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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
Date of Report (Date of earliest event reported):
September 3, 1998
PHARMERICA, INC.
(Exact name of Registrant as specified in its charter)
Delaware 0-20606 11-2310352
-------- ------- ----------
(State or other (Commission File (Employer
jurisdiction of Number) Identification
incorporation) Number)
3611 Queen Palm Drive, Tampa, Florida 33619
- --------------------------------------------------------------------------------
(Address of principal executive offices)
(800) 237-7676
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
N/A
- --------------------------------------------------------------------------------
(Former name or former address,
if changed since last report)
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ITEM 2. ACQUISITION OF ASSETS.
PharMerica, Inc. (the "Registrant") reports the following
acquisition to inform its security holders:
Pursuant to an Asset Purchase Agreement dated August 19, 1998, the
Registrant acquired an institutional pharmacy services business in the New
Mexico area, National Institutional Pharmaceutical Services Inc. ("NIPSI")
through arm's-length negotiations with the acquired company's shareholder,
Integrated Health Services, Inc ("IHS").
The purchase price was approximately $20,900,000, payable in cash. The
cash utilized in this acquisition was obtained from the Registrant's credit
facility with Chase Manhattan Bank.
Closing of the acquisition occurred August 19, 1998. The Registrant
intends to continue the acquired operations through a subsidiary.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) and (b) It is impracticable to provide the required financial
statements of the acquired businesses described in Item 2 and pro forma
financial information at this time. This information will be filed within 60
days.
(c) Exhibits. The exhibits filed as a part of this Report are listed in
the Index to Exhibits immediately following the signature page.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PHARMERICA, INC.
By: /s/ Thomas C. Hofmeister
--------------------------------
Thomas C. Hofmeister
Vice President and Corporate
Controller
Date: September 3, 1998
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EXHIBIT INDEX
EXHIBIT NO.
- -----------
2* Asset Purchase Agreement dated August 19, 1998 by and between
Registrant, NIPSI and IHS.
99 Press Release
* The exhibits to the Asset Purchase Agreement have been omitted but the
Registrant shall furnish supplementally a copy of any omitted exhibit to the
Commission upon request.
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Exhibit 2
ASSET PURCHASE AGREEMENT
DATED AS OF AUGUST 19, 1998
AMONG
INTEGRATED HEALTH SERVICES, INC.,
NATIONAL INSTITUTIONAL PHARMACY SERVICES, INC., AS SELLER,
AND
PHARMERICA, INC., AS BUYER
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TABLE OF CONTENTS
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ARTICLE I: PURCHASE AND SALE OF ASSETS; ASSUMPTION OF
CERTAIN LIABILITIES........................................................................... 1
1.1 Assets........................................................................ 1
1.2 Excluded Assets............................................................... 3
1.3 Assumed Liabilities........................................................... 5
1.4 Excluded Liabilities.......................................................... 5
1.5 Contracts..................................................................... 6
ARTICLE II: PURCHASE PRICE............................................................................ 6
2.1 Determination and Payment of Purchase Price................................... 6
2.2 Allocation of Purchase Price.................................................. 6
ARTICLE III: THE CLOSING.............................................................................. 7
3.1 Time and Place of Closing..................................................... 7
ARTICLE IV: REPRESENTATIONS AND WARRANTIES
OF SELLERS AND IHS............................................................................ 7
4.1 Organization and Standing..................................................... 7
4.2 Authority..................................................................... 8
4.3 Binding Effect................................................................ 8
4.4 Absence of Conflicting Agreements............................................. 8
4.5 Consents...................................................................... 9
4.6 Contracts..................................................................... 9
4.7 Financial Statements.......................................................... 10
4.8 Licenses; Permits; Certificates of Need....................................... 11
4.9 Title, Condition to Personal Property......................................... 11
4.10 Real Property................................................................. 12
4.11 Legal Proceedings............................................................. 13
4.12 Collective Bargaining, Labor Contracts, Employment
Practices, etc................................................................ 13
4.13 ERISA......................................................................... 14
4.14 Insurance and Surety Agreements............................................... 15
4.15 Assets Comprising the Business................................................ 15
4.16 Absence of Certain Events..................................................... 15
4.17 Compliance with Laws.......................................................... 17
4.18 Medicare and Medicaid Programs................................................ 18
4.19 Encumbrances Created by This Agreement........................................ 18
4.20 Finders....................................................................... 18
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4.21 Intellectual Property......................................................... 18
4.22 Environmental Matters......................................................... 19
4.23 Taxes......................................................................... 19
4.24 Employees..................................................................... 20
4.25 Disclosure.................................................................... 20
4.26 Related Transactions.......................................................... 20
