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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No._______)*
CAPSTONE PHARMACY SERVICES, INC.
- --------------------------------------------------------------------------------
(Name of Issuer)
Common Stock, Par Value $.01 Per Share
- --------------------------------------------------------------------------------
(Title of Class of Securities)
14066N101
- --------------------------------------------------------------------------------
(CUSIP Number)
Marshall A. Elkins, Esq., Executive Vice President and General Counsel
Integrated Health Services, Inc.
10065 Red Run Boulevard
Owings Mills, Maryland 21117
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
July 30, 1996
-------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
Check the following box if a fee is being paid with the statement [X]. (A fee is
not required only if the reporting person: (1) has a previous statement on file
reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
<PAGE>
SCHEDULE 13D
- ---------------------------- -------------------------------
CUSIP No. 14066N101 Page 2 of 62 Pages
- ---------------------------- -------------------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Integrated Health Services, Inc. 23-2428312
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
00
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES 2,112,490
BENEFICIALLY -----------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH 2,112,490
REPORTING -----------------------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH 2,112,490
-----------------------------------------------------
10 SHARED DISPOSITIVE POWER
2,112,490
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,112,490
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
10.5%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
CUSIP No.: 14066N101
SCHEDULE 13D
Item 1. Security and Issuer
-------------------
This statement relates to the common stock, par value $0.01
per share (the "Common Stock"), of Capstone Pharmacy Services, Inc., a Delaware
corporation (the "Issuer"), whose principal executive offices are located at
2930 Washington Boulevard, Baltimore, Maryland 21230.
Item 2. Identity and Background
-----------------------
(a) Name: Integrated Health Services, Inc. ("IHS")
----
The following persons are executive officers, directors or
controlling persons of IHS (the "Executive Officers and Directors"):
W. Bradley Bennett
Lawrence P. Cirka
E. Mac Crawford
Brian K. Davidson
Marshall A. Elkins
Robert N. Elkins, M.D.
Eleanor C. Harding
Marc B. Levin
Anthony R. Masso
Kenneth M. Mazik
Robert A. Mitchell
Charles W. Newhall, III
Timothy F. Nicholson
Scott W. Robertson
John L. Silverman
George H. Strong
C. Christian Winkle
(b) State of Organization or Citizenship: IHS is incorporated
in the State of Delaware. Each of the Executive Officers and Directors is a
citizen of the United States.
<PAGE>
(c) Principal Business or Occupation: IHS is a provider of
post-acute healthcare services. The principal occupation of each of the
Executive Officers and Directors is as follows:
-W. Bradley Bennett is Senior Vice President--Chief Accounting Officer
of IHS.
-Lawrence P. Cirka is President, Chief Operating Officer and a director
of IHS.
-E. Mac Crawford is Chairman and CEO of Magellan Health Services, Inc.
and a director of IHS.
-Brian K. Davidson is Executive Vice President--Office of the Chairman
of IHS.
-Marshall A. Elkins is Executive Vice President and General Counsel of
IHS.
-Robert N. Elkins, M.D. is Chairman of the Board and CEO of IHS.
-Eleanor C. Harding is Senior Vice President, Finance of IHS.
-Marc B. Levin is Executive Vice President--Investor Relations of IHS.
-Anthony R. Masso is Executive Vice President--Post Acute Development
of IHS.
-Kenneth M. Mazik is Chairman, Jovius Foundation and a director of IHS.
-Robert A. Mitchell is an attorney and a director of IHS.
-Charles W. Newhall, III is a General Partner of New Enterprise
Associates and a director of IHS.
-Timothy F. Nicholson is Chairman and CEO of Speciality Care, plc and a
director of IHS.
-Scott W. Robertson is Executive Vice President--Office of the Chairman
of IHS.
-John L. Silverman is Chief Executive Officer of AsiaCare Inc. and a
director of IHS.
-George H. Strong is a private investor and a director of IHS.
-C. Christian Winkle is Executive Vice President--Owned Operations of
IHS.
(d) Address of Principal Place of Business and Principal
Office:
---------------------------------------------------------
For: IHS
10065 Red Run Boulevard
Owings Mills, Maryland 21117
For: W. Bradley Bennett
Brian K. Davidson
Marshall A. Elkins
Eleanor C. Harding
Marc B. Levin
Anthony R. Masso
Scott W. Robertson
C. Christian Winkle
Integrated Health Services, Inc.
10065 Red Run Boulevard
Owings Mills, Maryland 21117
<PAGE>
For: Lawrence A. Cirka
Robert N. Elkins, M.D.
Integrated Health Services, Inc.
8889 Pelican Bay Boulevard
Naples, Florida 33963
For: E. Mac Crawford
Magellan Health Services, Inc.
3414 Peachtree Road, N.E.
Atlanta, Georgia 30326
For: Kenneth M. Mazik
Jovius Foundation
699 E. Fifth Avenue
Mt. Dora, Florida 32757
For: Robert A. Mitchell
162 E. 64th Street
New York, New York 10021
For: Charles W. Newhall, III
New Enterprise Associates
1119 St. Paul Street
Baltimore, Maryland 21202
For: Timothy F. Nicholson
Speciality Care plc
Hamilton House, 1 Temple Avenue
London EC4Y OHA
England
For: John L. Silverman
AsiaCare Inc.
Suite 28(B), 28th Floor
Wisma Denmark
86 Jalan Ampang
50450 Kuala Lumpur, Malaysia
For: George H. Strong
946 Navesink River Road
Locust, New Jersey 07760
(e) Criminal Convictions: Neither IHS nor any Executive
Officer and Director has, during the last five years, been convicted in a
criminal proceeding.
<PAGE>
(f) Civil Proceedings: Neither IHS nor any Executive Officer
and Director has, during the last five years, been a party to a civil proceeding
of a judicial or administrative body of competent jurisdiction which resulted in
a judgment, decree or final order enjoining IHS from future violations of, or
prohibiting or mandating activities subject to, federal or state securities
laws, or finding any violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration
-------------------------------------------------
On July 30, 1996, IHS sold to the Issuer, pursuant to an Asset
Purchase Agreement dated June 20, 1996 among IHS, various of its subsidiaries
and the Issuer, as amended (the "Asset Purchase Agreement"), substantially all
the assets and liabilities constituting IHS' institutional pharmacy services
division for $125 million in cash and 2,112,490 shares of the Issuer's Common
Stock.
Item 4. Purpose of Transaction
----------------------
IHS received the 2,112,490 shares of the Issuer's Common Stock
in partial payment of the purchase price for the assets and liabilities of IHS'
institutional pharmacy services division pursuant to the terms of the Asset
Purchase Agreement.
Neither IHS nor any Executive Officer and Director has any
present plans or proposals which relate to or would result in:
(a) The acquisition by any person of additional
securities of the Issuer, or the disposition of
securities of the Issuer, except that depending upon
market conditions, IHS may choose to sell some or all
of the Issuer's Common Stock owned by it;
(b) An extraordinary corporate transaction, such as a
merger, reorganization or liquidation, involving the
Issuer or any of its subsidiaries;
(c) A sale or transfer of a material amount of assets of
the Issuer or any of its subsidiaries;
(d) Any change in the present board of directors or
management of the Issuer, including any plans or
proposals to change the number or term of directors
or to fill any existing vacancies on the board;
(e) Any material change in the present capitalization or
dividend policy of the Issuer;
<PAGE>
(f) Any other material change in the Issuer's business or
corporate structure including but not limited to, if
the Issuer is a registered closed-end investment
company, any plans or proposals to make any changes
in its investment policy for which a vote is required
by section 13 of the Investment Company Act of 1940;
(g) Changes in the Issuer's charter, bylaws or
instruments corresponding thereto or other actions
which may impede the acquisition of control of the
Issuer by any person;
(h) Causing a class of securities of the Issuer to be
delisted from a national securities exchange or to
cease to be authorized to be quoted in an
inter-dealer quotation system of a registered
national securities association;
(i) A class of equity securities of the Issuer becoming
eligible for termination of registration pursuant to
Section 12(g)(4) of the Act; or
(j) Any action similar to any of those enumerated above.
Item 5. Interest in Securities of the Issuer
------------------------------------
(a) See Items 11 and 13 of the cover page of this Schedule 13D
for the aggregate number and percentage of the Issuer's Common Stock held by
IHS. The Executive Officers and Directors do not own any shares of the Issuer's
Common Stock.
(b) See Items 7-10 of the cover page of this Schedule 13D for
the number of shares of the Issuer's Common Stock held by IHS in which IHS has
the sole or shared power to vote or direct the vote and the sole or shared power
to dispose or direct the disposition. No Executive Officer and Director has the
sole or shared power to vote or direct the vote and the sole or shared power to
dispose or direct the disposition of any shares of the Issuer's Common Stock,
except that the Board of Directors of IHS may be deemed to have the shared power
to vote or direct the vote and the shared power to dispose or direct the
disposition of shares of the Issuer's Common Stock.
(c) On July 30, 1996, IHS received 2,112,490 shares of the
Issuer's Common Stock pursuant to the Asset Purchase Agreement in partial
payment of the purchase price for the assets and liabilities of IHS'
institutional pharmacy services division.
(d) None.
(e) Not applicable.
<PAGE>
Item 6. Contracts, Arrangements, Understandings or Relationships
with Respect to Securities of the Issuer
---------------------------------------------------------
Pursuant to the Asset Purchase Agreement, the 2,112,490 shares
of the Issuer's Common Stock are entitled to the benefit of certain demand and
piggyback registration rights. IHS has the right at any time, subject to certain
limitations, to include the shares of the Issuer's Common Stock owned by it in
any registered offering of the Issuer's Common Stock. In addition, unless the
shares of the Issuer's Common Stock owned by IHS have been registered pursuant
to a "piggyback" registration by October 28, 1996, the Issuer must, unless IHS
elects, in its sole discretion to delay or defer the process, as soon as
practicable, but in any event no later than December 31, 1996, prepare and file
with the Securities and Exchange Commission, and thereafter use its reasonable
best efforts to have declared effective as soon as possible, a registration
statement covering the resale of the Issuer's Common Stock owned by IHS. IHS may
elect not to include all 2,112,490 shares of the Issuer Common Stock in such
initial registration, in which event the Issuer shall be obligated to effect a
registration of some or all of the remaining shares at the request of IHS at any
time on or before July 30, 1998.
Item 7. Material to Be Filed as Exhibits
--------------------------------
1. Asset Purchase Agreement, dated as of June 20, 1996, among
Integrated Health Services, Inc., Symphony Pharmacy Services,
Inc., various of its Subsidiaries, Sellers, and Capstone
Pharmacy Services, Inc., Buyer, as amended.
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: August 8, 1996
INTEGRATED HEALTH SERVICES, INC.
By: /s/ W. BRADLEY BENNETT
--------------------------------
W. Bradely Bennett
Senior Vice President-Chief Accounting
Officer
---------------------------------------
- -
ASSET PURCHASE AGREEMENT
Dated as of June 20, 1996
among
INTEGRATED HEALTH SERVICES, INC.,
SYMPHONY PHARMACY SERVICES, INC.,
VARIOUS OF ITS SUBSIDIARIES, SELLERS
and
CAPSTONE PHARMACY SERVICES, INC., BUYER
---------------------------------------
<PAGE>
TABLE OF CONTENTS
-----------------
Page
ARTICLE I: PURCHASE AND SALE OF ASSETS; ASSUMPTION OF CERTAIN
LIABILITIES; CONTRACTS......................................................-2-
1.1 Assets......................................................-2-
1.2 Excluded Assets.............................................-2-
1.3 Liabilities.................................................-3-
1.4 Contracts...................................................-4-
ARTICLE II: PURCHASE PRICE..................................................-5-
2.1 Determination and Payment of Purchase Price.................-5-
2.2 Adjustment to the Purchase Price............................-5-
2.3 Allocation of Purchase Price................................-6-
2.4 ............................................................-6-
2.5 Registration Rights.........................................-6-
2.6 Registration Expenses.......................................-7-
2.7 Registration Procedures, etc................................-7-
2.8 Indemnification Procedures, Etc............................-10-
ARTICLE III: THE CLOSING...................................................-12-
3.1 Time and Place of Closing..................................-12-
3.2 Buyer's Financing..........................................-12-
ARTICLE IV: REPRESENTATIONS AND WARRANTIES OF SELLERS AND IHS..............-12-
4.1 Organization and Standing..................................-12-
4.2 Authority..................................................-13-
4.3 Binding Effect.............................................-13-
4.4 Absence of Conflicting Agreements..........................-13-
4.5 Consents...................................................-14-
4.6 Contracts..................................................-14-
4.7 Financial Statements.......................................-15-
4.8 Licenses; Permits; Certificates of Need....................-15-
4.9 Title, Condition to Personal Property......................-16-
4.10 Leased Real Properties.....................................-17-
4.11 Legal Proceedings..........................................-17-
4.12 Collective Bargaining, Labor Contracts, Employment
Practices, etc.........................................-17-
4.13 ERISA......................................................-18-
4.14 Insurance and Surety Agreements............................-18-
4.15 Assets Comprising the Business.............................-19-
4.16 Absence of Certain Events..................................-19-
4.17 Compliance with Laws.......................................-20-
4.18 Medicare and Medicaid Programs.............................-21-
4.19 Encumbrances Created by this Agreement.....................-21-
(i)
<PAGE>
4.20 Finders....................................................-21-
4.21 Patents, Trademarks, Trade Names, Trade Secrets
and Copyrights.........................................-21-
4.22 Environmental Matters......................................-22-
4.23 Tax Returns................................................-22-
4.24 Employees..................................................-22-
4.25 No Untrue Statement........................................-23-
4.26 Related Transactions.......................................-23-
4.27 Restricted Stock...........................................-23-
ARTICLE V: REPRESENTATIONS AND WARRANTIES OF BUYER.........................-23-
5.1 Organization and Standing..................................-23-
5.2 Power and Authority........................................-23-
5.3 Binding Agreement..........................................-24-
5.4 Absence of Conflicting Agreements..........................-24-
5.5 Consents...................................................-24-
5.6 Finders....................................................-24-
ARTICLE VI: INFORMATION AND RECORDS CONCERNING THE SELLERS
6.1 Access to Information and Records before Closing...........-24-
ARTICLE VII: OBLIGATIONS OF THE PARTIES UNTIL CLOSING......................-25-
7.1 Conduct of Business Pending Closing........................-25-
7.2 Negative Covenants of Sellers..............................-25-
7.3 Affirmative Covenants of Sellers...........................-26-
7.4 Pursuit of Consents and Approvals..........................-26-
7.5 Supplementary Financial Information........................-26-
7.6 H-S-R Act..................................................-27-
7.7 Excluded Services..........................................-27-
7.8 Nondisclosure of Confidential Information..................-27-
7.9 Employment Agreement with David Graft......................-27-
7.10 Exclusivity................................................-27-
7.11 Notice of Breach...........................................-27-
ARTICLE VIII: CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER.................-28-
8.1 Representations and Warranties.............................-28-
8.2 Performance of Covenants...................................-28-
8.3 Delivery of Closing Certificate............................-28-
8.4 Opinions of Counsel........................................-28-
8.5 Legal Matters..............................................-28-
8.6 Authorization Documents....................................-29-
8.7 Material Adverse Effect....................................-29-
8.8 Consents to Assignments of Employment Agreements...........-29-
8.9 Bill of Sale and Assignment................................-29-
8.10 Non-Competition Agreements.................................-29-
(ii)
<PAGE>
8.11 Hart-Scott Rodino Act......................................-31-
8.12 Employment Agreements......................................-31-
8.13 Non-solicitation Agreements with Certain Persons...........-31-
8.14 Documents..................................................-31-
ARTICLE IX: CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLERS AND IHS.....-32-
9.1 Representations and Warranties.............................-32-
9.2 Performance of Covenants...................................-32-
9.3 Delivery of Closing Certificate............................-32-
9.4 Opinions of Counsel........................................-32-
9.5 Legal Matters..............................................-32-
9.6 Authorization Documents....................................-33-
9.7 Undertaking................................................-33-
9.8 Hart-Scott Rodino Act......................................-33-
9.9 Lender Consent.............................................-33-
9.10 Other Documents............................................-33-
ARTICLE X: OBLIGATIONS OF THE PARTIES AFTER CLOSING.......................-33-
10.1 Survival of Representations and Warranties.................-33-
10.2 Indemnification............................................-34-
10.3 Restrictions...............................................-36-
10.4 Delivery of Records........................................-37-
10.5 Access to Records..........................................-37-
10.6 Employees..................................................-37-
10.7 Temporary License..........................................-38-
10.8 Licensure Power of Attorney................................-38-
10.9 Billing and Collection.....................................-38-
10.10 Financial Consolidation Software...........................-39-
10.11 Enforcement of Non-competes................................-39-
10.12 Cooperation - Further Assistance...........................-39-
10.13 Introductions..............................................-39-
ARTICLE XI: TERMINATION....................................................-39-
11.1 Termination................................................-39-
11.2 Effect of Termination......................................-40-
11.3 Break-up Fee...............................................-40-
ARTICLE XII: MISCELLANEOUS.................................................-40-
12.1 Costs and Expenses.........................................-40-
12.2 Benefit and Assignment.....................................-40-
12.3 Effect and Construction of this Agreement..................-40-
12.4 Notices....................................................-40-
12.5 Waiver, Discharge, Etc.....................................-41-
12.6 Rights of Persons Not Parties..............................-42-
12.7 Governing Law..............................................-42-
12.8 Public Announcements.......................................-42-
(iii)
<PAGE>
SCHEDULES
---------
Schedule 4.4 - Absence of Conflicting Agreements
Schedule 4.5 - Consents
Schedule 4.6(b) - Contracts
Schedule 4.6(c) - Contracts
Schedule 4.7 - Financial Statements
Schedule 4.8 - Material Changes
Schedule 4.9 - Licenses; Permits, Certificates of Need
Schedule 4.12 - Legal Proceedings
Schedule 4.13 - Collective Bargaining, Labor Contracts, Employment
Practices, etc.
