.2 Agreement of Merger, dated August 13, 1996, by and
among Northside Pharmacy, Inc., an Oklahoma
corporation, Willis
</TABLE>
3
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<TABLE>
<S> <C> <C>
V. Smith, Charles Oliver, the Willis Vernon Smith
Unitrust Dated August 8, 1996, NCS HealthCare
of Oklahoma, Inc., an Oklahoma corporation, and the
Registrant.
2.3 Stock Purchase Agreement, dated August 13, 1996,
by and among the Willis Vernon Smith Unitrust Dated
August 8, 1996, Charles Oliver, Willis V. Smith
and the Registrant.
99.1 Employment Agreement, dated as of August 13, 1996,
by and between NCS HealthCare of Oklahoma, Inc.,
an Oklahoma corporation, and Willis V. Smith.
</TABLE>
4
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<TABLE>
<CAPTION>
Sequential
Exhibit No. Description Page No.
----------- ----------- --------
<S> <C> <C>
99.2 Employment Agreement, dated as of August 13, 1996, by
and between NCS HealthCare of Oklahoma, Inc., an
Oklahoma corporation, and Charles Oliver.
99.3 Employment Agreement, dated as of August 13, 1996, by
and between NCS HealthCare of Oklahoma, Inc., an
Oklahoma corporation, and Gail Benjamin.
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<FN>
* The financial statements of Thrifty Medical Systems for the
periods specified in Rule 3-05(b) of Regulation S-X and the pro
forma financial information required pursuant to Article 11 of
Regulation S-X currently are not available and will be filed as soon
as is practicable, but not later than 60 days after the date that
this Report is due.
** The Registrant agrees by this filing to supplementally furnish
a copy of the schedules of this Agreement to the Commission upon
request.
</TABLE>
SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
NCS HEALTHCARE, INC.
By: /s/Jeffrey R. Steinhilber
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Jeffrey R. Steinhilber,
Senior Vice President and
Chief Financial Officer
Date: August 28, 1996
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EXIBIT 2.2
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement is entered into as of August 13, 1996, by and
among THRIFTY MEDICAL OF TULSA, L.L.C., an Oklahoma limited liability company
("Seller"), WILLIS V. SMITH and CHARLES OLIVER (each, a "Member," and
collectively, the "Members"), and NCS HEALTHCARE OF OKLAHOMA, INC., an Oklahoma
corporation ("Buyer").
Recitals:
A) Seller is engaged in the business of providing pharmaceuticals, drugs,
biologicals, medical devices and other health or medical supplies and related
services to nursing homes, other institutional care facilities and individuals
residing in such facilities (the "Business").
B) The parties desire that Seller sell to Buyer and that Buyer purchase
from Seller substantially all of the assets of the Business upon the terms
hereinafter set forth.
C) Members own 100% of the outstanding membership interests of Seller and
will benefit from the sale of such assets to Buyer.
In consideration of and in reliance upon the mutual representations,
warranties, covenants, obligations and agreements contained herein, the parties
hereby agree as follows:
1. PURCHASE AND SALE OF ASSETS.
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1.1 PURCHASED ASSETS. Seller hereby agrees to sell to Buyer, free of
all liens, encumbrances, claims or other restrictions of any kind, and Buyer
hereby agrees to purchase, all of Seller's right, title, and interest in and to
all of the properties, assets, and rights owned, used, acquired for use, or
arising or existing in connection with the Business, whether tangible or
intangible, and whether or not recorded on Seller's books and records, as the
same exist at the commencement of business on the Closing Date (as defined
below), including, without limitation, accounts receivable, equipment,
inventory, books and records, permits and other governmental authorizations
pertaining to the Business, know-how, trade secrets, patents, copyrights and
applications therefor, the name "Thrifty Medical of Tulsa" and all variants
thereof, and all rights to the use of such name as a trademark, trade name or
service mark, and all goodwill relating to the Business; PROVIDED, HOWEVER, that
(i) Seller shall not sell and Buyer shall not purchase the Retained Assets of
Seller described in Section 1.2; (ii) as to contracts only, Seller shall sell
and Buyer shall purchase only those contracts of Seller that are identified on
SCHEDULE 2.1; and (iii) Seller shall retain the right to use the name "Thrifty
Medical of Tulsa, L.L.C." as its limited liability
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company name. The assets to be purchased and sold pursuant to this Agreement
are referred to as the "Purchased Assets."
1.2 RETAINED ASSETS. Section 1.1 notwithstanding, Seller shall retain,
and Buyer shall not purchase, any rights of Seller arising under this Agreement;
any securities held by Seller, Seller's minute books, membership records and tax
returns or other similar books and records, originals of which Seller is
required to maintain under applicable laws (provided copies of the same are
included among the Purchased Assets); or any other assets of Seller that are
listed on SCHEDULE 1.2 (collectively, the "Retained Assets").
2. LIABILITIES OF SELLER.
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2.1 ASSUMED LIABILITIES. Buyer agrees to assume on the Closing Date
only the liabilities of Seller existing as of the Closing Date under the
contracts identified on SCHEDULE 2.1. Notwithstanding anything in this
Agreement to the contrary, Buyer will assume contract liabilities of Seller
under contracts listed on SCHEDULE 2.1 only to the extent (a) such contract
liabilities accrue and relate solely to the period after the Closing, and (b)
the corresponding benefits therefrom are validly assigned to and received by
Buyer.
2.2 RETAINED LIABILITIES. Notwithstanding anything in this Agreement to
the contrary, Buyer shall not assume or become responsible for any liability or
obligation of Seller of any nature whatsoever, whether known or unknown,
accrued, absolute, contingent or otherwise, or any claim against Seller, except
to the extent specifically assumed by Buyer pursuant to Section 2.1.
2.3 PERSONAL GUARANTIES. Buyer and Members will cooperate with each
other and use their respective best efforts to obtain after the Closing the
release or cancellation of any guaranty or similar instrument by which any
Member has guaranteed the payment or performance of any obligation of Seller (a
"Guaranteed Obligation") which Buyer has specifically agreed to assume pursuant
to Section 2.1. If any such release or cancellation cannot be obtained, Buyer
will indemnify and hold Members harmless from and against any liability for
such Guaranteed Obligation, but only to the extent (a) such Guaranteed
Obligation accrues and relates solely to the period after the Closing (even
though the guaranty was given before the Closing), and (b) the corresponding
benefits therefrom are validly assigned to and received by Buyer.
3. PURCHASE PRICE. The total purchase price for the Purchased Assets will
be Five Million Fifty-Five Thousand Dollars ($5,055,000.00) (the "Purchase
Price"). Subject to the terms and conditions of this Agreement, at the
Closing, Buyer will deliver to Seller (a) cash or its equivalent in the amount
of Four Million Nine Hundred Sixty-Three Thousand Two Hundred Dollars
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($4,963,200.00), and (b) a certificate representing Three Thousand Three
Hundred Ninety-Three (3,393) shares of Class A Common Stock, $.01 par value, of
NCS (the "NCS Stock"), which certificate shall be registered in the name of
Seller. Buyer, Seller and Members agree that, solely for purposes of
determining the Purchase Price hereunder, the shares of NCS Stock deliverable
to Seller hereunder shall have a fair market value equal to Ninety-One Thousand
Eight Hundred Dollars ($91,800.00).
3.1 ALLOCATION OF PURCHASE PRICE. The fair market values of the
Purchased Assets and the allocation of the Purchase Price among the Purchased
Assets for purposes of Section 1060 of the Internal Revenue Code shall be as
set forth in SCHEDULE 3.1, which Buyer and Seller shall prepare as soon as
practicable after the Closing and attach hereto. Buyer and Seller shall be
bound by such fair market value determination and allocation and shall complete
their respective tax returns accordingly.
4. REPRESENTATIONS AND WARRANTIES OF SELLER AND MEMBERS. Seller and
Members hereby jointly and severally represent and warrant to Buyer, as of the
date of this Agreement and as of the Closing Date, if later, as follows:
4.1 ORGANIZATION, AUTHORITY AND CAPACITY. Seller is a limited liability
company duly organized, validly existing and in good standing under the laws of
the State of Oklahoma, and has full power and authority to own, lease and
operate its assets and properties and carry on its business as and where such
assets and properties are now owned or leased and as such business is presently
being conducted. All of the Purchased Assets are located in the State of
Oklahoma. Seller has full power and authority, and Members have full capacity,
to execute, deliver, and perform this Agreement in accordance with its terms,
and such execution, delivery and performance by Seller has been approved by all
requisite action on the part of Seller and Members and any other person or
persons. This Agreement and each other document, agreement and instrument to
be delivered by or on behalf of Seller or any Member in connection herewith
constitutes a legal, valid and binding obligation of Seller or such Member,
enforceable in accordance with its terms.
4.2 NO CONSENTS OR CONFLICTS. No consent of, or filing with, any
governmental authority or third party is required in connection with the
execution, delivery or performance of this Agreement by Seller or Members.
Neither the execution or delivery nor the performance of this Agreement or any
of the other agreements, instruments or documents to be delivered by or on
behalf of Seller or any Member in connection herewith will cause, or give any
person grounds to cause (with or without notice, the passage of time, or both)
the maturity of any obligation or liability of Seller which Buyer has agreed to
assume pursuant to Section 2.1, or will conflict with, violate or result in any
breach of: (i) any judgment, decree, order, statute, rule or regulation
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applicable to Seller or any Member, (ii) any instrument to which Seller or any
Member is a party or by which Seller or any of its assets is bound, or (iii)
any provision of the Articles of Organization or the Operating Agreement of
Seller.
4.3 FINANCIAL STATEMENTS. SCHEDULE 4.3 includes the annual financial
statements of Seller for the fiscal years ended December 31, 1993, 1994 and
1995, and the month-end and year-to-date financial statements of Seller for the
six-month period ended June 30, 1996. Except as described on SCHEDULE 4.3,
such financial statements are accurate and complete in all material respects
and present fairly Seller's financial position and results of operations for
the periods they cover in conformity with generally accepted accounting
principles applied on a consistent basis. Except as described on SCHEDULE 4.3,
all inventory of Seller is reflected in such financial statements at the lower
of cost or market value. Seller's books of account accurately reflect all
items of income and expense (including accruals) and all of Seller's assets and
liabilities in accordance with normal accrual accounting practices, subject to
customary, immaterial year-end adjustments.
4.4 NO LIABILITIES. Seller has no material liabilities or obligations
of any kind (contingent or otherwise) except (i) as reflected on the most recent
month-end balance sheet in SCHEDULE 4.3 (the "Balance Sheet"), subject to any
exceptions described in SCHEDULE 4.3, (ii) future performance obligations under
contracts disclosed to Buyer before the Closing, or (iii) as incurred in the
ordinary course of business, consistent with past practice, since the date of
the Balance Sheet. Neither Seller, nor any other party to any contract
identified in SCHEDULE 2.1, has breached any obligation under any contract
identified in SCHEDULE 2.1.
4.5 NO CHANGES. Since the date of the Balance Sheet, Seller has been
operated only in the ordinary course, consistent with past practice, and there
has not been any material adverse change, or any event, fact or circumstance
which might reasonably be expected to result in a material adverse change, in
the assets, liabilities, operating performance, business relationships, or
prospects of Seller's business.
4.6 RECEIVABLES; NO PREPAYMENTS. All of the accounts receivable of
Seller included in the Purchased Assets, except where described on the Balance
Sheet or otherwise in SCHEDULE 4.3, arose from valid sales in the ordinary
course of business and reflect goods actually sold and delivered or services in
fact rendered. At least ninety percent (90%) of all such accounts receivable
reflecting goods sold or services rendered will be collected by Buyer within
240 days after the Closing Date. Seller has not received any payment before
the Closing for obligations to be performed after the Closing in connection
with
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any of the assigned contracts of Seller included in the Purchased Assets.
4.7 TITLE TO PURCHASED ASSETS. Except as set forth on SCHEDULE 4.7,
Seller owns all of the Purchased Assets free and clear of all liens, claims,
encumbrances and other restrictions or limitations of any kind whatsoever
affecting the ability to use or transfer the Purchased Assets.
4.8 OWNERSHIP OF SELLER. Members are the legal and beneficial owners of
all of the membership or other equity ownership interests of Seller, and own
all of such membership or other equity ownership interests free and clear of
all liens and encumbrances, and there exists no claim or right of an equity
ownership nature or membership nature of Seller other than those claims or
rights possessed by Members by virtue of the Operating Agreement of Seller.
There are no members of Seller other than Members, and there is no former
member of Seller or of any predecessor-in-interest of Seller with respect to
whom Buyer or NCS will have any liability whatsoever by reason of the
transactions contemplated by this Agreement.
4.9 ASSETS OWNED. The Purchased Assets include all of the fixed assets
reflected on the Balance Sheet less the Retained Assets, and comprise all of
those assets which have been used to operate the Business in the ordinary
course as presently conducted.
4.10 COMPLIANCE WITH LAWS. Seller is not in violation of any law,
regulation or order of any jurisdiction or governmental authority (a "Law"),
including, without limitation, any Law pertaining to Medicare or Medicaid
reimbursement, environmental protection, infectious or biomedical waste,
occupational health or safety, or employment practices. Seller has all permits
and licenses necessary in the conduct of the Business. All such permits and
licenses are in full force and effect, and no proceeding is pending or, to the
knowledge of Seller or any Member, threatened to revoke or limit any of them.
4.11 NO LITIGATION. Except for the litigation titled ADT SECURITY
SYSTEMS SOUTHWEST, INC. V. GADUGI PHARMACEUTICAL SERVICES, INC., Case No.
CS-95-05526, pending in the Tulsa County District Court (the "ADT Litigation"),
there is no claim, litigation, investigation or proceeding pending or, to the
knowledge of Seller or any Member, threatened against Seller. There are no
pending or, to the knowledge of Seller or any Member, threatened controversies,
grievances or claims by any employees or former employees of Seller with respect
to their employment, compensation, benefits or working conditions.
4.12 CONDITION. All of the items of tangible property included among the
Purchased Assets are in good operating condition, normal wear and tear
excepted, neither require nor are
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reasonably expected to require any special or extraordinary expenditures to
remain in such condition beyond normal maintenance, and are capable of being
used for their intended purposes in the ordinary course of business consistent
with past practice.
4.13 TAXES. All tax returns, reports and declarations (hereinafter
collectively, "Tax Returns") required by any governmental authority to be filed
in connection with the properties, business, income, expenses, net worth and
franchises of Seller have been timely filed, and such returns are correct and
complete. All tax due in connection with the properties, business, income,
expenses, net worth and franchises of Seller has been paid, other than tax
which is not yet due or which, if due, is not yet delinquent or is being
contested in good faith, and for which in all cases reserves have been
established in the Balance Sheet which are sufficient to cover the payment of
all such tax. There are no tax claims, audits or proceedings pending in
connection with the properties, business, income, expenses, net worth and
franchises of Seller, and, to the knowledge of Seller or any Member, there are
no such threatened claims, audits or proceedings.
4.14 ENVIRONMENTAL MATTERS. Seller has no liability, whether absolute or
contingent, in respect of any activities associated with the generation,
transportation, release, storage, treatment, disposal or identification of any
substance or material which could result in damage to the environment or danger
to the health and safety of the public.
4.15 EMPLOYEE BENEFITS. SCHEDULE 4.15 lists each Employee Benefit Plan
(within the meaning of Section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA")) which Seller maintains or to which Seller is
required to contribute (each, a "Plan"). None of the Plans is a "Multiemployer
Plan" within the meaning of Section 3(37) of ERISA. Each Plan has been
operated in accordance with its terms and with all laws applicable thereto.
Neither Seller nor any such Plan is subject to any liability (other than
routine claims for benefits) or any tax in connection with any such Plan.
Except as set forth on SCHEDULE 4.15, no such Plan provides benefits for
persons who are not active employees or managers of Seller. Except as
prohibited by law, Seller has the right to amend or terminate any Plan without
the consent of any other person. There is no Plan under which Seller or Buyer
would be obligated to pay, accrue or contribute benefits because of the
consummation of the transactions contemplated by this Agreement. Since
December 31, 1995, there has not been any increase made or promised in the
benefits payable under any Plan.
4.16 CUSTOMERS. Except as listed on SCHEDULE 4.16, no entity or group of
affiliated entities which is or are customers of Seller operates more than 500
beds. Except as listed on SCHEDULE 4.16, no nursing home or other institution
served by Seller has, since December 31, 1995, cancelled or otherwise
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terminated, or made any threat to cancel or otherwise terminate, its
relationship with Seller. Seller and Members have no knowledge that any such
customer is dissatisfied with the performance of Seller or Seller's principals
or that any such customer intends to cancel or otherwise terminate its
relationship with Seller, or to materially decrease its purchase of products
and services from Seller.
4.17 CONFLICTS. Except as set forth on SCHEDULE 4.17, no Member, and no
family member of any Member, has any direct or indirect interest in any
business enterprise which does business with Seller or competes with Seller in
any manner.
4.18 BROKERS AND FINDERS. No broker, finder or other person or entity
acting in a similar capacity has participated on behalf of Seller or Members in
bringing about the transactions contemplated herein, rendered any services with
respect thereto, or been in any way involved therewith.
4.19 INVESTMENT MATTERS. Seller is acquiring the NCS Stock for its own
investment and not with a view to distribution or resale or to divide its
participation with others. Each Member, by reason of his income or his net
worth or both, meets the definition of "accredited investor" as defined in
Regulation D, 17 C.F.R. Section 230.501(a), under the Securities Act of 1933,
as amended (the "Act"). Seller and each Member possess, either alone or
together with a purchaser representative, knowledge and experience in financial
and business matters such that it and he are capable of evaluating the merits
and risks of an investment in the NCS Stock. Seller and Members acknowledge
that they have received and reviewed the Issuer's Prospectus dated February 13,
1996, for the public offering of 4,240,000 shares of NCS Stock (including the
description of the NCS Stock set forth beginning at page 41 therein), the
Issuer's Current Report on Form 8-K dated May 15, 1996, as amended, the
Issuer's quarterly report on Form 10-Q for the quarter ended March 31, 1996,
and all other material and relevant information concerning the Issuer, and have
had the opportunity to ask questions of, receive answers from and obtain
additional information from the Issuer concerning the business and financial
condition of the Issuer.
Seller and Members understand, acknowledge and agree that: (i) none of the
NCS Stock will be registered under the Act, and that all of the NCS Stock will
constitute "restricted securities" as defined in Rule 144 under the Act; (ii)
such NCS Stock must be held indefinitely unless it is registered under the Act
or an exemption from registration is available; (iii) except as set forth in
Section 11 hereof, neither the Issuer nor Buyer is under any obligation or has
made any commitment to provide any such registration or to take such steps as
are necessary to permit sale without registration pursuant to Rule 144 under
the Act or otherwise; (iv) at such time as the NCS Stock may be disposed of in
routine sales without registration in reliance on Rule 144 under
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the Act, such disposition can be made only in limited amounts in accordance
with all of the terms and conditions of Rule 144; (v) if the Rule 144 exemption
is not available, compliance with some other exemption from registration will
be required; (vi) all certificates evidencing the NCS Stock will bear an
appropriate legend concerning the foregoing restrictions on transfer; and (vii)
the Transfer Agent and Registrar of the Issuer will be advised by appropriate
"stop-transfer" instructions of the foregoing restrictions and instructed to
advise the Issuer of any proposed transfer of certificate(s) evidencing the NCS
Stock.
5. REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer represents and warrants
to Seller and Members that:
5.1 ORGANIZATION OF BUYER AND NCS. Buyer is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Oklahoma. NCS is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Delaware.
5.2 AUTHORITY; NO VIOLATION, ETC. The execution, delivery and
performance of this Agreement by Buyer and of each other document, agreement
and instrument to be executed and delivered by Buyer in connection with the
provisions of this Agreement, have been duly and validly authorized and
approved by all necessary action on the part of Buyer, NCS and their respective
Boards of Directors. This Agreement and all other documents, agreements and
instruments to be delivered by Buyer in connection herewith constitute legal,
valid and binding obligations of Buyer, enforceable in accordance with their
respective provisions. The NCS Stock to be issued to Seller hereunder will be
duly authorized, validly issued, fully paid and non-assessable.
5.3 NO CONSENTS OR CONFLICTS. No consent of, or filing with, any
governmental authority or third party is required in connection with the
execution, delivery or performance of this Agreement by Buyer. Neither the
execution or delivery nor the performance of this Agreement or any of the other
agreements, instruments or documents to be delivered by or on behalf of Buyer
in connection herewith conflicts with, violates or results in any breach of:
(i) any judgment, decree, order, statute, rule or regulation applicable to
Buyer, (ii) any instrument to which Buyer is a party or by which it is bound,
or (iii) any provision of the Certificate of Incorporation or the By-Laws of
Buyer.
5.4 BROKERS AND FINDERS. No broker, finder or other person or entity
acting in a similar capacity has participated on behalf of Buyer or NCS in
bringing about the transactions contemplated herein, rendered any services with
respect thereto or been in any way involved therewith.
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6. BUYER'S CONDITIONS. Buyer's obligation to perform this Agreement is
subject to the satisfaction of the following conditions at or before the
Closing:
6.1 Buyer shall have received a mutually acceptable bill of sale, and
such certificates of title (including those for motor vehicles, if any,
included in the Purchased Assets) and other endorsements or instruments of
assignment and transfer as shall be required to transfer to Buyer the Purchased
Assets free of any liens or adverse claims, each duly executed by Seller.
6.2 Buyer shall have received a mutually acceptable lease agreement
covering the premises of Seller located at 1860 East 15th Street, Tulsa,
Oklahoma 74104 (the "Premises"), duly executed by Interchange Warehouse
Investors ("Landlord").
6.3 Buyer shall have received from each of Willis Smith, Charles Oliver
and Gail Benjamin a mutually acceptable Employment and Noncompetition
Agreement, each duly executed by such person (collectively, the "Employment
Agreements").
6.4 Buyer shall have received terminations of any and all security
interests in and liens on the Purchased Assets (or estoppel letters,
satisfactory to Buyer, committing to terminate such liens and security
interests), except to the extent specifically related to any liabilities
assumed by Buyer pursuant to Section 2.1. If Buyer proceeds to close on the
basis of estoppel letters in lieu of lien termination documents, Buyer may pay
to such lienholders on Seller's behalf, instead of paying directly to Seller,
such portions of the Purchase Price as are equal to the amounts due to such
lienholders.
6.5 There shall have been no material adverse change since the date of
the Balance Sheet in the financial condition, business or affairs of Seller;
Seller shall not have suffered any loss, not covered by insurance, which
materially affects the value of the Purchased Assets; Seller and Members shall
have performed all of the obligations to be performed by them at or before the
Closing; and all of the representations and warranties of Seller and Members
herein shall continue to be accurate at and as of the Closing Date, just as if
made at and as of the Closing Date.
7. SELLER'S AND MEMBERS' CONDITIONS. Seller's and Members' obligations to
perform this Agreement are subject to the satisfaction of the following
conditions at or before the Closing:
7.1 Seller shall have received the Cash Payment and the NCS Stock
described in Section 3.