ARTICLE V: REPRESENTATIONS AND WARRANTIES OF BUYER.................................................... 20
5.1 Organization and Standing..................................................... 20
5.2 Power and Authority........................................................... 20
5.3 Binding Agreement............................................................. 21
5.4 Absence of Conflicting Agreements............................................. 21
5.5 Consents...................................................................... 21
5.6 Finders....................................................................... 21
ARTICLE VI: INFORMATION AND RECORDS
CONCERNING THE SELLERS........................................................................ 22
6.1 Access to Information and Records before Closing.............................. 22
ARTICLE VII: OBLIGATIONS OF THE PARTIES
UNTIL CLOSING................................................................................. 22
7.1 Conduct of Business Pending Closing........................................... 22
7.2 Negative Covenants of Seller.................................................. 22
7.3 Affirmative Covenants of Seller............................................... 23
7.4 Pursuit of Consents and Approvals............................................. 24
7.5 Supplementary Financial Information........................................... 24
7.6 H-S-R Act..................................................................... 24
7.7 Nondisclosure of Confidential Information..................................... 24
7.8 Exclusivity................................................................... 24
7.9 Notice of Breach.............................................................. 25
ARTICLE VIII: CONDITIONS PRECEDENT TO OBLIGATIONS OF
BUYER......................................................................................... 25
8.1 Representations and Warranties................................................ 25
8.2 Performance of Covenants...................................................... 25
8.3 Delivery of Closing Certificate............................................... 25
8.4 Opinions of Counsel........................................................... 26
8.5 Legal Matters................................................................. 26
8.6 Authorization Documents....................................................... 26
8.7 Material Adverse Effect....................................................... 26
8.8 Bill of Sale and Assignment................................................... 26
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8.9 Non-Competition Agreements; Release........................................... 26
8.10 Hart-Scott-Rodino Act......................................................... 27
8.11 Documents..................................................................... 27
ARTICLE IX: CONDITIONS PRECEDENT TO THE OBLIGATIONS
OF SELLER AND IHS............................................................................. 27
9.1 Representations and Warranties................................................ 27
9.2 Performance of Covenants...................................................... 27
9.3 Delivery of Closing Certificate............................................... 28
9.4 Opinions of Counsel........................................................... 28
9.5 Legal Matters................................................................. 28
9.6 Authorization Documents....................................................... 28
9.7 Hart-Scott-Rodino Act......................................................... 28
9.8 Lender Consent................................................................ 28
9.9 Non-Competition Agreement; Release............................................ 28
9.10 Undertaking................................................................... 28
9.11 Other Documents............................................................... 29
ARTICLE X: OBLIGATIONS OF THE PARTIES AFTER CLOSING................................................... 29
10.1 Survival of Representations and Warranties.................................... 29
10.2 Indemnification............................................................... 29
10.3 Restrictions.................................................................. 32
10.4 Delivery of Records........................................................... 33
10.5 Access to Records............................................................. 33
10.6 Employees..................................................................... 33
10.7 Licensure Power of Attorney................................................... 34
10.8 Transition Services Agreement................................................. 34
10.9 Cooperation - Further Assistance.............................................. 34
ARTICLE XI: TERMINATION............................................................................... 34
11.1 Termination................................................................... 34
11.2 Effect of Termination......................................................... 35
ARTICLE XII: MISCELLANEOUS............................................................................ 35
12.1 Costs and Expenses............................................................ 35
12.2 Benefit and Assignment........................................................ 35
12.3 Effect and Construction of this Agreement..................................... 35
12.4 Notices....................................................................... 36
12.5 Waiver, Discharge, Etc........................................................ 37
12.6 Rights of Persons Not Parties................................................. 37
12.7 Governing Law................................................................. 37
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12.8 Public Announcements.......................................................... 37
12.9 Specific Performance.......................................................... 37
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SCHEDULES
Schedule 1.2 - Excluded Assets
Schedule 4.1 - State Tax Jurisdictions
Schedule 4.4 - Absence of Conflicting Agreements
Schedule 4.5 - Consents
Schedule 4.6 - Contracts
Schedule 4.7 - Financial Statements
Schedule 4.8 - Licenses; Permits; Certificates of Need
Schedule 4.9 - Permitted Liens
Schedule 4.10 - Real Property
Schedule 4.11 - Legal Proceedings
Schedule 4.12 - Collective Bargaining, Labor Contracts, Employment
Practices, etc.