Schedule 4.15 - Insurance and Surety Agreements
Schedule 4.17 - Absence of Certain Events
Schedule 4.18 - Compliance with Laws
Schedule 4.22 - Patents, Trade Marks, Trade Names, Trade Secrets and
Copyrights
Schedule 4.24(a) - Tax Returns
Schedule 4.25 - Employees
Schedule 5.5 - Consents
EXHIBITS
--------
Exhibit 8.9-1 - Bill of Sale
Exhibit 8.9-2 - Assignment of Contracts
Exhibit 9.7 - Undertaking
Exhibit 10.9 - Billing and Collection Agreement
(iv)
<PAGE>
-----------------------------
ASSET PURCHASE AGREEMENT
-----------------------------
This Asset Purchase Agreement (the "Agreement") is made as of
the 20th day of June, 1996, among INTEGRATED HEALTH SERVICES, INC., a Delaware
corporation and SYMPHONY HEALTH SERVICES, INC., a Delaware corporation
(collectively, "IHS"), SYMPHONY PHARMACY SERVICES, INC., a Delaware corporation
and a wholly owned subsidiary of IHS ("Symphony Pharmacy"), PATIENT CARE
PHARMACY, INC., a California corporation and a wholly owned subsidiary of
Symphony Pharmacy ("PCPI"), AMCARE, INC., a California corporation and a wholly
owned subsidiary of Symphony Pharmacy ("AI"), AMCARE SANTA BARBARA, INC., a
California corporation and a wholly owned subsidiary of Symphony Pharmacy
("ASBI"), AMCARE HEALTH SERVICES, INC., a Pennsylvania corporation and a wholly
owned subsidiary of Symphony Pharmacy ("AHSI"), PATIENT CARE PHARMACY OF
COLORADO SPRINGS, INC., a Delaware corporation and a wholly-owned subsidiary of
Symphony Pharmacy ("PCPCSI"), PHARMACEUTICAL DOSE SERVICES, INC., a Delaware
corporation and a wholly owned subsidiary of Symphony Pharmacy ("PDSI"),
HEALTHCARE PHARMACY SERVICES OF FLORIDA, INC., a Florida corporation and a
wholly owned subsidiary of Symphony Pharmacy ("HPSFI"), HEALTHCARE PHARMACY
SERVICES OF PENNSYLVANIA, INC., a Pennsylvania corporation and a wholly owned
subsidiary of Symphony Pharmacy ("HPSPI"), HEALTHCARE PHARMACY SERVICES OF
TEXAS, INC., a Texas corporation and a wholly owned subsidiary of Symphony
Pharmacy ("HPSTI"), and SUNCOAST PHARMACY SERVICES, INC., a Florida corporation
and a wholly owned subsidiary of Symphony Pharmacy ("SPSI" and together with
Symphony Pharmacy, PCPI, AI, ASBI, AHSI, PCPCSI, PDSI, HPSFI, HPSPI, and HPSTI,
the "Sellers" and each a "Seller") and CAPSTONE PHARMACY SERVICES, INC., a
Delaware corporation ("Buyer").
WHEREAS, Sellers are engaged in the business of dispensing
pharmacy products and services to long-term care facilities such as skilled
nursing facilities and assisted living facilities, including long-term care
facilities owned, managed or leased by IHS and/or various of its directly or
indirectly owned subsidiaries ("IHS LTC Facilities") (the "Business"); and
WHEREAS, Buyer wishes to purchase from Sellers, and Sellers
wish to sell to Buyer substantially all of the Assets (as hereinafter defined)
of Sellers relating to the Business upon the terms and subject to the conditions
set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, IHS, Sellers and Buyer intending to be legally bound, agree as
follows:
<PAGE>
ARTICLE I: PURCHASE AND SALE OF ASSETS; ASSUMPTION OF CERTAIN
-------------------------------------------------------------
LIABILITIES; CONTRACTS
----------------------
1.1 Assets.
Subject to the terms and conditions of this Agreement
at the Closing (as hereinafter defined), and in reliance upon the covenants,
representations and warranties of the other parties hereto, Sellers will sell,
assign, convey, transfer and deliver to Buyer free and clear of all Liens (as
such term is hereinafter defined in Section 4.9) other than Permitted Liens (as
such term is hereinafter defined in Section 4.9), and Buyer will purchase and
acquire from Sellers, all of the assets of Sellers which now or hereafter
comprise, all of each Seller's right, title and interest in and to: accounts
receivable, the proceeds collected from any Non-Assignable Receivables (as
defined below); useable and saleable items of pharmaceutical product inventory,
including controlled substances, dangerous drugs and prescription files, office
supplies, contents and other packaging materials; pharmacy equipment, medication
and treatment carts; books, records and other data relating to the Assets or the
business or operations of the Business, including payroll, personnel and other
employee records; facsimile machines, computers, furniture and fixtures; motor
vehicles; Contracts (as hereinafter defined in Section 4.6), and all other
contracts, leases, commitments, licenses, and permits; trade secrets,
tradenames, trademarks, the goodwill relating to the Business, each of the
corporate names listed on Schedule 4.21 hereto, and customer and supplier lists;
prepaid expenses, taxes or deposits, and cash; and all other real and personal
property, rights and assets in each case, which now or hereafter comprise, or
which are now or hereafter used or useful in connection with the operation of,
the Business (the "Assets"). Notwithstanding the foregoing or anything else to
the contrary contained in this Agreement, the Assets shall not include the
Excluded Assets as defined in Section 1.2 below. The services currently being
performed by Sellers consist of pharmaceutical dispensing and distribution
services and pharmaceutical products, including intravenous products, supplies
and services, and related equipment (including without limitation, medical
carts, telefacsimile machines, treatment carts, emergency boxes, convenient
boxes, automated dispensing cabinets, automated medical supply cabinets and
other new technology) and committed, scheduled training and education programs,
pharmacy consulting services, and medical records consulting. Notwithstanding
the foregoing, the said services do not include the Excluded Services.
1.2 Excluded Assets; Excluded Services.
(a) The Assets shall not include inventory and supplies
disposed of after the date hereof and prior to Closing as permitted in
accordance with Article VII hereof; obsolete equipment disposed of for fair
consideration, if any, after the date hereof and prior to Closing; licenses,
permits and Medicaid provider numbers which may not be transferred in accordance
with applicable Governmental Requirements (as such term is hereinafter defined
in Section 4.4); claims against third parties, including insurance companies,
for reimbursement, indemnification or under any warranties with respect to the
payment or satisfaction by any Seller of any Excluded Liabilities; contracts
covering or relating solely to Excluded Services; Plans (as hereinafter defined
in Section 4.13); each
-2-
<PAGE>
rebate, wholesaler and group purchasing agreement of any Seller which is not
assignable and which is subject to non-disclosure provisions as indicated on
Schedule 4.6 (b); use of the acquisition, accounting, legal, management
information service, human resource, risk management and other corporate
functions provided by IHS and the agreements, contracts, leases and commitments
set forth on Schedule 4.15 hereto except to the extent same constitute Subject
IHS Leases (as such term is defined in Section 1.4(b) below); tax refunds, if
any in respect of tax periods ending on or prior to Closing; cash expended,
disbursed or transferred after the date hereof and prior to Closing as permitted
in accordance with Article VII hereof; subject to Section 10.7 below, the name
"Symphony" and the goodwill related thereto; the capital stock of any Seller
and, unless otherwise elected by Buyer prior to the Closing, the capital stock
of Comprehensive Pharmacy Network of California, Inc.; any agreements to which
Comprehensive Pharmacy Network of California, Inc. is a party; all receivables
of Sellers from governmental payors which by law may not be assigned
("Non-Assignable Receivables"); the assets used solely in connection with the
provision of Excluded Services (as defined below); the assets and business of
Greenline Services, Inc. ("Greenline"); and the minute books, stock record books
and stock ledgers and any other books, records or other data relating solely to
Excluded Assets or Excluded Liabilities (as such term is defined in Section 1.3)
of each Seller (collectively, the "Excluded Assets"). "Excluded Services" means:
(a) the provision to facilities operated by IHS, Community Care of America,
Inc., Integrated Living Communities, Inc. ("ILC") or any entity which now or
hereafter is one of their respective subsidiaries (by reason of ownership, lease
or management agreement) of enteral, ostomy, colostomy, urological or wound care
product dispensing and distributing services and all services related thereto;
and (b) management of healthcare networks which include management of the
provision of pharmacy dispensing and distribution services (provided that same
shall not include actual provision of pharmacy dispensing and distribution
services), other than with respect to the Walker Joint Venture or Senior
Dimensions Pharmacy, Inc. Management Agreements.
1.3 Liabilities. At Closing, Buyer shall assume and
undertake to perform all (a) Adjusted Current Liabilities (as defined below),
(b) all amounts that otherwise would be obligations of any Seller but are
expressly stated to be payable by Buyer under Section 12.1 hereof, and (c) all
of each Seller's liabilities, obligations and debts arising under each of the
Contracts identified on Schedule 4.6, and the other leases, contracts,
commitments, licenses and permits included in the Assets to the extent (and only
to the extent) that they relate to the Assets or the Business, are incident to
the performance in accordance with the terms of such agreements, and relate to
periods on or after the Closing (collectively, all of the foregoing included in
subsections (a), (b) and (c) above, being the "Assumed Liabilities"). As used
herein, "Adjusted Current Liabilities" means the aggregate amount of all
operating trade payables and operating expenses of Symphony Pharmacy, on a
consolidated basis with the other Sellers, that would be classified as current
liabilities on a balance sheet of Symphony Pharmacy as of the Closing Date
prepared in accordance with GAAP applied on a basis consistent with the most
recent audited financial statements of Symphony Pharmacy; provided, however,
that Adjusted Current Liabilities shall not include any working capital loans or
other amounts (including, without limitation, interest thereon payable to or
from IHS or any of its direct or indirect subsidiaries including Sellers, or
federal, state and local income taxes payable by any Seller. Except for the
Assumed Liabilities, Buyer
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shall not assume any liabilities, debts or obligations of any of Sellers or IHS
of any kind, character or description, whether accrued, absolute, contingent or
otherwise, arising out of or resulting from Sellers' ownership, possession,
operation or use of the Business (or any predecessor business) or the Assets or
otherwise, including without limitation, any of the following such liabilities
or obligations to the extent not constituting Assumed Liabilities (the "Excluded
Liabilities"): (i) any liability with respect to the Business to the extent
arising from any accident, occurrence, misconduct, or breach of fiduciary duty
occurring prior to the Closing (but not to the extent caused by Buyer after the
Closing), (ii) any liability for Taxes (as such term is hereinafter defined in
Section 4.23 (b)), including any liability for income taxes arising as a result
of the transactions contemplated by this Agreement; (iii) any liability or
obligation arising out of any Excluded Assets or Excluded Services; and (iv) any
liability or obligation incurred in connection with (A) the negotiation,
execution or performance of this Agreement and the other agreements contemplated
hereby, including any and all legal, accounting, lenders' and other professional
fees and expenses, or (B) any other effort(s) to sell or dispose of the Assets.
1.4 Contracts.
(a) At Closing, Sellers shall assign all of their
respective rights, title, and interest under each Contract and under each other
contract, lease, commitment, license and permit of any Seller comprising any
part of the Assets to Buyer. Notwithstanding anything to the contrary contained
in this Agreement, Sellers make no representations or warranties as to the
assignability of the Contracts (other than as to the employment agreements
referred to on Schedule 4.6(a)(i)-A (the "Employment Agreements")) or of any
such other contracts, leases, commitments, licenses or permits which are
included within the Assets, and Buyer shall assume all of the same as aforesaid
regardless of whether the same are by their terms assignable and, upon their
receipt thereof, Sellers shall deliver to Buyer any benefits received by Sellers
arising out of services rendered or products supplied by Buyer under any of the
same after the Closing.
(b) Set forth on Schedule 1.4(b) hereto are certain
equipment, motor vehicle and other personal property leases to which IHS or one
of its subsidiaries (other than any of the Sellers) is a party (the "Subject IHS
Leases"). IHS agrees to use its commercially reasonable efforts to assign the
portion of such Subject IHS Leases which pertain to the operation of the
Business to Buyer at or after the Closing. Buyer shall assume all the
obligations of IHS or its subsidiaries under such Subject IHS Leases to the
extent such Subject IHS Leases are assigned to Buyer and relate to periods on or
after such assignment.
(c) At Closing, IHS shall assign to Buyer and Buyer
shall assume the Consulting Agreement, dated as of October 12, 1994, between IHS
and Jack E. Sassone, as amended by amendments of June 23, 1995, October 10, 1995
and January 1, 1996 (the "Sassone Contract") to the extent it relates to periods
on or after Closing. In addition, Buyer shall assume at Closing the obligation
to pay any earn-out which becomes payable to Sassone after the Closing Date
pursuant to Section 2.5 of the Asset Purchase Agreement, dated October , 1994,
among IHS, Sassone, Edith Sassone, and Pharmaceutical Dose Services of La.,
Inc., but only to the extent that
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such earn-out was credited to Sassone in respect of Qualifying Beds (as defined
in the said Asset Purchase Agreement) which were contracted for after the
Closing Date. IHS shall continue to be responsible for any such payments which
are based upon Qualifying Beds that were contracted for prior to the Closing
Date.
ARTICLE II: PURCHASE PRICE
--------------------------
2.1 Determination and Payment of Purchase Price. Subject
to adjustment as provided in this Agreement, the aggregate purchase price to be
paid to Sellers for the Assets (the "Purchase Price") shall be ONE HUNDRED AND
FIFTY MILLION and 00/100 ($150,000,000.00) DOLLARS. Such Purchase Price shall be
payable by Buyer at the Closing as follows:
(a) One Hundred Twenty-Five Million
($125,000,000.00) Dollars in cash by wire transfer of immediately available
funds to the account designated in writing by IHS to Buyer at least two business
days prior to the Closing; and
(b) Twenty-Five Million ($25,000,000.00) Dollars
by the delivery to Sellers of that number of newly issued shares of the common
stock, $.01 par value, of Buyer ("Buyer Stock") as shall be equal in value to
$25,000,000 based upon the average closing NASDAQ price of such stock for the
twenty (20) trading day period which ends on a date which is three (3) business
days prior to the Closing Date.
(c) To the extent that the price per share
calculated in (b) above would result in the issuance of shares of Buyer Stock to
the Sellers which would equal or exceed twenty (20%) percent of the then
outstanding shares of Buyer Stock, the parties agree to reduce the value of
Buyer Stock to be issued to Sellers to the amount which would result in the
issuance to Sellers of less than twenty (20%) percent of the outstanding shares
of Buyer Stock, and the cash portion of the Purchase Price shall be increased by
the amount of the reduction in the value of the Buyer Stock issued to Sellers.