7.2 Seller shall have received a mutually acceptable assumption
instrument, duly executed by Buyer, pursuant
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to which Buyer assumes the liabilities of Seller identified in Section 2.1.
7.3 Landlord shall have received a mutually acceptable lease agreement
covering the Premises, duly executed by Buyer.
7.4 Each of Willis Smith, Charles Oliver and Gail Benjamin shall have
received from Buyer a mutually acceptable Employment Agreement, duly executed
by Buyer.
7.5 Buyer shall have performed all of the obligations to be performed by
it at or before the Closing, and all of the representations and warranties of
Buyer herein shall continue to be accurate at and as of the Closing Date, just
as if made at and as of the Closing Date.
8. CLOSING. If the conditions to the parties' obligations are satisfied,
the consummation of the transactions contemplated by this Agreement (the
"Closing") will take place simultaneously with the execution and delivery of
this Agreement on the date hereof, or on such other date as the parties may
agree in writing (the "Closing Date"), at the offices of Lamun, Mock,
Featherly, Kuehling & Cunnyngham, Oklahoma City, or at such other place as the
parties may agree in writing. If the Closing does not occur by August 31,
1996, this Agreement may be terminated by Buyer or Seller without prejudice to
the rights of any party against any other for any breach or nonperformance of
its obligations prior to termination. The transfers and deliveries described
in Sections 6 and 7 shall be mutually interdependent and regarded as occurring
simultaneously, and no such transfer or delivery shall become effective until
all the other transfers and deliveries provided for in Sections 6 and 7 have
also been consummated. The transfers and deliveries herein contemplated shall
be deemed to have occurred and the Closing shall be effective as of the close
of business on the Closing Date.
9. RESTRICTIVE COVENANTS.
9.1 SMITH COVENANTS. The covenants made by Willis V. Smith in Sections
3.1 (relating to noncompetition), 3.2 (relating to nondisclosure of
Confidential Information, as defined therein), and 3.3 (relating to
noninterference with the business of Buyer) of the Employment Agreement entered
into between Willis V. Smith and Buyer in connection with this Agreement (the
"Smith Employment Agreement") are all hereby incorporated into this Agreement
by reference and made a part hereof as if fully rewritten herein (the "Smith
Covenants"). Willis V. Smith agrees (i) to be bound by and to observe and
comply with all of the Smith Covenants, (ii) that a breach thereof by him will
constitute a breach of this Agreement, and (iii) that for purposes of this
Agreement, the term "Company" as used in the Smith Employment Agreement will be
deemed
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to mean and include NCS, Buyer, and all other persons or entities controlled
directly or indirectly by NCS.
9.2 OLIVER COVENANTS. The covenants made by Charles Oliver in Sections
3.1 (relating to noncompetition), 3.2 (relating to nondisclosure of
Confidential Information, as defined therein), and 3.3 (relating to
noninterference with the business of Buyer) of the Employment Agreement entered
into between Charles Oliver and Buyer in connection with this Agreement (the
"Oliver Employment Agreement") are all hereby incorporated into this Agreement
by reference and made a part hereof as if fully rewritten herein (the "Oliver
Covenants"). Charles Oliver agrees (i) to be bound by and to observe and
comply with all of the Oliver Covenants, (ii) that a breach thereof by him will
constitute a breach of this Agreement, and (iii) that for purposes of this
Agreement, the term "Company" as used in the Oliver Employment Agreement will
be deemed to mean and include NCS, Buyer, and all other persons or entities
controlled directly or indirectly by NCS.
9.3 SELLER COVENANTS. Seller covenants and agrees with Buyer (i) to be
bound by and to observe and comply with all of the Smith Covenants and all of
the Oliver Covenants, with the same effect as though Seller were a party to the
Smith Employment Agreement and the Oliver Employment Agreement and making the
covenants set forth in Sections 3.1, 3.2 and 3.3 therein, (ii) that a breach
thereof by Seller will constitute a breach of this Agreement, and (iii) that
for purposes of this Agreement, the term "Company" as used in the Oliver
Employment Agreement and the Smith Employment Agreement will be deemed to mean
and include NCS, Buyer, and all other persons or entities controlled directly
or indirectly by NCS.
9.4 ADEQUATE CONSIDERATION. Seller and Members acknowledge and agree
that the obligations of Buyer and NCS hereunder constitute adequate
consideration for all of Sellers' and Members' obligations under this Section
9.
9.5 REMEDIES. Seller and Members acknowledge and agree that a breach of
any of the provisions of this Section 9 will result in irreparable damage to
Buyer and NCS for which there will be no adequate remedy at law, and agree that
Buyer and NCS, in addition to their rights at law, will be entitled to
injunctive relief to enforce such provisions, without having to post any bond.
9.6 REFORMATION. In the event of the unenforceability or invalidity of
any provision of this Section 9, such provision shall be enforceable in part to
the fullest extent permitted by law, such invalidity or unenforceability shall
not otherwise affect any other provision of this Agreement or any similar
agreement, and this Agreement shall otherwise remain in full force and effect.
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<PAGE> 12
10. FURTHER ASSURANCES. Each party hereto shall execute and deliver to
any other party any and all documents and instruments, and do and perform such
acts, in addition to those expressly provided for herein, as may be necessary
or appropriate to carry out or evidence the transactions contemplated by this
Agreement, whether before, at or after the Closing.
11. INCIDENTAL REGISTRATION. If, at any time prior to the time when any
of the NCS Stock issuable to Seller hereunder may be disposed of without
registration in reliance upon Rule 144 under the Act, NCS proposes to file on
its behalf and/or on behalf of any of its security holders a registration
statement under the Act (other than on Form S-4 or Form S-8 promulgated under
the Act) for the registration of NCS Stock to be sold for cash, NCS will give
written notice to Seller at least thirty (30) days before the initial filing
with the U.S. Securities and Exchange Commission of such registration
statement, which notice shall set forth the intended method of distribution of
the NCS Stock proposed to be registered by NCS. Such notice will offer to
include in such filing, for sale in such offering, the number of shares of NCS
Stock issued hereunder as Seller may request, subject to the provisions hereof.
If Seller desires to have such NCS Stock registered under this Section 11, it
shall notify NCS in writing within ten (10) days after the date of receipt of
such notice from NCS, setting forth the number of shares of such NCS Stock for
which registration is requested by Seller. If the managing underwriter (in the
case of an underwritten public offering) shall advise NCS that, in such
underwriter's opinion, the distribution of the NCS Stock requested to be
included in the registration statement by Seller concurrently with the NCS
Stock being registered by NCS is not advisable or would adversely affect the
distribution of NCS Stock by NCS, then Seller shall reduce the number of shares
of NCS Stock which it initially requested to be registered as directed by NCS
or the managing underwriter, on a pro-rata basis between Seller and all other
persons having (and exercising) a similar incidental registration right with
respect to such registration statement, based on the number of shares initially
requested to be registered by them. Seller and Members shall cooperate with
NCS and furnish all information with respect to Seller and Members as NCS may
reasonably request in connection with such registration statement. All
expenses of such registration, other than any underwriting discounts and
commissions with respect to any NCS Stock being registered on behalf of Seller,
shall be borne by NCS.
12. ORDINARY COURSE. From the date of this Agreement until the Closing,
Seller will operate its business substantially as presently operated and only
in the ordinary course, and will not pay any dividend, distribution or other
payment to any Member other than payments of salary and expense reimbursements
in the ordinary course. Seller and each Member will use their best efforts to
preserve intact the present business organization and the relationships with
persons having business dealings with Seller.
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<PAGE> 13
13. ASSIGNMENT OF CONTRACTS, RIGHTS, ETC. Notwithstanding anything
contained in this Agreement to the contrary, this Agreement will not constitute
an agreement to assign any contract, claim, permit or authorization or any
right or benefit arising thereunder or resulting therefrom if an attempted
assignment thereof, without the consent of a third party thereto, would
constitute a breach thereof or in any way affect the rights of Buyer
thereunder. Seller and Members shall use their best efforts to obtain the
consent of the other party to any of the foregoing to the assignment thereof to
Buyer in all cases in which such consent is required for assignment or
transfer. If such consent is not obtained, Seller and Members agree to
cooperate with Buyer in any reasonable arrangement designed to provide for
Buyer the benefits thereunder, including, but not limited to, having (a) Buyer
act as agent for Seller and (b) Seller enforce for the benefit of Buyer any and
all rights of Seller against the other party thereto arising out of the
cancellation by such other party or otherwise.
14. SURVIVAL OF REPRESENTATIONS, WARRANTIES & COVENANTS; INDEMNIFICATION.
The representations, warranties and covenants contained in this Agreement or in
any other document, certificate, instrument, Schedule or Exhibit delivered in
connection herewith, shall survive the Closing and continue to be binding
thereafter, regardless of any investigation made by any party hereto at any
time. Nevertheless, the right of Buyer to bring claims for breaches is subject
to the limits in Section 14.3, and the rights of Members and Seller to bring
claims for breaches are subject to the limits in Section 14.4.
14.1 INDEMNIFICATION BY SELLER AND MEMBERS. Seller and each Member
jointly and severally agrees (except where such agreement is expressly made
severally but not jointly hereinbelow), to indemnify and hold Buyer, NCS, and
their respective officers, directors and subsidiaries (the "NCS Indemnified
Parties") harmless from and against any and all loss, damage, liability or
deficiency resulting from or arising out of (i) any inaccuracy in or breach of
any representation or warranty made by Members or Seller, or the breach or
nonperformance of any covenant or obligation made or incurred by Members or
Seller, in this Agreement, (ii) the ADT Litigation, (iii) any claim or action
by any former or alleged present member (other than Members) of Seller or of
any predecessor-in-interest of Seller relating in any way to the transactions
contemplated by this Agreement, or (iv) any imposition or attempted imposition
upon any NCS Indemnified Party of any liability or obligation of Seller or
Members which Buyer has not specifically agreed to assume pursuant to Section
2.1, and any and all costs and expenses (including reasonable attorneys' and
accountants' fees) related to any of the foregoing (collectively, "Losses").
Seller and Members agree severally, but NOT jointly, to indemnify and hold the
NCS Indemnified Parties harmless from and against Losses resulting from
breaches or nonperformances of
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<PAGE> 14
covenants made or incurred by them pursuant to Section 9 hereof ("Restrictive
Covenants").
14.2 INDEMNIFICATION BY BUYER. Buyer agrees to indemnify and hold
Members and Seller harmless from and against any and all loss, damage, liability
or deficiency resulting from or arising out of any inaccuracy in or breach of
any representation or warranty made by Buyer, or the breach or nonperformance of
any covenant or obligation made or incurred by Buyer, in this Agreement, and any
and all costs and expenses (including reasonable attorneys' and accountants'
fees) related thereto.
14.3 LIMITATIONS ON INDEMNIFICATION BY SELLER AND MEMBERS. The
indemnification of the NCS Indemnified Parties provided for in Section 14.1
shall be limited in certain respects as follows:
14.3.1 Any claim for indemnification under Section 14.1 shall be
made in writing by the second anniversary of the Closing Date, except that a
claim for such indemnification relating to the representations, warranties and
covenants contained in Sections 4.13 ("Taxes"), 4.10 ("Compliance With Laws"),
4.14 ("Environmental Matters"), and 4.15 ("Employee Benefits") may be made until
the expiration of the applicable statutes of limitation, if any, relating to
such matters, and except that there shall be no limit on the time for making a
claim for such indemnification relating to the representations and warranties
and covenants contained in Sections 4.1 ("Organization, Authority and
Capacity"), 4.7 ("Title to Purchased Assets"), 4.8 ("Ownership of Seller"), or
relating to any matter described clauses (ii), (iii) or (iv) of Section 14.1,
or, subject to the terms thereof, the covenants of Members and Seller contained
in Section 9 ("Restrictive Covenants").
14.3.2 Subject to the following sentence, Members and Seller shall
not be liable for indemnification claims under Section 14.1 until the aggregate
amount of indemnification claims under Section 14.1 exceeds $15,000.00.
Notwithstanding the foregoing sentence, Members and Seller shall be liable for
indemnification claims under Section 14.1, to the extent such claims relate to
the matters described in clauses (ii), (iii) or (iv) of Section 14.1 or the
representations, warranties and covenants contained in Section 9, from the first
dollar to the full extent of such claims.
14.3.3 Subject to the following sentence, the aggregate liability
of Members and Seller for indemnification claims under Section 14.1 will not
exceed the amount of Five Million Fifty-Five Thousand Dollars ($5,055,000.00).
Notwithstanding the preceding sentence, there shall be no limit on the aggregate
liability of Members and Seller for indemnification claims under Section 14.1 to
the extent such claims relate to the
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<PAGE> 15
matters described in clauses (ii), (iii) or (iv) of Section 14.1 or the
representations, warranties and covenants in Section 9.
14.3.4 Seller or any Member may elect to satisfy all or any portion
of the amount of any indemnification claim hereunder by delivering shares of NCS
Stock in payment thereof, which NCS Stock shall be valued for purposes of such
satisfaction at the fair market value thereof on the date of such delivery.
14.4 LIMITATIONS ON INDEMNIFICATION BY NCS. The indemnification of
Members and Seller provided for in Section 14.2 shall be limited in certain
respects as follows:
14.4.1 Any claim for indemnification under Section 14.2 shall be
made in writing by the second anniversary of the Closing Date, except that there
shall be no limit on the time for making a claim for such indemnification
relating to the representations and warranties contained in Sections 5.1
("Organization of Buyer and NCS") and 5.2 ("Authority, No Violation, Etc.").
14.4.2 Buyer shall not be liable for indemnification claims under
Section 14.2 until the aggregate amount of indemnification claims under Section
14.2 exceeds $15,000.00.
14.5 THIRD PARTY CLAIMS. If any legal proceeding is instituted or any
claim asserted by any third party (a "Claim") in respect of which Members or
Seller on the one hand, or the NCS Indemnified Parties on the other hand, may
be entitled to indemnity hereunder, the party asserting such right to indemnity
(the "Indemnitee") will give the party from whom indemnity is sought (the
"Indemnitor") written notice thereof. The Indemnitor will have the right, at
its option and expense, to participate in the defense of such a Claim, but not
to control the defense, negotiation or settlement thereof, which control will
at all times rest with the Indemnitee, unless the Claim involves only money
damages, not an injunction or other equitable relief, and unless the Indemnitor
(a) irrevocably acknowledges in writing complete responsibility for and agrees
to indemnify the Indemnitee, and (b) furnishes satisfactory evidence of the
financial ability to indemnify the Indemnitee, in which case the Indemnitor may
assume such control through counsel of its choice and at its expense, but the
Indemnitee will continue to have the right to be represented, at its own
expense, by counsel of its choice in connection with the defense of such a
Claim.
If the Indemnitor does not assume control of the defense of such a Claim,
the entire defense of the Claim by the Indemnitee, any settlement made by the
Indemnitee, and any judgment entered in the Claim will be deemed to have been
consented to by, and will be binding on, the Indemnitor as fully as though it
alone
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<PAGE> 16
had assumed the defense thereof and a judgment had been entered in the Claim in
the amount of such settlement or judgment, except that the right of the
Indemnitor to contest the right of the Indemnitee to indemnification under this
Agreement with respect to the Claim will not be extinguished. If the
Indemnitor does assume control of the defense of such a Claim, it will not,
without the prior written consent of the Indemnitee, settle the Claim or
consent to entry of any judgment relating thereto which does not include as an
unconditional term thereof the giving by the claimant to the Indemnitee a
release from all liability in respect of the Claim. The parties hereto agree
to cooperate fully with each other in connection with the defense, negotiation
or settlement of any such Claim.
15. AMENDMENTS; BINDING EFFECT. The Agreement (including each Schedule
and Exhibit hereto) may not be amended or modified except by a document in
writing signed by all parties hereto. This Agreement and the rights and
obligations of each party hereunder shall be binding upon and shall inure to
the benefit of the respective successors and assigns of each of the parties
hereto.
16. NOTICES. All notices, requests, demands and other communications
which are required or may be given under this Agreement shall be in writing and
shall be deemed to have been duly given on the third day following deposit in
the United States Mail if delivered or mailed, first class certified or
registered mail, return receipt requested, postage prepaid, as set forth below,
and otherwise shall be deemed duly given when received:
If to Seller,
or Members, to
such parties
in care of: Willis V. Smith
6221 Beavercreek Road
Oklahoma City, Oklahoma 73162
And to: Charles Oliver
13229 Cedar Springs Road
Oklahoma City, Oklahoma 73120
With a copy to: Lamun, Mock, Featherly,
Kuehling & Cunnyngham
5900 Northwest Grand Blvd.
Oklahoma City, Oklahoma 73118
Attention: Barry D. Mock, Esq.
If to Buyer, to
Buyer in care of: NCS HealthCare, Inc.
3201 Enterprise Parkway, Suite 220
Beachwood, Ohio 44122
Attention: President
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<PAGE> 17
With a copy to: Calfee, Halter & Griswold
800 Superior Avenue, Suite 1400
Cleveland, Ohio 44114
Attention: Patrick Morris, Esq.
17. SUIT FEE PROVISION. In the event any legal action or arbitration
proceeding is undertaken by a party in respect of the matters addressed in this
Agreement and the agreements collateral hereto, the prevailing party shall be
awarded his, her or its legal expenses and costs incurred in the prosecution or
defense of any such action or proceeding. The "prevailing party" as used
herein shall mean the party, if any, determined by the court or arbitrator to
have most nearly prevailed, even if such party did not prevail in all matters,
and not necessarily the party in whose favor a judgment or award is rendered.
18. MISCELLANEOUS. This Agreement sets forth the exclusive statement of
the agreement among the parties concerning the subject matter hereof, and there
are no agreements or understandings between or among any of the parties hereto
concerning such subject matter other than as set forth herein. This Agreement
may be executed in multiple counterparts, each of which shall be deemed and
original, and all of which together shall constitute one and the same document.
This Agreement shall be governed by and construed in accordance with the laws
of the State of Ohio applicable to contracts made and to be performed entirely
within the State of Ohio.
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<PAGE> 18
IN WITNESS WHEREOF, the parties have executed this Asset Purchase
Agreement on the date first written above.
THRIFTY MEDICAL OF TULSA, L.L.C.
("Seller")
By: /s/ Willis V. Smith
___________________________
Title: Manager
________________________
/s/ Willis V. Smith
_______________________________
WILLIS SMITH
/s/ Charles Oliver
_______________________________
CHARLES OLIVER
("Members")
NCS HEALTHCARE OF OKLAHOMA, INC.
("Buyer")
By: /s/ Kevin B. Shaw
___________________________
Title: President
________________________
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<PAGE> 1
EXHIBIT 2.3
AGREEMENT OF MERGER
THIS AGREEMENT OF MERGER (this "Agreement") is entered into on
this 13th day of August, 1996, by and among NORTHSIDE PHARMACY, INC., an
Oklahoma corporation ("Northside"), WILLIS V. SMITH, CHARLES OLIVER, and the
WILLIS VERNON SMITH UNITRUST DATED AUGUST 8, 1996 (each individually, a
"Shareholder," and collectively, the "Shareholders"), NCS HEALTHCARE OF
OKLAHOMA, INC., an Oklahoma corporation ("NCS/Oklahoma"), and NCS HEALTHCARE,
INC., a Delaware corporation ("NCS").
WITNESSETH:
WHEREAS, Northside and NCS/Oklahoma (collectively, the
"Constituent Corporations") are corporations organized and existing under the
laws of the State of Oklahoma, and NCS/Oklahoma is a wholly owned subsidiary of
NCS;
WHEREAS, the total authorized capital stock of Northside
consists of 3,000 shares, all of which are shares of Common Stock, $1.00 par
value (the "Northside Shares"); and the total authorized capital stock of
NCS/Oklahoma consists of 10,000 shares, all of which are shares of Common
Stock, $.01 par value (the "NCS/Oklahoma Shares");
WHEREAS, the Board of Directors and the shareholders of each
of the Constituent Corporations have determined that it is advisable and in the
best interests of the respective Constituent Corporations and their respective
shareholders that Northside be merged with and into NCS/Oklahoma pursuant to
the authority of Section 1081 of the Oklahoma General Corporation Act (the
"OGCA") and in accordance with the terms and conditions of this Agreement;
WHEREAS, the Board of Directors and the shareholders of each
of the Constituent Corporations have authorized, approved and adopted this
Agreement by resolutions duly adopted in accordance with the provisions of the
OGCA; and
WHEREAS, the Constituent Corporations desire to adopt this
Agreement as a plan of reorganization in accordance with the provisions of
Section 368 of the Internal Revenue Code of 1986, as amended (the "Code");
NOW, THEREFORE, in consideration of and in reliance upon the
representations, warranties and covenants set forth in this Agreement,
Northside, Shareholders, NCS/Oklahoma and NCS hereby agree as follows:
1. THE MERGER. Effective at the Effective Time (as
defined below), Northside shall be merged with and into NCS/Oklahoma in
accordance with the provisions of Section 1081 of the OGCA (the "Merger").
NCS/Oklahoma shall be the surviving corporation in the Merger (the "Surviving
Corporation"). At the Effective Time, the corporate existence of Northside
shall cease, and the Surviving Corporation, to the extent permitted
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<PAGE> 2
by applicable laws, shall succeed to all of the business, properties, assets,
rights and liabilities of the Constituent Corporations. When used in this
Agreement, the term "Effective Time" shall mean the time at which a duly
executed certificate of merger with respect to the Merger is duly filed in the
office of the Secretary of State of Oklahoma in accordance with the OGCA.
2. CERTIFICATE OF INCORPORATION; BY-LAWS. The
Certificate of Incorporation of NCS/Oklahoma as in effect immediately prior to
the Effective Time shall continue in effect following the Merger and shall be
the Certificate of Incorporation of the Surviving Corporation, until changed or
amended from time to time in accordance with the terms thereof and with
applicable law. The By-Laws of NCS/Oklahoma as in effect immediately prior to
the Effective Time shall continue in effect following the Merger and shall be
the By-Laws of the Surviving Corporation, until changed or amended from time to
time in accordance with the terms thereof and with applicable law.
3. DIRECTORS AND OFFICERS. The Directors and officers
of NCS/Oklahoma holding office immediately prior to the Effective Time shall
continue in office following the Merger and shall be the Directors and
officers, respectively, of the Surviving Corporation.
4. TERMS OF MERGER. The terms of the Merger and the
mode of carrying them into effect, and the manner and basis of converting the
outstanding shares of the capital stock of the Constituent Corporations, shall
be as follows:
4.1 OUTSTANDING NCS/OKLAHOMA STOCK. Each
NCS/Oklahoma Share which is issued and outstanding immediately prior to the
Effective Time shall remain issued and outstanding following the Merger and
shall become, by virtue of the Merger, a share of Common Stock, $.01 par value,
of the Surviving Corporation.
4.2 OUTSTANDING NORTHSIDE STOCK. All Northside
Shares which are issued and outstanding immediately prior to the Effective Time
shall, by virtue of the Merger and without any action on the part of the
Constituent Corporations or any holder thereof or any other person, be canceled
and extinguished, and shall be converted at the Effective Time into the
respective rights of the holders thereof to receive, upon the surrender to
NCS/Oklahoma of all certificates representing such Northside Shares, the
following consideration:
4.2.1 SHARES HELD BY WILLIS SMITH. All
Northside Shares held by Willis V. Smith shall be converted, in the aggregate,
into the right to receive Fifty-Six Thousand Four Hundred (56,400) shares of
Class A Common Stock, $.01 par value, of NCS ("NCS Stock").