Schedule 4.13 - ERISA
Schedule 4.14 - Insurance and Surety Agreements
Schedule 4.15 - Assets Comprising the Business
Schedule 4.16 - Absence of Certain Events
Schedule 4.17 - Compliance with Laws
Schedule 4.21 - Intellectual Property
Schedule 4.23 - Taxes
Schedule 4.24 - Employees
Schedule 5.5 - Consents
EXHIBITS
Exhibit A - Form of Promissory Note
Exhibit B - Form of Amended and Restated Non-Competition
Agreement
Exhibit 8.4 - Form of Opinion of Counsel to Seller and IHS
Exhibit 8.8-1 - Bill of Sale
Exhibit 8.8-2 - Assignment of Contracts
Exhibit 9.4 - Form of Opinion of Counsel to Buyer
Exhibit 9.10 - Undertaking
Exhibit 10.9 - Transition Services Agreement
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (the "Agreement") is made as of the 19th
day of August, 1998, among INTEGRATED HEALTH SERVICES, INC., a Delaware
corporation ("IHS"), NATIONAL INSTITUTIONAL PHARMACY SERVICES, INC., a Delaware
corporation ("Seller") and a wholly owned subsidiary of IHS, and PHARMERICA,
INC., a Delaware corporation ("Buyer").
WHEREAS, Seller is engaged in the business of dispensing pharmacy
products and services to long-term care facilities such as skilled nursing
facilities and assisted living facilities (such business excluding the Excluded
Services and the Excluded Assets, as such terms are defined below, being the
"Business"), including long-term care facilities owned, managed or leased by IHS
and/or various of its directly or indirectly owned subsidiaries ("IHS LTC
Facilities"); and
WHEREAS, Buyer wishes to purchase from Seller, and Seller wishes to
sell to Buyer, the Assets (as hereinafter defined) of Seller, 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, Seller and Buyer intending to be legally bound, agree as
follows:
ARTICLE I: PURCHASE AND SALE OF ASSETS; ASSUMPTION OF
CERTAIN LIABILITIES
1.1 Assets.
Upon the terms and subject to the conditions of this Agreement, at the
Closing (as hereinafter defined), and in reliance upon the covenants,
representations and warranties of Buyer, Seller 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, in reliance upon the covenants,
representations and warranties of IHS and Seller, Buyer will purchase, acquire
and accept from Seller, all of Seller's assets, properties and rights of every
kind and description, wherever located, whether tangible or intangible, real,
personal or mixed, as in existence on the Closing Date (as hereinafter defined)
(collectively, the "Assets"), including, without limitation, the following
assets of Seller:
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(a) all of Seller's right, title and interest in and to any
real property owned in fee (the "Owned Real Property"), together with all
buildings and improvements thereon, and all rights, privileges, permits and
easements appurtenant thereto;
(b) all of Seller's right, title and interest in and to any
and all leasehold estates (the "Real Property Leases") in land, facilities and
real property improvements (whether owned or leased) (the "Leased Real
Property") together with all rights, privileges and easements appurtenant
thereto;
(c) all accounts, loans and notes receivable, the proceeds
collected from any Non-Assignable Receivables (as hereinafter defined in Section
1.2(k)), advances, performance and surety bonds and letters of credit or other
similar instruments in favor of Seller;
(d) all inventory and supplies, including, without limitation,
all useable and saleable items of pharmaceutical product inventory, including
controlled substances, dangerous drugs and prescription files, and all office
supplies, contents and other packaging materials;
(e) all machinery and equipment, including, without
limitation, all pharmacy equipment, medication and treatment carts, emergency
boxes, convenient boxes, automated dispensing cabinets, facsimile machines,
computers and computer hardware and software, furniture and fixtures, motor
vehicles, repair parts and tools, together with any rights, claims and interests
arising out of maintenance or service contracts relating thereto or the breach
of any express or implied warranties by the manufacturers or sellers of any such
assets or any component part thereof;
(f) all of Seller's right, title and interest in and to each
joint venture or partnership to which Seller is a party, together with all of
Seller's right, title and interest in and to all joint venture or partnership
agreements that govern each such joint venture or partnership;
(g) all books, records and other data in whatever form
maintained, including, without limitation, payroll, personnel and other employee
records;
(h) all Contracts (as hereinafter defined in Section 4.6), and
all other contracts, leases and commitments, including, without limitation, all
rights to receive payments for products sold or services rendered pursuant to
Contracts and to assert claims and to take other actions in respect of breaches,
defaults and other violations thereunder;
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(i) all certificates of need, accreditations, registrations,
licenses, permits and other consents or approvals of Governmental Authorities
(as hereinafter defined in Section 4.4) or accreditation organizations, to the
extent permitted by applicable Governmental Requirements (as hereinafter defined
in Section 4.4) to be transferred;
(j) all Intellectual Property, as defined in Section 4.21,
(including, without limitation, the name "National Institutional Pharmacy
Services, Inc." and "NIPSI") and customer and supplier lists;
(k) all goodwill relating to the Business;
(l) all credits and prepaid expenses, taxes (other than income
taxes) and deposits; and
(m) all causes of action, choses in action, lawsuits,
judgments, claims, rights under express or implied warranties, guarantees,
indemnities and similar rights in favor of Seller, rights of recovery, rights of
set-off, rights of subrogation and all other rights and demands of any nature
available to or being pursued by Seller, whether arising by way of counterclaim
or otherwise.