2.2 Adjustment to the Purchase Price. In the event that the
Closing Date Bed Count (as defined below) shall be less than 36,500, the
Purchase Price shall be reduced by an amount equal to Three Thousand ($3,000)
Dollars, multiplied by the difference between 36,500 and the Closing Date Bed
Count. As used herein, "Closing Date Bed Count" means the number of licensed
beds immediately prior to the Closing in (a) nursing homes, (b) residential care
facilities, (c) hospice care facilities, and (d) homes for the mentally retarded
receiving or under contract to receive pharmaceutical products and services from
any of Sellers, or from the Walker Joint Venture, or pursuant to the Management
Agreement between Senior Dimensions Pharmacy, Inc. and Symphony Pharmacy, in
each case, whether or not such beds are occupied. Beds in facilities which
receive only medical records or consulting services, are not included in the
Closing Date Bed Count.
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2.3 Allocation of Purchase Price. The Purchase Price as
adjusted pursuant to Section 2.2 (and all other capitalizable costs) shall be
allocated among the various categories of Assets, and the Non-Competition
Agreement (as such term is defined in Section 8.10), as shall be determined by
Buyer, subject to the consent of Seller with respect to the allocation among the
entities and to the Non-Competition Agreement (which consent shall not
unreasonably be withheld or delayed), in accordance with Section 1060 of the
Internal Revenue Code of 1986, as amended (the "Code"). Each of the parties
hereto agrees to prepare and file all tax returns (including Form 8594) in a
manner consistent with such allocation and to report this transaction for
Federal and state income tax purposes in accordance with such allocation of the
Purchase Price and shall use their reasonable efforts to sustain such allocation
in any subsequent tax audit or dispute.
2.4 [This Section intentionally left blank]
2.5 Registration Rights. IHS will have the following
registration rights with respect to the shares of Buyer Stock issued as part of
the Purchase Price:
(a) Initial Registration. Unless Buyer Stock has
been registered pursuant to the terms of Section 2.5(b) as soon as is reasonably
practicable but in any event within ninety (90) days following the Closing Date,
Buyer will cause to be prepared, filed, and will use its best efforts to have
declared effective by the Securities and Exchange Commission (the "Commission"),
a registration of the Buyer Stock on Form S-3 or its equivalent and such other
documents, including a prospectus, as may be necessary in the opinion of both
counsel for Buyer and counsel for the holders of Buyer Stock in order to comply
with the provisions of the Securities Act of 1933, as amended (the "Securities
Act"), so as to permit a public offering and sale by the Sellers of the Buyer
Stock. The Buyer will not include any securities other than Buyer Stock in such
Registration Statement if such inclusion would adversely impact registration of
Buyers Stock.
(b) Piggyback Registration Rights. If the Buyer
shall at any time propose to file a registration statement under the Securities
Act for any sales of securities of the Buyer on behalf of the Buyer or
otherwise, the Buyer shall give to Sellers written notice of such registration
no later than thirty (30) days before its filing with the Commission; provided,
that registrations relating solely to securities to be issued by the Buyer in
connection with any acquisition, employee stock option or employee stock
purchase or savings or similar plan on Form S-4 or S-8 (or successor Forms)
under the Securities Act shall not be subject to this Section 2.5(b). If Sellers
so request within fifteen (15) days of the sending of such notice, the Buyer
shall include all of the Buyer Stock in any such registration. However, the
Buyer shall not be obligated to include any portion (or all) of such Buyer Stock
to the extent any underwriter or underwriters of such securities being otherwise
registered by the Buyer shall determine in good faith that the inclusion of such
Buyer Stock or any portion thereof) would jeopardize the successful sale of such
other securities proposed to be sold by such underwriter or underwriters;
provided, however that if such offering includes securities being offered for
resale by other sellers of the Buyer, then the Buyer Stock may be eliminated
from such offering only to the extent that the securities being offered by such
other sellers also are eliminated on a pari passu basis.
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2.6 Registration Expenses. Buyer shall bear all
reasonable expenses related to any registration referred to in Section 2.5. Such
costs and expenses shall include, without limitation, all underwriters' and
brokers' expenses exclusive of discounts and commissions applicable to the Buyer
Stock, the fees and expenses of counsel for the Buyer and of its accountants,
all other costs, fees and expenses of the Buyer incident to the preparation,
printing, registration and filing under the Securities Act of the registration
statement and all amendments and supplements thereto, the fees and expenses of
one counsel to the Sellers relating to such registration, the cost of furnishing
copies of each preliminary prospectus, each final prospectus and each amendment
or supplement thereto to underwriters, dealers and Sellers. Notwithstanding the
foregoing, if the net proceeds per share to Sellers are less than the price per
share as determined under Section 2.1(b), Buyer shall pay any underwriting
discount to the extent necessary to cause such net proceeds to equal the price
per shares as determined under Section 2.1(b).
2.7 Registration Procedures, etc. In connection with the
registration rights granted to the Sellers with respect to the Buyer Stock as
provided in Section 2.5, Buyer covenants and agrees to:
(a) use its best efforts to cause each
registration under Section 2.5 to be declared effective and to remain effective
(and in compliance with the Securities Act) by such action as may be necessary
or appropriate for a period of two (2) years (plus an amount of time equal to
the number of days during which sales of Buyer Stock under such registration
statement shall have been prohibited in any jurisdiction in which such
securities are registered for sale by applicable law, court order or similar
compulsion) after the effective date of such registration statement, or, if
sooner, until an exemption from registration of the Buyer Stock becomes
available to Sellers, including, without limitation, the filing of
post-effective amendments and supplements to any registration statement or
prospectus necessary to keep the registration statement current and the further
qualification under any applicable Blue Sky or other state securities laws to
permit such sale or distribution, all as requested by holders of Buyer Stock.
The Buyer will immediately notify holders of Buyer Stock at any time when a
prospectus relating to a registration statement under Section 2.5 is required to
be delivered under the Securities Act, of the happening of any event as a result
of which the prospectus included in such registration statement, as then in
effect, includes an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then existing.
(b) furnish, at least five business days before
filing a registration statement that registers such Buyer Stock, a prospectus
relating thereto or any amendments or supplements relating to such a
registration statement or prospectus, to one counsel selected by the persons
holding a majority of the Buyer Stock being so registered (the "Stockholder
Counsel"), copies of all such documents proposed to be filed (it being
understood that such five-business-day period need not apply to successive
drafts of the same document proposed to be filed so long as such successive
drafts are supplied to the Sellers in advance of the proposed filing by a period
of time that is customary and reasonable under the circumstances);
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(c) notify in writing (which notice may be sent
via fax or overnight courier) the Sellers promptly (i) of the receipt by the
Buyer of any notification with respect to any comments by the Commission with
respect to such registration statement or prospectus or any amendment or
supplement thereto or any request by the Commission for the amending or
supplementing thereof or for additional information with respect thereto, to the
extent that such comments or requirements relate to information regarding the
Company or the persons selling Buyer Stock (ii) of the receipt by the Buyer of
any notification with respect to the issuance by the Commission of any stop
order suspending the effectiveness of such registration statement or prospectus
or any amendment or supplement thereto or the initiation or threatening of any
proceeding for that purpose and (iii) of the receipt by the Buyer of any
notification with respect to the suspension of the qualification of such Buyer
Stock for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purposes;
(d) use its best efforts to obtain the with-
drawal of any order suspending the effectiveness of such registration statement,
or the lifting of any suspension of the qualification or exemption from
qualification of any of the Buyer Stock for sale in any jurisdiction, at the
earliest possible time;
(e) use its best efforts to register or qualify
such Buyer Stock under such other securities or blue sky laws of such
jurisdictions as the Sellers selling Buyer Stock reasonably request and any and
all other acts and things which may be reasonably necessary or advisable to
enable such persons to consummate the disposition in such jurisdictions of the
Buyer Stock; provided, however, that the Buyer will not be required to qualify
generally to do business, subject itself to general taxation or consent to
general service of process in any jurisdiction where it would not otherwise be
required to do so but for this paragraph (e);
(f) furnish to the persons selling Buyer Stock
such number of copies of a summary prospectus or other prospectus, including a
preliminary prospectus, in conformity with the requirements of the Securities
Act, and such other documents as such persons may reasonably request in order to
facilitate the public sale or other disposition of such Buyer Stock;
(g) use its best efforts to cause such Buyer
Stock to be registered with or approved by such other governmental agencies or
authorities as may be necessary by virtue of the business and operations of the
Buyer to enable the persons selling Buyer Stock to consummate the disposition of
such Buyer Stock;
(h) notify the persons selling Buyer Stock on a
timely basis at any time when a prospectus relating to such Buyer Stock is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then existing
and, at the request of such persons, prepare and furnish to such persons a
reasonable number of copies of a supplement to or an amendment
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of such prospectus as may be necessary so that, as thereafter delivered to the
offerees of such shares, such prospectus shall not include an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in light of
the circumstances then existing;
(i) make available for inspection by the persons
selling Buyer Stock, any underwriter participating in any disposition pursuant
to such registration statement and any attorney, accountant or other agent
retained by such persons or underwriter (collectively, the "Inspectors"), all
pertinent financial and other records, pertinent corporate documents and
properties of the Buyer (collectively, the "Records"), as shall be reasonably
necessary to enable them to exercise their due diligence responsibility, and
cause the Buyer's officers, directors and employees and any person possessing
such information on behalf of the Buyer to supply all information (together with
the Records, the "Information") reasonably requested by any such Inspector in
connection with such registration statement; provided that any of the
Information which the Buyer determines in good faith to be confidential, and of
which determination the Inspectors are so notified, shall not be disclosed by
the Inspectors unless (i) the disclosure of such Information is necessary to
avoid or correct a misstatement or omission in the registration statement, (ii)
the release of such Information is ordered pursuant to a subpoena or other order
from a court or government agency of competent jurisdiction or (iii) such
Information has been made generally available to the public; provided, however,
that each such person agrees that it will, upon learning that disclosure of such
Information is sought in a court of competent jurisdiction, give notice to the
Buyer and allow the Buyer, at its expense, to undertake appropriate action to
prevent disclosure of the Information deemed confidential;
(j) use its best efforts to obtain from its
independent certified public accountants "cold comfort" letters addressed to IHS
and each person selling Buyer Stock in customary form and at customary times and
covering matters of the type customarily covered by cold comfort letters;
(k) use its best efforts to obtain from its
counsel an opinion or opinions addressed to IHS in customary form covering
matters of the type customarily covered by such opinions;
(l) provide a transfer agent and registrar
(which may be the same entity and which may be the Buyer) for such Buyer Stock;
(m) issue to any underwriter to which the
Sellers selling Buyer Stock may sell shares in such offering certificates
evidencing such Buyer Stock (following surrender of any existing certificate for
such securities);
(n) otherwise use its best efforts to comply
with all applicable rules and regulations of the Commission and make available
to the Buyer's security holders, as soon as reasonably practicable, publicly
available earnings statements (which need not be audited)
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covering a period of twelve (12) months beginning within three (3) months after
the effective date of the Registration Statement, which earnings statements
shall satisfy the provisions of Section 11(a) of the Securities Act; and
(o) use its best efforts to take all other steps
necessary to effect the registration of such Buyer Stock contemplated hereby.
2.8 Indemnification Procedures, Etc.
(a) The information included or incorporated by
reference in the registration statements filed pursuant to Section 2.5 will not,
at the time any such registration statement becomes effective, contain any
untrue statement of a material fact, or omit to state any material fact required
to be stated therein as necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading or
necessary to correct any statement in any earlier filing of such registration
statement or any amendments thereto. The registration statements will comply in
all material respects with the provisions of the Securities Act and the rules
and regulations thereunder. The Buyer shall indemnify the holders of Buyer Stock
to be sold pursuant to any registration statement, their successors and assigns,
and each person, if any, who controls such holders within the meaning of section
15 of the Securities Act or section 20(a) of the Securities Exchange Act of
1934, as amended (the "Exchange Act") against any and all loss, claim, damage,
expense or liability (including all expenses reasonably incurred in
investigating, preparing or defending against any claim whatsoever) to which any
of them may become subject under the Securities Act, the Exchange Act or any
other statute, common law or otherwise, arising out of or based upon any untrue
statement or alleged untrue statement of a material fact contained in such
registration statement executed by Buyer or based upon written information
furnished by Buyer filed in any jurisdiction in order to qualify the Buyer Stock
under the securities laws thereof or filed with the Commission, any state
securities commission or agency, NYSE or any securities exchange; or the
omission or alleged omission therefrom of a material fact required to be stated
therein or necessary to make the statements contained therein not misleading,
unless such statement or omission was made in reliance upon and in conformity
with written information furnished to Buyer by the holder or its affiliate
seeking indemnification expressly for use in such registration statement, any
amendment or supplement thereto or any application, as the case may be. If any
action is brought against the holders or any controlling person of the holders
in respect of which indemnity may be sought against Buyer pursuant to this
subsection 2.8(a), the holders or such controlling person shall promptly, and in
any event, within thirty (30) days (provided that the failure to give prompt
notice shall not relieve the indemnifying party of its indemnification
obligation but such obligation shall be reduced by any damages suffered by such
party resulting from a failure to give prompt notice) after the receipt thereby
of a summons or complaint, notify Buyer in writing of the institution of such
action and Buyer shall assume the defense of such actions, including the
employment and payment of reasonable fees and expenses of counsel (reasonably
satisfactory to the holders or such controlling person). The holders or such
controlling person shall have the right to employ its or their own counsel in
any such case, but the fees and expenses of such counsel shall be at the expense
of the holders or such
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controlling person unless (A) the employment of such counsel shall have been
authorized in writing by Buyer in connection with the defense of such action, or
(B) Buyer shall not have promptly employed counsel to have charge of the defense
of such action, or (C) such indemnified party or parties shall have reasonably
concluded that there may be defenses available to it or them which are different
from or additional to those available to Buyer (in which case, Buyer shall not
have the right to direct the defense of such action on behalf of the indemnified
party or parties), in any of which events the reasonable fees and expenses of
not more than one additional principal firm of attorneys (and, if necessary,
applicable firms to serve as local counsel) for the holders and/or such
controlling person shall be borne by Buyer. Except as expressly provided in the
previous sentence, in the event that Buyer shall have assumed the defenses of
any such action or claim, Buyer shall not thereafter be liable to such holders
or such controlling person for their expenses in investigating, preparing or
defending any such action or claim, except for reimbursement of expenses
incurred at Buyer's request (e.g., attending depositions etc.). Buyer agrees
promptly to notify the holders of the commencement or any litigation or
proceedings against Buyer or any of its officers, directors or controlling
persons in connection with the resale of the Buyer Stock or in connection with
such registration statement.
(b) Each holder of the Buyer Stock to be sold
pursuant to a registration statement, and his successors and assigns, shall
severally, and not jointly, indemnify Buyer, any underwriter, its or their
officers and directors and each person, if any, who controls Buyer or any
underwriter within the meaning of section 15 of the Securities Act or section
20(a) of the Exchange Act against any and all loss, claim, damage, or expense or
liability (including all expenses reasonably incurred in investigating,
preparing or defending against any claim whatsoever) to which they may become
subject under the Securities Act, the Exchange Act or any other statute, common
law or otherwise, arising from information containing any untrue statement of a
material fact furnished in writing by or on behalf of such holder, or his
successors or assigns for specific inclusion in such registration statement.
However, in no event shall the obligation of a seller of Buyer Stock hereunder
exceed the price received by such seller for such shares.
(c) If the indemnification provided for in this
Section 2.8 is held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any loss, claim, damage, expense, liability or
action referred to herein, then the indemnifying party, in lieu of indemnifying
such indemnified party hereunder, shall contribute to the amounts paid or
payable by such indemnified party as a result of such loss, claim, damage,
expense, liability or action in such proportion as is appropriate to reflect the
relative fault of the indemnifying party on the one and of the indemnified party
on the other in connection with the statement or omissions which resulted in
such loss, claim, damage, expense, liability or action as well as any other
relevant equitable considerations. The relevant fault of the indemnifying party
and of the indemnified party shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the indemnifying party or by the indemnified party and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. However, in no event shall the obligation of
a seller of Buyer Stock hereunder exceed the price received by such seller for
such shares.
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ARTICLE III: THE CLOSING
------------------------
3.1 Time and Place of Closing. The closing (the
"Closing") of the transactions contemplated by this Agreement shall take place,
at the offices of Sellers, on the date which is two business days following the
date on which all of the conditions to each party's obligations hereunder have
been satisfied or waived or such other date as the parties may agree in writing,
but in any event not later than the date which is thirty (30) days after the
date of this Agreement, except to the extent expressly provided in Section 8.5,
8.11, 9.5 or 9.8, below, and provided that, for accounting purposes only, the
Closing shall in any event be effective as of June 30, 1996. The date on which
the Closing is held is hereinafter referred to as the "Closing Date."