4.2.2 SHARES HELD BY SMITH TRUST. All
Northside Shares held by the Willis Vernon Smith Unitrust Dated August 8, 1996,
shall be converted, in the aggregate, into the right to receive (i) cash or its
equivalent in the amount of Two Hundred Ninety- Nine Thousand Nine Hundred
Ninety-Eight Dollars ($299,998.00), and (ii) a Non-
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<PAGE> 3
Negotiable 6% Promissory Note in the form attached to this Agreement as EXHIBIT
A executed by NCS/Oklahoma, dated as of the Closing Date, in the original
principal amount of Two Hundred Five Thousand Eight Hundred Four Dollars
($205,804.00).
4.2.3 SHARES HELD BY CHARLES OLIVER. All
Northside Shares held by Charles Oliver shall be converted, in the aggregate,
into the right to receive (i) Eight Thousand Three Hundred Thirty-Eight (8,338)
shares of NCS Stock, (ii) cash or its equivalent in the amount of Three Hundred
Forty-Six Thousand Seven Hundred Ninety-Eight Dollars ($346,798.00), and (iii)
a Non-Negotiable 6% Promissory Note in the form attached to this Agreement as
EXHIBIT A executed by NCS/Oklahoma, dated as of the Closing Date, in the
original principal amount of Sixty-Three Thousand Five Hundred Ninety-Six
Dollars ($63,596.00).
5. CLOSING. If the conditions to the parties'
obligations are satisfied, the consummation of the transactions contemplated by
this Agreement (the "Closing") will take place simultaneously with the
execution and delivery of this Agreement by all of the parties hereto on the
date hereof, or on such other date as the parties may agree in writing (the
"Closing Date"), at the offices of Lamun, Mock, Featherly, Kuehling &
Cunnyngham, Oklahoma City, or at such other place as the parties may agree in
writing. If the Closing does not occur by August 31, 1996, this Agreement may
be terminated by Northside and Shareholders, or by NCS/Oklahoma and NCS,
without prejudice to the rights of any party against any other for any breach
or nonperformance of its obligations prior to termination.
6. REPRESENTATIONS AND WARRANTIES OF NORTHSIDE AND
SHAREHOLDERS. Northside and Shareholders hereby jointly and severally
represent and warrant to NCS/Oklahoma and NCS, as of the date of this Agreement
and as of the Closing Date, if later, as follows:
6.1 ORGANIZATION, ETC., OF NORTHSIDE. Northside
(i) is a corporation duly incorporated, validly existing and in good standing
under the laws of the State of Oklahoma, (ii) is qualified to do business as a
foreign corporation in every state or other jurisdiction where the conduct of
its business or the ownership of its assets and properties requires it to be so
qualified, and (iii) has full corporate power and authority to own, lease and
operate its assets and properties and to carry on its business as and where
such assets and properties are now owned or leased and as such business is
presently being conducted. SCHEDULE 6.1 sets forth correct and complete copies
of the Certificate of Incorporation and the By-Laws of Northside, including all
amendments thereto, each as in effect on the date hereof and as of the Closing
Date.
6.2 AUTHORITY, NO VIOLATION, ETC. The Merger and
the execution, delivery and performance by Northside of this Agreement and of
each other document, agreement and instrument to be executed and delivered by
Northside in connection with the provisions of this Agreement, have been duly
and validly authorized and approved by all necessary action on the part of
Northside, the Board of Directors of Northside and Shareholders. This
Agreement and all other documents, agreements and instruments to be
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<PAGE> 4
delivered by Northside in connection herewith constitute legal, valid and
binding obligations of Northside, enforceable in accordance with their
respective provisions.
6.3 CAPACITY OF SHAREHOLDERS. Each Shareholder
has full power and capacity to execute, deliver and perform this Agreement and
each of the agreements and documents to be delivered by such Shareholder in
connection herewith. This Agreement and each other agreement and document
delivered by any Shareholder in connection herewith has been duly executed and
delivered by such Shareholder, and constitutes a legal, valid and binding
obligation of such Shareholder, enforceable in accordance with its terms.
6.4 MINUTES AND STOCK RECORDS. The stock records
of Northside which have previously been delivered to NCS for inspection are
correct and complete in all material respects. The corporate minutes of
Northside which have previously been delivered to NCS for inspection are
correct and complete in all material respects and contain all of the
proceedings of the shareholders, directors and committees of directors of
Northside. SCHEDULE 6.4 sets forth a correct and complete list of all
incumbent directors and officers of Northside.
6.5 SUBSIDIARIES AND AFFILIATES. Except as set
forth on SCHEDULE 6.5, Northside does not own, directly or indirectly, any
equity or ownership interest in any corporation, business trust, partnership,
joint venture, joint stock company, limited liability company, or other
business organization or association, and is not a partner or joint venturer of
any other person.
6.6 CAPITAL STOCK OF NORTHSIDE; TITLE TO SHARES.
The total authorized capital stock of Northside consists of Three Thousand
(3,000) shares, all of which are shares of Common Stock, $1.00 par value (the
"Common Stock"). There are no shares of capital stock of Northside held in the
treasury of Northside. There are a total of Five Hundred (500) issued and
outstanding shares of Common Stock. All of such issued and outstanding shares
of Common Stock (collectively, the "Shares") are owned of record and
beneficially by Shareholders in the respective amounts set forth on SCHEDULE
6.6, and are owned by them, respectively, free and clear of all liens, claims,
charges or encumbrances of any nature whatsoever, or any other restrictions
affecting the ability to transfer such Shares. All of the Shares are duly
authorized, validly issued, fully paid and nonassessable, and have been issued
in compliance with all applicable state and federal securities laws. There
exist no options, warrants, stock appreciation, conversion or similar rights or
obligations, whether vested or contingent, providing for the purchase,
redemption, sale, or issuance of any shares of capital stock of Northside, and
there exist no claims or rights, whether vested or contingent, of an equity
ownership nature of Northside which will not be completely and permanently
extinguished at the Effective Time of the Merger.
6.7 NO CONSENTS, APPROVALS OR CONFLICTS. No
consent or approval of, and no registration, declaration or filing with, any
governmental authority or third party is required in connection with the
execution, delivery or performance of this Agreement by Northside or
Shareholders. The Merger and the execution, delivery and performance by
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Northside and Shareholders of this Agreement and of all other documents,
agreements and instruments to be delivered by Northside or any Shareholder in
connection herewith will not cause, or give any person grounds to cause (with
or without notice, the passage of time, or both) the maturity of any obligation
or liability of Northside to be accelerated or increased, and will not conflict
with, violate or result in any breach of: (i) any judgment, decree, order,
statute, rule or regulation applicable to Northside or any Shareholder, (ii)
any contract, agreement, instrument or understanding to which Northside or any
Shareholder is a party or by which Northside, any of its assets, or any
Shareholder is bound, or (iii) any provision of the Certificate of
Incorporation or the By-Laws of Northside.
6.8 FINANCIAL STATEMENTS. SCHEDULE 6.8 includes
the annual financial statements of Northside for each of its fiscal years ended
March 31, 1994, 1995 and 1996, and the financial statements of Northside for
the three-month period ended June 30, 1996 (collectively, the "Financial
Statements"). Except as set forth on SCHEDULE 6.8, all of the Financial
Statements are accurate and complete in all material respects and present
fairly the financial position and results of operations of Northside for the
periods they cover in conformity with generally accepted accounting principles
applied on a consistent basis. Northside's books of account accurately reflect
all items of income and expense (including accruals) and all of Northside's
assets and liabilities in accordance with normal accrual accounting practices,
subject to customary, immaterial year-end adjustments.
6.9 NET WORTH. The net book value of Northside
at and as of the Closing, determined in accordance with Northside's internal
accounting practices applied on a consistent basis, will be at least $830,109.
6.10 NO LIABILITIES. Northside has no material
liabilities or obligations of any kind (whether contingent or otherwise) except
(i) as reflected on the balance sheet of Northside as of June 30, 1996 which is
included in SCHEDULE 6.8 (the "Balance Sheet"), subject to any exceptions
described in SCHEDULE 6.8, (ii) future performance obligations under contracts
disclosed in writing to NCS before the Closing, or (iii) as incurred in the
ordinary course of business, consistent with past practice, since the date of
the Balance Sheet. Neither Northside, nor any other party, has breached any
obligation under any contract to which Northside is a party or by which any of
Northside's assets is bound.
6.11 INDEBTEDNESS. SCHEDULE 6.11 sets forth a
complete and accurate list of all contracts, agreements, facilities, notes,
guaranties, letters of credit, and any other commitments, instruments and
obligations to which Northside is a party or by which Northside or any of its
assets is bound, relating to indebtedness or obligations of Northside, whether
fixed or contingent, in respect of borrowed money, and includes, without
limitation, all bank or other institutional debt, other loans or commitments,
and capitalized leases undertaken by Northside.
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6.12 CONTRACTS. SCHEDULE 6.12 sets forth a
complete and accurate list of:
6.12.1 All contracts to which Northside is
a party or by which it is bound (other than contracts listed on SCHEDULE 6.11),
which either (a) involve amounts in excess of $100,000, or payments based on
profits or sales, or (b) are not cancelable by Northside upon less than 30
days' notice, or (c) involve terms or quantities exceeding normal commitments
in the ordinary course of business.
6.12.2 All contracts pursuant to which
Northside provides pharmaceuticals, medical supplies, therapies, intravenous
infusion services, or any other products, services or therapies related to any
of the foregoing.
6.12.3 All contracts with wholesalers,
distributors, dealers, sales representatives, or co-operative associations to
which Northside is a party or by which Northside is bound.
6.12.4 All contracts with any federal,
state or local governmental authorities, agencies or subdivisions to which
Northside is a party or by which Northside is bound.
6.12.5 All contracts for the past or
present disposal of hazardous or infectious waste or other materials to which
Northside is or was a party or by which Northside is or was bound.
6.12.6 All employment, consulting,
management, or agency contracts to which Northside is a party or by which
Northside is bound.
6.12.7 All contracts containing an
obligation of confidentiality with respect to information furnished by
Northside or Shareholders to a third party, or received by Northside or
Shareholders from a third party.
6.12.8 All contracts limiting the freedom
of Northside or of Shareholders to compete in any line of business, or with any
person, or in any geographic area or market.
6.12.9 All contracts providing for the
present or future lease (whether as lessee or lessor), purchase or sale of any
real property by Northside.
6.13 COMPLIANCE WITH LAWS. Northside is not in
violation of any law, regulation or order of any jurisdiction or governmental
authority (a "Law"), including, without limitation, any Law pertaining to
Medicare or Medicaid reimbursement, environmental protection, infectious or
biomedical waste, occupational health or safety, or employment practices.
Northside has all permits and licenses necessary in the conduct of its
business. All such permits and licenses are in full force and effect, and no
proceeding
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is pending or, to the knowledge of Northside or any Shareholder, threatened to
revoke or limit any of them.
6.14 NO LITIGATION. There is no claim,
litigation, investigation or proceeding by any person or governmental authority
pending or, to the knowledge of any Shareholder, threatened against Northside.
There are no pending or, to the knowledge of any Shareholder, threatened
controversies or disputes with, or grievances or claims by, any employees or
former employees of Northside or any of its predecessors of any nature
whatsoever, including, without limitation, any controversies, disputes,
grievances or claims with respect to their employment, compensation, benefits
or working conditions.
6.15 COMPLETENESS OF AND TITLE TO ASSETS.
Included in the assets reflected on the Balance Sheet are all those assets
which have been or are being used to operate the business of Northside in the
ordinary course as such business is presently conducted. Except as set forth
on SCHEDULE 6.15, Northside owns all of the assets reflected on the Balance
Sheet free and clear of all liens, claims, encumbrances and other restrictions
or limitations affecting Northside's ability to use or transfer them.
6.16 RECEIVABLES. All of the accounts receivable
of Northside reflected on the Balance Sheet, except where described on the
Balance Sheet or otherwise in SCHEDULE 6.8, arose from valid sales in the
ordinary course of business and reflect goods actually sold and delivered or
services in fact rendered. At least ninety percent (90%) of all such accounts
receivable reflecting goods sold or services rendered will be collected by
NCS/Oklahoma within 240 days after the Closing.
6.17 INVENTORIES. The inventories reflected on
the Balance Sheet are sufficient to cover the immediate needs of Northside and
to cover time required for re-stocking after the Closing.
6.18 CONDITION. All of the tangible assets
reflected on the Balance Sheet are in good operating condition, ordinary wear
and tear excepted, neither require nor can reasonably be expected to require
any special or extraordinary expenditures to remain in such condition beyond
normal maintenance, and are capable of being used for their intended purposes
in the ordinary course of business consistent with past practice.
6.19 REAL PROPERTY. SCHEDULE 6.19 lists all real
property which is now or at any time prior to the Closing Date was owned,
leased or occupied by Northside or any of its predecessors, and indicates for
each such property whether it was owned, leased and/or occupied. Neither
Northside nor any Shareholder is, or has received notification alleging that it
or he is, in breach of any lease of any such leased real property.
6.20 ENVIRONMENTAL MATTERS. Northside has no
liability, whether absolute or contingent, in respect of any activities
associated with the generation, transportation, release, storage, treatment,
disposal or identification of any substance or
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material which could result in damage to the environment or danger to the
health and safety of the public.
6.21 EMPLOYEE BENEFITS. SCHEDULE 6.21 lists each
Employee Benefit Plan (within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")) which Northside
maintains or to which Northside is required to contribute (each, a "Plan").
None of the Plans is a "Multiemployer Plan" within the meaning of Section 3(37)
of ERISA. Each Plan has been operated in accordance with its terms and with
all laws applicable thereto. Neither Northside nor any such Plan is subject to
any liability (other than routine claims for benefits) or any tax in connection
with any such Plan. Except as set forth on SCHEDULE 6.21, no such Plan
provides benefits for persons who are not active employees or directors of
Northside. Except as prohibited by law, Northside has the right to amend or
terminate any Plan without the consent of any other person. There is no Plan
under which Northside would be obligated to pay, accrue or contribute benefits
because of the consummation of the transactions contemplated by this Agreement.
Since December 31, 1995, there has not been any increase made or promised in
the benefits payable under any Plan.
6.22 NO CHANGES. Since March 31, 1996, Northside
has been operated only in the ordinary course, consistent with past practice,
and there has not been any material adverse change, or any event, fact or
circumstance which might reasonably be expected to result in a material adverse
change in the assets, liabilities, operating performance, business
relationships, or prospects of Northside's business. Except as set forth on
SCHEDULE 6.22, since March 31, 1996, Northside has not paid any dividend,
distribution or other payment to any Shareholder or to any relative of any
Shareholder other than payments of salary and expense reimbursements, if any,
made in the ordinary course of business, consistent with past practice, for
employment services actually rendered or expenses actually incurred on behalf
of Northside.
6.23 TAXES. All tax returns, reports and
declarations (collectively, "Tax Returns") required by any governmental
authority to be filed in connection with the properties, business, income,
expenses, net worth and franchises of Northside have been timely filed, and all
such Tax Returns are correct and complete in all respects. All tax due in
connection with the properties, business, income, expenses, net worth and
franchises of Northside has been paid, other than tax which is not yet due or
which, if due, is not yet delinquent or is being contested in good faith, and
for which in all cases reserves have been established in the Balance Sheet
which are sufficient to cover the payment of all such tax. There are no tax
claims, audits or proceedings pending in connection with the properties,
business, income, expenses, net worth or franchises of Northside, and, to the
knowledge of any Shareholder, there are no such threatened claims, audits or
proceedings.
6.24 CUSTOMERS. Except as set forth on SCHEDULE
6.24, no entity or group of affiliated entities which is or are customers of
Northside operates more than 500 beds. Except as set forth on SCHEDULE 6.24,
no nursing home or other facility or institution served by Northside has, since
December 31, 1995, cancelled or otherwise terminated, or
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made any threat to cancel or otherwise terminate, its relationship with
Northside. Neither Northside nor any Shareholder has any knowledge that any
customer of Northside is dissatisfied with the performance of Northside or its
employees or that any such customer intends to cancel or otherwise terminate
its relationship with Northside or to materially decrease its purchases of
products and/or services from Northside.
6.25 NO CONFLICTS. Except as set forth on
SCHEDULE 6.25, no Shareholder, no director, officer or employee of Northside,
and no relative of any such person, has any direct or indirect interest in any
business enterprise which does business with Northside or competes with
Northside in any manner, or is a party to any contract to which Northside is
also a party or by which any of Northside's assets is bound.
6.26 BROKERS AND FINDERS. No broker, finder or
other person or entity acting in a similar capacity has participated on behalf
of Northside or any Shareholder in bringing about the transactions contemplated
by this Agreement, rendered any services with respect thereto, or been in any
way involved therewith.
6.27 INVESTMENT MATTERS. Each of Willis V. Smith
and Charles Oliver (the "NCS Stock Recipients") is acquiring the NCS Stock for
his own investment and not with a view to distribution or resale or with the
present intention to divide his participation with others or otherwise sell or
transfer the NCS Stock. Each NCS Stock Recipient, by reason of his income or
his net worth or both, meets the definition of "accredited investor" as defined
in Regulation D, 17 C.F.R. Section 230.501(a), under the Securities Act of
1933, as amended (the "Act"). Each NCS Stock Recipient possesses, either alone
or together with a purchaser representative, knowledge and experience in
financial and business matters such that he is capable of evaluating the merits
and risks of his investment in the NCS Stock. Each NCS Stock Recipient
acknowledges that he has received and reviewed NCS' Prospectus dated February
13, 1996, for the public offering of 4,240,000 shares of NCS Stock (including
the description of the NCS Stock set forth beginning at page 41 therein); NCS'
Current Report on Form 8-K dated May 15, 1996, as amended; NCS' quarterly
report on Form 10-Q for the quarter ended March 31, 1996; and all other
material and relevant information concerning NCS, and has had the opportunity
to ask questions of, receive answers from and obtain additional information
from NCS concerning the business and financial condition of NCS.
Each NCS Stock Recipient understands, acknowledges and agrees
that: (i) none of the NCS Stock will be registered under the Act, and that all
of the NCS Stock will constitute "restricted securities" as defined in Rule 144
under the Act; (ii) such NCS Stock must be held indefinitely unless it is
registered under the Act or an exemption from registration is available; (iii)
except as set forth in Section 11 hereof, neither NCS nor NCS/Oklahoma is under
any obligation or has made any commitment to provide any such registration or
to take such steps as are necessary to permit sale without registration
pursuant to Rule 144 under the Act or otherwise; (iv) at such time as the NCS
Stock may be disposed of in routine sales without registration in reliance on
Rule 144 under the Act, such disposition can be made only in limited amounts in
accordance with all of the terms and
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conditions of Rule 144; (v) if the Rule 144 exemption is not available,
compliance with some other exemption from registration will be required; (vi)
all certificates evidencing the NCS Stock will bear an appropriate legend
concerning the foregoing restrictions on transfer; and (vii) the Transfer Agent
and Registrar of NCS will be advised by appropriate "stop-transfer"
instructions of the foregoing restrictions and instructed to advise NCS of any
proposed transfer of certificate(s) evidencing the NCS Stock.
6.28 NO UNDISCLOSED INFORMATION. This Agreement
(including the Schedules hereto), and all documents or certificates delivered
by Northside or any Shareholder to NCS or NCS/Oklahoma in connection herewith,
do not contain any untrue statement of a material fact by Northside or any
Shareholder, and do not omit to state a material fact necessary in order to
make the statements by Northside and Shareholders contained herein or therein,
in light of the circumstances under which such statements are made, not
misleading.
7. REPRESENTATIONS AND WARRANTIES OF NCS/OKLAHOMA AND
NCS. NCS/Oklahoma and NCS hereby jointly and severally represent and warrant
to Shareholders and Northside as follows:
7.1 ORGANIZATION. NCS/Oklahoma is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of Oklahoma. NCS is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware.
7.2 AUTHORITY; NO VIOLATION, ETC. The Merger and
the execution, delivery and performance by NCS/Oklahoma and NCS of this
Agreement and of each other document, agreement and instrument to be executed
and delivered by them in connection with the provisions of this Agreement, have
been duly and validly authorized and approved by all necessary action on the
part of NCS/Oklahoma, NCS and their respective Boards of Directors. This
Agreement and all other documents, agreements and instruments to be delivered
by NCS/Oklahoma and NCS in connection herewith constitute legal, valid and
binding obligations of NCS/Oklahoma and NCS, respectively, enforceable in
accordance with their respective provisions. The NCS Stock to be issued to the
NCS Stock Recipients hereunder will be duly authorized, validly issued, fully
paid and non-assessable.
7.3 NO CONSENTS, APPROVALS OR CONFLICTS. No
consent or approval of, and no registration, declaration or filing with, any
governmental authority or third party is required in connection with the
execution, delivery or performance of this Agreement by NCS/Oklahoma or NCS.
Neither the execution or delivery nor the performance of this Agreement or any
of the other agreements, instruments or documents to be delivered by or on
behalf of NCS/Oklahoma or NCS in connection herewith conflicts with, violates
or results in any breach of: (i) any judgment, decree, order, statute, rule or
regulation applicable to them, (ii) any contract, agreement, instrument or
understanding to which either of them is a party or by which either of them is
bound, or (iii) any provision of the respective Certificates of Incorporation
or By-Laws of NCS/Oklahoma or NCS.
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7.4 BROKERS AND FINDERS. No broker, finder or
other person or entity acting in a similar capacity has participated on behalf
of NCS in bringing about the transactions contemplated by this Agreement,
rendered any services with respect thereto, or been in any way involved
therewith.
7.5 NO UNDISCLOSED INFORMATION. This Agreement
(including the Schedules hereto), and all documents or certificates delivered
by NCS/Oklahoma or NCS to Northside or any Shareholder in connection herewith,
do not contain any untrue statement of a material fact by NCS/Oklahoma or NCS,
and do not omit to state a material fact necessary in order to make the
statements by NCS/Oklahoma and NCS contained herein or therein, in light of the
circumstances under which such statements are made, not misleading.
8. CLOSING CONDITIONS.
8.1 CONDITIONS OF NCS. The obligations of
NCS/Oklahoma and NCS to perform this Agreement are subject to the satisfaction
of the following conditions at or before the Closing:
8.1.1 Shareholders shall have delivered to
NCS/Oklahoma all certificates representing all of the Shares, in each case duly
endorsed in blank (or accompanied by appropriate stock powers duly executed in
blank) and otherwise in proper form for transfer, together with all other
documents necessary or appropriate to validly transfer the Shares free and
clear of all liens or adverse claims.
8.1.2 A certificate of merger with respect
to the Merger shall have been duly executed and filed with the Secretary of
State of Oklahoma in accordance with the OGCA.