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.
1.2 Excluded Assets. The Assets shall not include any of the following
assets (the "Excluded Assets"):
(a) inventory and supplies disposed of after the date hereof
and prior to Closing as permitted in accordance with Article VII hereof;
(b) obsolete equipment disposed of for fair consideration, if
any, after the date hereof and prior to the Closing;
(c) Licenses and Medicare and Medicaid provider numbers which
may not be transferred in accordance with applicable Governmental Requirements;
(d) claims or defenses against third parties, including
insurance companies, for reimbursement, indemnification or under any warranties
with respect to the payment or satisfaction by Seller of any Excluded
Liabilities or relating to any other Excluded Assets;
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(e) contracts covering or relating solely to Excluded Services
(as hereinafter defined), the assets used solely in connection with the
provision of Excluded Services and the other assets identified on Schedule 1.2
hereto;
(f) Plans (as hereinafter defined in Section 4.13(b));
(g) use of the acquisition, accounting, legal, management
information service, human resource, risk management and other corporate
functions provided by IHS or any of its subsidiaries (other than Seller) except
as provided in the Transition Services Agreement (as defined in Section 10.8
hereof);
(h) income tax refunds, if any, in respect of tax periods
ending on or prior to Closing;
(i) all cash and bank accounts of Seller;
(j) the capital stock of Seller;
(k) all receivables of Seller from governmental payors which
by law may not be assigned ("Non-Assignable Receivables");
(l) the articles of incorporation, by-laws, 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 1.4) of Seller.; and
(m) any capital stock of ASCO Healthcare of New England, Inc.,
a Maryland corporation, and any limited partnership interest in ASCO Healthcare
of New England Limited Partnership.
For purposes hereof, "Excluded Services" means: (a) the provision to
facilities operated (by reason of ownership, lease or management agreement) 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 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).
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1.3 Assumed Liabilities. Upon the terms and subject to the conditions
of this Agreement, at the Closing, Buyer shall assume and undertake to pay,
discharge and perform as and when due only the following obligations and
liabilities:
(a) all operating trade payables that would be classified as
current liabilities on a balance sheet prepared in accordance with generally
accepted accounting principles ("GAAP") applied on a basis consistent with the
most recent unaudited financial statements of Seller excluding any working
capital loans or other amounts payable to IHS or any of its direct or indirect
subsidiaries or affiliates of IHS and excluding any federal, state or local
income taxes payable; and
(b) all of Seller's obligations arising under the Contracts
identified on Schedule 4.6 (except to the extent expressly identified as a
non-assumed contract on Schedule 4.6) and the other contracts, leases,
commitments and Licenses included in the Assets, in each case to the extent and
solely to the extent such obligations relate to the Business, are incident to
the performance in accordance with the terms of such agreements and relate
solely to periods after the Closing.
All of the foregoing included in subsections (a) and (b) above, being the
"Assumed Liabilities."
1.4 Excluded Liabilities. Except for the Assumed Liabilities, Buyer
shall not assume any liabilities, debts or obligations of Seller or IHS of any
kind, character or description, whether accrued, absolute, contingent or
otherwise, whether or not arising out of or resulting from Seller's 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 Assets or the
Business occurring, relating to or arising in any period prior to the
Closing, including 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), and including without limitation
any liability for stay bonuses, retention bonuses or similar bonuses or
other compensation agreed to be paid by IHS or any of its subsidiaries
to Seller's employees;
(ii) any liability for Taxes (as such term is
hereinafter defined in Section 4.23), including any liability for
income Taxes arising as a result of the transactions contemplated by
this Agreement and the Seller's intercompany payable in the amount of
approximately $32 million (and including any interest payable thereon);
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(iii) any liability or obligation arising out of or
relating to 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' or other professional fees and
expenses, or (B) any other effort(s) to sell or dispose of the Business
or the Assets.