3.2 Buyer's Financing. The parties mutually acknowledge
that Buyer requires financing of approximately $100,000,000 in order to complete
the transaction hereunder (the "Financing"), although the completion of the
Financing is not a condition to Buyer's obligation to close under this
Agreement. In the event that the Financing does not close by August 1, 1996, it
is agreed that the Closing Date shall be extended for up to one hundred (100)
days in order to enable Buyer to develop alternative financing sources. During
this period, IHS shall cooperate with Buyer and provide reasonable assistance in
identifying potential sources of the Financing. Also during this period, the
parties will make such reasonable adjustments to the structure of this
transaction as may be necessary to complete the Financing, provided that in no
event shall any party hereto be required to agree to any such modification which
would affect negatively the economic or business benefits to be derived by such
party under this Agreement. In any event, if the Closing does not occur by the
expiration of the said 100-day period due to Buyer's failure to complete the
Financing, the break-up fee described in Section 11.3 shall be due and payable,
subject to the conditions stated in Section 11.3.
ARTICLE IV: REPRESENTATIONS AND WARRANTIES OF SELLERS AND IHS
-------------------------------------------------------------
Each of the Sellers and IHS hereby jointly and severally
represents and warrants to Buyer as follows:
4.1 Organization and Standing. Each Seller and IHS is a
corporation duly organized, validly existing and in good standing under the laws
of the State of its incorporation. Copies of such corporation's Articles of
Incorporation and By-Laws and all amendments thereof to date, have been
delivered to Buyer, and are complete and correct. Each Seller and IHS has the
power and authority to own the property and assets now owned by it and to
conduct the business currently being conducted by it. Each Seller is qualified
to do business as a foreign corporation in each state where the failure to be so
qualified would have a Material Adverse Effect. Except as set forth on Schedule
4.1, no Seller nor IHS with respect to the Ownership or use of the Assets, files
franchise, income or other Tax returns in any jurisdiction based upon the
ownership or use of its property therein or its derivation of income therefrom.
For purposes of this Agreement, any event, circumstance or set of facts shall be
deemed to have a "Material Adverse Effect" if it has,
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a material adverse effect on the value of the Assets or Assumed Liabilities
taken as a whole or on the ability of Sellers to operate the Business consistent
with past practice or on the consolidated financial position of Sellers or on
the results of the operations of Sellers on a consolidated basis with respect to
the period then ended.
4.2 Authority. Each Seller and IHS has full corporate power
and authority to own, lease and operate its assets, properties and business and
to carry on its business as it is now being conducted. Each Seller and IHS has
the full corporate power and authority to make, execute, deliver and perform
this Agreement, including all Schedules and Exhibits hereto, and the other
agreements, instruments, certificates and documents required or contemplated
hereby or thereby to be executed or delivered by it ("Seller Transaction
Documents") and all of the transactions contemplated hereby and thereby. Such
execution, delivery, performance and consummation have been duly authorized by
all necessary action, corporate or otherwise, on the part of each Seller, IHS,
its respective directors and, if applicable, shareholders. Sellers and IHS each
have delivered to Buyer copies of (a) its Certificate or Articles of
Incorporation, (b) its Bylaws, and (c) resolutions of its Boards of Directors
and, if applicable, its shareholders authorizing the transactions contemplated
by this Agreement, in each case certified as true and correct by the corporate
secretary of such corporation.
4.3 Binding Effect. This Agreement and the Seller Transaction
Documents executed by each Seller and IHS constitute the legal, valid and
binding obligations of such Seller and IHS, enforceable against each Seller and
IHS in accordance with their respective terms, except (a) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of
general application affecting enforcement of creditors' rights, and (b) as
limited by the application of legal principles affecting the availability of
specific performance, injunctive relief, and other equitable remedies.
4.4 Absence of Conflicting Agreements. Neither the execution
or delivery of this Agreement or any of the Seller Transaction Documents by any
Seller or IHS nor the performance by any Seller or IHS of the transactions
contemplated hereby and thereby, conflicts with, or constitutes a breach of or a
default (or an event which with notice or lapse of time or both, would
constitute a breach or default) under: (a) such Seller's or IHS's Articles of
Incorporation or By-Laws; or (b) any resolution adopted by the Board of
Directors or the shareholders of IHS or such Seller; or (c) any judgment, order,
writ, injunction, or decree of any court applicable to IHS or such Seller; or
(d) any Federal, state, local or other governmental laws or ordinances, or any
applicable order, rule or regulation ("Governmental Requirements") of any
Federal, state, local or other governmental department or court or other
authority having jurisdiction over it ("Governmental Authorities") or applicable
to such Seller or IHS except as set forth in Schedule 4.4 or as would not have a
Material Adverse Effect; or (e) any agreement, indenture, contract or instrument
to which such Seller or IHS is now a party or by which any of them or any of the
Assets is bound, except for conflicts, breaches, or defaults arising solely by
reason of the assignment of any Contracts which are not Employment Agreements at
Closing, and except as set forth in Schedule 4.4 or as would not have a Material
Adverse Effect.
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4.5 Consents. Except as reflected in Schedule 4.5, except for
licenses and permits which constitute Excluded Assets, and except as would not
have a Material Adverse Effect if not obtained, no authorization, consent,
approval, license, exemption by filing or registration by any Seller or IHS with
any Governmental Authority or with the employee under any Employment Agreement,
is necessary in connection with the entry into, execution, delivery and
performance of this Agreement or any of the Seller Transaction Documents by any
Seller or IHS, or for the consummation of the transactions contemplated hereby
and thereby.
4.6 Contracts.
(a) Schedule 4.6 (a) sets forth a true and
correct list of each of the following contracts (written or oral) to which any
Seller is a party or is bound (together with the contracts set forth on
Schedule 4.6(b), the "Contracts"):
(i) each employment, collective
bargaining, termination or consulting agreement with any directors,
officers, employees or consultants earning in excess of $50,000 per
year;
(ii) each agreement restricting the
conduct of business anywhere in the world for any period of time or the
use or disclosure of any confidential or proprietary information;
(iii) each partnership, joint venture or
management contract or similar arrangement or agreement which involves
a right to share profits or future payments with respect to the
Business or any portion thereof or the business of any other person or
entity;
(iv) each agreement pursuant to which the
services and products of the Business are provided, but excluding any
of the same which cover or relate solely to Excluded Services;
(v) each agreement, lease or other
instrument granting a leasehold interest to any Seller in real property
together with any and all non-disturbance agreements with mortgagees or
deed of trust beneficiaries which relate to the real property covered
by such leases (the "Real Property Leases");
(vi) each agreement (whether evidenced by
one document or a series of related documents with the same party)
involving past, present, or future consideration in excess of $50,000.
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(b) Schedule 4.6(b) sets forth each material
oral or written contract relating to the Assets or the Business not otherwise
listed on Schedule 4.6(a) hereto. Except to the extent that same would not have
a Material Adverse Effect, each Contract was entered into and requires
performance in the ordinary course of business, is in full force and effect and
constitutes a legal, valid and binding obligation enforceable against the
applicable Seller in accordance with its terms, except (a) as enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium and
other laws of general application affecting enforcement of creditors's rights,
(b) as limited by the application of legal principles affecting the availability
of specific performance, injunctive relief and other equitable remedies, and (c)
as limited by other applicable law. Sellers are not in default under any
provision of any contract set forth on Schedule 4.6(a) or 4.6(b) and no
condition exists which (with notice or lapse of time or both) would constitute a
default by any Seller thereunder, in each case, except to the extent same would
not have a Material Adverse Effect, and to the knowledge of Sellers and IHS, no
other party to any of such contracts is in default under any provision of any
such contract except to the extent such default would not have a Material
Adverse Effect. The Sellers previously have delivered true, correct, and
complete copies of each written Contract, including all amendments,
modifications, renewals, supplements, and extensions thereto (except as to those
which are indicated on Schedule 4.6 as being unavailable), and a written
description of each oral contract currently in effect.
4.7 Financial Statements.
(a) Attached hereto as Schedule 4.7(a) are the
audited financial statements of Symphony Pharmacy and the other Sellers on a
consolidated basis for the fiscal year ended December 31, 1995 (the "12/31/95
Financial Statements"). The Financial Statements (including any related notes
thereto) are true and correct in all material respects and present fairly the
financial condition and results of operations of Symphony Pharmacy and the other
Sellers reflected on a consolidated basis as, at and for the periods therein
specified and were prepared in accordance with GAAP applied on a basis
consistent with prior periods.
(b) Attached hereto as Schedule 4.7(b) are the
unaudited income statement and balance sheet of Symphony Pharmacy and the other
Sellers on a consolidated basis for the fiscal quarter ended March 31, 1996 (the
"Interim Financial Statements"), which quarterly financial statements are true
and correct in all material respects and present fairly the financial condition
and results of operations of Symphony Pharmacy and the other Sellers reflected
on a consolidated basis as, at and for the periods therein specified and were
prepared in accordance with GAAP applied on a basis consistent with prior
periods.
4.8 Licenses; Permits; Certificates of Need. Schedule 4.8 sets
forth a complete and accurate list of and copy of each material license or other
permit or approval of any Governmental Authority necessary to the operation of
the Business heretofore obtained and that is now in effect (collectively, the
"Licenses") including any such licenses, permits, or approvals required by the
Federal Food and Drug Administration ("FDA"), the Federal Drug Enforcement
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Agency ("DEA"), the State Pharmacy Boards ("State Boards"), and the Medicare or
Medicaid programs. Each Seller owns, possesses or has the legal right to use its
Licenses. No Seller is in default under any such License, which default would
have a Material Adverse Effect.
4.9 Title, Condition to Personal Property.
(a) Sellers own, or have good and valid
leasehold interests or licenses in, all of the personal property comprising the
Assets and has good and valid title to all such personal property (tangible and
intangible) (or in the case of personal property which is leased or licensed to
it, Seller has the right to use such personal property superior in right to all
others), subject to no liens, claims, security interests, mortgages, pledges, or
encumbrances of any kind or nature whatsoever ("Liens"), other than Permitted
Liens (as defined below) or Liens which shall be removed at or prior to Closing.
Except to the extent it would not have a Material Adverse Effect, all of such
personal property comprising equipment, improvements, furniture and other
tangible personal property, whether owned or leased, is in good operating
condition and repair except for normal wear and tear, and is functioning, in all
respects, in the manner and for the purpose for which it was intended, and is
suitable to enable Buyer to operate the Business in a normal and efficient
manner. None of Sellers nor IHS has granted any option or other right to acquire
any material portion of the Assets or the Business other than pursuant to this
Agreement or with respect to inventory in the ordinary course of business, which
option or right is in effect on the date hereof. There are no pending or, to the
knowledge of Sellers and IHS, threatened condemnation proceedings relating to
any of Sellers' leased properties used in connection with the Business.
(b) "Permitted Liens" means:
(i) each lien set forth on Schedule
4.9(b) hereto;
(ii) carriers', warehouseman's,
mechanics, materialmen's, repairmen's or other like liens arising in
the ordinary course of business which do not exceed $50,000 in the
aggregate;
(iii) deposits to secure the performance
of bids, trade contracts (other than for borrowed money), leases,
statutory obligations, surety and appeal bonds, performance bonds and
other obligations of like nature incurred in the ordinary course of
business, provided that each such deposit shall be included in the
Assets;
(iv) pledges or deposits in connection
with worker's compensation, unemployment insurance, and other social
security legislation; and
(v) judgment liens which, in the
aggregate, secure amounts not in excess of $50,000 and which are in
existence less than thirty (30) days after the entry thereof and which
are being contested in good faith and with respect to which adequate
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cash reserves have been established and with respect to which execution
has been stayed or the payment of which is covered in full (subject to
a reasonable and customary deductible) by insurance.
4.10 Leased Real Properties. No Seller owns any real property
or, other than the Real Property Leases, has a leasehold interest in any real
property. Each Seller has a valid leasehold interest in each of the properties
covered by the Real Property Leases to which it is a party. The Real Property
Leases represent all leasehold interests currently used in the operation of the
Business. Each of the Sellers has the right to quiet enjoyment of the premises
covered by the Real Property Leases leased by it as tenant for the full term of
the lease thereof to the extent provided in such Real Property Lease, except to
the extent same would not have a Material Adverse Effect.
4.11 Legal Proceedings. Other than as reflected on Schedule
4.11, there are no disputes, claims, actions, suits or proceedings, arbitrations
or investigations, either administrative or judicial, pending, or, to the
knowledge of Sellers and IHS, threatened or contemplated, against or affecting
any Seller or any of the Assets or such Seller's or IHS' rights therein or the
conduct or operation of the Business or the transactions contemplated by this
Agreement, at law or in equity or otherwise, before or by any court or
governmental agency or body, in any case, which would have a Material Adverse
Effect.
4.12 Collective Bargaining, Labor Contracts, Employment
Practices, etc. No employees of the Business (the "Employees") are represented
by any labor union or similar organization except as set forth on Schedule 4.12,
there are no pending or to the knowledge of IHS and each Seller, threatened
activities the purpose of which is to achieve such representation of all or some
of such Employees. To the knowledge of Sellers, except as set forth in Schedule
4.12, (a) the Business is operating and has been operated in compliance in all
respects with all Government Requirements covering employment and employment
practices, terms and conditions of employment and wages and hours, including the
Immigration Reform and Control Act, the Worker Adjustment and Retraining
Notification Act of 1988 (the "WARN Act"), any such Government Requirements
respecting employment discrimination, equal opportunity, affirmative action,
employee privacy, wrongful or unlawful termination, workers' compensation,
occupational safety and health requirements, labor/management relations and
unemployment insurance, or related matters and there are no threatened or
pending claims relating thereto, in each case, except to the extent such
noncompliance or claims would not have a Material Adverse Effect, (b) there is
no labor strike, dispute, slowdown or stoppage pending or threatened against or
affecting the Business, and Sellers have not experienced any work stoppage or
other labor difficulty affecting the Business in the last year which would have
a Material Adverse Effect, and (c) in the event of termination of the employment
of any Employee (other than any Employee referred to on Schedule 4.6(a)(i)-A),
Buyer will not, pursuant to any agreement with any Seller or IHS or by reason of
any representation made or plan adopted by any Seller or IHS prior to the
Closing, be liable to any Employee for so-called "severance pay", parachute
payments or any other similar payments or benefits, including, without
limitation, post-employment healthcare (other than pursuant to COBRA) or
insurance benefits, except as shall be included in the Assumed Liabilities.
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4.13 ERISA.
(a) No Seller nor IHS maintains, or makes
contributions to, and no Seller nor IHS has at any time in the past two years
maintained or made contributions to, any employee benefit plan which is subject
to the minimum funding standards of Employee Retirement Income Security Act of
1974, as amended ("ERISA") or subject to the terms of the Multi- employer
Pension Plan Amendment Act of 1980.
(b) Except for the Employment Agreements,
Schedule 4.13(b) sets forth each severance agreement, and each plan, agreement,
arrangement or plan, bonus plan, deferred compensation agreement, employee
pension, profit sharing, savings or retirement plan, group life, health, or
accident insurance or other employee benefit plan, agreement, arrangement or
commitment, including, without limitation, any commitment arising under
severance, holiday, vacation, Christmas or other bonus plans (including, but not
limited to, "employee benefit plans", as defined in Section 3(3) of ERISA
maintained by Seller or IHS for any Employees or with respect to which Sellers
or IHS have liability with respect to any Employees, or make or have an
obligation to make contributions on behalf of Employees ("Plans"). Each Plan
that covers only Employees has been identified as such on Schedule 4.13(b).
(c) The IHS Retirement Savings Plan has received
a favorable determination letter from the Internal Revenue Service and nothing
has occurred to adversely affect such qualification.
(d) Schedule 4.13(d) identifies all Employees on
leave of absence eligible to receive health benefits, as required by the
continuation health care coverage provisions of Section 4980B of the Code or
Section 601 through 608 of ERISA ("COBRA"). Notice of the availability of COBRA
coverage has been provided to all Employees on leave of absence entitled
thereto, and all persons electing such coverage are being (or have been, if
applicable) provided such coverage.