8.1.3 NCS/Oklahoma shall have received
from each of Willis V. Smith and Charles Oliver a mutually acceptable
Employment and Noncompetition Agreement, duly executed by such individual
(collectively, the "Employment Agreements").
8.1.4 NCS/Oklahoma shall have received a
mutually acceptable lease agreement covering Northside's premises located at
3166-3168 North Portland, Oklahoma City, Oklahoma 73112 (the "Premises"), duly
executed by Willis Smith and Lisa Smith (collectively, "Landlord").
8.1.5 NCS/Oklahoma and NCS shall have
received all consents and permits necessary for the consummation of the
transactions contemplated by this Agreement, and no suit, action or other
proceeding shall be pending or threatened before any court or before or by any
governmental authority in which it is sought to restrain, prohibit, invalidate
or set aside in whole or in part the consummation of the transactions
contemplated by this Agreement.
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8.1.6 Northside and Shareholders shall
have performed and complied in all material respects with all obligations,
covenants and conditions required by this Agreement to have been performed or
complied with by them at or prior to the Closing, and if the Closing occurs
after the date of this Agreement, all representations and warranties of
Shareholders contained herein shall continue to be accurate in all material
respects at and as of the Closing, just as if made as of the Closing.
8.1.7 If the Closing occurs after the date
of this Agreement, NCS/Oklahoma and NCS shall have received a certificate from
Northside and Shareholders, in form and substance acceptable to NCS/Oklahoma
and NCS, dated as of the Closing and duly executed by Northside and
Shareholders, certifying as to the fulfillment of the conditions set forth in
Section 8.1.6 hereof.
8.1.8 There shall have been no material
adverse change since the date of the Balance Sheet in the financial condition,
business or affairs of Northside, and Northside shall not have suffered any
material loss, not covered by insurance, which materially affects the value of
its assets, properties or business.
8.2 CONDITIONS OF NORTHSIDE AND SHAREHOLDERS.
The obligations of Northside and Shareholders to perform this Agreement are
subject to the satisfaction of the following conditions at or before the
Closing:
8.2.1 Shareholders shall have received the
cash payments, the promissory notes and NCS Stock described in Section 4.
8.2.2 A certificate of merger with respect
to the Merger shall have been duly executed and filed with the Secretary of
State of Oklahoma in accordance with the OGCA.
8.2.3 Northside and Shareholders shall
have received all consents and permits necessary for the consummation of the
transactions contemplated by this Agreement, and no suit, action or other
proceeding shall be pending or threatened before any court or before or by any
governmental authority in which it is sought to restrain, prohibit, invalidate
or set aside in whole or in part the consummation of the transactions
contemplated by this Agreement.
8.2.4 NCS/Oklahoma and NCS shall have
performed and complied in all material respects with all obligations, covenants
and conditions required by this Agreement to have been performed or complied
with by them at or prior to the Closing, and if the Closing occurs after the
date of this Agreement, all representations and warranties of NCS/Oklahoma and
NCS contained herein shall continue to be accurate in all material respects at
and as of the Closing, just as if made as of the Closing.
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8.2.5 Each of Willis V. Smith and Charles
Oliver shall have received a mutually acceptable Employment Agreement, each
duly executed by NCS/Oklahoma.
8.2.6 Landlord shall have received a
mutually acceptable lease agreement covering the Premises, duly executed by
NCS/Oklahoma.
8.3 INTERDEPENDENCE. The transfers and
deliveries described in this Section 8 shall be mutually interdependent and
regarded as occurring simultaneously, and, unless waived by Northside,
Shareholders, NCS/Oklahoma and NCS, no such transfer or delivery shall become
effective unless and until all the other transfers and deliveries provided for
in this Section 8 have also been consummated. The transfers and deliveries
herein contemplated shall be deemed to have occurred and the Closing shall be
effective at and as of the Effective Time of the Merger.
9. RESTRICTIVE COVENANTS.
9.1 SMITH COVENANTS. The covenants made by
Willis V. Smith in Sections 3.1 (relating to noncompetition), 3.2 (relating to
nondisclosure of Confidential Information, as defined therein), and 3.3
(relating to noninterference with the business of NCS/Oklahoma) of the
Employment Agreement entered into between Willis V. Smith and NCS/Oklahoma in
connection with this Agreement (the "Smith Employment Agreement") are all
hereby incorporated into this Agreement by reference and made a part hereof as
if fully rewritten herein (the "Smith Covenants"). Willis V. Smith agrees (i)
to be bound by and to observe and comply with all of the Smith Covenants, (ii)
that a breach thereof by him will constitute a breach of this Agreement, and
(iii) that for purposes of this Agreement, the term "Company" as used in the
Smith Employment Agreement will be deemed to mean and include NCS,
NCS/Oklahoma, and all other persons or entities controlled directly or
indirectly by NCS.
9.2 OLIVER COVENANTS. The covenants made by
Charles Oliver in Sections 3.1 (relating to noncompetition), 3.2 (relating to
nondisclosure of Confidential Information, as defined therein), and 3.3
(relating to noninterference with the business of NCS/Oklahoma) of the
Employment Agreement entered into between Charles Oliver and NCS/Oklahoma in
connection with this Agreement (the "Oliver Employment Agreement") are all
hereby incorporated into this Agreement by reference and made a part hereof as
if fully rewritten herein (the "Oliver Covenants"). Charles Oliver agrees (i)
to be bound by and to observe and comply with all of the Oliver Covenants, (ii)
that a breach thereof by him will constitute a breach of this Agreement, and
(iii) that for purposes of this Agreement, the term "Company" as used in the
Oliver Employment Agreement will be deemed to mean and include NCS,
NCS/Oklahoma, and all other persons or entities controlled directly or
indirectly by NCS.
9.3 TRUST COVENANTS. The Trust covenants and
agrees that it will not, until the seventh (7th) anniversary of the date of
this Agreement, invest in or finance any
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<PAGE> 14
person, entity or enterprise which Smith would be prohibited from investing in
or financing pursuant to the covenants of Smith contained in Section 3.1 of the
Smith Employment Agreement.
9.4 ADEQUATE CONSIDERATION. Shareholders
acknowledge and agree that the obligations of NCS/Oklahoma and NCS hereunder
constitute adequate consideration for all of Shareholders' obligations under
this Section 9.
9.5 REMEDIES. Shareholders acknowledge and agree
that a breach of any of the provisions of this Section 9 will result in
irreparable damage to NCS/Oklahoma and NCS for which there will be no adequate
remedy at law, and agree that NCS/Oklahoma and NCS, in addition to their rights
at law, will be entitled to injunctive relief to enforce such provisions,
without having to post any bond.
9.6 REFORMATION. In the event of the
unenforceability or invalidity of any provision of this Section 9, such
provision shall be enforceable in part to the fullest extent permitted by law,
such invalidity or unenforceability shall not otherwise affect any other
provision of this Agreement or any similar agreement, and this Agreement shall
otherwise remain in full force and effect.
10. FURTHER ASSURANCES. NCS/Oklahoma, NCS and
Shareholders shall each execute and deliver to the other parties any and all
documents and instruments, and do and perform such acts, in addition to those
expressly provided for herein, as may be reasonably necessary or appropriate to
carry out or evidence the transactions contemplated by this Agreement, whether
before, at or after the Closing.
11. INCIDENTAL REGISTRATION. If, at any time prior to
the time when any of the NCS Stock issuable to the NCS Stock Recipients
hereunder may be disposed of without registration in reliance upon Rule 144
under the Act, NCS proposes to file on its behalf and/or on behalf of any of
its security holders a registration statement under the Act (other than on Form
S-4 or Form S-8 promulgated under the Act) for the registration of NCS Stock to
be sold for cash, NCS will give written notice to the NCS Stock Recipients at
least thirty (30) days before the initial filing with the U.S. Securities and
Exchange Commission of such registration statement, which notice shall set
forth the intended method of distribution of the NCS Stock proposed to be
registered by NCS. Such notice will offer to include in such filing, for sale
in such offering, the number of shares of NCS Stock issued hereunder as the NCS
Stock Recipients may request, subject to the provisions hereof. Each NCS Stock
Recipient desiring to have such NCS Stock registered under this Section 11
shall notify NCS in writing within ten (10) days after the date of receipt of
such notice from NCS, setting forth the number of shares of such NCS Stock for
which registration is requested by such NCS Stock Recipient. If the managing
underwriter (in the case of an underwritten public offering) shall advise NCS
that, in such underwriter's opinion, the distribution of the NCS Stock
requested to be included in the registration statement by the NCS Stock
Recipients concurrently with the NCS Stock being registered by NCS is not
advisable or would adversely affect the distribution of NCS Stock by NCS, then
the NCS Stock Recipients shall
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reduce the number of shares of NCS Stock which each initially requested to be
registered as directed by NCS or the managing underwriter, on a pro-rata basis
between the NCS Stock Recipients and all other persons having (and exercising)
a similar incidental registration right with respect to such registration
statement, based on the number of shares initially requested to be registered
by them. The NCS Stock Recipients shall cooperate with NCS and furnish all
information with respect to themselves as NCS may reasonably request in
connection with such registration statement. All expenses of such
registration, other than any underwriting discounts and commissions with
respect to any NCS Stock being registered on behalf of the NCS Stock
Recipients, shall be borne by NCS.
12. ORDINARY COURSE. From the date of this Agreement
until the Closing, if later, Northside (i) will operate its business
substantially as presently operated and only in the ordinary course, consistent
with past practice, (ii) will not pay (nor will Shareholders accept) any
dividend, distribution or other payment to Shareholders other than payments, if
any, of salary and expense reimbursements in the ordinary course, consistent
with past practice, (iii) will not effect any amendment to the Certificate of
Incorporation or the By-Laws of Northside, (iv) will not redeem or repurchase
any issued and outstanding shares of capital stock of Northside, and will not
issue any additional shares of capital stock of Northside, or undertake any
obligation, whether absolute or contingent, to redeem, repurchase or issue any
shares of capital stock of Northside; and Shareholders will cause Northside to
comply with the provisions of this Section 12.
13. EXPENSES. NCS/Oklahoma and NCS shall pay all of the
expenses incident to the transactions contemplated by this Agreement which are
incurred by them or their representatives, and Shareholders shall pay all of
the expenses incident to the transactions contemplated by this Agreement which
are incurred by Northside, Shareholders or their representatives.
14. REORGANIZATION. Shareholders jointly and severally
represent and warrant to NCS/Oklahoma and NCS that neither of the NCS Stock
Recipients has any present plan or intention to sell, exchange or otherwise
dispose of any of the shares of NCS Stock issuable to him pursuant to this
Agreement. No Shareholder shall take any action or omit to take any action,
which action or omission may cause the Merger to fail to qualify as a
non-taxable reorganization under Section 368 of the Code. Shareholders jointly
and severally agree to indemnify NCS/Oklahoma, NCS and all of NCS' affiliates
and hold them harmless from and against any and all liability for taxes arising
from or related to any failure of the Merger to qualify as a non-taxable
reorganization under the Code (collectively, "Reorganization Taxes"), PROVIDED
that the aggregate liability of Shareholders pursuant to this Section 14 shall
be reduced by the aggregate present value (calculated using a discount rate
equal to two (2) percentage points in excess of the long-term applicable
federal rate in effect on the Closing Date, and based upon all applicable tax
laws as in effect on the Closing Date) of any tax benefits received by
NCS/Oklahoma, NCS or such affiliates on account of the payment of such
Reorganization Taxes.
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<PAGE> 16
15. SURVIVAL OF REPRESENTATIONS, WARRANTIES & COVENANTS;
INDEMNIFICATION. The representations, warranties and covenants contained in
this Agreement or in any other document, certificate, instrument, Schedule or
Exhibit delivered in connection herewith, shall survive the Closing and
continue to be binding thereafter, regardless of any investigation made by any
party hereto at any time. Nevertheless, the rights of NCS/Oklahoma and NCS to
bring claims for breaches are subject to the limits in Section 15.3, and the
rights of Shareholders to bring claims for breaches are subject to the limits
in Section 15.5.
15.1 INDEMNIFICATION BY SHAREHOLDERS.
Shareholders jointly and severally agree (except where such agreement is
expressly made severally but not jointly hereinbelow), to indemnify and hold
NCS/Oklahoma, NCS and their respective officers, directors and subsidiaries
(the "NCS Indemnified Parties") harmless from and against any and all loss,
damage, liability or deficiency resulting from or arising out of any inaccuracy
in or breach of any representation or warranty made by Shareholders or
Northside, or the breach or nonperformance of any covenant or obligation made
or incurred by Shareholders or Northside, in this Agreement, and any and all
costs and expenses (including reasonable attorneys' and accountants' fees)
related thereto (collectively, "Losses"). Shareholders and Smith agree
severally, but NOT jointly, to indemnify and hold the NCS Indemnified Parties
harmless from and against Losses resulting from breaches or nonperformances of
covenants made or incurred by them pursuant to Section 9 hereof ("Restrictive
Covenants").
15.2 INDEMNIFICATION BY NCS/OKLAHOMA AND NCS.
NCS/Oklahoma and NCS jointly and severally agree to indemnify and hold
Shareholders harmless from and against any and all loss, damage, liability or
deficiency resulting from or arising out of any inaccuracy in or breach of any
representation or warranty made by NCS/Oklahoma or NCS, or the breach or
nonperformance of any covenant or obligation made or incurred by NCS/Oklahoma
or NCS, in this Agreement, and any and all costs and expenses (including
reasonable attorneys' and accountants' fees) related thereto.
15.3 LIMITATIONS ON INDEMNIFICATION BY
SHAREHOLDERS. The indemnification of the NCS Indemnified Parties provided for
in Section 15.1 shall be limited in certain respects as follows:
15.3.1 Any claim for indemnification under
Section 15.1 shall be made in writing by the second anniversary of the Closing
Date, except that a claim for such indemnification relating to the
representations, warranties and covenants contained in Sections 6.23 ("Taxes"),
6.13 ("Compliance With Laws"), 6.20 ("Environmental Matters"), 6.21 ("Employee
Benefits") and 14 ("Reorganization") may be made until the expiration of the
applicable statutes of limitation, if any, relating to such matters, and except
that there shall be no limit on the time for making a claim for such
indemnification relating to the representations and warranties contained in
Sections 6.1 ("Organization, Etc., of Northside"), 6.2 ("Authority, No
Violation, Etc."), 6.3 ("Capacity of Shareholders"), and 6.6 ("Capital Stock of
Northside; Title to Shares"), or, subject to the terms thereof, the covenants
of Shareholders contained in Section 9 ("Restrictive Covenants").
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<PAGE> 17
15.3.2 Subject to the following sentence,
Shareholders shall not be liable for indemnification claims under Section 15.1
until the aggregate amount of indemnification claims under Section 15.1 exceeds
$15,000.00. Notwithstanding the foregoing sentence, Shareholders shall be
liable for indemnification claims under Section 14, or under Section 15.1 to
the extent relating the representations, warranties and covenants in Sections 9
or 14, from the first dollar to the full extent of such claims.
15.3.3 The aggregate liability of
Shareholders for indemnification claims under Section 15.1, exclusive of
indemnification claims relating to the representations, warranties and
covenants contained in Sections 9 or 14, will not exceed the amount of Two
Million Six Hundred Ninety-Four Thousand Dollars ($2,694,000.00). There shall
be no limit on the aggregate liability of Shareholders for indemnification
claims under Section 14, or under Section 15.1 to the extent relating the
representations, warranties and covenants in Sections 9 or 14.
15.3.4 Subject to the other provisions of
this Section 15.3, NCS/Oklahoma shall have the right to deduct from any amounts
remaining due under either of the promissory notes deliverable under Section 4
hereof to Charles Oliver and the Willis Vernon Smith Unitrust Dated August 8,
1996, in the order in which such amounts become due, all of the NCS Indemnified
Parties' claims for indemnification pursuant to Sections 15.1 or 14; PROVIDED,
however, that any claims not so satisfied shall continue until satisfied in
full, and such right of offset will be in addition to and not in lieu of any
other rights or remedies that may be available to the NCS Indemnified Parties
as against any Shareholder at law or in equity. Any Shareholder may elect to
satisfy all or any portion of the amount of any indemnification claim hereunder
by delivering shares of NCS Stock in payment thereof, which NCS Stock shall be
valued for purposes of such satisfaction at the fair market value thereof on
the date of such delivery.
15.4 CONTRIBUTION AMONG SHAREHOLDERS.
Notwithstanding that the liability of Shareholders with respect to the
representations, warranties and covenants made by them herein is joint and
several (except as to the covenants in Section 9 hereof, where such liability
is several but not joint), Shareholders hereby agree with and among themselves
that each Shareholder (an "Indemnifying Shareholder") shall have and be
entitled to a right of contribution from each of the other Shareholders to the
extent that such Indemnifying Shareholder satisfies more than his or its
percentage of the amount of any indemnification claim of any NCS Indemnified
Party, as follows: Willis V. Smith, 56.64 percent; the Willis Vernon Smith
Unitrust Dated August 8, 1996, 19.75 percent; and Charles Oliver, 23.61
percent.
15.5 LIMITATIONS ON INDEMNIFICATION BY
NCS/OKLAHOMA AND NCS. The indemnification of Shareholders provided for in
Section 15.2 shall be limited in certain respects as follows:
15.5.1 Any claim for indemnification under
Section 15.2 shall be made in writing by the second anniversary of the Closing
Date, except that there
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<PAGE> 18
shall be no limit on the time for making a claim for such indemnification
relating to the representations and warranties contained in Sections 7.1
("Organization") and 7.2 ("Authority, No Violation, Etc.").
15.5.2 NCS/Oklahoma and NCS shall not be
liable for indemnification claims under Section 15.2 until the aggregate amount
of indemnification claims under Section 15.2 exceeds $15,000.00.
15.6 THIRD PARTY CLAIMS. If any legal proceeding
is instituted or any claim asserted by any third party (a "Claim") in respect
of which the Shareholders on the one hand, or the NCS Indemnified Parties on
the other hand, may be entitled to indemnity hereunder, the party asserting
such right to indemnity (the "Indemnitee") will give the party from whom
indemnity is sought (the "Indemnitor") written notice thereof. The Indemnitor
will have the right, at its option and expense, to participate in the defense
of such a Claim, but not to control the defense, negotiation or settlement
thereof, which control will at all times rest with the Indemnitee, unless the
Claim involves only money damages, not an injunction or other equitable relief,
and unless the Indemnitor (a) irrevocably acknowledges in writing complete
responsibility for and agrees to indemnify the Indemnitee, and (b) furnishes
satisfactory evidence of the financial ability to indemnify the Indemnitee, in
which case the Indemnitor may assume such control through counsel of its choice
and at its expense, but the Indemnitee will continue to have the right to be
represented, at its own expense, by counsel of its choice in connection with
the defense of such a Claim.
If the Indemnitor does not assume control of the
defense of such a Claim, the entire defense of the Claim by the Indemnitee, any
settlement made by the Indemnitee, and any judgment entered in the Claim will
be deemed to have been consented to by, and will be binding on, the Indemnitor
as fully as though it alone had assumed the defense thereof and a judgment had
been entered in the Claim in the amount of such settlement or judgment, except
that the right of the Indemnitor to contest the right of the Indemnitee to
indemnification under this Agreement with respect to the Claim will not be
extinguished. If the Indemnitor does assume control of the defense of such a
Claim, it will not, without the prior written consent of the Indemnitee, settle
the Claim or consent to entry of any judgment relating thereto which does not
include as an unconditional term thereof the giving by the claimant to the
Indemnitee a release from all liability in respect of the Claim. The parties
hereto agree to cooperate fully with each other in connection with the defense,
negotiation or settlement of any such Claim.
16. AMENDMENTS; BINDING EFFECT. This Agreement
(including each Schedule and Exhibit hereto) may not be amended or modified
except by a document in writing signed by all of the parties hereto. Subject
to the foregoing, this Agreement may, to the extent permitted by the OGCA, be
amended by mutual agreement of the Boards of Directors of the Constituent
Corporations at any time prior to the filing of a certificate of merger with
respect to the Merger with the Secretary of State of Oklahoma. This Agreement
and the rights and obligations of each party hereunder shall be binding upon
and shall inure to the benefit of the respective successors and assigns of the
parties hereto.
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<PAGE> 19
17. ABANDONMENT AND TERMINATION. At any time prior to the
filing with the Secretary of State of Oklahoma of a certificate of merger with
respect to the Merger, the Merger may be abandoned and this Agreement
terminated by action of the Board of Directors of either of the Constituent
Corporations, notwithstanding the approval of this Agreement by the
shareholders of the Constituent Corporations.
18. PAYMENT OF CERTAIN TAXES. At the Closing,
Shareholders will pay to NCS the aggregate amount of $134,707.00, representing
the income tax payable by Northside for its fiscal year ended March 31, 1996.
Such payment will be made as follows: Willis V. Smith will deliver a check
payable to the order of Northside in the amount of $76,298.00; Charles Oliver
will deliver a check payable to the order of Northside in the amount of
$31,805.00; and the Willis Vernon Smith Unitrust Dated August 8, 1996, will pay
to Northside the amount of $26,604.00 by means of a reduction of the cash
portion of the Merger consideration of $326,602.00 which would otherwise be
payable to it.
19. NOTICES. All notices, requests, demands and other
communications which are required or may be given under this Agreement shall be
in writing and shall be deemed to have been duly given on the third day
following deposit in the United States Mail if delivered or mailed, via first
class certified or registered mail, return receipt requested, postage prepaid,
addressed as set forth below, and shall be deemed to have been duly given on
the next business day following documented delivery thereof to any national
overnight delivery service addressed as set forth below, and otherwise shall be
deemed duly given when received:
If to Shareholders, to: Willis V. Smith
6221 Beavercreek Road
Oklahoma City, Oklahoma 73162
and to: Charles Oliver
13229 Cedar Springs Road
Oklahoma City, Oklahoma 73120
and to: The Willis Vernon Smith Unitrust dtd 8/8/96
Attention: M. Phil Goss, Special Trustee
201 Northeast Expressway
Oklahoma City, Oklahoma 73105
With a copy to: Lamun, Mock, Featherly, Kuehling & Cunnyngham
5900 Northwest Grand Blvd.
Oklahoma City, Oklahoma 73118
Attention: Barry D. Mock, Esq.
And with a copy to: Crowe & Dunlevy
20 North Broadway, Suite 1800
Oklahoma City, Oklahoma 73102
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<PAGE> 20
Attention: James H. Holloman Jr., Esq.
If to NCS or
NCS/Oklahoma, to: NCS HealthCare, Inc.
3201 Enterprise Parkway, Suite 220
Beachwood, Ohio 44122
Attention: President
With a copy to: Calfee, Halter & Griswold
800 Superior Avenue, Suite 1400
Cleveland, Ohio 44114
Attention: Patrick Morris, Esq.
20. SUIT FEE PROVISION. In the event any legal action or
arbitration proceeding is undertaken by a party in respect of the matters
addressed in this Agreements and the agreements collateral hereto, the
prevailing party shall be awarded his or its legal expenses and costs incurred
in the prosecution or defense of any such action or proceeding. The
"prevailing party" as used herein shall mean the party, if any, determined by
the court or arbitrator to have most nearly prevailed, even if such party did
not prevail in all matters, and not necessarily the party in whose favor a
judgment or award is rendered.