1.5 Contracts. At Closing, Seller shall assign all of its rights,
title, and interest under each Contract and under each other contract, lease,
commitment, license and permit of Seller comprising any part of the Assets to
Buyer. Notwithstanding anything to the contrary contained in this Agreement,
Seller makes no representations or warranties as to the assignability of the
Contracts 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 its receipt thereof, Seller shall deliver to Buyer any benefits
received by Seller arising out of services rendered or products supplied by
Buyer under any of the same after the Closing, including without limitation any
such sums received by Seller after the Closing in respect of Contracts or other
assets intended to be assigned but as to which any applicable consents have not
been obtained (in each case other than any Excluded Assets).
ARTICLE II: PURCHASE PRICE
2.1 Determination and Payment of Purchase Price. The aggregate purchase
price to be paid to Seller for the Assets (the "Purchase Price") shall be TWENTY
MILLION NINE HUNDRED THOUSAND and 00/100 ($20,900,000.00) DOLLARS. The Purchase
Price shall be payable by Buyer at the Closing as follows:
(a) Sixteen Million Four Hundred Thousand and 00/100
($16,400,000.00) Dollars in cash by wire transfer of immediately available funds
to the account designated in writing by Seller to Buyer at least two business
days prior to the Closing; and
(b) Four Million Five Hundred Thousand and 00/100
($4,500,000.00) Dollars by the delivery to Seller of a promissory note (the
"Note") in the form annexed hereto as Exhibit A.
2.2 Allocation of Purchase Price. The Purchase Price (and all other
capitalizable costs) shall be allocated among the various categories of Assets,
as shall
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be determined by Buyer, subject to Seller's consent (which shall not be
unreasonably withheld), 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.
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
Weil, Gotshal & Manges, LLP, 767 Fifth Avenue, New York, New York, 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, 8.10, 9.5 or 9.7, below, and provided
that, for accounting purposes only, the Closing shall in any event be effective
as of August 1, 1998. The date on which the Closing is held is hereinafter
referred to as the "Closing Date."
ARTICLE IV: REPRESENTATIONS AND WARRANTIES
OF SELLERS AND IHS
Each of Seller and IHS hereby jointly and severally represents and
warrants to Buyer as follows (provided, however, that the following
representations and warranties (other than those in Sections 4.1, 4.2, 4.3,
4.4(a), 4.5, 4.14, 4.15, 4.16, 4.19, 4.20, 4.24 and 4.26) shall be limited, as
to matters arising prior to January 1, 1998, to Seller's knowledge, which shall
mean, for purposes of this Agreement, matters actually known to the executive
personnel of IHS after due inquiry):
4.1 Organization and Standing. Each of Seller and IHS is a corporation
duly organized, validly existing and in good standing under the laws of the
State of its incorporation. Each of Seller and IHS are duly authorized to
conduct business and are in good standing under the laws of each jurisdiction
where such qualification is required, except where the failure to so qualify or
obtain authorization would not have, individually or in the aggregate, a
Material Adverse Effect (as hereinafter defined). Each of Seller and IHS has
full corporate power and authority and all licenses, permits and authorizations
necessary to own and lease the property and assets now owned or leased by it and
to conduct the business currently being
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conducted by it. Except as set forth on Schedule 4.1, neither 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 a material adverse effect on the value of
the Assets or Assumed Liabilities taken as a whole or on the ability of Seller
to operate the Business consistent with past practice or on the financial
position of Seller or on the results of the operations of Seller.
4.2 Authority. Each of 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 of Seller, IHS, their respective
directors and, if applicable, shareholders. Each of Seller and IHS has 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 an authorized officer of such
corporation.
4.3 Binding Effect. This Agreement and the Seller Transaction Documents
have been duly executed by each of Seller and IHS and constitute the legal,
valid and binding obligations of Seller and IHS, enforceable against each of
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 general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law) (the
exceptions referred to in clauses (a) and (b) hereof being the "Enforceability
Exceptions").
4.4 Absence of Conflicting Agreements. Except as set forth on Schedule
4.4, neither the execution, delivery or performance by Seller and IHS of this
Agreement or any of the Seller Transaction Documents nor the consummation by
Seller and 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, or result in
any violation of, or require the consent of any Person under: (a) Seller's or
IHS's Certificate or Articles of Incorporation or By-Laws or any resolution
adopted by the Board of Directors or the shareholders of Seller or IHS; or (b)
any judgment, order, writ, injunction, or
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decree of any court applicable to Seller or IHS; or (c) 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 Seller or IHS except as would not
have a Material Adverse Effect, except that no representation or warranty is
made with respect to licensing requirements applicable to Buyer as a consequence
of the transactions contemplated hereby; or (d) any agreement, indenture,
contract or instrument to which Seller or IHS is a party or by which any of them
or any of the Assets is bound except for conflicts, breaches or defaults under
contracts arising solely by reason of the assignment of such contracts at
Closing and, in any case, except as would not have a Material Adverse Effect.