4.14 Insurance and Surety Agreements. Schedule 4.14 sets forth
a true and complete list of policies of fire, liability, property, workers'
compensation and other forms of insurance held or owned by any Seller or IHS or
otherwise in force and providing coverage for the Business or any of the
property covered by the Real Property Leases or Assets. The insurance policies
listed on Schedule 4.14 are in full force and effect, (i) all premiums due on or
before the Closing Date have been or will be paid on or before the Closing Date,
(ii) are carried by insurers of recognized responsibility, (iii) are sufficient
for compliance in all material respects with all requirements of applicable law,
and (iv) insure the Business and the Assets against the types of liabilities,
claims and risks against which similarly situated businesses in Seller's
industry customarily insure. Each Seller and IHS is in compliance in all
material respects with the provisions of such policies and, no Seller nor IHS
has been advised by any of its insurance carriers of an intention to terminate
or modify any such policies.
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4.15 Assets Comprising the Business. The Assets represent all
of the real and personal property, licenses, intellectual property, permits and
authorizations, contracts, leases and other agreements that are necessary to the
operation of the Business as now operated, except for the Excluded Assets.
Except as set forth on Schedule 4.15 or except for Excluded Assets, IHS (as
opposed to Sellers) does not own any personal property, licenses, intellectual
property, permits or authorizations, and has not entered into any contracts,
leases or other agreements that are necessary to the operation of the Business
as now operated, except as otherwise expressly set forth in this Agreement. The
quantities of inventory items included in the Assets are reasonable in light of
the present and anticipated volume of the Business and the inventory is good,
usable, merchantable, and saleable in the ordinary course of Business, in each
case, as determined by Sellers in good faith and consistent with past practice.
The accounts receivable of Sellers are reflected properly on their books and
records in accordance with GAAP and have been billed or invoiced in the ordinary
course of business consistent with past practice
4.16 Absence of Certain Events. Except as set forth on
Schedule 4.16 or as contemplated or permitted by this Agreement or as reflected
in the 12/31/95 Financial Statements (including the notes thereto) or the
Interim Financial Statements (the "Financial Statements"), since December 31,
1995:
(a) there has been no acquisition, sale,
transfer, or other disposition (including any dividend, distribution, or
extraordinary disbursement or expenditure) of any material properties or assets
owned by Sellers (individually or in the aggregate) or used in the Business as
conducted during the period prior to the Balance Sheet Date, except for the
acquisition, sale, expenditure, transfer, or other disposition of inventory,
cash, or other property or assets in the ordinary course of business and
consistent with past practice, including funding to and from IHS and its direct
or indirect subsidiaries;
(b) there has been no change in any Seller's
accounting methods or practices (including any change in depreciation or
amortization policies or rates), except as required by GAAP;
(c) the Business has been conducted in the
ordinary course consistent with past practice;
(d) Sellers and IHS have not mortgaged, pledged,
encumbered or subjected any of the Assets to any Lien other than Permitted
Liens;
(e) except in the ordinary course of business
consistent with past practice, or otherwise to comply with any applicable
minimum wage law, there has not been any increase in the salaries or other
compensation now or hereafter payable to any Employees, or increase in, or any
additions to, other benefits to which any of such Employees may be entitled,
including, without limitation, bonus, incentive compensation or service awards
or other like benefit;
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(f) there has not been any settlement or
agreement to settle any litigation, action or proceeding before any court or
governmental body relating to any Seller or their property and no Seller has
received any threat thereof which, in any case, would have a Material Adverse
Effect;
(g) there has been no cancellation, termination,
or express waiver of any contract, agreement, lease (including real property
leases), or other instrument, or any rights or claims thereunder, relating to
the Business other than such cancellations, or terminations, as would not have a
Material Adverse Effect when aggregated with new contracts, agreements or
instruments relating to the Business;
(h) there has not been any loss of service of
any Employee that would have a Material Adverse Effect;
(i) there has not been any material
extraordinary item of loss, or incurrence of any material extraordinary
obligation or liability;
(j) there has not been any other event,
circumstance or set of facts which is not covered by the representations and
warranties set forth in subsections (a) through (i) above and which has had or
would have a Material Adverse Effect; and
(k) there has not been any agreement,
arrangement or understanding to do any of the foregoing.
4.17 Compliance with Laws. Sellers and, to the extent related
to the Business, IHS, each licensed Employee are, in compliance with all
applicable statutes, laws, ordinances, rules, orders and regulations of any
Governmental Authority (including without limitation, Environmental Laws (as
such term is hereinafter defined in Section 4.22) and Section 1320a-7b and
Section 1395nn of Title 42 of the United States Code or the regulations
promulgated thereunder, or related state or local statutes or regulations),
applicable to the Business, except where noncompliance would not have a Material
Adverse Effect. Except as set forth in Schedule 4.17, during the two-year period
ending on the date hereof, neither Sellers nor IHS has, received any written
notice or other written communication from a Governmental Authority that alleges
that the Business or any of the Assets is not in compliance with any Federal,
state, local or foreign statute, law, ordinance, rule, order or regulations
(including without limitation, Environmental Laws), which noncompliance would
have a Material Adverse Effect. To the knowledge of Sellers, Sellers have
maintained all records required to be maintained by the FDA, DEA and State
Boards of Pharmacy and the Medicare and Medicaid programs as required so as not
to have a Material Adverse Effect and Sellers have no knowledge of any presently
existing circumstances which are likely to result in violations of any such
regulations which would have a Material Adverse Effect. Neither Sellers or, to
the extent related to the Business, IHS or nor any officer, director, employee,
agent, or other representative of Sellers or, to the extent related to the
Business, IHS or any person acting on behalf of Sellers has made, directly, or
indirectly, any
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illegal bribes, kickbacks, or political contributions with corporate funds,
illegal payments from corporate funds to governmental officials in their
individual capacities, or illegal payments from corporate funds to obtain or
retain business either within the United States or abroad which would have a
Material Adverse Effect.
4.18 Medicare and Medicaid Programs. Sellers, to the extent
necessary to conduct the Business in a manner consistent with past practice, are
qualified for participation in the Medicare and Medicaid programs except to the
extent same would not have a Material Adverse Effect. Except as reflected on
Schedule 4.18 or the Financial Statements, (a) no Seller or IHS has received any
notice of recoupment with respect to the Business from the Medicaid programs, or
any other third party reimbursement source (b) there is no basis for the
assertion after the Closing Date of any such recoupment claim against Buyer
which arose out of any transactions on the part of Sellers prior to the Closing
or against any Seller for which Buyer will be liable except as reflected in the
Financial Statements, and (c) to the knowledge of Sellers and IHS, no Medicare
or Medicaid investigation, survey or audit is pending, threatened or imminent
with respect to the operation of the Business prior to the Closing.
4.19 Encumbrances Created by this Agreement. Neither the
execution and delivery of this Agreement by Sellers or IHS nor the execution and
delivery of any of the Seller Transaction Documents creates, and the
consummation of the transactions contemplated hereby or thereby will not create,
any Liens on any of the Assets in favor of third parties.
4.20 Finders. No broker or finder has acted for any Seller or
IHS in connection with the transactions contemplated by this Agreement and no
broker or finder is entitled to any broker's or finder's fee or other commission
in respect thereof based in any way on agreements, understandings or
arrangements with any Seller or IHS.
4.21 Patents, Trademarks, Trade Names, Trade Secrets and
Copyrights. Schedule 4.21 contains a complete and accurate list of all United
States and foreign patents and patent applications, trademarks, service marks
(registered or as to which registration has been applied for), registered trade
names, and registered copyrights including, without limitation, proprietary
computer software, owned in whole or in part by any Seller or used by any Seller
in the Business and that, in each case, is material to the Business of the
Sellers as currently conducted ("Protected Material"). There has been no
infringement or misappropriation, actual or claimed, by the Sellers of any
Protected Material or trade secrets owned by others, or other adverse claim
(including judicial or adversary proceedings) against Sellers with respect to
their usage of Protected Material or trade secrets owned by others or, to the
knowledge of Sellers and IHS, by others of any Protected Material owned by or
licensed to the Sellers or IHS, which would have a Material Adverse Effect.
Except as set forth in Schedule 4.21, none of the Sellers or IHS is in default
under any agreement pursuant to which it is licensing Protected Material of a
third party or granting licenses to its own Protected Material, except for such
defaults which would not have a Material Adverse Effect.
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4.22 Environmental Matters. To the knowledge of Sellers,
Sellers are in compliance in all respects with all environmental and related
Governmental Requirements applicable to Sellers, the Business, the Assets and
the real property covered by the Real Property Leases, including, but not
limited to, the Resource Conservation and Recovery Act of 1976, as amended, the
Comprehensive Environmental Response Compensation and Liability Act of 1980, as
amended, the Federal Water Pollution Control Act, as amended by the Clean Water
Act, and subsequent amendments, the Federal Toxic Substances Control Act, as
amended, and the Clean Air Act, as amended, with respect to environmental
matters, public or workplace health or safety, or hazardous, toxic or infectious
wastes, materials or substances (including medical wastes) or petroleum
products, materials or wastes or radioactive substances or wastes (collectively
"Environmental Laws"), except to the extent noncompliance would not have a
Material Adverse Effect. The foregoing representation and warranty applies to
the operation of the Business and the use of the Assets including, but not
limited to, the use, handling, treatment, storage, transportation and disposal
of any hazardous, toxic or infectious waste, material or substance (including
medical waste) or petroleum products, material or waste or radioactive
substances or waste whether performed on any of the properties covered by the
Real Property Leases or at any other location. To the knowledge of Sellers and
IHS, no investigation or review is pending or threatened by any Governmental
Authority or other party with respect to any alleged violation by Sellers or the
Business of any Environmental Law, the need for any work, repairs, or demolition
by any Seller, on or in connection with any property in order to comply with any
Environmental Law, or any actual or threatened release (including, but not
limited to, any spill, discharge, leak, emission, ejection, escape or dumping)
or inadequate storage of, or contamination caused by, any hazardous, toxic or
infectious waste, material or substance (including medical waste) or petroleum
product, material or waste or radioactive substance or waste, or any such
constituent which would have a Material Adverse Effect.
4.23 Tax Returns.
(a) Except as set forth in Schedule 4.23(a), (i)
all Tax (as defined below) returns, statements, reports and forms or extensions
with respect thereto required to be filed with any Governmental Authority on or
before the Closing Date by or on behalf of any Seller (collectively, the "Tax
Returns"), have been or will be timely filed on or before the Closing Date in
accordance in all material respects with all applicable Governmental
Requirements; and (ii) each Seller has timely paid all Taxes payable by it.
(b) For purposes of this Agreement, "Tax" means
any net income, gross income, sales, use, franchise, personal, or real property
tax.
4.24 Employees. Attached hereto as Schedule 4.24 is the most
recent payroll of the Sellers, indicating the names and compensation of their
employees. All of such information is materially correct as of such date. To the
knowledge of Sellers, none of the Employees, while in the employ of any of the
Sellers, has ever had his or her professional license or certification denied,
suspended, revoked, terminated, or voluntarily relinquished under threat of
disciplinary
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action, or has ever been restricted in any way from performing the duties he or
she is to provide for the Sellers, and there is no proceeding pending, or
threatened, pursuant to which any of the foregoing may occur.
4.25 No Untrue Statement. None of the representations and
warranties in this Article IV contains any untrue statement of material fact or
omits to state a material fact necessary, in light of the circumstance under
which it was made, in order to make any such representation not misleading in
any material respect.
4.26 Related Transactions. Except for transfers of cash
pursuant to IHS's customary corporate treasury and cash management functions, no
transaction has been consummated or committed to between any Sellers or between
any Seller and IHS on other than fair market or arms length terms.
4.27 Restricted Stock. All shares of Buyer Stock to be issued
hereunder will be newly issued shares of Buyer. Each of the Sellers, by its
acceptance of the Buyer Stock issuable hereunder, represents and warrants to
Buyer that the Buyer Stock being issued hereunder is being acquired, and will be
acquired, by such holder for investment for its own account and not with a view
to or for sale in connection with any distribution thereof within the meaning of
the Securities Act or the applicable state securities law; such holder
acknowledges that the Buyer Stock constitutes restricted securities under Rule
144 promulgated by the Commission pursuant to the Securities Act, may have to be
held indefinitely and may not be sold, transferred, assigned, pledged or
otherwise disposed of except pursuant to an effective registration statement or
an exemption from registration under the Securities Act and the rules and
regulations thereunder. Each Seller has the knowledge and experience in
financial and business matters, is capable of evaluating the merits and risks of
the investment, and is able to bear the economic risk of such investment. Each
Seller has been provided with such materials as are generally provided to
shareholders of the Buyer and has had the opportunity to make inquiries of and
obtain from representatives and employees of the Buyer such other information
about the Buyer as they deem necessary in connection with such investment.
ARTICLE V: REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to IHS and the Sellers as
follows:
5.1 Organization and Standing. Buyer has been duly
incorporated and is validly existing and is in good standing under the laws of
the State of Delaware.
5.2 Power and Authority. Buyer has full corporate power
and authority to own, lease and operate its assets, properties and business and
to carry on its business as it is now being conducted. Buyer has the corporate
power and authority to make, execute and deliver this Agreement including all
Schedules and Exhibits hereto, and all of the instruments and agreements
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required to be delivered by it to IHS or any Seller at the Closing,
(collectively the "Buyer Transaction Documents"), and to perform and consummate
all of the transactions contemplated hereby and thereby. Buyer has delivered to
IHS, (i) its Certificate of Incorporation, (ii) its Bylaws, and (iii)
resolutions of its Board of Directors, and, if applicable, shareholders
authorizing the transactions contemplated by this Agreement, certified as true
and correct by the corporate secretary of Buyer.
5.3 Binding Agreement. This Agreement has been duly executed
and delivered by Buyer. This Agreement is, and when executed and delivered by
Buyer at the Closing, each of the Buyer Transaction Documents executed by Buyer
will be, the legal, valid and binding obligations of Buyer enforceable against
Buyer in accordance with their respective terms, except (a) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of
general application affecting enforcement of creditors' rights, and (b) as
limited by the application of legal principles affecting the availability of
specific performance, injunctive relief, and other equitable remedies.
5.4 Absence of Conflicting Agreements. Neither the execution
or delivery of this Agreement or of any of the Buyer Transaction Documents by
Buyer nor the performance by Buyer of the transactions contemplated hereby and
thereby, conflicts with, or constitutes a breach of or a default under (a) the
Articles of Incorporation or By-Laws of Buyer; or (b) any resolution adopted by
the Board of Directors or shareholders of Buyer; or (c) any judgment, order,
writ, injunction, or decree of any court applicable to Buyer; or (c) any
Governmental Requirement applicable to Buyer; or (d) any agreement, indenture,
contract or instrument to which Buyer is now a party or by which it or any of
its assets are bound and except as would not have a Material Adverse Effect.
5.5 Consents. Except as reflected in Schedule 5.5 or which the
failure to obtain would not have a Material Adverse Effect, no authorization,
consent, approval, license, exemption by filing or registration with any
Governmental Authority, is necessary in connection with the entry into,
execution, delivery and performance of this Agreement or any of the Buyer
Transaction Documents by Buyer, or for the consummation by Buyer of the
transactions contemplated hereby and thereby.
5.6 Finders. No broker or finder has acted for Buyer in
connection with the transactions contemplated by this Agreement, and no broker
or finder is entitled to any broker's or finder's fee or other commission in
respect thereof based in any way on agreements, understandings or arrangements
with Buyer.
ARTICLE VI: INFORMATION AND RECORDS CONCERNING THE SELLERS
----------------------------------------------------------
6.1 Access to Information and Records before Closing. Prior to
the Closing Date, Buyer may make, or cause to be made, such investigation of
Sellers' financial and legal condition as Buyer deems necessary or advisable to
familiarize itself with Sellers and/or matters relating to their history or
operation. Upon reasonable prior notice, each Seller and IHS shall
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permit Buyer and its authorized representatives (including legal counsel and
accountants), to have full access to such Seller's books and records during
normal business hours, and each Seller and IHS will furnish, or cause to be
furnished, to Buyer such financial and operating data and other information and
copies of documents with respect to such Seller's products, services, operations
and assets as Buyer shall from time to time reasonably request and as shall be
in the possession or control of IHS or such Seller or which IHS or such Seller
shall have the ability to obtain with reasonable efforts.
ARTICLE VII: OBLIGATIONS OF THE PARTIES UNTIL CLOSING
-----------------------------------------------------
7.1 Conduct of Business Pending Closing. Between the date of
this Agreement and the Closing, IHS shall cause Sellers and Sellers shall
conduct the Business diligently and in the ordinary course consistent with past
practice.