21. PERSONAL GUARANTIES. NCS and Shareholders will
cooperate with each other and use their respective best efforts to obtain after
the Closing the release or cancellation of any guaranty or similar instrument
by which any Shareholder has guaranteed the payment or performance of any
obligation of Northside, provided that such obligation is disclosed in this
Agreement or a Schedule hereto (a "Guaranteed Obligation"). If any such
release or cancellation cannot be obtained, NCS will indemnify and hold such
Shareholder harmless from and against any liability for such Guaranteed
Obligation.
22. MISCELLANEOUS. This Agreement sets forth the
exclusive statement of the agreement among the parties concerning the subject
matter hereof, and there are no agreements or understandings between the
parties concerning such subject matter other than as set forth herein. This
Agreement may be executed in multiple counterparts, each of which shall be
deemed and original, and all of which together shall constitute one and the
same document. This Agreement shall be governed by and construed in accordance
with the laws of the State of Ohio applicable to contracts made and to be
performed entirely within the State of Ohio.
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<PAGE> 21
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
/s/ Willis V. Smith NORTHSIDE PHARMACY, INC.
- -----------------------------
WILLIS V. SMITH
By: /s/ Willis V. Smith
-------------------------
/s/ Charles Oliver Title:
- ----------------------------- ----------------------
CHARLES OLIVER
NCS HEALTHCARE OF OKLAHOMA, INC.
/s/ M. Phil Goss
- -----------------------------
M. PHIL GOSS, AS INDEPENDENT
SPECIAL TRUSTEE OF THE WILLIS By: /s/ Kevin B. Shaw
VERNON SMITH UNITRUST DATED --------------------------
AUGUST 8, 1996 Title: President
-----------------------
NCS HEALTHCARE, INC.
By: /s/ Kevin B. Shaw
--------------------------
Title: President
-----------------------
CERTIFICATIONS
--------------
The undersigned Lisa Smith hereby certifies that she is the duly
appointed and acting Secretary of Northside Pharmacy, Inc., an Oklahoma
corporation, and in such capacity does hereby certify further that, on August
13, 1996, the foregoing Agreement of Merger was approved and adopted by the
affirmative vote of all of the outstanding stock of Northside Pharmacy, Inc.
NORTHSIDE PHARMACY, INC.
By: /s/ Lisa Smith
----------------------------
Lisa Smith, Secretary
The undersigned Gerald A. Monroe hereby certifies that he is the duly
appointed and acting Assistant Secretary of NCS HealthCare of Oklahoma, Inc.,
an Oklahoma corporation, and in such capacity does hereby certify further that,
on August 13, 1996, the foregoing Agreement of Merger was approved and adopted
by the affirmative vote of all of the outstanding stock of NCS HealthCare of
Oklahoma, Inc.
NCS HEALTHCARE OF OKLAHOMA, INC.
By: /s/ Gerald A. Monroe
-------------------------------------
Gerald A. Monroe, Assistant Secretary
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<PAGE> 1
EXHIBIT 2.4
STOCK PURCHASE AGREEMENT
------------------------
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is entered
into on this 13th day of August, 1996, by and among THE WILLIS VERNON SMITH
UNITRUST DATED AUGUST 8, 1996 (the "Trust") and CHARLES OLIVER ("Oliver") as
sellers (each of the Trust and Oliver are hereinafter referred to individually
as a "Shareholder," and collectively as the "Shareholders"), WILLIS V. SMITH
("Smith"), and NCS HEALTHCARE, INC., a Delaware corporation, as purchaser
("NCS").
RECITALS:
---------
A. Shareholders own all of the issued and outstanding
shares of the capital stock of Thrifty Medical Supply, Inc., an Oklahoma
corporation ("Thrifty").
B. Shareholders desire to sell to NCS, and NCS desires
to purchase from Shareholders, all of the issued and outstanding shares of the
capital stock of Thrifty for the consideration and subject to the terms and
conditions set forth in this Agreement.
C. Smith is a principal officer and a Director of
Thrifty and the grantor or settlor of the Trust, and as a beneficiary of the
Trust will benefit materially from the Trust.
NOW, THEREFORE, in consideration of and in reliance upon the
representations, warranties and covenants set forth in this Agreement, NCS,
Shareholders and Smith hereby agree as follows:
1. SALE AND PURCHASE OF SHARES. Upon the terms and
subject to the conditions of this Agreement, at the Closing (as defined below),
Shareholders shall sell, assign, transfer and deliver to NCS, and NCS shall
purchase and acquire from Shareholders, all of the issued and outstanding
shares of the capital stock of Thrifty (each individually, a "Share," and
collectively, the "Shares").
2. PURCHASE PRICE. The aggregate purchase price for the
Shares (the "Purchase Price") shall be One Million Two Hundred Nineteen
Thousand Eight Hundred Eleven Dollars ($1,219,811.00). Subject to the terms
and conditions of this Agreement, at the Closing, NCS shall pay and deliver the
Purchase Price to Shareholders as follows:
(a) NCS shall deliver to the Trust: (i) cash or its
equivalent in the amount of Eight Hundred Eighty-Nine Thousand Two
Hundred Eighty-Two Dollars ($889,282.00), and (ii) a Non-Negotiable 6%
Promissory Note in the form attached to this Agreement as EXHIBIT A
executed by NCS, dated as of the Closing Date, in the original
principal amount of Two Hundred Thirty-Two Thousand Nine Hundred
Forty-Four Dollars ($232,944.00); and
(b) NCS shall deliver to Oliver: (i) cash or its
equivalent in the amount of Seventy-Seven Thousand Three Hundred
Twenty- Nine Dollars ($77,329.00), and (ii) a
452\18485MWC.342 -1-
<PAGE> 2
Non-Negotiable 6% Promissory Note in the form attached to this
Agreement as EXHIBIT A executed by NCS, dated as of the Closing Date,
in the original principal amount of Twenty Thousand Two Hundred
Fifty-Six Dollars ($20,256.00).
3. CLOSING. If the conditions to the parties'
obligations are satisfied, the consummation of the transactions contemplated by
this Agreement (the "Closing") will take place simultaneously with the
execution and delivery of this Agreement by all of the parties hereto on the
date hereof, or on such other date as the parties may agree in writing (the
"Closing Date"), at the offices of Lamun, Mock, Featherly, Kuehling &
Cunnyngham, Oklahoma City, or at such other place as the parties may agree in
writing. If the Closing does not occur by August 31, 1996, this Agreement may
be terminated by NCS or Shareholders without prejudice to the rights of any
party against any other for any breach or nonperformance of its obligations
prior to termination.
4. REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS.
Shareholders and Smith hereby jointly and severally represent and warrant to
NCS, as of the date of this Agreement and as of the Closing Date, if later, as
follows:
4.1 ORGANIZATION, ETC., OF THRIFTY. Thrifty (i)
is a corporation duly incorporated, validly existing and in good standing under
the laws of the State of Oklahoma, (ii) is qualified to do business as a
foreign corporation in every state or other jurisdiction where the conduct of
its business or the ownership of its assets and properties requires it to be so
qualified, and (iii) has full corporate power and authority to own, lease and
operate its assets and properties and to carry on its business as and where
such assets and properties are now owned or leased and as such business is
presently being conducted. SCHEDULE 4.1 sets forth correct and complete copies
of the Certificate of Incorporation and the By-Laws of Thrifty, including all
amendments thereto, each as in effect on the date hereof and as of the Closing
Date.
4.2 CAPACITY OF SHAREHOLDERS. Each of the
Shareholders and Smith has full power and capacity to execute, deliver and
perform this Agreement and each of the agreements and documents to be delivered
by such Shareholder or Smith in connection herewith. This Agreement and each
other agreement and document delivered by either of the Shareholders or Smith
in connection herewith has been duly executed and delivered by such Shareholder
or Smith, and constitutes a legal, valid and binding obligation of such
Shareholder or of Smith, as the case may be, enforceable in accordance with its
terms.
4.3 MINUTES AND STOCK RECORDS. The stock records
of Thrifty which have previously been delivered to NCS for inspection are
correct and complete in all material respects. The corporate minutes of
Thrifty which have previously been delivered to NCS for inspection are correct
and complete in all material respects and contain all of the proceedings of the
shareholders, directors and committees of directors of Thrifty. SCHEDULE 4.3
sets forth a correct and complete list of all incumbent directors and officers
of Thrifty.
452\18485MWC.342 -2-
<PAGE> 3
4.4 SUBSIDIARIES AND AFFILIATES. Except as set
forth on SCHEDULE 4.4, Thrifty does not own, directly or indirectly, any equity
or ownership interest in any corporation, business trust, partnership, joint
venture, joint stock company, limited liability company, or other business
organization or association, and is not a partner or joint venturer of any
other person.
4.5 CAPITAL STOCK OF THRIFTY; TITLE TO SHARES.
The total authorized capital stock of Thrifty consists of Fifty Thousand
(50,000) shares, of which One Thousand (1,000) are shares of Common Voting
Stock, $1.00 par value (the "Voting Stock"), and Forty-Nine Thousand (49,000)
are shares of Common Non-Voting Stock, $1.00 par value (the "Non-Voting
Stock"). There are no shares of capital stock of Thrifty held in the treasury
of Thrifty. There are a total of Five Hundred (500) issued and outstanding
shares of Voting Stock, and there are no shares of Non-Voting Stock issued or
outstanding. All of such issued and outstanding shares of Voting Stock
(collectively, the "Shares") are owned of record and beneficially by
Shareholders in the respective amounts set forth on SCHEDULE 4.5, and are owned
by them, respectively, free and clear of all liens, claims, charges or
encumbrances of any nature whatsoever, or any other restrictions affecting the
ability to transfer such Shares, and the consummation of the transactions
contemplated by this Agreement will vest in NCS good and merchantable title to
all of the Shares. All of the Shares are duly authorized, validly issued,
fully paid and nonassessable, and have been issued in compliance with all
applicable state and federal securities laws. There exist no options,
warrants, stock appreciation, conversion or similar rights or obligations,
whether vested or contingent, providing for the purchase, redemption, sale, or
issuance of any shares of capital stock of Thrifty, and there exist no claims
or rights, whether vested or contingent, of an equity ownership nature of
Thrifty which will not be completely and permanently extinguished upon transfer
of the Shares by Shareholders to NCS hereunder.
4.6 NO CONSENTS, APPROVALS OR CONFLICTS. No
consent or approval of, and no registration, declaration or filing with, any
governmental authority or third party is required in connection with the
execution, delivery or performance of this Agreement by Shareholders or Smith.
Neither the execution or delivery nor the performance of this Agreement or any
of the other agreements, instruments or documents to be delivered by or on
behalf of Thrifty, either Shareholder or Smith in connection herewith will
cause, or give any person grounds to cause (with or without notice, the passage
of time, or both) the maturity of any obligation or liability of Northside to
be accelerated or increased, or conflict with, violate or result in any breach
of: (i) any judgment, decree, order, statute, rule or regulation applicable to
Thrifty, either Shareholder or Smith, (ii) any contract, agreement, instrument
or understanding to which Thrifty, either Shareholder or Smith is a party or by
which Thrifty, any of its assets, either Shareholder or Smith is bound, or
(iii) any provision of the Certificate of Incorporation or the By-Laws of
Thrifty.
4.7 FINANCIAL STATEMENTS. SCHEDULE 4.7 includes
the annual financial statements of Thrifty for each of its fiscal years ended
May 31, 1994, 1995 and 1996 (collectively, the "Financial Statements"). Except
as set forth on SCHEDULE 4.7, all of the Financial Statements are accurate and
complete in all material respects and present fairly the
452\18485MWC.342 -3-
<PAGE> 4
financial position and results of operations of Thrifty for the periods they
cover in conformity with generally accepted accounting principles applied on a
consistent basis. Thrifty's books of account accurately reflect all items of
income and expense (including accruals) and all of Thrifty's assets and
liabilities in accordance with normal accrual accounting practices, subject to
customary, immaterial year-end adjustments.
4.8 NET WORTH. The net book value of Thrifty at
and as of the Closing, determined in accordance with Thrifty's internal
accounting practices applied on a consistent basis, will be at least
$446,714.00.
4.9 NO LIABILITIES. Thrifty has no material
liabilities or obligations of any kind (whether contingent or otherwise) except
(i) as reflected on the balance sheet of Thrifty as of May 31, 1996 which is
included in SCHEDULE 4.7 (the "Balance Sheet"), subject to any exceptions
described in SCHEDULE 4.7, (ii) future performance obligations under contracts
disclosed in writing to NCS before the Closing, or (iii) as incurred in the
ordinary course of business, consistent with past practice, since the date of
the Balance Sheet. Neither Thrifty, nor any other party, has breached any
obligation under any contract to which Thrifty is a party or by which any of
Thrifty's assets is bound.
4.10 INDEBTEDNESS. SCHEDULE 4.10 sets forth a
complete and accurate list of all contracts, agreements, facilities, notes,
guaranties, letters of credit, and any other commitments, instruments and
obligations to which Thrifty is a party or by which Thrifty or any of its
assets is bound, relating to indebtedness or obligations of Thrifty, whether
fixed or contingent, in respect of borrowed money, and includes, without
limitation, all bank or other institutional debt, other loans or commitments,
and capitalized leases undertaken by Thrifty.
4.11 CONTRACTS. SCHEDULE 4.11 sets forth a
complete and accurate list of:
4.11.1 All contracts to which Thrifty is a
party or by which it is bound (other than contracts listed on SCHEDULE 4.10),
which either (a) involve amounts in excess of $100,000, or payments based on
profits or sales, or (b) are not cancelable by Thrifty upon less than 30 days'
notice, or (c) involve terms or quantities exceeding normal commitments in the
ordinary course of business.
4.11.2 All contracts pursuant to which
Thrifty provides pharmaceuticals, medical supplies, therapies, intravenous
infusion services, or any other products, services or therapies related to any
of the foregoing.
4.11.3 All contracts with wholesalers,
distributors, dealers, sales representatives, or co-operative associations to
which Thrifty is a party or by which Thrifty is bound.
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4.11.4 All contracts with any federal,
state or local governmental authorities, agencies or subdivisions to which
Thrifty is a party or by which Thrifty is bound.
4.11.5 All contracts for the past or
present disposal of hazardous or infectious waste or other materials to which
Thrifty is or was a party or by which Thrifty is or was bound.
4.11.6 All employment, consulting,
management, or agency contracts to which Thrifty is a party or by which Thrifty
is bound.
4.11.7 All contracts containing an
obligation of confidentiality with respect to information furnished by Thrifty,
Shareholders or Smith to a third party, or received by Thrifty, Shareholders or
Smith from a third party.
4.11.8 All contracts limiting the freedom
of Thrifty, Shareholders or Smith to compete in any line of business, or with
any person, or in any geographic area or market.
4.11.9 All contracts providing for the
present or future lease (whether as lessee or lessor), purchase or sale of any
real property by Thrifty.
4.12 COMPLIANCE WITH LAWS. Thrifty is not in
violation of any law, regulation or order of any jurisdiction or governmental
authority (a "Law"), including, without limitation, any Law pertaining to
Medicare or Medicaid reimbursement, environmental protection, infectious or
biomedical waste, occupational health or safety, or employment practices.
Thrifty has all permits and licenses necessary in the conduct of its business.
All such permits and licenses are in full force and effect, and no proceeding
is pending or, to the knowledge of Thrifty, either Shareholder or Smith,
threatened to revoke or limit any of them.
4.13 NO LITIGATION. There is no claim,
litigation, investigation or proceeding by any person or governmental authority
pending or, to the knowledge of any Shareholder or Smith, threatened against
Thrifty. There are no pending or, to the knowledge of any Shareholder or
Smith, threatened controversies or disputes with, or grievances or claims by,
any employees or former employees of Thrifty or any of its predecessors of any
nature whatsoever, including, without limitation, any controversies, disputes,
grievances or claims with respect to their employment, compensation, benefits
or working conditions.
4.14 COMPLETENESS OF AND TITLE TO ASSETS.
Included in the assets reflected on the Balance Sheet are all those assets
which have been or are being used to operate the business of Thrifty in the
ordinary course as such business is presently conducted. Except as set forth
on SCHEDULE 4.14, Thrifty owns all of the assets reflected on the Balance Sheet
free and clear of all liens, claims, encumbrances and other restrictions or
limitations affecting Thrifty's ability to use or transfer them.
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4.15 RECEIVABLES. All of the accounts receivable
of Thrifty reflected on the Balance Sheet, except where described on the
Balance Sheet or otherwise in SCHEDULE 4.7, arose from valid sales in the
ordinary course of business and reflect goods actually sold and delivered or
services in fact rendered. At least ninety percent (90%) of all such accounts
receivable reflecting goods sold or services rendered will be collected by
Thrifty within 240 days after the Closing.
4.16 INVENTORIES. The inventories reflected on
the Balance Sheet are sufficient to cover the immediate needs of Thrifty and to
cover time required for re-stocking after the Closing.
4.17 CONDITION. All of the tangible assets
reflected on the Balance Sheet are in good operating condition, ordinary wear
and tear excepted, neither require nor can reasonably be expected to require
any special or extraordinary expenditures to remain in such condition beyond
normal maintenance, and are capable of being used for their intended purposes
in the ordinary course of business consistent with past practice.
4.18 REAL PROPERTY. SCHEDULE 4.18 lists all real
property which is now or at any time prior to the Closing Date was owned,
leased or occupied by Thrifty or any of its predecessors, and indicates for
each such property whether it was owned, leased and/or occupied. Neither
Thrifty nor either Shareholder nor Smith is, or has received notification
alleging that it or he is, in breach of any lease of any such leased real
property.
4.19 ENVIRONMENTAL MATTERS. Thrifty has no
liability, whether absolute or contingent, in respect of any activities
associated with the generation, transportation, release, storage, treatment,
disposal or identification of any substance or material which could result in
damage to the environment or danger to the health and safety of the public.
4.20 EMPLOYEE BENEFITS. SCHEDULE 4.20 lists each
Employee Benefit Plan (within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")) which Thrifty
maintains or to which Thrifty is required to contribute (each, a "Plan"). None
of the Plans is a "Multiemployer Plan" within the meaning of Section 3(37) of
ERISA. Each Plan has been operated in accordance with its terms and with all
laws applicable thereto. Neither Thrifty nor any such Plan is subject to any
liability (other than routine claims for benefits) or any tax in connection
with any such Plan. Except as set forth on SCHEDULE 4.20, no such Plan
provides benefits for persons who are not active employees or directors of
Thrifty. Except as prohibited by law, Thrifty has the right to amend or
terminate any Plan without the consent of any other person. There is no Plan
under which Thrifty would be obligated to pay, accrue or contribute benefits
because of the consummation of the transactions contemplated by this Agreement.
Since December 31, 1995, there has not been any increase made or promised in
the benefits payable under any Plan.
4.21 NO CHANGES. Since May 31, 1996, Thrifty has
been operated only in the ordinary course, consistent with past practice, and
there has not been any
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material adverse change, or any event, fact or circumstance which might
reasonably be expected to result in a material adverse change in the assets,
liabilities, operating performance, business relationships, or prospects of
Thrifty's business. Except as set forth on SCHEDULE 4.21, since May 31, 1996,
Thrifty has not paid any dividend, distribution or other payment to either
Shareholder or Smith or to any relative of either Shareholder or Smith other
than payments of salary and expense reimbursements, if any, made in the
ordinary course of business, consistent with past practice, for employment
services actually rendered or expenses actually incurred on behalf of Thrifty.
4.22 TAXES. All tax returns, reports and
declarations (collectively, "Tax Returns") required by any governmental
authority to be filed in connection with the properties, business, income,
expenses, net worth and franchises of Thrifty have been timely filed, and all
such Tax Returns are correct and complete in all respects. All tax due in
connection with the properties, business, income, expenses, net worth and
franchises of Thrifty has been paid, other than tax which is not yet due or
which, if due, is not yet delinquent or is being contested in good faith, and
for which in all cases reserves have been established in the Balance Sheet
which are sufficient to cover the payment of all such tax. There are no tax
claims, audits or proceedings pending in connection with the properties,
business, income, expenses, net worth or franchises of Thrifty, and, to the
knowledge of either Shareholder or Smith, there are no such threatened claims,
audits or proceedings.
4.23 CUSTOMERS. Except as set forth on SCHEDULE
4.23, no entity or group of affiliated entities which is or are customers of
Thrifty operates more than 500 beds. Except as set forth on SCHEDULE 4.23, no
nursing home or other facility or institution served by Thrifty has, since
December 31, 1995, cancelled or otherwise terminated, or made any threat to
cancel or otherwise terminate, its relationship with Thrifty. Neither Thrifty
nor either Shareholder nor Smith has any knowledge that any customer of Thrifty
is dissatisfied with the performance of Thrifty or its employees or that any
such customer intends to cancel or otherwise terminate its relationship with
Thrifty or to materially decrease its purchases of products and/or services
from Thrifty.
4.24 NO CONFLICTS. Except as set forth on
SCHEDULE 4.24, neither Smith, nor any Shareholder, nor any director, officer or
employee of Thrifty, nor any relative of any such person, has any direct or
indirect interest in any business enterprise which does business with Thrifty
or competes with Thrifty in any manner, or is a party to any contract to which
Thrifty is also a party or by which any of Thrifty's assets is bound.
4.25 BROKERS AND FINDERS. No broker, finder or
other person or entity acting in a similar capacity has participated on behalf
of Thrifty, either Shareholder or Smith in bringing about the transactions
contemplated by this Agreement, rendered any services with respect thereto, or
been in any way involved therewith.
4.26 NO UNDISCLOSED INFORMATION. This Agreement
(including the Schedules hereto), and all documents or certificates delivered
by either Shareholder or Smith to NCS in connection herewith, do not contain
any untrue statement of a material fact by
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either Shareholder or Smith, and do not omit to state a material fact necessary
in order to make the statements by Shareholders and Smith contained herein or
therein, in light of the circumstances under which such statements are made,
not misleading.
5. REPRESENTATIONS AND WARRANTIES OF NCS. NCS hereby
represents and warrants to Shareholders and Smith as follows:
5.1 ORGANIZATION, ETC., OF NCS AND NCS/OKLAHOMA.
NCS is a corporation duly incorporated, validly existing and in good standing
under the laws of the State of Delaware. NCS/Oklahoma is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Oklahoma.
5.2 AUTHORITY; NO VIOLATION, ETC. The execution,
delivery and performance by NCS of this Agreement and of each other document,
agreement and instrument to be executed and delivered by NCS or NCS/Oklahoma in
connection with the provisions of this Agreement, have been duly and validly
authorized and approved by all necessary action on the part of NCS,
NCS/Oklahoma and their respective Boards of Directors. This Agreement and all
other documents, agreements and instruments to be delivered by NCS or
NCS/Oklahoma in connection herewith constitute legal, valid and binding
obligations of NCS and NCS/Oklahoma, respectively, enforceable in accordance
with their respective provisions.
5.3 NO CONSENTS, APPROVALS OR CONFLICTS. No
consent or approval of, and no registration, declaration or filing with, any
governmental authority or third party is required in connection with the
execution, delivery or performance of this Agreement by NCS or NCS/Oklahoma.