4.5 Consents. Except as reflected in Schedule 4.5, except for Licenses
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 Seller or IHS with any Governmental
Authority, is necessary in connection with the entry into, execution, delivery
and performance of this Agreement or any of the Seller Transaction Documents by
Seller or IHS, or for the consummation of the transactions contemplated hereby
and thereby, except that no representation or warranty is made with respect to
licensing requirements applicable to Buyer as a consequence of the transactions
contemplated hereby.
4.6 Contracts.
(a) Schedule 4.6(a) sets forth a true, complete and correct
list of each of the following contracts (written or oral) to which Seller is a
party or is bound that relates to the Business (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,
including without limitation, the agreements with Long Term Care
Management Services, Inc.;
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(iv) each agreement pursuant to which the services
and products of the Business are provided;
(v) each of the Real Property Leases;
(vi) each agreement for the lease of personal
property to or from any Person providing for lease payments in excess
of $40,000 per annum (the "Personal Property Leases"); and
(vii) each agreement (whether evidenced by one
document or a series of related documents with the same party) relating
to the Business involving present or future consideration in excess of
$50,000.
(b) Schedule 4.6(b) sets forth each material oral or written
contract relating to the Business not otherwise listed on Schedule 4.6(a)
hereto. Except to the extent that same would not have a Material Adverse Effect
or as set forth on Schedule 4.6(b), 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 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 general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law), and (c) as limited by other
applicable Governmental Requirements. Seller is not in breach or default under
any provision of any Contract set forth on Schedule 4.6(a) and no condition
exists which (with notice or lapse of time or both) would constitute a breach or
default by Seller thereunder, in each case, except to the extent same would not
have a Material Adverse Effect, and to the knowledge of Seller, 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.
Seller has delivered or made available to Buyer true, correct, and complete
copies of each written Contract, including all amendments, modifications,
renewals, supplements, and extensions thereto, and a written summary setting
forth the terms and conditions of each oral Contract currently in effect.
4.7 Financial Statements. Attached hereto as Schedule 4.7 are the
unaudited income statement and balance sheet of Seller relating to the Business
for the five month period ended May 31, 1998 (the "Interim Financial
Statements"), which financial statements are certified as true and correct in
all material respects by the Chief Financial Officer of the Seller and present
fairly the financial condition and results of operations of the Business (except
as set forth thereon) as, at and for the period therein specified and, except as
reflected on Schedule 4.7, were prepared in accordance with GAAP applied on a
basis consistent with prior periods.
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4.8 Licenses; Permits; Certificates of Need. Each of Seller and IHS has
all material licenses and other permits and approvals of any Governmental
Authority necessary for Seller to operate the Business ("Licenses"), including
any such Licenses required by the Federal Food and Drug Administration ("FDA"),
the Federal Drug Enforcement Agency ("DEA"), the State Pharmacy Boards ("State
Boards"), and the Medicare or Medicaid programs, as are necessary for the
operation of the Business as presently conducted and the ownership of the
Assets. Schedule 4.8 sets forth a complete and accurate list of each such
License, and all such Licenses are validly held by Seller and are in full force
and effect. Seller is in compliance with all Licenses identified on Schedule
4.8, except for such noncompliance which, individually or in the aggregate,
would not have a Material Adverse Effect.