7.2 Negative Covenants of Sellers. Without the prior
written approval of Buyer, which approval shall not be unreasonably withheld,
delayed or conditioned, no Seller shall and, to the extent relating to any
Assets or any portion of the Business, IHS shall not, except as otherwise
contemplated or permitted by this Agreement between the date hereof and the
Closing:
(a) cause or permit (to the extent within the
control of the applicable Seller or IHS) to occur any of the events or
occurrences described in Section 4.16 (Absence of Certain Events) of this
Agreement;
(b) take any action that would prevent Sellers
or IHS from consummating the transactions contemplated by this Agreement;
(c) cancel any material debts or claims due to
it, except in the ordinary course of business or as would not have a Material
Adverse Effect;
(d) fail to comply with any laws, ordinances,
regulations or other governmental restrictions applicable in any respect to the
Business or any of the Assets which would have a Material Adverse Effect;
(e) except as shall be within the ordinary
course of the Business consistent with prior practice, enter into any contract,
lease, order, commitment or other obligation in any one case requiring payments
or expenditures in excess of $50,000 that would constitute an Asset;
(f) except as shall be within the ordinary
course of the Business consistent with prior practice, and except for transfers
of cash pursuant to IHS's customary corporate treasury and cash management
functions, create, incur, guarantee, assume, or otherwise become liable or
obligated with respect to any indebtedness, nor make any loan or advance to, or
any investment in, any person or entity, nor create any lien, security interest,
mortgage, right or encumbrance in any of the Assets.
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(g) enter into any agreement, arrangement or
commitment to do any of the things described in any of (a) through (d) above.
7.3 Affirmative Covenants of Sellers. Between the date
hereof and the Closing, each Seller and to the extent relating to any Assets or
any portion of the Business, IHS, shall:
(a) maintain the Assets in substantially the
state of repair, order and condition as on the date hereof, reasonable wear and
tear or loss by insured casualty excepted, except to the extent same would not
have a Material Adverse Effect;
(b) maintain in full force and effect all
Licenses; and shall use its commercially reasonable efforts to perform in all
material respects all of its obligations under the Contracts and Licenses as
such obligations come due;
(c) maintain in full force and effect the
insurance policies and binders currently in effect with respect to Sellers, or
replacements thereof;
(d) use its commercially reasonable efforts: to
preserve intact their present business operations and organization; to keep
available the services of their present employees and agents; and maintain their
relations and good will with patients, suppliers, vendors, employees, and any
others having business relating to the Business; and
(e) provide Buyer with an affidavit, stating,
under penalty of perjury, its United States taxpayer identification number and
that it is not a foreign person, pursuant to Section 1445(b)(2) of the Code.
7.4 Pursuit of Consents and Approvals. Promptly upon execution
of this Agreement, Buyer shall use commercially reasonable efforts to obtain, at
its own cost and expense, all approvals and consents of Governmental Authorities
to the transfer of all transferable Licenses to Buyer and consents of any third
parties to the assignment of the Employment Agreements to Buyer. Sellers shall
fully cooperate with Buyer in respect thereof. The parties agree that Buyer
shall not be required to obtain consent or approval for the transfer of any
Medicare provider numbers prior to Closing. Buyer agrees to obtain, as soon as
possible, all licenses, permits and approvals required by applicable
Governmental Requirements to purchase and resell all of the controlled
substances and dangerous drugs constituting Assets.
7.5 Supplementary Financial Information. Within twenty-five
(25) days after the end of each calendar month between the date of this
Agreement and the Closing Date, Symphony Pharmacy shall provide to Buyer
unaudited financial statements (including at the minimum income statement and
balance sheet) for such month then ended that shall present fairly the
consolidated results of the operations of Symphony Pharmacy and the other
Sellers at such date and for the period covered thereby, all in accordance with
GAAP applied on a basis consistent with prior periods, in each case, certified
as true and correct in all material respects by the chief financial officer of
Symphony Pharmacy.
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7.6 H-S-R Act. Buyer and Sellers shall, on the date hereof,
make their respective filings under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976 (the "H-S-R Act") with respect to the transactions contemplated by
this Agreement, and thereafter shall make any other required submissions in
connection therewith. Each party shall use its best efforts to obtain early
termination of the waiting period under the H-S-R for the transactions
contemplated by this Agreement. Each party represents and warrants to the other
that it has no reason to believe that such early termination will not be
granted.
7.7 Excluded Services. Notwithstanding anything to the
contrary contained in this Agreement, Sellers and IHS shall be entitled to amend
any provider agreements which constitute Contracts to the extent necessary to
exclude therefrom any Excluded Services.
7.8 Nondisclosure of Confidential Information. Sellers
and IHS agree not to divulge, communicate, use to the material detriment of the
Business, or misuse in any way, any Protected Material or trade secrets included
in the Assets; provided, however, that the foregoing obligations do not apply to
the extent that (a) any such disclosure is in the public domain (other than as a
result of a disclosure by Sellers, IHS, or any agent or employee thereof in
violation of this Section 7.8), or (b) any disclosure is necessary in connection
with compliance with applicable law and in such event, to the extent practicable
and permitted, after consultation with Buyer after any such disclosure.
7.9 Employment Agreement with David Graft. IHS will grant
its consent to permit David Graft to take a leave of absence under his
employment agreement with IHS so as to enable Mr. Graft to perform, at Buyer's
option and expense, full-time services for Buyer for a period of up to six (6)
months following the Closing Date, with a further option on the part of Buyer to
extend such services for an additional six (6) months.
7.10 Exclusivity.
(a) Until the earlier of Closing or the
termination of this Agreement, neither IHS nor any Seller, nor any of their
respective affiliates, shall solicit, entertain, or engage in any discussions or
negotiations directly or indirectly with any other party in respect of the sale
of the Assets, or in respect of any merger, consolidation, or other
reorganization of any or all of Sellers.
(b) Until the earlier of Closing or the
termination of this Agreement, neither Buyer, nor any of its affiliates, shall
engage in any discussions or negotiations directly or indirectly with any other
party for the purpose of obtaining such party's consent to the assignment of any
of the Contracts.
7.11 Notice of Breach. Sellers will provide prompt notice
to Buyer of any event of which Seller or IHS becomes aware and which causes or,
with the passage of time would reasonably be expected to cause, any
representation and warranty of Sellers or IHS hereunder to be breached in any
material respect.
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ARTICLE VIII: CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER
----------------------------------------------------------
The obligations of Buyer to consummate the transactions
contemplated by this Agreement to occur at the Closing are subject to the
fulfillment, prior to or at the Closing, of each of the following conditions,
any one or more of which may be waived in whole or in part by Buyer in writing.
Upon failure of any of the following conditions, Buyer may terminate this
Agreement prior to Closing pursuant to and in accordance with Article XI herein.
8.1 Representations and Warranties. The representations and
warranties of Sellers and IHS made under this Agreement and under each Seller
Transaction Document shall be true and correct in all material respects (except
those representations and warranties that are qualified by materiality, which
shall be true and correct in all respects) at and as of the Closing Date, as
though such representations and warranties were made at and as of such time
except for changes permitted or contemplated by this Agreement.
8.2 Performance of Covenants. Sellers and IHS shall have
performed or complied in all material respects with their respective agreements
and covenants (except those agreements and covenants that are qualified by
materiality, which shall be performed and complied with in all respects)
required by this Agreement and the Seller Transaction Documents to be performed
or complied with by them, prior to or at the Closing.
8.3 Delivery of Closing Certificate. An officer of each Seller
and of IHS shall have executed and delivered to Buyer a certificate, dated the
Closing Date, upon which Buyer may rely, certifying that the conditions set
forth in Sections 8.1 and 8.2 have been satisfied.
8.4 Opinions of Counsel. Sellers and IHS shall have delivered
to Buyer or Buyer's lenders an opinion, dated the Closing Date, of its
applicable counsel, as to the matters covered by the representations and
warranties contained in Sections 4.1, 4.2, 4.3, 4.4(a), (b) and (c) and 4.11
hereof, provided that as to factual matters such counsel may rely on its actual
knowledge and the truth and accuracy of the representations and warranties made
by Sellers and IHS contained in this Agreement, the Seller Transaction
Documents, and certificates supplied to such counsel by the Sellers, IHS and
Governmental Authorities. Said opinion shall be addressed to and may be relied
upon only by Buyer and its lender.
8.5 Legal Matters. No suit, action, investigation, or legal or
administrative proceeding shall have been brought or shall have been threatened
that questions the validity or legality of this Agreement or the consummation of
the transactions contemplated by this Agreement, which in the determination of
Buyer, upon advice of counsel, is reasonably likely to result in damages to
Buyer in excess of $10,000,000, and no injunction or other order or decree of
any Government Authority shall be in effect which prohibits Buyer from
consummating the transactions contemplated by this Agreement; provided, however,
that if any such injunction shall be temporary, either party may elect to extend
the first date on which this Agreement may be terminated for failure to meet the
condition set forth in this Section 8.5 in accordance with Article
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XI hereof until a date which is forty-five (45) days following the date hereof.
Notwithstanding the foregoing, the conditions to Buyer's obligations set forth
in this Section 8.5 shall not be a basis for a termination by Buyer under
Section 11.1 if IHS shall have executed an agreement reasonably satisfactory to
Buyer holding Buyer harmless from and against any loss or liability arising out
of any of the matters described in this Section 8.5, it being understood that
any such indemnification will not be subject to any of the limitations described
in Section 10.2.
8.6 Authorization Documents. Buyer shall have received a
certificate of the Secretary or other authorized officer of Seller and of IHS
certifying a copy of resolutions of its Board of Directors authorizing the
execution and full performance of this Agreement and the Seller Transaction
Documents to which such Seller or IHS is a party and the incumbency of its
officers.
8.7 Material Adverse Effect. Since the date of this
Agreement there shall not have occurred any event or occurrence which would have
a Material Adverse Effect; provided, however, that, subject to the Purchase
Price adjustment provisions of Section 2.2, the termination of Contracts for the
provision of services and products of the Business shall not be deemed to have a
Material Adverse Effect.
8.8 Consents to Assignments of Employment Agreements.
Each employee under each Employment Agreement shall, to the extent required,
have consented to the assignment of the applicable Employment Agreement to
Buyer.
8.9 Bill of Sale and Assignment. Each Seller shall have
executed and delivered to Buyer a Bill of Sale (the "Bill of Sale") and an
Assignment of Contracts instrument (the "Assignment of Contracts") respectively
in the forms of Exhibits 8.9-1 and 8.9-2, and such other endorsements,
assignments, and other good and sufficient instruments of conveyance and
transfer (including, without limitation, assignments of any intellectual
properties), in form and substance reasonably satisfactory to Buyer and its
counsel, as are effective to vest in Buyer good and valid title in the Assets
free and clear of all Liens, except Permitted Liens.
8.10 Non-Competition Agreements. IHS, on behalf of itself
and all IHS Subsidiaries, shall have entered into a non-competition agreement
(the "Non-Competition Agreement") with Buyer, providing that none of IHS or the
IHS Subsidiaries (collectively, the "Bound Parties"), will, directly or
indirectly, for a period of five (5) years after the Closing, whether as an
owner, partner, shareholder, member, manager, consultant, agent or otherwise,
wholly or partially own or engage in the operation, management or conduct of any
business or enterprise that provides institutional pharmacy dispensing or
consulting services to long-term care facilities (which facilities include,
without limitation, skilled nursing facilities, nursing facilities and assisted
living facilities) and which is located within a one hundred fifty (150) mile
radius of either (i) any pharmacy included in the Assets or operated by Buyer or
(ii) any IHS LTC Facility; provided that no Bound Party would be prohibited
from: (a) providing dispensing services for
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intravenous products other than to IHS LTC Facilities, (b) providing Excluded
Services, or any other products currently sold or marketed by Greenline
Services, Inc., (c) providing pharmacy dispensing services to the home health
market or the physician practice market, or (d) acquiring and owning any
otherwise prohibited pharmacy dispensing services business as part of the
acquisition of a larger business if such pharmacy dispensing services business
does not constitute the principal component of the larger business and the
purchaser thereof agrees to use its reasonable commercial efforts to sell such
pharmacy dispensing services business as promptly as possible under the
circumstances. For purposes of this Agreement, "IHS Subsidiary" shall mean any
person or entity which on the date in question, directly or indirectly is
controlled by IHS; and, for such purposes, IHS shall be deemed to "control"
another entity if IHS is the "beneficial owner" (as that term is defined in Rule
13d-3 promulgated under the Securities Exchange Act of 1934, as amended) of
greater than twenty-five percent (25%) of any class of voting securities (or
other voting interests) of a controlled entity which is a publicly-traded
entity, or fifty-one percent (51%) of any privately-held entity, or IHS
possesses, directly or indirectly, the power to direct or cause the direction of
the management or policies of the controlled entity with respect to the matters
covered by the Non-Competition Agreement, whether through ownership of stock,
election of directors, by contract or otherwise. By way of clarification and not
of limitation, it is understood and agreed that the following are not deemed to
be IHS Subsidiaries for the purposes of this Section 8.10: Tutera Health Care
Management, L.P., Integrated Living Communities, Inc., Community Care of
America, Inc., and HPC America, Inc.
Such Non-Competition Agreement shall also provide that:
(A) (i) Buyer shall have the right to require that the fair
market value of any (or all) businesses or enterprises described in
subsection 8.10(d) above which are acquired by IHS or any IHS
Subsidiary (each a "Permitted Acquisition Business") be appraised, at
IHS's cost, by an appraisal firm of national standing, as selected by
IHS, and which does not have any material business relationship with
IHS or any IHS Subsidiary, and (ii) for a period of thirty (30) days
after the fair market value of any such Permitted Acquisition Business
has been so determined, Buyer may elect to purchase such Permitted
Acquisition Business for cash at such fair market value price by
delivery of written notice exercising such option. In the event Buyer
exercises such election, Buyer shall close such acquisition within
sixty (60) days after its exercise of its election. IHS and the IHS
Subsidiaries will make available to such appraiser and to Buyer, its
potential lender(s) and their respective professional advisors all
information requested by them with respect to any such Permitted
Acquisition Business;
(B) In the event that any court of competent jurisdiction
finds the restrictions set forth in the Non-Competition Agreement
unenforceable as applied to any act or condition in any specific
instance, but such act or condition would nonetheless be prohibited if
the Non-Competition Agreement were to impose a lesser time, geographic
or scope-of-business restriction, then, as applied to such act or
condition of such Bound Party, then the temporal, geographic and/or
scope of business limitations contained in the Non-Competition
Agreement shall automatically be modified to restrict only such acts
and conditions as such court may determine to be the maximum
enforceable under law; and
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(C) Such agreement shall be enforceable except as limited by
the application of legal principles affecting the availability of
specific performance, injunction and other equitable remedies.
8.11 Hart-Scott Rodino Act. All applicable waiting
periods under the H-S-R Act shall have expired or been terminated, and no action
shall have been taken or formal protest made by the United States Department of
Justice or the Federal Trade Commission or any other person or entity to
prohibit the transactions contemplated by this Agreement by reason of a claimed
violation of any antitrust laws. Without limiting the foregoing, no obligation
arising out of the H-S-R Act shall have been imposed on Buyer to divest any
material portion of its business by reason of the transactions contemplated by
this Agreement. The parties shall have until a date which is forty-five (45)
days following the date of this Agreement to satisfy the foregoing condition,
and if the foregoing condition shall not have been satisfied by such date,
either party may elect to terminate this Agreement for failure to satisfy the
condition set forth in this Section 8.11 in accordance with Article XI hereof.
8.12 Employment Agreements. Sellers shall have assigned
to Buyer the Employment Agreements with each of Ken Chen, Nancy Hoffman, Tracy
Muller, Martin R. Natter and Timothy Quarberg, and Sellers shall have obtained
any required consents and ratifications to effectuate such assignments.
8.13 Non-solicitation Agreements with Certain Persons. At
or prior to Closing, Robert N. Elkins, Taylor Pickett, and Scott Robertson shall
have agreed for a period of three years from the Closing Date not to solicit the
institutional pharmacy goods and services dispensing business from any long-term
care facility operated by IHS or any of the IHS Subsidiaries or from any
long-term care facility which is currently receiving such services from any
Seller; provided, however, that the foregoing shall not apply to any matter
which is excluded from coverage under the Non-competition Agreement, and further
provided that nothing contained in the foregoing shall be deemed to prohibit any
of such persons from owning any interest in, or being an employee of any
business which is so soliciting such services so long as the principal purpose
of such business is not the provision of such services and such person is not
actively involved with and does not provide any material assistance with respect
to the provision of such services or the solicitation of such business and does
not make use of any relationships which he has with any of such facilities in
connection with any such solicitation. The condition set forth above may be
satisfied by the agreement by IHS (x) to obtain from such executives an
agreement as provided above and (y) to enforce such agreement, in each case, at
the sole cost and expense of Buyer. Buyer shall indemnify and hold IHS and
Sellers harmless from any Loss arising out of any actions taken by IHS or any
Seller at the request of Buyer to enforce said agreement.