Neither the execution or delivery nor the performance of this Agreement or any
of the other agreements, instruments or documents to be delivered by or on
behalf of NCS or NCS/Oklahoma in connection herewith conflicts with, violates
or results in any breach of: (i) any judgment, decree, order, statute, rule or
regulation applicable to them, (ii) any contract, agreement, instrument or
understanding to which either of them is a party or by which either of them is
bound, or (iii) any provision of the respective Certificates of Incorporation
or By-Laws of NCS or NCS/Oklahoma.
5.4 BROKERS AND FINDERS. No broker, finder or
other person or entity acting in a similar capacity has participated on behalf
of NCS or NCS/Oklahoma in bringing about the transactions contemplated by this
Agreement, rendered any services with respect thereto, or been in any way
involved therewith.
5.5 NO UNDISCLOSED INFORMATION. This Agreement
(including the Schedules hereto), and all documents or certificates delivered
by NCS to any Shareholder or Smith in connection herewith, do not contain any
untrue statement of a material fact by NCS, and do not omit to state a material
fact necessary in order to make the statements by NCS contained herein or
therein, in light of the circumstances under which such statements are made,
not misleading.
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6. CLOSING CONDITIONS.
6.1 CONDITIONS OF NCS. The obligation of NCS to
perform this Agreement is subject to the satisfaction of the following
conditions at or before the Closing:
6.1.1 Shareholders shall have delivered to
NCS all certificates representing all of the Shares, in each case duly endorsed
(or accompanied by appropriate stock powers duly executed in blank or in favor
of NCS) and otherwise in proper form for transfer to NCS, together with all
other documents necessary or appropriate to validly transfer the Shares to NCS
free and clear of all liens or adverse claims.
6.1.2 NCS shall have received letters of
resignation, effective as of the Closing, from those directors and officers of
Thrifty whom NCS shall have requested to resign.
6.1.3 NCS/Oklahoma shall have received
from Oliver and Smith a mutually acceptable Employment and Noncompetition
Agreement, duly executed by such individual (collectively, the "Employment
Agreements").
6.1.4 Thrifty shall have received a
mutually acceptable lease agreement covering Thrifty's premises located at 6815
N.W. 10th Street, Oklahoma City, Oklahoma 73127 (the "Premises"), duly executed
by Willis Smith and Lisa Smith (collectively, "Landlord").
6.1.5 NCS shall have received all consents
and permits necessary for the consummation of the transactions contemplated by
this Agreement, and no suit, action or other proceeding shall be pending or
threatened before any court or before or by any governmental authority in which
it is sought to restrain, prohibit, invalidate or set aside in whole or in part
the consummation of the transactions contemplated by this Agreement.
6.1.6 Shareholders and Smith shall have
performed and complied in all material respects with all obligations, covenants
and conditions required by this Agreement to have been performed or complied
with by Shareholders or Smith at or prior to the Closing, and if the Closing
occurs after the date of this Agreement, all representations and warranties of
Shareholders and Smith contained herein shall continue to be accurate in all
material respects at and as of the Closing, just as if made as of the Closing.
6.1.7 If the Closing occurs after the date
of this Agreement, NCS shall have received a certificate from Shareholders and
Smith, in form and substance acceptable to NCS, dated as of the Closing and
duly executed by Shareholders and Smith, certifying as to the fulfillment of
the conditions set forth in Section 6.1.6 hereof.
452\18485MWC.342 -9-
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6.1.8 There shall have been no material
adverse change since the date of the Balance Sheet in the financial condition,
business or affairs of Thrifty, and Thrifty shall not have suffered any
material loss, not covered by insurance, which materially affects the value of
its assets, properties or business.
6.2 CONDITIONS OF SHAREHOLDER. The obligations
of Shareholders and Smith to perform this Agreement are subject to the
satisfaction of the following conditions at or before the Closing:
6.2.1 Shareholders shall have received the
cash payments and promissory notes described in Section 2.
6.2.2 Shareholders shall have received all
consents and permits necessary for the consummation of the transactions
contemplated by this Agreement, and no suit, action or other proceeding shall
be pending or threatened before any court or before or by any governmental
authority in which it is sought to restrain, prohibit, invalidate or set aside
in whole or in part the consummation of the transactions contemplated by this
Agreement.
6.2.3 NCS shall have performed and
complied in all material respects with all obligations, covenants and
conditions required by this Agreement to have been performed or complied with
by NCS at or prior to the Closing, and if the Closing occurs after the date of
this Agreement, all representations and warranties of NCS contained herein
shall continue to be accurate in all material respects at and as of the
Closing, just as if made as of the Closing.
6.2.4 Each of Oliver and Smith shall have
received a mutually acceptable Employment Agreement, each duly executed by
NCS/Oklahoma.
6.2.5 Landlord shall have received a
mutually acceptable lease agreement covering the Premises, duly executed by
Thrifty.
6.3 INTERDEPENDENCE. The transfers and
deliveries described in this Section 6 shall be mutually interdependent and
regarded as occurring simultaneously, and, unless waived by Shareholders, Smith
and NCS, no such transfer of delivery shall become effective unless and until
all the other transfers and deliveries provided for in this Section 6 have also
been consummated. The transfers and deliveries herein contemplated shall be
deemed to have occurred and the Closing shall be effective as of the
commencement of business on the Closing Date.
7. RESTRICTIVE COVENANTS.
7.1 SMITH COVENANTS. The covenants made by Smith
in Sections 3.1 (relating to noncompetition), 3.2 (relating to nondisclosure of
Confidential Information, as
452\18485MWC.342 -10-
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defined therein), and 3.3 (relating to noninterference with the business of
NCS/Oklahoma) of the Employment Agreement entered into between Smith and
NCS/Oklahoma in connection with this Agreement (the "Smith Employment
Agreement") are all hereby incorporated into this Agreement by reference and
made a part hereof as if fully rewritten herein (the "Smith Covenants"). Smith
agrees (i) to be bound by and to observe and comply with all of the Smith
Covenants, (ii) that a breach thereof by him will constitute a breach of this
Agreement, and (iii) that for purposes of this Agreement, the term "Company" as
used in the Smith Employment Agreement will be deemed to mean and include NCS,
NCS/Oklahoma, and all other persons or entities controlled directly or
indirectly by NCS.
7.2 OLIVER COVENANTS. The covenants made by
Oliver in Sections 3.1 (relating to noncompetition), 3.2 (relating to
nondisclosure of Confidential Information, as defined therein), and 3.3
(relating to noninterference with the business of NCS/Oklahoma) of the
Employment Agreement entered into between Oliver and NCS/Oklahoma in connection
with this Agreement (the "Oliver Employment Agreement") are all hereby
incorporated into this Agreement by reference and made a part hereof as if
fully rewritten herein (the "Oliver Covenants"). Oliver agrees (i) to be bound
by and to observe and comply with all of the Oliver Covenants, (ii) that a
breach thereof by him will constitute a breach of this Agreement, and (iii)
that for purposes of this Agreement, the term "Company" as used in the Oliver
Employment Agreement will be deemed to mean and include NCS, NCS/Oklahoma, and
all other persons or entities controlled directly or indirectly by NCS.
7.3 TRUST COVENANTS. The Trust covenants and
agrees that it will not, until the seventh (7th) anniversary of the date of
this Agreement, invest in or finance any person, entity or enterprise which
Smith would be prohibited from investing in or financing pursuant to the
covenants of Smith contained in Section 3.1 of the Smith Employment Agreement.
7.4 ADEQUATE CONSIDERATION. Shareholders and
Smith acknowledge and agree that the obligations of NCS and NCS/Oklahoma
hereunder and under the Employment Agreements constitute adequate consideration
for all of Shareholders' and Smith's obligations under this Section 7.
7.5 REMEDIES. Shareholders and Smith acknowledge
and agree that a breach of any of the provisions of this Section 7 will result
in irreparable damage to NCS and NCS/Oklahoma for which there will be no
adequate remedy at law, and agree that NCS and NCS/Oklahoma, in addition to
their rights at law, will be entitled to injunctive relief to enforce such
provisions, without having to post any bond.
7.6 REFORMATION. In the event of the
unenforceability or invalidity of any provision of this Section 7, such
provision shall be enforceable in part to the fullest extent permitted by law,
such invalidity or unenforceability shall not otherwise affect any other
provision of this Agreement or any similar agreement, and this Agreement shall
otherwise remain in full force and effect.
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8. FURTHER ASSURANCES. NCS, Shareholders and Smith
shall each execute and deliver to the other parties any and all documents and
instruments, and do and perform such acts, in addition to those expressly
provided for herein, as may be reasonably necessary or appropriate to carry out
or evidence the transactions contemplated by this Agreement, whether before, at
or after the Closing.
9. ORDINARY COURSE. From the date of this Agreement
until the Closing, if later, Shareholders and Smith will cause Thrifty (i) to
operate its business substantially as presently operated and only in the
ordinary course, consistent with past practice, (ii) not to pay (nor will
Shareholders or Smith accept) any dividend, distribution or other payment to
Shareholders other than payments, if any, of salary and expense reimbursements
in the ordinary course, consistent with past practice, (iii) not to effect any
amendment to the Certificate of Incorporation or the By-Laws of Thrifty, (iv)
not to redeem or repurchase any issued and outstanding shares of capital stock
of Thrifty, and not to issue any additional shares of capital stock of Thrifty,
or undertake any obligation, whether absolute or contingent, to redeem,
repurchase or issue any shares of capital stock of Thrifty.
10. EXPENSES. NCS shall pay all of the expenses incident
to the transactions contemplated by this Agreement which are incurred by NCS or
its representatives, and Shareholders and Smith shall pay all of the expenses
incident to the transactions contemplated by this Agreement which are incurred
by Thrifty, Shareholders, Smith or their representatives.
11. SURVIVAL OF REPRESENTATIONS, WARRANTIES & COVENANTS;
INDEMNIFICATION. The representations, warranties and covenants contained in
this Agreement or in any other document, certificate, instrument, Schedule or
Exhibit delivered in connection herewith, shall survive the Closing and
continue to be binding thereafter, regardless of any investigation made by any
party hereto at any time. Nevertheless, the right of NCS to bring claims for
breaches is subject to the limits in Section 11.3, and the rights of
Shareholders and Smith to bring claims for breaches are subject to the limits
in Section 11.5.
11.1 INDEMNIFICATION BY SHAREHOLDERS AND SMITH.
Shareholders and Smith jointly and severally agree (except where such agreement
is expressly made severally but not jointly hereinbelow), to indemnify and hold
NCS, NCS/Oklahoma and their respective officers, directors and subsidiaries
(the "NCS Indemnified Parties") harmless from and against any and all loss,
damage, liability or deficiency resulting from or arising out of any inaccuracy
in or breach of any representation or warranty made by Shareholders or Smith,
or the breach or nonperformance of any covenant or obligation made or incurred
by Shareholders or Smith, in this Agreement, and any and all costs and expenses
(including reasonable attorneys' and accountants' fees) related thereto
(collectively, "Losses"). Shareholders and Smith agree severally, but NOT
jointly, to indemnify and hold the NCS Indemnified Parties harmless from and
against Losses resulting from breaches or nonperformances of covenants made or
incurred by them pursuant to Section 7 hereof ("Restrictive Covenants").
452\18485MWC.342 -12-
<PAGE> 13
11.2 INDEMNIFICATION BY NCS. NCS agrees to
indemnify and hold Shareholders and Smith harmless from and against any and all
loss, damage, liability or deficiency resulting from or arising out of any
inaccuracy in or breach of any representation or warranty made by NCS, or the
breach or nonperformance of any covenant or obligation made or incurred by NCS,
in this Agreement, and any and all costs and expenses (including reasonable
attorneys' and accountants' fees) related thereto.
11.3 LIMITATIONS ON INDEMNIFICATION BY
SHAREHOLDERS AND SMITH. The indemnification of the NCS Indemnified Parties
provided for in Section 11.1 shall be limited in certain respects as follows:
11.3.1 Any claim for indemnification under
Section 11.1 shall be made in writing by the second anniversary of the Closing
Date, except that a claim for such indemnification relating to the
representations, warranties and covenants contained in Sections 4.22 ("Taxes"),
4.12 ("Compliance With Laws"), 4.19 ("Environmental Matters"), and 4.20
("Employee Benefits") may be made until the expiration of the applicable
statutes of limitation, if any, relating to such matters, and except that there
shall be no limit on the time for making a claim for such indemnification
relating to the representations and warranties contained in Sections 4.1
("Organization, Etc., of Thrifty"), 4.2 ("Capacity of Shareholders"), and 4.5
("Capital Stock of Northside; Title to Shares"), or, subject to the terms
thereof, the covenants of Shareholders and Smith contained in Section 7
("Restrictive Covenants").
11.3.2 Subject to the following sentence,
Shareholders and Smith shall not be liable for indemnification claims under
Section 11.1 until the aggregate amount of indemnification claims under Section
11.1 exceeds $15,000.00. Notwithstanding the foregoing sentence, Shareholders
and Smith shall be liable for indemnification claims under Section 11.1 to the
extent relating the representations, warranties and covenants in Section 7 from
the first dollar to the full extent of such claims.
11.3.3 The aggregate liability of
Shareholders and Smith for indemnification claims under Section 11.1, exclusive
of indemnification claims relating to the representations, warranties and
covenants contained in Section 7, will not exceed the amount of One Million Two
Hundred Sixty-Six Thousand Dollars ($1,266,000.00). There shall be no limit on
the aggregate liability of Shareholders and Smith for indemnification claims
under Section 11.1 to the extent relating the representations, warranties and
covenants in Section 7.
11.3.4 Subject to the other provisions of
this Section 11.3, NCS shall have the right to deduct from any amounts
remaining due under either of the promissory notes deliverable under Section 2
hereof to Shareholders, in the order in which such amounts become due, all of
the NCS Indemnified Parties' claims for indemnification pursuant to Section
11.1; PROVIDED, however, that any claims not so satisfied shall continue until
satisfied in full, and such right of offset will be in addition to and not in
lieu of any other rights or remedies that may be available to the NCS
Indemnified Parties as against any
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<PAGE> 14
Shareholder or Smith at law or in equity. Any Shareholder or Smith may elect
to satisfy all or any portion of the amount of any indemnification claim
hereunder by delivering shares of Class A Common Stock, $.01 par value, of NCS
("NCS Stock") in payment thereof, which NCS Stock shall be valued for purposes
of such satisfaction at the fair market value thereof on the date of such
delivery.
11.4 CONTRIBUTION AMONG SHAREHOLDERS AND SMITH.
Notwithstanding that the liability of Shareholders and Smith with respect to
the representations, warranties and covenants made by them herein is joint and
several (except as to the covenants in Section 7 hereof, where such liability
is several but not joint), Shareholders and Smith hereby agree with and among
themselves that each Shareholder or Smith (an "Indemnifying Person") shall have
and be entitled to a right of contribution from each of the other Shareholders
or Smith to the extent that such Indemnifying Person satisfies more than his or
its percentage of the amount of any indemnification claim of any NCS
Indemnified Party, as follows: the Trust, 92 percent; and Oliver, 8 percent.
11.5 LIMITATIONS ON INDEMNIFICATION BY NCS. The
indemnification of Shareholders and Smith provided for in Section 11.2 shall be
limited in certain respects as follows:
11.5.1 Any claim for indemnification under
Section 11.2 shall be made in writing by the second anniversary of the Closing
Date, except that there shall be no limit on the time for making a claim for
such indemnification relating to the representations and warranties contained
in Sections 5.1 ("Organization, Etc., of NCS and NCS/Oklahoma") and 5.2
("Authority, No Violation, Etc.").
11.5.2 NCS shall not be liable for
indemnification claims under Section 11.2 until the aggregate amount of
indemnification claims under Section 11.2 exceeds $15,000.00.
11.6 THIRD PARTY CLAIMS. If any legal proceeding
is instituted or any claim asserted by any third party (a "Claim") in respect
of which the Shareholders or Smith on the one hand, or the NCS Indemnified
Parties on the other hand, may be entitled to indemnity hereunder, the party
asserting such right to indemnity (the "Indemnitee") will give the party from
whom indemnity is sought (the "Indemnitor") written notice thereof. The
Indemnitor will have the right, at its option and expense, to participate in
the defense of such a Claim, but not to control the defense, negotiation or
settlement thereof, which control will at all times rest with the Indemnitee,
unless the Claim involves only money damages, not an injunction or other
equitable relief, and unless the Indemnitor (a) irrevocably acknowledges in
writing complete responsibility for and agrees to indemnify the Indemnitee, and
(b) furnishes satisfactory evidence of the financial ability to indemnify the
Indemnitee, in which case the Indemnitor may assume such control through
counsel of its choice and at its expense, but the Indemnitee will continue to
have the right to be represented, at its own expense, by counsel of its choice
in connection with the defense of such a Claim.
452\18485MWC.342 -14-
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If the Indemnitor does not assume control of the
defense of such a Claim, the entire defense of the Claim by the Indemnitee, any
settlement made by the Indemnitee, and any judgment entered in the Claim will
be deemed to have been consented to by, and will be binding on, the Indemnitor
as fully as though it alone had assumed the defense thereof and a judgment had
been entered in the Claim in the amount of such settlement or judgment, except
that the right of the Indemnitor to contest the right of the Indemnitee to
indemnification under this Agreement with respect to the Claim will not be
extinguished. If the Indemnitor does assume control of the defense of such a
Claim, it will not, without the prior written consent of the Indemnitee, settle
the Claim or consent to entry of any judgment relating thereto which does not
include as an unconditional term thereof the giving by the claimant to the
Indemnitee a release from all liability in respect of the Claim. The parties
hereto agree to cooperate fully with each other in connection with the defense,
negotiation or settlement of any such Claim.
12. AMENDMENTS; BINDING EFFECT. This Agreement
(including each Schedule and Exhibit hereto) may not be amended or modified
except by a document in writing signed by each Shareholder, Smith and NCS.
This Agreement and the rights and obligations of each party hereunder shall be
binding upon and shall inure to the benefit of the respective successors and
assigns of the parties hereto.
13. NOTICES. All notices, requests, demands and other
communications which are required or may be given under this Agreement shall be
in writing and shall be deemed to have been duly given on the third day
following deposit in the United States Mail if delivered or mailed, via first
class certified or registered mail, return receipt requested, postage prepaid,
addressed as set forth below, and shall be deemed to have been duly given on
the next business day following documented delivery thereof to any national
overnight delivery service addressed as set forth below, and otherwise shall be
deemed duly given when received:
If to Smith, to: Willis V. Smith
6221 Beavercreek Road
Oklahoma City, Oklahoma 73162
If to Shareholders, to: Charles Oliver
13229 Cedar Springs Road
Oklahoma City, Oklahoma 73120
and to: The Willis Vernon Smith Unitrust dtd 8/8/96
Attention: M. Phil Goss, Special Trustee
201 Northeast Expressway
Oklahoma City, Oklahoma 73105
With a copy to: Lamun, Mock, Featherly, Kuehling & Cunnyngham
5900 Northwest Grand Blvd.
Oklahoma City, Oklahoma 73118
452\18485MWC.342 -15-
<PAGE> 16
Attention: Barry D. Mock, Esq.
And a copy to: Crowe & Dunlevy
20 North Broadway, Suite 1800
Oklahoma City, Oklahoma 73102
Attention: James H. Holloman Jr., Esq.
If to NCS, to: NCS HealthCare, Inc.
3201 Enterprise Parkway, Suite 220
Beachwood, Ohio 44122
Attention: President
With a copy to: Calfee, Halter & Griswold
800 Superior Avenue, Suite 1400
Cleveland, Ohio 44114
Attention: Patrick Morris, Esq.
14. SUIT FEE PROVISION. In the event any legal action or
arbitration proceeding is undertaken by a party in respect of the matters
addressed in this Agreements and the agreements collateral hereto, the
prevailing party shall be awarded his or its legal expenses and costs incurred
in the prosecution or defense of any such action or proceeding. The
"prevailing party" as used herein shall mean the party, if any, determined by
the court or arbitrator to have most nearly prevailed, even if such party did
not prevail in all matters, and not necessarily the party in whose favor a
judgment or award is rendered.
15. PERSONAL GUARANTIES. NCS, Smith and Shareholders
will cooperate wth each other and use their respective best efforts to obtain
after the Closing the release or cancellation of any guaranty or similar
instrument by which Smith or any Shareholder has guaranteed the payment or
performance of any obligation of Thrifty, provided that such obligation is
disclosed in this Agreement or a Schedule hereto (a "Guaranteed Obligation").
If any such release or cancellation cannot be obtained, NCS will indemnify and
hold Smith or such Shareholder harmless from and against any liability for such
Guaranteed Obligation.
16. MISCELLANEOUS. This Agreement sets forth the
exclusive statement of the agreement among the parties concerning the subject
matter hereof, and there are no agreements or understandings between the
parties concerning such subject matter other than as set forth herein. This
Agreement may be executed in multiple counterparts, each of which shall be
deemed and original, and all of which together shall constitute one and the
same document. This Agreement shall be governed by and construed in accordance
with the laws of the State of Ohio applicable to contracts made and to be
performed entirely within the State of Ohio.
452\18485MWC.342 -16-
<PAGE> 17
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
/s/ Willis V. Smith
________________________________________
WILLIS V. SMITH
/s/ Charles Oliver
________________________________________
CHARLES OLIVER
/s/ M. Phil Goss
________________________________________
M. PHIL GOSS, AS
INDEPENDENT SPECIAL TRUSTEE
OF THE WILLIS VERNON SMITH
UNITRUST DATED AUGUST 8, 1996
NCS HEALTHCARE, INC.
By: /s/ Kevin B. Shaw
______________________________
Title: President
__________________________
452\18485MWC.342 -17-
<PAGE> 1
EXHIBIT 99.1
EMPLOYMENT AGREEMENT
--------------------
THIS AGREEMENT is made as of the 13th day of August, 1996, by and between
NCS HEALTHCARE OF OKLAHOMA, INC., an Oklahoma corporation (the "Company"), and
WILLIS SMITH, an individual ("Employee").
RECITALS:
---------
A. Employee is a principal officer and shareholder of Thrifty Medical
Supply, Inc. ("Thrifty Medical"), Med-Equip Homecare Equipment Service, Inc.
("Med-Equip"), and Northside Pharmacy, Inc. ("Northside"), each an Oklahoma
corporation, and a principal officer and member of Thrifty Medical of Tulsa,
L.L.C., an Oklahoma limited liability company ("Thrifty Tulsa," and together
with Thrifty Medical, Med-Equip and Northside, the "Acquired Companies").
B. Employee has obtained valuable knowledge and experience pertaining to
the Acquired Companies' businesses (the "Businesses") of providing
pharmaceuticals, drugs, biologicals, medical devices, durable medical equipment
and other health or medical supplies and related services to nursing homes,
other institutional care facilities and individuals residing in such
facilities.