4.9 Title, Condition to Personal Property.
(a) Seller owns, or has 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 ("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 the manner presently operated. Except as disclosed on Schedule 4.9 hereto,
neither Seller 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 Seller or IHS, threatened condemnation proceedings relating to any
of Seller's 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;
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(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 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 Real Property. Schedule 4.10 lists and describes briefly all real
property owned, leased or subleased to Seller. Seller has delivered or made
available to Buyer true, correct and complete copies of the Real Property Leases
listed on Schedule 4.10 (as amended to date). With respect to each Real Property
Lease:
(a) such Real Property Lease is legal, valid, binding,
enforceable, and in full force and effect subject to the Enforceability
Exceptions;
(b) no notice, consent or approval is required with respect to
such Real Property Lease as a result of this Agreement, and the actions
contemplated by this Agreement will not result in the change of any terms of any
Real Property Lease or otherwise affect the ongoing validity of any Real
Property Lease;
(c) (i) Seller is not, and to Seller's knowledge, no other
party to the Real Property Lease is in breach or default and no event has
occurred which, with notice or lapse of time, would constitute a breach or
default, or permit termination, modification, or acceleration thereunder; and
(ii) to the knowledge of Seller and IHS, no party to a Real Property Lease
entered into with Seller is in breach or default and no event has occurred
which, with notice or lapse of time, would constitute a breach or default or
permit termination, modification, or acceleration thereunder, except, in each
case, to the extent that such breach or default or permitted termination,
modification, or acceleration would not have a Material Adverse Effect;
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(d) there are no disputes, oral agreements, or forbearance
programs in effect as to such Real Property Lease known to Seller or that have
resulted from matters occurring after January 1, 1998;
(e) Seller has not assigned, transferred, conveyed, mortgaged,
deeded in trust, or encumbered any interest in the leasehold or subleasehold;
(f) all facilities leased or subleased thereunder have
received all material approvals of Governmental Authorities (including Licenses
and permits) required by Seller in connection with the operation thereof and
have been operated and maintained by Seller in all material respects in
accordance with applicable Governmental Requirements; and
(g) all facilities leased or subleased thereunder are supplied
with utilities and other material services necessary for the operation of said
facilities.
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.
(a) No employees of the Business (the "Employees") are
represented by any labor union or similar organization, and except as set forth
on Schedule 4.12, there are no pending, or, to the knowledge of Seller or IHS,
threatened, activities the purpose of which is to achieve such representation of
all or some of such Employees.
(b) To the knowledge of Seller and IHS, except as set forth in
Schedule 4.12, (i) 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
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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, (ii) there is
no labor strike, dispute, slowdown or stoppage pending or threatened against or
affecting the Business, and Seller has not experienced any work stoppage or
other labor difficulty affecting the Business in the last year which would have
a Material Adverse Effect, and (iii) in the event of termination of the
employment of any Employee, Buyer will not, pursuant to any agreement with
Seller or by reason of any representation made or plan adopted by Seller 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.
4.13 ERISA.
(a) Except as set forth on Schedule 4.13, neither Seller nor
IHS maintains, or makes contributions to, and neither Seller nor IHS has at any
time in the past two years maintained or made contributions to, any employee
benefit plan covering Employees 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) Schedule 4.13(b) sets forth each severance agreement, and
each 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
Seller or IHS has 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
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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,
complete and correct list of all insurance policies and other surety
arrangements of any kind or nature whatsoever which are in force and are held or
owned by Seller or otherwise in force and providing coverage for the Business or
any of the 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. Seller is
in compliance in all material respects with the provisions of such policies and
Seller has not been advised by any of its insurance carriers of an intention to
terminate or modify any such policies.
4.15 Assets Comprising the Business. The Assets constitute and will
constitute on the Closing Date (a) all of the material assets and rights that
are used in the operation of the Business as it is being conducted as of the
date of this Agreement and as it will be conducted on the Closing Date and (b)
represent all of the material real and personal property, Licenses, Intellectual
Property, and authorizations, contracts, leases and other agreements that are
necessary to the operation of the Business as now operated, in each case, except
for the Excluded Assets. Except as set forth on Schedule 4.15 and except for
Excluded Assets, IHS (as opposed to Seller) does not own any personal property,
licenses, intellectual property, permits or authorizations, and has not entered
into any contracts, leases or other agreements that have been used in, or 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 Seller in good faith and consistent with past practice. The
accounts receivable of Seller are reflected properly on its 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 Interim
Financial Statements, since May 31, 1998;
(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 Seller or used in
the
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Business, 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 (it being agreed that the
collection of all accounts receivable due in respect of services from any
facility owned, managed or leased by IHS or any of its subsidiaries, other than
those arising out of goods or services furnished from and after July 1, 1998 in
excess of $1,500,000, shall be deemed to be in the ordinary course of business
consistent with past practice), including funding to and from IHS and its direct
or indirect subsidiaries;
(b) there has been no change in 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 and, without limitation, Seller has paid its
accounts payable and other current liabilities in the ordinary course of
business consistent with past practice (it being agreed that the collection of
all accounts receivable due in respect of services from any facility owned,
managed or leased by IHS or any of its subsidiaries, other than those arising
out of goods or services furnished from and after July 1, 1998 in excess of
$1,500,000, shall be deemed to be in the ordinary course of business consistent
with past practice) and there has been no material incurrence of liabilities or
reduction of current assets (other than cash) outside the ordinary course of
business consistent with past practice or any material increase in trade
payables or other current liabilities of the Business;
(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;
(f) other than the settlement with Buyer, there has not been
any settlement or agreement to settle any litigation, action or proceeding
before any court or governmental body relating to Seller or its property and
Seller has not 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
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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.