8.14 Documents. Sellers and IHS shall have furnished
Buyer with all other documents, certificates and other instruments required to
be furnished to Buyer pursuant to the terms hereof.
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ARTICLE IX: CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLERS
--------------------------------------------------------------
AND IHS
-------
The obligations of each Seller and IHS to consummate the
transactions contemplated hereby to occur at the Closing are subject to the
fulfillment, prior to or at the Closing, of each of the following conditions,
any one or more of which may be waived in whole or in part by Sellers or IHS in
writing. Upon failure of any of the following conditions, Sellers or IHS may
terminate this Agreement prior to Closing pursuant to and in accordance with
Article XI herein.
9.1 Representations and Warranties. The representations and
warranties of Buyer made under this Agreement and under each Buyer Transaction
Document shall be true and correct in all material respects (except those
representations and warranties that are qualified by materiality, which shall be
true and correct in all respects) at and as of the Closing Date, as though such
representations and warranties were made at and as of such time except for
changes permitted or contemplated by this Agreement.
9.2 Performance of Covenants. Buyer shall have performed or
complied in all material respects with its agreements and covenants (except
those agreements and covenants that are qualified by materially, which shall be
performed and complied with in all respects) required by this Agreement and each
Buyer Transaction Document to be performed or complied with by it prior to or at
the Closing.
9.3 Delivery of Closing Certificate. An authorized officer of
Buyer shall have executed and delivered to each Seller and IHS a certificate,
dated the Closing Date, upon which Sellers and IHS may rely, certifying that the
conditions set forth in Sections 9.1 and 9.2 have been satisfied.
9.4 Opinions of Counsel. Buyer shall have delivered to Sellers
and IHS an opinion, dated the Closing Date, of its counsel, as to the matters
covered by the representations and warranties contained in Sections 5.1, 5.2 and
5.3 hereof, provided that as to any factual matters such counsel may rely on its
actual knowledge and the truth and accuracy of the representations and
warranties made by Buyer contained in this Agreement, the Buyer Transaction
Documents and certificates supplied to such counsel by representatives of Buyer
and of Governmental Authorities. Said opinion shall be addressed to and may be
relied upon by each Seller and IHS.
9.5 Legal Matters. No suit, action, investigation, or legal or
administrative proceeding shall have been brought or shall have been threatened
that questions the validity or legality of this Agreement or the consummation of
the transactions contemplated by this Agreement, which in the determination of
IHS, upon advice of counsel, is reasonably likely to result in damages to IHS or
Sellers in excess of $10,000,000, and no injunction or other order or decree of
any Government Authority shall be in effect which prohibits IHS or any Seller
from
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consummating the transactions contemplated by this Agreement; provided, however,
that if any such injunction shall be temporary, either party may elect to extend
the first date on which this Agreement may be terminated for failure to satisfy
the condition set forth in this Section 9.5 in accordance with Article XI hereof
until a date which is forty-five (45) days following the date hereof.
9.6 Authorization Documents. Sellers and IHS shall have
received a certificate of the Secretary or other authorized officer of Buyer
certifying a copy of resolutions of its Board of Directors authorizing its
execution and full performance of this Agreement and the Buyer Transaction
Documents to which it is a party and the incumbency of its officers.
9.7 Undertaking. Buyer shall have executed and delivered to
the Sellers and IHS an undertaking in the form and substance of Exhibit 9.7
hereto (the "Undertaking").
9.8 Hart-Scott Rodino Act. All applicable waiting periods
under the H-S-R Act shall have expired or been terminated, and no action shall
have been taken or formal protest made by the United States Department of
Justice or the Federal Trade Commission or any other person or entity to
prohibit the transactions contemplated by this Agreement by reason of a claimed
violation of any antitrust laws. The parties shall have until a date which is
forty-five (45) days following the date of this Agreement to satisfy the
foregoing condition, and if the foregoing condition shall not have been
satisfied by such date, either party may elect to terminate this Agreement for
failure to satisfy the condition set forth in this Section 9.8 in accordance
with Article XI hereof.
9.9 Lender Consent. IHS shall have received the written
consent of its senior secured lenders to the transaction contemplated hereunder,
which consent IHS shall use commercially reasonable efforts to obtain.
9.10 Other Documents. Buyer shall have furnished Sellers
and IHS with all other documents, certificates and other instruments required to
be furnished to any of them by Buyer pursuant to the terms hereof.
ARTICLE X: OBLIGATIONS OF THE PARTIES AFTER CLOSING
---------------------------------------------------
10.1 Survival of Representations and Warranties. All
representations and warranties made by each party in this Agreement and in each
Schedule and Transaction Document shall survive the Closing Date and for a
period of one (1) year after the Closing notwithstanding any investigation at
any time made by or on behalf of the other party, provided that (i) the
representations and warranties contained in Section 4.18 (Medicare and Medicaid)
and Section 4.23 (Tax), shall survive until the applicable period of limitations
for audits by the applicable Governmental Authority shall have expired, and (ii)
the representations and warranties contained in Section 4.17 (Compliance with
Laws) shall survive for a period of eighteen (18) months after
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the Closing. All representations and warranties related to any claim asserted in
writing prior to the expiration of the applicable survival period shall survive
(but only with respect to such claim) until such claim shall be resolved and
payment in respect thereof, if any is owing, shall be made.
10.2 Indemnification.
(a) Sellers and IHS jointly and severally shall
indemnify and defend and hold harmless Buyer and its officers, directors,
employees, agents, representatives and affiliates against and with respect to
any and all damages, claims, losses, penalties, liabilities, actions, fines,
costs and expenses (including, without limitation, reasonable attorney's fees
and expenses) (all of the foregoing hereinafter collectively referred to as
"Loss"), regardless of whether an action has been filed or asserted against
Buyer after the Closing Date, arising from, in connection with or with respect
to the following items (i) (A) any misrepresentation or breach of warranty under
this Agreement or any Seller Transaction Document, or (B) any failure to fulfill
any agreement or covenant on the part of any Seller and/or IHS contained in
Article VII hereof or (ii) any failure to fulfill any agreement or covenant on
the part of any Seller and/or IHS (not covered by clause (i) above) under this
Agreement or; any Seller Transaction Document; (iii) any assertion or claim
against Buyer of any Excluded Liability; (iv) a determination that the sale of
the Assets hereunder is ineffective against any creditor of Sellers (other than
Assumed Liabilities) or any taxing authority or other entity asserting any
similar claim against Sellers; (v) any and all actions, suits, proceedings,
judgments, settlements (to the extent approved or entered into by IHS as
hereinafter provided), costs, penalties and legal and other expenses incident to
any of the foregoing.
(b) Buyer shall indemnify and defend and hold
harmless Sellers and IHS and their respective officers, directors, employees,
agents and affiliates against and with respect to any and all Losses regardless
of whether an action has been filed or asserted against Seller or IHS after the
Closing Date, arising from, in connection with or with respect to the following
items: (i) any misrepresentation, breach of any warranty, or failure to fulfill
any agreement or covenant on the part of Buyer under this Agreement or any Buyer
Transaction Document, (ii) any Loss arising out of the operation or ownership of
the Assets or the operation of the Business after the Closing Date or out of any
of the Assumed Liabilities, (iii) the use by Buyer of the names referred to in
Section 10.7 (provided that, without implying that any indemnification
obligations covered by this Section 10.2 include consequential damages, it is
expressly understood that Buyer shall not be required to indemnify IHS or any
Seller for consequential damages by reason of this clause (iii)), and (iv) any
and all actions, suits, proceedings, judgements, settlements (to the extent
approved or entered into by Buyer as hereinafter provided), costs, penalties and
legal and other expenses incident to any of the foregoing.
(c) Any claim for indemnification under this
Section 10.2 must be asserted by written notice by a date which is one (1) year
following the Closing Date, except that (i) any claim based upon a breach of the
representations and warranties contained in Section 4.18 (Medicare and Medicaid)
or Section 4.23 (Tax) may be asserted until the applicable period of limitations
for audits by the applicable Governmental Authority shall have expired, and (ii)
any
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claim based upon a breach of the representations and warranties contained in
Section 4.17 (Compliance with Laws) may be asserted until the date which is
eighteen (18) months following the Closing Date.
(d) At any time, the aggregate liability of
Sellers and IHS for indemnification under this Agreement and the Transaction
Documents shall not exceed (i) $55,000,000, less (ii) the aggregate amount that
previously shall have been paid to Buyer pursuant to the indemnification
provisions of this Agreement by IHS and Sellers.
(e) Notwithstanding anything to the contrary
contained in this Agreement, no Seller nor IHS shall be liable under the
indemnification provisions of this Section 10.2 or otherwise have any liability
for any misrepresentation or breach of warranty or covenant under this Agreement
or otherwise in connection with the transactions contemplated hereby to the
extent that the Loss constitutes an Assumed Liability.
(f) If any action or proceeding be commenced, or
if any claim, demand or assessment be asserted, in respect of which any party
("Indemnitee") proposes to hold any other party ("Indemnitor") liable under the
indemnity provisions of this Section 10.2 or otherwise under this Agreement or
in connection with the transactions contemplated hereby (a "Claim"), then if the
Indemnitor shall, at its option, acknowledge its indemnification obligation and
notify Indemnitee of its election to contest or defend any such Claim, such
Indemnitor shall be entitled, at its sole cost and expense, to contest or defend
the same with counsel of its own choosing, and Indemnitee shall not admit any
liability with respect thereto or settle, compromise, pay or discharge the same
without the prior written consent of the Indemnitor so long as any Indemnitor is
contesting or defending the same in good faith, and Indemnitee (and its
successors and assigns) shall cooperate with the Indemnitor in the contest or
defense thereof (and the Indemnitor shall reimburse Indemnitee for the
Indemnitee's reasonable actual out-of-pocket expenses incurred in connection
with such cooperation) and Indemnitee shall enter into any settlement with
respect thereto recommended by Indemnitor so long as the amount of such
settlement is paid by the Indemnitor and no obligation to perform or refrain
from performing any act shall be imposed upon Indemnitee by reason thereof and
such settlement otherwise is reasonable.
(i) Notwithstanding the foregoing, any
Indemnitee shall be entitled to conduct its own defense at the reasonable cost
and expense of the Indemnitor if it would materially prejudice the Indemnitee
due to the nature of any claims or counterclaims presented or by virtue of a
conflict between the interest of the Indemnitee and the Indemnitor, and provided
further that in any event the Indemnitee may participate in such defense at its
own expense. If Indemnitee shall have given Indemnitor at least thirty (30) days
prior written notice that it intends to assume the defense of any Claim and if
the Indemnitor fails to assume the defense of such Claim as provided above by
the end of such thirty (30) day period or such later reasonable time (which
shall be such period of time as will not result in prejudice to the rights of
the Indemnitee), then the Indemnitee
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shall have the right to prosecute and conduct its own defense by counsel of its
choice, and in connection therewith shall have full right to conduct the defense
thereof and to enter into any compromise or settlement thereof with the consent
of the Indemnitor (which shall not unreasonably be withheld, conditioned or
delayed). Such defense shall be at the cost and expense of the Indemnitor if it
is subsequently determined that the Indemnitor was obligated to defend or
indemnify the Indemnitee with respect to such action, proceeding, claim, demand
or assessment.
(ii) It is specifically understood and
agreed that in the event a misrepresentation or breach of warranty or covenant
is discovered by Buyer after the Closing, the remedy of Buyer shall be limited
to the indemnification as set forth in this Section 10.2, and Buyer shall not be
entitled to a rescission of this Agreement.
The obligation of each Indemnitor hereunder shall be without right of
set-off or hold-back in respect of any claim, counterclaim or cross claim such
Indemnitor may have or allege against any Indemnitee, whether under this
Agreement or otherwise, and such Indemnitor hereby waives any such right of
set-off or hold-back it may have or allege to have.
10.3 Restrictions.
(a) From and after the Closing Date, none of IHS
and Sellers shall disclose, to any person or entity, or make use of, without the
authorization of Buyer, any non-public pricing strategies or records of any
Seller, any proprietary data or trade secrets owned by any Seller and included
in the Assets or any financial or other information about any Seller; provided
that the foregoing restrictions shall not apply to any information which:
(i) is or becomes publicly known through
no negligent or wrongful act or omission on the part of Seller or IHS; or
(ii) is or becomes available to the
disclosing party on a non- confidential basis from a third party without a
similar restriction and without breach of this Agreement; or
(iii) is approved for release by Buyer; or
(iv) is required to be disclosed in
accordance with applicable law.
(b) No Solicitation of Employees. During the
period terminating on the second anniversary of the Closing Date, no Seller
shall and IHS shall not, directly or indirectly through any entity controlled
directly or indirectly by any of them, solicit for purposes of employment, any
Employee; provided, however, that the foregoing shall not apply to general
advertisements or other appeals seeking employees generally made to the public.
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(c) (i) Until the fifth anniversary of the
Closing Date, IHS shall take, and shall cause each IHS Subsidiary to take, all
actions which are reasonably necessary to maintain in full force and effect in
accordance with its terms each agreement between IHS or any IHS Subsidiary and
Buyer pursuant to which any institutional pharmacy goods or services are
dispensed by Buyer, and IHS shall not take, and shall not permit any IHS
Subsidiary to take, any action which is not in the ordinary course of business,
consistent with past practice, which would cause a modification, amendment or
termination of such agreement.
(ii) Without limitation of clause (i)
above, until the fifth anniversary of the Closing Date, IHS agrees that it will
not, and it will not permit any IHS Subsidiary to, enter into any new agreement
or arrangement with any provider of institutional pharmacy dispensing services
involving provision of such services pursuant to such new agreement or
arrangement to three or more long-term care facilities owned, managed or leased
by IHS and/or IHS Subsidiaries.
(d) IHS and each Seller acknowledge that the
restrictions contained in this Section 10.3 may be specifically enforced.
10.4 Delivery of Records. On the Closing Date, each Seller
shall deliver, cause to be delivered, or make available to Buyer all records and
files then in such Seller's possession relating to the operation of the
Business.
10.5 Access to Records. After the Closing, at reasonable times
and on reasonable notice, Sellers shall have access to the books and records
pertaining to their operations which were delivered to Buyer (and shall be
permitted to make copies of any portion thereof), and Buyer shall retain such
books and records for a period of six years after the Closing Date, except as
hereinafter provided. Buyer shall notify Sellers of its intention to dispose of
or destroy any of such books and records and, upon any Seller's request, shall
deliver such books and records to such Seller.
10.6 Employees.
(a) Buyer agrees to make offers of employment to
substantially all of the Employees. Any Employee on short term disability or
long term disability as set forth on Schedule 10.6-A shall be offered employment
by Buyer only when and to the extent that such Employee would have been entitled
to reemployment under Sellers' applicable written leave of absence or other
written employment policies relating to the Business. Buyer agrees to indemnify,
and on demand defend and hold IHS and Sellers harmless from and against and with
respect to any and all damage, loss, liability, deficiency, cost and expense
(including, without limitation, reasonable attorneys' fees and costs), arising
out of any failure to give any required notices to appropriate persons with
respect to employment issues that may arise following the sale contemplated by
this Agreement under the WARN Act and any other applicable similar state
notification laws of the States of New Jersey and Minnesota. Buyer's foregoing
indemnification obligations shall not apply to the extent that any notifications
are required by reason of actions taken by Sellers or IHS.
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(b) By no later than December 31, 1996, Buyer
agrees to make available health care benefits (comparable in coverage and rates
to that currently provided by Buyer to its own employees) to the Employees (who
become and remain employees of Buyer pursuant to subsection (a) above) pursuant
to COBRA. Seller shall provide a list bill of all Employee COBRA enrollees each
month and a statement of claims and fixed costs incurred by the fifteenth of the
next month. Until Buyer shall comply with its obligations under the first
sentence of this subsection (b), Buyer shall reimburse Sellers within five (5)
days of submission of an invoice to Buyer setting forth the amount due (which
invoices shall not be presented more frequently than monthly), for the greater
of (x) the COBRA equivalent premiums and (y) the actual fixed costs and claims
incurred after the Closing with respect to Employees and their qualified
beneficiaries.