C. The Company is acquiring substantially all of the assets of Med-Equip
and Thrifty Tulsa related to the Businesses pursuant to those two certain Asset
Purchase Agreements, each dated August 13, 1996 (collectively, the "Asset
Purchase Agreements"), by and among the Company, each of Med-Equip and Thrifty
Tulsa, and their respective shareholders or members. The Company is also
acquiring Northside by means of a merger of Northside with and into the
Company, pursuant to an Agreement of Merger dated as of August 13, 1996 (the
"Merger Agreement"), by and among Northside, the shareholders thereof, the
Company, and NCS HealthCare, Inc., a Delaware corporation and the parent
corporation of the Company ("NCS"). NCS is acquiring all of the outstanding
capital stock of Thrifty Medical pursuant to a certain Stock Purchase
Agreement, dated August 13, 1996 (the "Stock Purchase Agreement"), by and among
NCS, the shareholders of Thrifty Medical, and Employee.
D. As a condition to all of such acquisitions, Employee and the Company
desire to enter into an agreement to provide for the employment of Employee by
the Company.
In consideration of and in reliance upon the covenants, obligations and
agreements contained herein, the Company and Employee hereby agree as follows:
1. EMPLOYMENT SERVICES. For the five (5) year period commencing on the
date hereof (the "Employment Period"), the Company hereby agrees to employ
Employee as an employee. As such,
<PAGE> 2
Employee shall perform such reasonable and appropriate duties for the Company
as may be assigned to him by the Board of Directors of the Company (the
"Board") or its designee. Throughout the Employment Period, Employee shall
devote his efforts diligently and faithfully on a full-time basis to the
business and welfare of the Company in accordance with and in furtherance of
the policies and directives of the Board. Employee will not engage in any
activity which interferes with the performance of his duties hereunder and in
any case will not hold any part-time job or perform any consulting services;
PROVIDED, HOWEVER, that Employee may provide consulting services to (i) the
retail pharmacy businesses operated by Thrifty Pharmacy No. 3, Inc. at such
sites as that entity operates as of the date hereof, as long as such sites
collectively service less than 200 institutional or other long-term care beds,
and (ii) to Captiva L.L.C., an Oklahoma limited liability company, and may
continue to sell wound care supplies and services, of the types which Employee
is engaged in selling as of the date hereof, in Oklahoma as a commissioned
salesman, it being understood that NCS has declined to purchase such wound care
business from Employee (such wound care activities, Thrifty Pharmacy No. 3,
Inc., and Captiva L.L.C. are herein referred to collectively as the "Retained
Interests"), as long as such services and activities do not interfere with the
performance of Employee's duties to the Company hereunder. Employee shall not
be required to move his residence outside of the Oklahoma City, Oklahoma,
metropolitan area without his consent.
2. COMPENSATION AND BENEFITS.
2.1 SALARY. The Company shall pay Employee a base salary (the "Base
Salary") during his employment at the rate of $110,000.00 per year, less such
deductions and withholdings as are required by law, payable in accordance with
the Company's standard payroll practices. Employee's Base Salary shall be
subject to annual reviews and such increases as the Company may determine in
its sole discretion from time to time.
2.2 BONUS. In addition to the Base Salary provided under Section 2.1,
the Company shall pay Employee a bonus (the "EBIT-A Bonus") based upon the net
earnings of the Company before interest, taxes and amortization ("EBIT-A") for
its fiscal year ending June 30, 1997, in accordance with the provisions of
EXHIBIT A attached hereto and incorporated herein by reference. The amount of
the EBIT-A Bonus, if any, shall be payable to Employee within 90 days after the
close of such fiscal year. The EBIT-A Bonus in subsequent fiscal years shall
be discretionary with the Company and subject to such period adjustments as the
Company may determine in its sole discretion from time to time.
2.3 BENEFITS. The Company shall provide Employee during the Employment
Period with substantially the same benefits as are generally provided other
executive employees of the Company.
-2-
<PAGE> 3
2.4 EXPENSES. The Company shall reimburse Employee for reasonable
expenses incurred by him on behalf of the Company in the performance of his
services during his employment. Employee shall furnish the Company with the
documentation in connection with such expenses required by the Internal Revenue
Code and the regulations promulgated thereunder.
2.5 VACATION. During the Employment Period Employee shall be entitled to
six (6) weeks of paid vacation per year. All vacations shall be taken at such
time or times as are mutually convenient for Employee and the Company.
2.6 AUTOMOBILE. The Company shall furnish Employee during his employment
with the same automobile which Employee was being furnished by the Acquired
Companies as of the date of this Agreement (the "Automobile"), and which the
Company acquired pursuant to the Asset Purchase Agreements; PROVIDED, that
following the expiration of the lease on the Automobile or the end of the
useful life thereof, Employee's entitlement to the use of a Company automobile
will be subject to the Company's standard policies regarding automobile usage.
3. NON-DISCLOSURE, NON-COMPETITION AND NON-INTERFERENCE.
3.1 NON-COMPETITION. Employee agrees that during the seven (7) year
period commencing on the date of this Agreement, he shall not directly or
indirectly, without the prior written approval of the Board, enter into the
employ of, render any services or assistance to, acquire any financial interest
in, or otherwise become associated in any way with any person or entity
("Competitor"), whether in the capacity of principal, agent, partner, officer,
director, employee, consultant, shareholder, or otherwise, which provides
pharmaceuticals, drugs, biologicals, medical devices, durable medical equipment
or other health or medical supplies to nursing homes or other institutional
care facilities in the states of Oklahoma, Ohio, Indiana, Pennsylvania,
Kentucky, Illinois, Wisconsin, Minnesota, Michigan, Maine, New Hampshire,
Massachusetts, Vermont, Connecticut, New York, New Jersey, Missouri, Iowa,
Kansas or Oregon, or to individuals residing in any such home or facility in
such geographic region. Nothing in this Section 3 shall prevent Employee from
being a member or officer of or from participating in the activities of any
trade or professional association, or from acquiring an equity interest in the
Company or any of its affiliates or an equity interest of less than one percent
(1%) in a Competitor whose shares are traded on a national securities exchange
or over-the-counter, or from performing consulting or referral services to or
maintaining his interests in the Retained Interests subject to the limitations
and conditions of Section 1 hereof.
Notwithstanding the foregoing provisions of this Section 3.1, following his
employment hereunder, Employee shall be
-3-
<PAGE> 4
permitted to provide services as a pharmacist in a hospital pharmacy,
mail-order pharmacy, or a retail pharmacy, so long as such retail pharmacy
services less than two hundred (200) long-term care beds and Employee has no
contract with administrators or owners of such long-term care facilities.
3.2 NON-DISCLOSURE. Employee agrees that he shall not directly or
indirectly disseminate verbally or in writing (except for such disclosure of
the terms of this Agreement and the Acquisition Agreements as may be required
to be made to Employee's legal or accounting advisors for purposes of rendering
consultation to Employee), or use for his personal benefit any Confidential
Information, regardless of how it may have been acquired, except for the
disclosure of such information as may be required by law, or authorized in
writing by the Board. Employee further agrees that upon termination of his
employment he will return promptly to the Company all memoranda, notes,
records, reports, manuals, and other documents (and all copies thereof)
relating to the Company's business which he may then possess or have under his
control. For purposes of this Agreement, "Confidential Information" means all
information relating to the terms and conditions of this Agreement, the Asset
Purchase Agreements, the Merger Agreement, the Stock Purchase Agreement and the
transactions contemplated thereby and all information belonging to, used by, or
which is in the possession of the Company relating to the Company's business,
products, services, strategies, pricing, customers, representatives, suppliers,
distributors, technology, programs, finances, costs, employee compensation,
marketing plans, developmental plans, computer software (including all
operating system and systems application software), inventions, developments,
or trade secrets, all to the extent such information is not intended by the
Company to be disseminated to the public or to other participants in its trade
or business or is otherwise not generally known to Competitors of the Company.
Employee acknowledges that all of the Confidential Information is and shall
continue to be the exclusive proprietary property of the Company, whether or
not prepared in whole or in part by Employee and whether or not disclosed to or
entrusted to the custody of Employee.
3.3 NON-INTERFERENCE. Employee agrees that he shall not at any time
during the term of this Agreement and for two (2) years thereafter induce,
attempt to induce, or assist others in inducing or attempting to induce any
employee, agent, customer, or supplier of the Company or any other person or
entity associated or doing business with the Company (or proposing to become
associated or to do business with the Company) to terminate his or its
relationship with the Company (or to refrain from becoming associated or doing
business with the Company) or in any other manner to interfere with the
relationship between the Company and any such person or entity.
3.4 NEW DEVELOPMENTS. Employee agrees that he will disclose promptly to
the Company any and all improvements,
-4-
<PAGE> 5
inventions, developments, discoveries, innovations, systems, techniques, ideas,
processes, programs, and other things, whether patentable or unpatentable,
related in any way to the Company's business at the time, that are made or
conceived by him alone or with others, in whole or in part, during his
employment and which were made or conceived in whole or in part with the
Company's resources or during Company time (collectively referred to as the
"New Developments"). Employee further agrees that all such New Developments
made or conceived in whole or in part with Company resources or during Company
time shall be and remain the sole and exclusive property of the Company and
that Employee shall, upon the request of the Company, and without further
compensation, do all lawful things reasonably necessary to ensure the Company's
ownership of any New Development, including the execution of any necessary
documents assigning and transferring to the Company all of Employee's right,
title and interest in and to any New Development, and the execution of all
necessary documents required to enable the Company to file and obtain patents
and copyrights in the United States and foreign countries on any New
Development.
3.5 REMEDIES. If Employee commits or threatens to commit a breach of any
of the provisions of this Section 3, the Company shall have the right to have
the provisions of this Agreement specifically enforced by any court having
jurisdiction, it being acknowledged by Employee and agreed by the parties that
any such breach or threatened breach will cause injury to the Company for which
money damages along will not provide an adequate remedy. The rights and
remedies enumerated above shall be in addition to, and not in lieu of, any
other rights and remedies available to the Company at law or in equity.
3.6 REFORMATION OF AGREEMENT. In the event that any of the covenants
contained in this Section 3, or any portion thereof, shall be found by a court
of competent jurisdiction to be invalid or unenforceable as against public
policy or for any other reason, such court shall exercise its discretion to
reform such covenant to the end that Employee shall be subject to
non-disclosure, non-interference and non-competition covenants that are
reasonable under the circumstances and are enforceable by the Company. In any
event, if any provision of this Agreement is found unenforceable for any
reason, such provision shall remain in force and effect to the maximum extent
allowable and all non-affected provisions shall remain fully valid and
enforceable.
3.7 EXPENSES OF ENFORCEMENT OF COVENANTS. In the event that any action,
suit, or other proceeding at law or in equity is brought to enforce any of the
covenants contained in this Section 3, or to obtain money damages for the
breach thereof, the party prevailing in any such action, suit or other
proceeding shall be entitled upon demand to reimbursement from the other party
for all expenses (including, without limitation, reasonable attorneys' fees and
disbursements) incurred in connection therewith.
-5-
<PAGE> 6
4. TERM.
4.1 MANNER OF TERMINATION. This Agreement may be terminated prior to the
end of the Employment Period, as follows:
(a) BY THE COMPANY FOR DISABILITY. At the option of and by written
notice from the Company if Employee shall become disabled, which, for purposes
of this Agreement, shall be deemed to have occurred if Employee suffers from
any disability or impairment of health which continues for at least 120 days
and which in the opinion of the Board renders the Employee unable to perform
his duties on an active, full-time basis.
(b) BY THE COMPANY FOR GOOD CAUSE. At the option of and by written
notice from the Company if the Board shall find "good cause" for termination,
which, for purposes of this Agreement, shall mean (i) a material breach by
Employee of his obligations under this Agreement or his fiduciary duties to the
Company, (ii) public conduct which in any manner offends against decency or
morality, (iii) repeated absenteeism, (iv) drug use or excessive alcohol
consumption on the part of Employee, or (v) if Employee fails, after notice and
a reasonable chance to cure, to observe the directives of the Board or its
designee to whom Employee reports.
(c) BY EMPLOYEE. By Employee upon not less than 120 days advance written
notice.
(d) DEATH. As of the end of the month in which Employee dies.
4.2 CONSEQUENCES OF TERMINATION.
(a) IN GENERAL. Notwithstanding any provision in this Agreement to the
contrary, upon any termination of this Agreement, the provisions hereof will
survive such termination to the extent required so that (i) the Company may
enforce the obligations of Employee under Section 3, and (ii) Employee and the
Company may each enforce any obligations of the other which accrued hereunder
before, or because of, such termination. All other rights and obligations of
the parties hereunder will expire upon termination of this Agreement.
(b) SALARY CONTINUATION. If Employee's employment with the Company is
terminated by the Company before the fifth anniversary of the date hereof other
than pursuant to Section 4.1(a) or 4.1(b), the Company shall continue to pay to
Employee the Base Salary provided for in Section 2.1 during the remainder of
the Employment Period, and Employee shall continue to be bound by the covenants
contained in Section 3 in accordance with the terms thereof.
5. MISCELLANEOUS.
-6-
<PAGE> 7
5.1 WAIVER. Failure of the Company at any time to enforce any provision
of this Agreement or to require performance by Employee of any provision hereof
shall in no way affect the validity of this Agreement or any part hereof or the
right of the Company thereafter to enforce its rights hereunder; nor shall it
be taken to constitute a condonation or waiver by the Company of that default
or any other or subsequent default or breach.
5.2 NOTICE. Any notice required to be given under the terms of this
Agreement shall be in writing and mailed to the recipient's last known address
or delivered in person. If sent by registered or certified mail such notice
shall be effective when mailed, otherwise, it shall be effective upon delivery.
5.3 ASSIGNMENT. Except as set forth herein, no rights of any kind under
this Agreement shall, without prior written consent of the Company, be
transferable to or assignable by Employee or any other person, or be subject to
alienation, encumbrance, garnishment, attachment, execution or levy of any
kind, voluntary or involuntary. This Agreement shall be binding upon and shall
inure to the benefit of the Company, its successors and assigns.
5.4 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Ohio.
5.5 COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same document.
5.6 HEADINGS. The headings in this Agreement are intended solely for
convenience of reference and shall be given no effect in the construction or
interpretation of this Agreement.
5.7 ENTIRE AGREEMENT. This Agreement constitutes the entire
understanding and agreement among the parties hereto concerning the subject
matter hereof. All negotiations among the parties hereto concerning the
subject matter hereof are merged into this Agreement, and there are no
representations, warranties, covenants, understandings or agreements, oral or
otherwise, in relation thereto among the parties hereto other than those
incorporated herein. The parties hereto acknowledge that the Company is a
party to, and this Agreement is made in conjunction with, the Asset Purchase
Agreements, the Merger Agreement and the Stock Purchase Agreement
(collectively, the "Acquisition Agreements"); and it is understood that nothing
in this Agreement is intended to modify the provisions of the Acquisition
Agreements or any other agreement or instrument contemplated therein. Nothing
expressed or implied in this Agreement is intended or shall be construed so as
to grant or confer on any person, firm or corporation other than the parties
hereto any rights or privileges
-7-
<PAGE> 8
hereunder. No supplement, modification or amendment of this Agreement shall be
binding unless executed in writing by the parties hereto.
INTENDING TO BE LEGALLY BOUND, the parties or their duly authorized
representatives have signed this Agreement on the date first written above.
NCS HEALTHCARE OF OKLAHOMA, INC.
(the "Company")
By: /s/ Kevin B. Shaw
__________________________________
Title: President
_______________________________
/s/ Willis Smith
________________________________________
WILLIS SMITH ("Employee")
-8-
<PAGE> 1
Exhibit 99.2
EMPLOYMENT AGREEMENT
--------------------
THIS AGREEMENT is made as of the 13th day of August, 1996, by and between
NCS HEALTHCARE OF OKLAHOMA, INC., an Oklahoma corporation (the "Company"), and
CHARLES OLIVER, an individual ("Employee").
RECITALS:
---------
A. Employee is a principal officer and shareholder of Thrifty Medical
Supply, Inc. ("Thrifty") and Northside Pharmacy, Inc. ("Northside"), each an
Oklahoma corporation, and a principal officer and member of Thrifty Medical of
Tulsa, L.L.C., an Oklahoma limited liability company ("Thrifty Tulsa," and
together with Thrifty Medical and Northside, the "Acquired Companies").
B. Employee has obtained valuable knowledge and experience pertaining to
Sellers' businesses (the "Businesses") of providing pharmaceuticals, drugs,
biologicals, medical devices, durable medical equipment and other health or
medical supplies and related services to nursing homes, other institutional
care facilities and individuals residing in such facilities.
C. The Company is acquiring substantially all of the assets of Thrifty
Tulsa related to the Businesses pursuant to that certain Asset Purchase
Agreement, dated August 13, 1996 (the "Asset Purchase Agreement"), by and among
the Company, Thrifty Tulsa and the members of Thrifty Tulsa. The Company is
also acquiring Northside by means of a merger of Northside with and into the
Company, pursuant to an Agreement of Merger dated as of August 13, 1996 (the
"Merger Agreement"), by and among Northside, the shareholders thereof, the
Company, and NCS HealthCare, Inc., a Delaware corporation and the parent
corporation of the Company ("NCS"). NCS is acquiring all of the outstanding
capital stock of Thrifty Medical pursuant to a certain Stock Purchase
Agreement, dated August 13, 1996 (the "Stock Purchase Agreement"), by and among
NCS, the shareholders of Thrifty Medical, and Willis V. Smith.
D. As a condition to all of such acquisitions, Employee and the Company
desire to enter into an agreement to provide for the employment of Employee by
the Company.
In consideration of and in reliance upon the covenants, obligations and
agreements contained herein, the Company and Employee hereby agree as follows:
1. EMPLOYMENT SERVICES. For the five (5) year period commencing on the
date hereof (the "Employment Period"), the Company hereby agrees to employ
Employee as an employee. As such, Employee shall perform such reasonable and
appropriate duties for the Company as may be assigned to him by the Board of
Directors of the Company (the "Board") or its designee. Throughout the
<PAGE> 2
Employment Period, Employee shall devote his efforts diligently and faithfully
on a full-time basis to the business and welfare of the Company in accordance
with and in furtherance of the policies and directives of the Board. Employee
will not engage in any activity which interferes with the performance of his
duties hereunder and in any case will not hold any part-time job or perform any
consulting services; PROVIDED, HOWEVER, that Employee may provide consulting
services to Captiva L.L.C., an Oklahoma limited liability company, and may
continue to sell wound care supplies and services, of the types which Employee
is engaged in selling as of the date hereof, in Oklahoma as a commissioned
salesman, it being understood that NCS has declined to purchase such wound care
business from Employee (such wound care activities and Captiva L.L.C. are
herein referred to collectively as the "Retained Interests"), as long as such
services and activities do not interfere with the performance of Employee's
duties to the Company hereunder. Employee shall not be required to move his
residence outside of the Oklahoma City, Oklahoma, metropolitan area without his
consent.
2. COMPENSATION AND BENEFITS.
2.1 SALARY. The Company shall pay Employee a base salary (the "Base
Salary") during his employment at the rate of $90,000.00 per year, less such
deductions and withholdings as are required by law, payable in accordance with
the Company's standard payroll practices. Employee's Base Salary shall be
subject to annual reviews and such increases as the Company may determine in
its sole discretion from time to time.
2.2 BONUS. In addition to the Base Salary provided under Section 2.1,
the Company shall pay Employee a bonus (the "EBIT-A Bonus") based upon the net
earnings of the Company before interest, taxes and amortization ("EBIT-A") for
its fiscal year ending June 30, 1997, in accordance with the provisions of
EXHIBIT A attached hereto and incorporated herein by reference. The amount of
the EBIT-A Bonus, if any, shall be payable to Employee within 90 days after the
close of such fiscal year. The EBIT-A Bonus in subsequent fiscal years shall
be discretionary with the Company and subject to such period adjustments as the
Company may determine in its sole discretion from time to time.
2.3 BENEFITS. The Company shall provide Employee during the Employment
Period with substantially the same benefits as are generally provided other
executive employees of the Company.
2.4 EXPENSES. The Company shall reimburse Employee for reasonable
expenses incurred by him on behalf of the Company in the performance of his
services during his employment. Employee shall furnish the Company with the
documentation in connection with such expenses required by the Internal Revenue
Code and the regulations promulgated thereunder.
-2-
<PAGE> 3
2.5 VACATION. During the Employment Period Employee shall be entitled to
four (4) weeks of paid vacation per year. All vacations shall be taken at such
time or times as are mutually convenient for Employee and the Company.
2.6 AUTOMOBILE. The Company shall furnish Employee during his employment
with the same automobile which Employee was being furnished by the Acquired
Companies as of the date of this Agreement (the "Automobile") and which the
Company acquired pursuant to the Asset Purchase Agreements; PROVIDED, that
following the expiration of the lease on the Automobile or the end of the
useful life thereof, Employee's entitlement to the use of a Company automobile
will be subject to the Company's standard policies regarding automobile usage.
3. NON-DISCLOSURE, NON-COMPETITION AND NON-INTERFERENCE.
3.1 NON-COMPETITION. Employee agrees that during the seven (7) year
period commencing on the date of this Agreement, he shall not directly or
indirectly, without the prior written approval of the Board, enter into the
employ of, render any services or assistance to, acquire any financial interest
in, or otherwise become associated in any way with any person or entity
("Competitor"), whether in the capacity of principal, agent, partner, officer,
director, employee, consultant, shareholder, or otherwise, which provides
pharmaceuticals, drugs, biologicals, medical devices, durable medical equipment
or other health or medical supplies to nursing homes or other institutional
care facilities in the states of Oklahoma, Ohio, Indiana, Pennsylvania,
Kentucky, Illinois, Wisconsin, Minnesota, Michigan, Maine, New Hampshire,
Massachusetts, Vermont, Connecticut, New York, New Jersey, Missouri, Iowa,
Kansas or Oregon, or to individuals residing in any such home or facility in
such geographic region. Nothing in this Section 3 shall prevent Employee from
being a member or officer of or from participating in the activities of any
trade or professional association, or from acquiring an equity interest in the
Company or any of its affiliates or an equity interest of less than one percent
(1%) in a Competitor whose shares are traded on a national securities exchange
or over-the-counter, or from performing consulting or referral services to or
maintaining his interests in the Retained Interests, subject to the limitations
and conditions of Section 1 hereof.
Notwithstanding the foregoing provisions of this Section 3.1, following his
employment hereunder, Employee shall be permitted to provide services as a
pharmacist in a hospital pharmacy, mail-order pharmacy, or a retail pharmacy so
long as such retail pharmacy services less than two hundred (200) long-term
care beds and Employee has no contact with administrators or owners of such
long-term care facilities.