(c) IHS and Sellers shall provide COBRA
coverage, to the extent elected, to any Employee and their respective qualified
beneficiaries if such person had a qualifying event occurring before or on the
Closing Date. On the Closing Date, Sellers shall provide each Employee and his
qualified beneficiaries a notice as described in Section 4980B of the Code
concerning his right to continuation coverage of IHS's or Sellers' group health
benefits and, to the extent elected, provide such coverage.
10.7 Temporary License. Symphony Pharmacy hereby grants a
non-exclusive royalty free license to Buyer to use the stock of stationery
included in the Assets and containing the names "Symphony" or any of the names
listed on Schedule 4.21 in connection with the operation of the Business during
the period commencing on the Closing Date and terminating 180 days thereafter.
10.8 Licensure Power of Attorney. At the request of Buyer,
Sellers shall execute such powers of attorney as Buyer may reasonably deem
necessary to allow Buyer to utilize any licenses or permits of any Seller which
are not transferable to Buyer for a period not to exceed that permitted by
applicable law without penalty, premium or the like, provided, as a condition
precedent to any Seller's execution of such instrument, Buyer shall also provide
Sellers with (a) appropriate covenants that (i) the Assets following Closing
shall be operated in accordance with all applicable laws, rules, regulations and
third party payor requirements in all material respects and that all goods and
services shall be provided in accordance with customary and accepted standards
of care and (ii) Buyer shall use its best efforts to obtain, as soon as
reasonably possible, new licenses, with release of Sellers from any liability
resulting from post-Closing operations, and (b) indemnification against all Loss
arising out of the grant of such powers of attorney and the use thereof in form
and substance reasonably acceptable to Sellers.
10.9 Billing and Collection Agreement. At the Closing, the
parties shall enter into a Billing and Collection Agreement in the form and
substance of Exhibit 10.9 hereto pursuant to which Buyer shall collect all of
the Non-Assignable Receivables on behalf of Sellers. Buyer shall not receive a
fee for such services.
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10.10 Financial Consolidation Software. IHS agrees to make its
financial consolidation software with respect to the Business available to
Buyer, at Buyer's sole cost and expense, until December 31, 1996.
10.11 Enforcement of Non-competes. IHS agrees to take any and
all actions necessary, including, without limitation, commencement of legal
proceedings, to enforce each of the non-competition agreements set forth on
Schedule 10.11 hereto upon the request of Buyer. Buyer shall indemnify and hold
IHS and Sellers harmless from any Loss arising out of taking any such actions.
10.12 Cooperation - Further Assistance. From time to time, as
and when reasonably requested by Buyer after the Closing, Sellers will execute
and deliver, or cause to be executed and delivered, all such documents,
instruments and consents and will use reasonable efforts to take all such other
action as may be reasonably necessary to carry out the intent and purposes of
this Agreement, and to vest in Buyer good title to, possession of and control of
all of the Assets. Notwithstanding the foregoing, Sellers shall not be obligated
to obtain any consents to assignments of any Contracts other than Employment
Agreements.
10.13 Introductions. Following the Closing, IHS, through one
or more of its senior executives, will provide Buyer with introductions to
representatives of Community Care of America, Inc., Tutera Health Care
Management, L.P., and Integrated Living Communities, Inc., for the purpose of
familiarizing such companies with the pharmacy services available from Buyer
after the Closing.
ARTICLE XI: TERMINATION
-----------------------
11.1 Termination. This Agreement may be terminated at any
time at or prior to the time of Closing by:
(a) Buyer, if any condition precedent to the
obligations of Buyer hereunder, including without limitation those conditions
set forth in Article VIII hereof, have not been satisfied by a date which is
thirty (30) days following the date of this Agreement, except as otherwise
provided in Section 8.5 or 8.11 hereof;
(b) IHS, if any condition precedent to the
obligations of any Seller or IHS hereunder, including without limitation those
conditions set forth in Article IX hereof, have not been satisfied by a date
which is thirty (30) days following the date of this Agreement, except as
otherwise provided in Section 9.5 or 9.8 hereof;
(c) as otherwise provided in this Agreement; or
(d) the mutual consent of Buyer and IHS.
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11.2 Effect of Termination. Subject to the provisions of 11.3,
below, if a party terminates this Agreement because one of its conditions
precedent has not been fulfilled, or if this Agreement is terminated by mutual
consent, this Agreement shall become null and void without any liability of any
party to the other; provided, however, that if such termination is by reason of
the breach by Sellers or IHS of any of their representations, warranties, or
obligations under this Agreement, Buyer shall be entitled to be indemnified for
any Loss incurred by it by reason thereof in accordance with Section 10.2 hereof
(and for such purposes such Section 10.2 shall survive the termination of this
Agreement).
11.3 Break-up Fee. In the event that this Agreement is
terminated pursuant to Section 11.1 for any reason other than (i) the failure of
any of the conditions to Buyer's obligations to close as set forth in Article
VIII, or the failure of any of the conditions to Seller's obligations to close
as set forth in Section 9.5, 9.8, and 9.9, then in such event, and provided that
Sellers are not then in breach of any of their obligations under this Agreement
in any material respect, the Buyer shall pay to Sellers, promptly upon demand by
Sellers, a cash break-up fee in the amount of $12,500,000, which amount the
Sellers agree to accept as full liquidated damages hereunder.
ARTICLE XII: MISCELLANEOUS
--------------------------
12.1 Costs and Expenses. Except as expressly otherwise
provided in this Agreement, each party hereto shall bear its own costs and
expenses in connection with this Agreement and the transactions contemplated
hereby. Buyer shall pay all sales, transfer, recording, and stamp taxes payable
in connection with any of the transactions contemplated by this Agreement. Buyer
shall pay the application fees in connection with the filings required under the
H-S-R Act.
12.2 Benefit and Assignment. This Agreement binds and inures
to the benefit of each party hereto and its successors and proper assigns. This
Agreement and the rights and obligations hereunder may not be assigned without
the consent of the remaining parties hereto. At the Closing, Buyer may designate
one or more wholly owned subsidiaries to which the Assets are to be assigned or
transferred hereunder, and Sellers may designate one or more wholly owned
subsidiaries of IHS to which the Buyer Stock is to be issued.
12.3 Effect and Construction of this Agreement. This Agreement
and the Exhibits, Schedules and the Transaction Documents embody the entire
agreement and understanding of the parties and supersede any and all prior
agreements, arrangements and understandings relating to matters provided for
herein. The captions used herein do not constitute part of this Agreement, are
for convenience only and shall not control or affect the meaning or construction
of the provisions of this Agreement. This Agreement may be executed in one or
more counterparts, and all such counterparts shall constitute one and the same
instrument.
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12.4 Notices. All notices and demands required or permitted
hereunder shall be in writing and shall be deemed to be properly given or made
when personally delivered to the party or parties entitled to receive the notice
or two (2) business days after being sent by certified or registered mail,
postage prepaid, or the on the next business day if sent for next day delivery
by a nationally recognized overnight courier, in either case, properly addressed
to the party or parties entitled to receive such notice at the address stated
below:
If to Buyer: Capstone Pharmacy Services, Inc.
2930 Washington Boulevard
Baltimore, MD 21230
Attention: Dirk Allison
With a copy to: Harwell Howard Hyne Gabbert & Manner, P.C.
1800 First American Center
315 Deaderick Street
Nashville, TN 37238
Attention: Mark Manner, Esq.
If to any Seller or IHS: Integrated Health Services, Inc.
10065 Red Run Boulevard
Owings Mills, MD 21117
Attn: Marshall A. Elkins, General Counsel
and
Integrated Health Services, Inc.
10065 Red Run Boulevard
Owings Mills, MD 21117
Attn: Brian Davidson, Executive Vice President
With a copy to: Blass & Driggs, Esqs.
461 Fifth Avenue, 19th Floor
New York, NY 10017
Attn: Michael S. Blass, Esq.
Such addresses may be changed by providing written notice as provided in this
Section 13.4.
12.5 Waiver, Discharge, Etc. This Agreement shall not be
released, discharged, abandoned, changed or modified in any manner, except by an
instrument in writing executed by IHS on behalf of itself and Sellers and by
Buyer. The failure of any party to enforce at any time any of the provisions of
this Agreement shall in no way be construed to be a waiver of any such
provision, nor in any way to affect the validity of this Agreement or any part
hereof or the right of any party thereafter to enforce each and every such
provision. No waiver of any breach of this Agreement shall be held to be a
waiver of any other or subsequent breach.
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<PAGE>
12.6 Rights of Persons Not Parties. Nothing contained in
this Agreement shall be deemed to create rights in persons not parties hereto,
other than the successors and proper assigns of the parties hereto.
12.7 Governing Law. This Agreement shall be governed by
and construed in accordance with the internal laws of the State of Delaware
applicable to contracts executed, delivered and to be fully performed in such
State, disregarding any contrary rules relating to the choice or conflict of
laws.
12.8 Public Announcements. Any general public
announcements or similar media publicity with respect to this Agreement or the
transactions contemplated herein shall be at such time and in such manner as IHS
and Buyer shall determine; provided that nothing herein shall prevent such
party, upon as much prior notice to, and opportunity to comment by, the other
party as shall be reasonably practicable under the circumstances, from making
such written announcements as such party's counsel may consider advisable in
order to satisfy the party's legal and contractual obligations in such regard.
[SIGNATURES ON THE FOLLOWING PAGE]
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<PAGE>
IN WITNESS WHEREOF, each of the parties hereto and in the
capacity indicated below has executed this Agreement as of the day and year
first above written.
CAPSTONE PHARMACY SERVICES, INC.
By: /s/Allan Silber
------------------------------------------
Its: Chairman and Chief Executive Officer
---------------------------------------
INTEGRATED HEALTH SERVICES, INC.
By: /s/Brian K. Davidson
----------------------------------------
Its: Executive Vice President
-------------------------------------
SYMPHONY PHARMACY SERVICES, INC.
By: /s/Brian K. Davidson
----------------------------------------
Its: Executive Vice President
--------------------------------------
PATIENT CARE PHARMACY, INC.
By: /s/Brian K. Davidson
-----------------------------------------
Its: Executive Vice President
--------------------------------------
AMCARE, INC.
By: /s/Brian K. Davidson
-----------------------------------------
Its: Executive Vice President
---------------------------------------
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<PAGE>
AMCARE SANTA BARBARA, INC.
By: /s/Brian K. Davidson
----------------------------------------
Its: Executive Vice President
---------------------------------------
AMCARE HEALTH SERVICES, INC.
By: /s/Brian K. Davidson
------------------------------------------
Its: Executive Vice President
----------------------------------------
PATIENT CARE PHARMACY-COLORADO SPRINGS, INC.
By: /s/Brian K. Davidson
-------------------------------------------
Its: Executive Vice President
----------------------------------------
PHARMACEUTICAL DOSE SERVICES, INC.
By: /s/Brian K. Davidson
--------------------------------------------
Its: Executive Vice President
------------------------------------------
HEALTHCARE PHARMACY SERVICES OF FLORIDA, INC.
By: /s/Brian K. Davidson
---------------------------------------------
Its: Executive Vice President
------------------------------------------
HEALTHCARE PHARMACY SERVICES OF PENNSYLVANIA, INC.
By: /s/Brian K. Davidson
---------------------------------------------
Its: Executive Vice President
--------------------------------------------
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HEALTHCARE PHARMACY SERVICES OF TEXAS, INC.
By: /s/Brian K. Davidson
----------------------------------------------
Its: Executive Vice President
SUNCOAST PHARMACY SERVICES, INC.
By: /s/Brian K. Davidson
---------------------------------------------
Its: Executive Vice President
SYMPHONY HEALTH SERVICES, INC.
By /s/Brian K. Davidson
---------------------------------------------
Its: Executive Vice President
--------------------------------------------
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<PAGE>
AMENDMENT NO. 1 TO
ASSET PURCHASE AGREEMENT
This Amendment No. 1 to the Asset Purchase Agreement by and between
IHS, Sellers and Buyer (each as defined therein), dated as of June 19, 1996 (the
"Purchase Agreement") is made this 30th day of July, 1996 by and between the
parties to the Purchase Agreement. All terms used but not defined herein shall
have the meaning given such terms in the Purchase Agreement.
WHEREAS, the parties hereto have previously entered into the Purchase
Agreement to sell Assets of the Sellers to Buyer;
WHEREAS, the parties desire to amend the Purchase Agreement to amend
the registration rights granted to IHS therein;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto intending to be legally bound, agree as
follows:
1. Existing Registration Rights.
-----------------------------
IHS has piggyback registration rights with respect to certain
registrations of Buyer common stock, which rights may apply to previously filed
registration statements ("Registration") of Buyer. IHS and Buyer desire to
reflect their agreement that the piggyback registration rights of IHS, to the
extent they exist, are waived with respect to the Registrations, in exchange for
the amendments reflected herein.
2. Amendment to Section 2.5(a)
---------------------------
The parties hereby amend Section 2.5(a) of the Purchase Agreement by
deleting it in its entirety and replacing it with the following:
(a) Initial Registration. Unless all of the Buyer Stock has been
registered pursuant to the terms of Section 2.5(b), as soon as is
reasonably practicable but in any event by December 31, 1996, Buyer
will cause to be prepared and filed with the Securities and Exchange
Commission (the "Commission") (and will thereafter use its best efforts
to have declared effective as soon as possible) an underwritten
registration statement of all of the Buyer Stock on Form S-3 or its
equivalent and such other documents, including a prospectus, as may be
necessary in the opinion of both counsel for Buyer and counsel for the
holders of the Buyer Stock in order to comply with the provisions of
the Securities Act of 1933, as amended (the "Securities Act"), so as to
permit an underwritten public offering and sale by IHS of all or a
portion of the Buyer Stock as elected by IHS. Buyer shall give IHS at
least 30 days notice prior to filing a registration statement. Buyer
shall be entitled to select the underwriter or underwriters for such
registration statement. In the event that IHS elects, in its sole
discretion, to delay or defer the process, or to sell less
<PAGE>
than all shares of Buyer Stock owned by IHS, IHS may at any time after
December 31, 1996 notify Buyer that it desires that the registration
process commence or recommence (as the case may be) as to all or any of
said shares, and thereupon Buyer shall commence or recommence (as the
case may be) such process promptly and shall file within 60 days of the
IHS notification (or prosecute the effectiveness of a registration
statement if one is on file for IHS) the registration statement and use
its best efforts to cause it to become effective as soon as possible.
IHS may require Buyer to, and Buyer shall, file up to a total of two
such underwritten registration statements during the two year period
following Closing under the Purchase Agreement.
2. Amendment to Section 2.5(b).
----------------------------
The parties hereby amend Section 2.5(b) of the Purchase Agreement by
deleting from the third line of such paragraph the words "on behalf of the Buyer
or otherwise" and inserting in its place the following:
"(i) on behalf of the holders of securities sold by Buyer in a private
placement in April 1996 (the "April Holders") pursuant to a demand
registration by such April Holders or (ii) any other filing"
and by further amending such section by inserting at the end of such paragraph
the following:
"(except as otherwise set forth in this section). Notwithstanding the
foregoing, in the case of a registration statement filed under item
(ii), to the extent any underwriter or underwriters for such
registration statement shall determine that inclusion of all of the
securities proposed to be sold would jeopardize the successful sale of
such securities, the shares of Buyer Stock shall be excluded from such
registration statement prior to the exclusion of the securities of the
April Holders." Buyer represents and warrants that there are no holders
of shares of its common stock with registration rights not previously
included in a registration statement, other than the April Holders and
Counsel Corporation. Counsel Corporation has agreed to not exercise its
registration rights in a manner which would adversely affect the
registration rights of IHS.
3. Amendment to Section 2.7(a).
----------------------------
The parties hereby amend Section 2.7(a) of the Purchase Agreement to
reflect that if the registration is an underwritten offering, Buyer shall be
required to maintain the effectiveness of an underwritten registration statement
only for a reasonable period of time.
4. Carve back agreement.
---------------------
In the event that the shares of Buyer Stock that IHS proposes to
register in a registration under Section 2.5 is carved back or reduced by an
underwriter or by the Buyer, IHS shall be entitled to a shelf registration on
Form S-3 in accordance with Section 2.5 (as if not amended) covering the number
of shares that were subject to the carve back.
<PAGE>
Intending to be legally bound, the parties have executed this amendment
as of the date first above written.
For IHS and the Sellers:
INTEGRATED HEALTH SERVICES, INC.
By: /s/ Brian K. Davidson
-------------------------------
Executive Vice President
For the Buyers:
CAPSTONE PHARMACY SERVICES, INC.
By: /s/ Allan Silber
-------------------------------
President