3.2 NON-DISCLOSURE. Employee agrees that he shall not directly or
indirectly disseminate verbally or in writing
-3-
<PAGE> 4
(except for such disclosure of the terms of this Agreement and the Acquisition
Agreements as may be required to be made to Employee's legal and accounting
advisors for purposes of rendering consultation to Employee), or use for his
personal benefit any Confidential Information, regardless of how it may have
been acquired, except for the disclosure of such information as may be required
by law, or authorized in writing by the Board. Employee further agrees that
upon termination of his employment he will return promptly to the Company all
memoranda, notes, records, reports, manuals, and other documents (and all
copies thereof) relating to the Company's business which he may then possess or
have under his control. For purposes of this Agreement, "Confidential
Information" means all information relating to the terms and conditions of this
Agreement, the Asset Purchase Agreement, the Merger Agreement, the Stock
Purchase Agreement, and the transactions contemplated thereby and all
information belonging to, used by, or which is in the possession of the Company
relating to the Company's business, products, services, strategies, pricing,
customers, representatives, suppliers, distributors, technology, programs,
finances, costs, employee compensation, marketing plans, developmental plans,
computer software (including all operating system and systems application
software), inventions, developments, or trade secrets, all to the extent such
information is not intended by the Company to be disseminated to the public or
to other participants in its trade or business or is otherwise not generally
known to Competitors of the Company. Employee acknowledges that all of the
Confidential Information is and shall continue to be the exclusive proprietary
property of the Company, whether or not prepared in whole or in part by
Employee and whether or not disclosed to or entrusted to the custody of
Employee.
3.3 NON-INTERFERENCE. Employee agrees that he shall not at any time
during the term of this Agreement and for two (2) years thereafter induce,
attempt to induce, or assist others in inducing or attempting to induce any
employee, agent, customer, or supplier of the Company or any other person or
entity associated or doing business with the Company (or proposing to become
associated or to do business with the Company) to terminate his or its
relationship with the Company (or to refrain from becoming associated or doing
business with the Company) or in any other manner to interfere with the
relationship between the Company and any such person or entity.
3.4 NEW DEVELOPMENTS. Employee agrees that he will disclose promptly to
the Company any and all improvements, inventions, developments, discoveries,
innovations, systems, techniques, ideas, processes, programs, and other things,
whether patentable or unpatentable, related in any way to the Company's
business at the time, that are made or conceived by him alone or with others,
in whole or in part, during his employment and which were made or conceived in
whole or in part with the Company's resources or during Company time
(collectively referred to as the "New Developments"). Employee further agrees
that all such New
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<PAGE> 5
Developments made or conceived in whole or in part with Company resources or
during Company time shall be and remain the sole and exclusive property of the
Company and that Employee shall, upon the request of the Company, and without
further compensation, do all lawful things reasonably necessary to ensure the
Company's ownership of any New Development, including the execution of any
necessary documents assigning and transferring to the Company all of Employee's
right, title and interest in and to any New Development, and the execution of
all necessary documents required to enable the Company to file and obtain
patents and copyrights in the United States and foreign countries on any New
Development.
3.5 REMEDIES. If Employee commits or threatens to commit a breach of any
of the provisions of this Section 3, the Company shall have the right to have
the provisions of this Agreement specifically enforced by any court having
jurisdiction, it being acknowledged by Employee and agreed by the parties that
any such breach or threatened breach will cause injury to the Company for which
money damages along will not provide an adequate remedy. The rights and
remedies enumerated above shall be in addition to, and not in lieu of, any
other rights and remedies available to the Company at law or in equity.
3.6 REFORMATION OF AGREEMENT. In the event that any of the covenants
contained in this Section 3, or any portion thereof, shall be found by a court
of competent jurisdiction to be invalid or unenforceable as against public
policy or for any other reason, such court shall exercise its discretion to
reform such covenant to the end that Employee shall be subject to
non-disclosure, non-interference and non-competition covenants that are
reasonable under the circumstances and are enforceable by the Company. In any
event, if any provision of this Agreement is found unenforceable for any
reason, such provision shall remain in force and effect to the maximum extent
allowable and all non-affected provisions shall remain fully valid and
enforceable.
3.7 EXPENSES OF ENFORCEMENT OF COVENANTS. In the event that any action,
suit, or other proceeding at law or in equity is brought to enforce any of the
covenants contained in this Section 3, or to obtain money damages for the
breach thereof, the party prevailing in any such action, suit or other
proceeding shall be entitled upon demand to reimbursement from the other party
for all expenses (including, without limitation, reasonable attorneys' fees and
disbursements) incurred in connection therewith.
4. TERM.
4.1 MANNER OF TERMINATION. This Agreement may be terminated prior to the
end of the Employment Period, as follows:
(a) BY THE COMPANY FOR DISABILITY. At the option of and by written
notice from the Company if Employee shall become disabled, which, for purposes
of this Agreement, shall be deemed to
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<PAGE> 6
have occurred if Employee suffers from any disability or impairment of health
which continues for at least 120 days and which in the opinion of the Board
renders the Employee unable to perform his duties on an active, full-time
basis.
(b) BY THE COMPANY FOR GOOD CAUSE. At the option of and by written
notice from the Company if the Board shall find "good cause" for termination,
which, for purposes of this Agreement, shall mean (i) a material breach by
Employee of his obligations under this Agreement or his fiduciary duties to the
Company, (ii) public conduct which in any manner offends against decency or
morality, (iii) repeated absenteeism, (iv) drug use or excessive alcohol
consumption on the part of Employee, or (v) if Employee fails, after notice and
a reasonable chance to cure, to observe the directives of the Board or its
designee to whom Employee reports.
(c) BY EMPLOYEE. By Employee upon not less than 120 days advance written
notice.
(d) DEATH. As of the end of the month in which Employee dies.
4.2 CONSEQUENCES OF TERMINATION.
(a) IN GENERAL. Notwithstanding any provision in this Agreement to the
contrary, upon any termination of this Agreement, the provisions hereof will
survive such termination to the extent required so that (i) the Company may
enforce the obligations of Employee under Section 3, and (ii) Employee and the
Company may each enforce any obligations of the other which accrued hereunder
before, or because of, such termination. All other rights and obligations of
the parties hereunder will expire upon termination of this Agreement.
(b) SALARY CONTINUATION. If Employee's employment with the Company is
terminated by the Company before the fifth anniversary of the date hereof other
than pursuant to Section 4.1(a) or 4.1(b), the Company shall continue to pay to
Employee the Base Salary provided for in Section 2.1 during the remainder of
the Employment Period, and Employee shall continue to be bound by the covenants
contained in Section 3 in accordance with the terms thereof.
5. MISCELLANEOUS.
5.1 WAIVER. Failure of the Company at any time to enforce any provision
of this Agreement or to require performance by Employee of any provision hereof
shall in no way affect the validity of this Agreement or any part hereof or the
right of the Company thereafter to enforce its rights hereunder; nor shall it
be taken to constitute a condonation or waiver by the Company of that default
or any other or subsequent default or breach.
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<PAGE> 7
5.2 NOTICE. Any notice required to be given under the terms of this
Agreement shall be in writing and mailed to the recipient's last known address
or delivered in person. If sent by registered or certified mail such notice
shall be effective when mailed, otherwise, it shall be effective upon delivery.
5.3 ASSIGNMENT. Except as set forth herein, no rights of any kind under
this Agreement shall, without prior written consent of the Company, be
transferable to or assignable by Employee or any other person, or be subject to
alienation, encumbrance, garnishment, attachment, execution or levy of any
kind, voluntary or involuntary. This Agreement shall be binding upon and shall
inure to the benefit of the Company, its successors and assigns.
5.4 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Ohio.
5.5 COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same document.
5.6 HEADINGS. The headings in this Agreement are intended solely for
convenience of reference and shall be given no effect in the construction or
interpretation of this Agreement.
5.7 ENTIRE AGREEMENT. This Agreement constitutes the entire
understanding and agreement among the parties hereto concerning the subject
matter hereof. All negotiations among the parties hereto concerning the
subject matter hereof are merged into this Agreement, and there are no
representations, warranties, covenants, understandings or agreements, oral or
otherwise, in relation thereto among the parties hereto other than those
incorporated herein. The parties hereto acknowledge that the Company is a
party to, and this Agreement is made in conjunction with, the Asset Purchase
Agreement, the Merger Agreement and the Stock Purchase Agreement (collectively,
the "Acquisition Agreements"); and it is understood that nothing in this
Agreement is intended to modify the provisions of the Acquisition Agreements or
any other agreement or instrument contemplated therein. Nothing expressed or
implied in this Agreement is intended or shall be construed so as to grant or
confer on any person, firm or corporation other than the parties hereto any
rights or privileges hereunder. No supplement, modification or amendment of
this Agreement shall be binding unless executed in writing by the parties
hereto.
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<PAGE> 8
INTENDING TO BE LEGALLY BOUND, the parties or their duly authorized
representatives have signed this Agreement on the date first written above.
NCS HEALTHCARE OF OKLAHOMA, INC.
(the "Company")
By: /s/ Kevin B. Shaw
__________________________________
Title: President
_______________________________
/s/ Charles Oliver
________________________________________
CHARLES OLIVER ("Employee")
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<PAGE> 1
Exhibit 99.3
EMPLOYMENT AGREEMENT
--------------------
THIS AGREEMENT is made as of the 13th day of August, 1996, by and between
NCS HEALTHCARE OF OKLAHOMA, INC., an Oklahoma corporation (the "Company"), and
GAIL BENJAMIN, an individual ("Employee").
RECITALS:
---------
A. Employee is a principal officer and shareholder of Med-Equip Homecare
Equipment Service, Inc., an Oklahoma corporation ("Seller").
B. Employee has obtained valuable knowledge and experience pertaining to
Seller's business (the "Business") of providing medical devices, durable
medical equipment and other health or medical supplies and related services to
nursing homes, other institutional care facilities and individuals residing in
such facilities.
C. The Company is acquiring substantially all of the assets of Seller
related to the Business pursuant to that certain Asset Purchase Agreement,
dated August 13, 1996 (the "Asset Purchase Agreement"), by and among the
Company, Seller, and the shareholders of Seller.
D. As a condition to such acquisition, Employee and the Company desire to
enter into an agreement to provide for the employment of Employee by the
Company.
In consideration of and in reliance upon the covenants, obligations and
agreements contained herein, the Company and Employee hereby agree as follows:
1. EMPLOYMENT SERVICES. For the five (5) year period commencing on the
date hereof (the "Employment Period"), the Company hereby agrees to employ
Employee as an employee. As such, Employee shall perform such reasonable and
appropriate duties for the Company as may be assigned to her by the Board of
Directors of the Company (the "Board") or its designee. Throughout the
Employment Period, Employee shall devote her efforts diligently and faithfully
on a full-time basis to the business and welfare of the Company in accordance
with and in furtherance of the policies and directives of the Board. Employee
will not engage in any activity which interferes with the performance of her
duties hereunder and in any case will not hold any part-time job or perform any
consulting services. Employee shall not be required to move her residence
outside of the Oklahoma City, Oklahoma, metropolitan area without her consent.
It is understood that Employee's primary responsibility hereunder will be
to manage the Company's two durable medical equipment offices in Oklahoma City
and Tulsa,
<PAGE> 2
Oklahoma, respectively. In the event the Company intends for Employee to
perform additional services for multiple locations in Oklahoma or other states,
then the Company agrees to compensate Employee for such additional services in
a manner to be agreed upon by the Company and Employee at such time.
2. COMPENSATION AND BENEFITS.
2.1 SALARY. The Company shall pay Employee a base salary (the "Base
Salary") during her employment at the rate of $80,000.00 per year, less such
deductions and withholdings as are required by law, payable in accordance with
the Company's standard payroll practices. Employee's Base Salary shall be
subject to annual reviews and such increases as the Company may determine in
its sole discretion from time to time.
2.2 BONUS. In addition to the Base Salary provided under Section 2.1,
the Company shall pay Employee a bonus (the "EBIT-A Bonus") based upon the net
earnings of the Company before interest, taxes and amortization ("EBIT-A") for
its fiscal year ending June 30, 1997, in accordance with the provisions of
EXHIBIT A attached hereto and incorporated herein by reference. The amount of
the EBIT-A Bonus, if any, shall be payable to Employee within 90 days after the
close of such fiscal year. The EBIT-A Bonus in subsequent fiscal years shall
be discretionary with the Company and subject to such period adjustments as the
Company may determine in its sole discretion from time to time.
2.3 BENEFITS. The Company shall provide Employee during the Employment
Period with substantially the same benefits as are generally provided other
executive employees of the Company.
2.4 EXPENSES. The Company shall reimburse Employee for reasonable
expenses incurred by her on behalf of the Company in the performance of her
services during her employment. Employee shall furnish the Company with the
documentation in connection with such expenses required by the Internal Revenue
Code and the regulations promulgated thereunder.
2.5 VACATION. During the Employment Period Employee shall be entitled to
four (4) weeks of paid vacation per year. All vacations shall be taken at such
time or times as are mutually convenient for Employee and the Company.
2.6 AUTOMOBILE. The Company shall furnish Employee during her employment
with the same automobile which Seller furnished to Employee prior to the date
hereof and which the Company acquired pursuant to the Asset Purchase Agreement
(the "Automobile"); PROVIDED, that following the expiration of the lease on the
Automobile, (a) Employee's entitlement to the use of a Company automobile will
be subject to the Company's standard policies regarding automobile usage, and
(b) Employee may then
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<PAGE> 3
purchase the Automobile from the Company at the depreciated value thereof on
the Company's books.
3. NON-DISCLOSURE, NON-COMPETITION AND NON-INTERFERENCE.
3.1 NON-COMPETITION. Employee agrees that during the seven (7) year
period commencing on the date of this Agreement, she shall not directly or
indirectly, without the prior written approval of the Board, enter into the
employ of, render any services or assistance to, acquire any financial interest
in, or otherwise become associated in any way with any person or entity
("Competitor"), whether in the capacity of principal, agent, partner, officer,
director, employee, consultant, shareholder, or otherwise, which provides
pharmaceuticals, drugs, biologicals, medical devices, durable medical equipment
or other health or medical supplies to nursing homes or other institutional
care facilities in the states of Oklahoma, Ohio, Indiana, Pennsylvania,
Kentucky, Illinois, Wisconsin, Minnesota, Michigan, Maine, New Hampshire,
Massachusetts, Vermont, Connecticut, New York, New Jersey, Missouri, Iowa,
Kansas or Oregon, or to individuals residing in any such home or facility in
such geographic region. Nothing in this Section 3 shall prevent Employee from
being a member or officer of or from participating in the activities of any
trade or professional association, or from acquiring an equity interest in the
Company or any of its affiliates or an equity interest of less than one percent
(1%) in a Competitor whose shares are traded on a national securities exchange
or over-the-counter.
3.2 NON-DISCLOSURE. Employee agrees that she shall not directly or
indirectly disseminate verbally or in writing (except for such disclosure of
the terms of this Agreement and the Asset Purchase Agreement as may be required
to be made to Employee's legal or accounting advisors for purposes of rendering
consultation to Employee), or use for her personal benefit any Confidential
Information, regardless of how it may have been acquired, except for the
disclosure of such information as may be required by law, or authorized in
writing by the Board. Employee further agrees that upon termination of her
employment she will return promptly to the Company all memoranda, notes,
records, reports, manuals, and other documents (and all copies thereof)
relating to the Company's business which she may then possess or have under her
control. For purposes of this Agreement, "Confidential Information" means all
information relating to the terms and conditions of this Agreement or the Asset
Purchase Agreement or the transactions contemplated thereby and all information
belonging to, used by, or which is in the possession of the Company relating to
the Company's business, products, services, strategies, pricing, customers,
representatives, suppliers, distributors, technology, programs, finances,
costs, employee compensation, marketing plans, developmental plans, computer
software (including all operating system and systems application software),
inventions, developments, or trade secrets, all to the
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<PAGE> 4
extent such information is not intended by the Company to be disseminated to
the public or to other participants in its trade or business or is otherwise
not generally known to Competitors of the Company. Employee acknowledges that
all of the Confidential Information is and shall continue to be the exclusive
proprietary property of the Company, whether or not prepared in whole or in
part by Employee and whether or not disclosed to or entrusted to the custody of
Employee.
3.3 NON-INTERFERENCE. Employee agrees that she shall not at any time
during the term of this Agreement and for two (2) years thereafter induce,
attempt to induce, or assist others in inducing or attempting to induce any
employee, agent, customer, or supplier of the Company or any other person or
entity associated or doing business with the Company (or proposing to become
associated or to do business with the Company) to terminate his or its
relationship with the Company (or to refrain from becoming associated or doing
business with the Company) or in any other manner to interfere with the
relationship between the Company and any such person or entity.
3.4 NEW DEVELOPMENTS. Employee agrees that she will disclose promptly to
the Company any and all improvements, inventions, developments, discoveries,
innovations, systems, techniques, ideas, processes, programs, and other things,
whether patentable or unpatentable, relating in any way to the Company's
business at the time, that are made or conceived by her alone or with others,
in whole or in part, during her employment and which were made or conceived in
whole or in part with the Company's resources or during Company time
(collectively referred to as the "New Developments"). Employee further agrees
that all such New Developments made or conceived in whole or in part with
Company resources or during Company time shall be and remain the sole and
exclusive property of the Company and that Employee shall, upon the request of
the Company, and without further compensation, do all lawful things reasonably
necessary to ensure the Company's ownership of any New Development, including
the execution of any necessary documents assigning and transferring to the
Company all of Employee's right, title and interest in and to any New
Development, and the execution of all necessary documents required to enable
the Company to file and obtain patents and copyrights in the United States and
foreign countries on any New Development.
3.5 REMEDIES. If Employee commits or threatens to commit a breach of any
of the provisions of this Section 3, the Company shall have the right to have
the provisions of this Agreement specifically enforced by any court having
jurisdiction, it being acknowledged by Employee and agreed by the parties that
any such breach or threatened breach will cause injury to the Company for which
money damages along will not provide an adequate remedy. The rights and
remedies enumerated above shall be in addition to, and not in lieu of, any
other rights and remedies available to the Company at law or in equity.
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<PAGE> 5
3.6 REFORMATION OF AGREEMENT. In the event that any of the covenants
contained in this Section 3, or any portion thereof, shall be found by a court
of competent jurisdiction to be invalid or unenforceable as against public
policy or for any other reason, such court shall exercise its discretion to
reform such covenant to the end that Employee shall be subject to
non-disclosure, non-interference and non-competition covenants that are
reasonable under the circumstances and are enforceable by the Company. In any
event, if any provision of this Agreement is found unenforceable for any
reason, such provision shall remain in force and effect to the maximum extent
allowable and all non-affected provisions shall remain fully valid and
enforceable.
3.7 EXPENSES OF ENFORCEMENT OF COVENANTS. In the event that any action,
suit, or other proceeding at law or in equity is brought to enforce any of the
covenants contained in this Section 3, or to obtain money damages for the
breach thereof, the party prevailing in any such action, suit or other
proceeding shall be entitled upon demand to reimbursement from the other party
for all expenses (including, without limitation, reasonable attorneys' fees and
disbursements) incurred in connection therewith.
4. TERM.
4.1 MANNER OF TERMINATION. This Agreement may be terminated prior to the
end of the Employment Period, as follows:
(a) BY THE COMPANY FOR DISABILITY. At the option of and by written
notice from the Company if Employee shall become disabled, which, for purposes
of this Agreement, shall be deemed to have occurred if Employee suffers from
any disability or impairment of health which continues for at least 120 days
and which in the opinion of the Board renders the Employee unable to perform
her duties on an active, full-time basis.
(b) BY THE COMPANY FOR GOOD CAUSE. At the option of and by written
notice from the Company if the Board shall find "good cause" for termination,
which, for purposes of this Agreement, shall mean (i) a material breach by
Employee of her obligations under this Agreement or her fiduciary duties to the
Company, (ii) public conduct which in any manner offends against decency or
morality, (iii) repeated absenteeism, (iv) drug use or excessive alcohol
consumption on the part of Employee, or (v) if Employee fails, after notice and
a reasonable chance to cure, to observe the directives of the Board or its
designee to whom Employee reports.
(c) BY EMPLOYEE. By Employee upon not less than 120 days advance written
notice.
(d) DEATH. As of the end of the month in which Employee dies.
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<PAGE> 6
4.2 CONSEQUENCES OF TERMINATION.
(a) IN GENERAL. Notwithstanding any provision in this Agreement to the
contrary, upon any termination of this Agreement, the provisions hereof will
survive such termination to the extent required so that (i) the Company may
enforce the obligations of Employee under Section 3, and (ii) Employee and the
Company may each enforce any obligations of the other which accrued hereunder
before, or because of, such termination. All other rights and obligations of
the parties hereunder will expire upon termination of this Agreement.
(b) SALARY CONTINUATION. If Employee's employment with the Company is
terminated by the Company before the fifth anniversary of the date hereof other
than pursuant to Section 4.1(a) or 4.1(b), the Company shall continue to pay to
Employee the Base Salary provided for in Section 2.1 during the remainder of
the Employment Period, and Employee shall continue to be bound by the covenants
contained in Section 3 in accordance with the terms thereof.
5. MISCELLANEOUS.
5.1 WAIVER. Failure of the Company at any time to enforce any provision
of this Agreement or to require performance by Employee of any provision hereof
shall in no way affect the validity of this Agreement or any part hereof or the
right of the Company thereafter to enforce its rights hereunder; nor shall it
be taken to constitute a condonation or waiver by the Company of that default
or any other or subsequent default or breach.
5.2 NOTICE. Any notice required to be given under the terms of this
Agreement shall be in writing and mailed to the recipient's last known address
or delivered in person. If sent by registered or certified mail such notice
shall be effective when mailed, otherwise, it shall be effective upon delivery.
5.3 ASSIGNMENT. Except as set forth herein, no rights of any kind under
this Agreement shall, without prior written consent of the Company, be
transferable to or assignable by Employee or any other person, or be subject to
alienation, encumbrance, garnishment, attachment, execution or levy of any
kind, voluntary or involuntary. This Agreement shall be binding upon and shall
inure to the benefit of the Company, its successors and assigns.
5.4 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Ohio.
5.5 COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an
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<PAGE> 7
original, and all of which together shall constitute one and the same document.
5.6 HEADINGS. The headings in this Agreement are intended solely for
convenience of reference and shall be given no effect in the construction or
interpretation of this Agreement.
5.7 ENTIRE AGREEMENT. This Agreement constitutes the entire
understanding and agreement among the parties hereto concerning the subject
matter hereof. All negotiations among the parties hereto concerning the
subject matter hereof are merged into this Agreement, and there are no
representations, warranties, covenants, understandings or agreements, oral or
otherwise, in relation thereto among the parties hereto other than those
incorporated herein. The parties hereto acknowledge that the Company is a
party to, and this Agreement is made in conjunction with, the Asset Purchase
Agreement; and it is understood that nothing in this Agreement is intended to
modify the provisions of the Asset Purchase Agreement or any other agreement or
instrument contemplated therein. Nothing expressed or implied in this
Agreement is intended or shall be construed so as to grant or confer on any
person, firm or corporation other than the parties hereto any rights or
privileges hereunder. No supplement, modification or amendment of this
Agreement shall be binding unless executed in writing by the parties hereto.
INTENDING TO BE LEGALLY BOUND, the parties or their duly authorized
representatives have signed this Agreement on the date first written above.
NCS HEALTHCARE OF OKLAHOMA, INC.
(the "Company")
By: /s/ Kevin B. Shaw
__________________________________
Title: President
_______________________________
/s/ Gail Benjamin
________________________________________
GAIL BENJAMIN ("Employee")
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