(a) Except as set forth on Schedule 4.17(a), (i) the Business
is being operated in compliance with all applicable statutes, laws, ordinances,
rules, orders and regulations of any Governmental Authority and ss.1320a-7b and
ss.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, the Assets and the Assumed Liabilities, (ii) no written claims or
complaints have been received by Seller since January 1, 1998 from any
Governmental Authority or other Persons alleging that the Business is or was
being operated in violation of any Governmental Regulations or Licenses
applicable to the Business, the Assets or the Assumed Liabilities, and (iii)
since January 1, 1998, Seller has not received notice from any Governmental
Authority of any proceedings to take all or any part of the Assets or other
properties relating to the Business, the Assets or the Assumed Liabilities, in
each case except as would not individually or in the aggregate have a Material
Adverse Effect. This Section 4.17 does not relate to Environmental Laws or Taxes
which are the subject of Section 4.22 and Section 4.23, respectively.
(b) To the knowledge of Seller, Seller has maintained all
records required to be maintained by the FDA, DEA, State Boards of Pharmacy and
the Medicare and Medicaid programs so as not to have a Material Adverse Effect
and Seller has 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.
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(c) Neither Seller nor, to its knowledge, any officer,
director, employee, agent, or other representative of Seller or any person
acting on behalf of Seller has made, directly, or indirectly, any 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. Seller, to the extent necessary to
conduct the Business in a manner consistent with past practice, is 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) Seller has not received any notice of any
material 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 Seller prior to the Closing
or against Seller after January 1, 1998 and for which Buyer will be liable, and
(c) to the knowledge of Seller, 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 Seller 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 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 Seller or IHS.
4.21 Intellectual Property.
(a) Schedule 4.21 contains a true, correct and complete 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 Seller or used by
Seller in the Business and that, in each case, is material to the Business of
Seller as currently conducted (collectively, "Intellectual Property").
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(b) Since January 1, 1998, there has been no infringement or
misappropriation, actual or (to Seller's knowledge) claimed, by Seller of any
rights or trade secrets owned by another Person, or other adverse claim
(including judicial or adversary proceedings) against Seller with respect to its
usage of Intellectual Property or of rights or trade secrets owned by others or,
to the knowledge of Seller, by others of any Intellectual Property owned by or
licensed to Seller, which would have a Material Adverse Effect.
(c) Except as set forth in Schedule 4.21(c), Seller is not in
default under any agreement pursuant to which it is licensing Intellectual
Property of a third party or granting licenses to its own Intellectual Property,
except for such defaults which would not have a Material Adverse Effect.
4.22 Environmental Matters. To the knowledge of Seller, Seller is in
compliance in all respects with all environmental and related Governmental
Requirements applicable to Seller, 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 Seller, no investigation or review is pending or
threatened by any Governmental Authority or other party with respect to any
alleged violation by Seller or the Business of any Environmental Law, the need
for any work, repairs, or demolition by 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 Taxes.
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(a) Except as set forth in Schedule 4.23(a), (i) all Tax
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 Seller (collectively, the "Tax Returns"), have been or
will be timely filed on or before the Closing Date and all such Tax Returns were
true, correct and complete in all material respects; and (ii) 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 Seller, indicating the names and compensation of Employees. All of
such information is materially correct as of such date. To the knowledge of
Seller, none of the Employees, while in the employ of Seller, has ever had his
or her professional license or certification denied, suspended, revoked,
terminated, or voluntarily relinquished under threat of disciplinary action, or
has ever been restricted in any way from performing the duties he or she is to
provide for Seller, and there is no proceeding pending, or threatened, pursuant
to which any of the foregoing may occur.
4.25 Disclosure. 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 Seller and IHS on other than fair
market or arms length terms (excluding under Contracts disclosed herein or in
any Schedule hereto).
ARTICLE V: REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to the Seller and IHS as follows:
5.1 Organization and Standing. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of its
incorporation.
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
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Exhibits hereto, and all of the instruments and agreements required to be
delivered by it to 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 Seller, (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 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 general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
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
Certificate 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 (d) any
Governmental Requirement applicable to Buyer; or (e) 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 in each case 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, in
each case with respect to which Seller shall have any liability unless agreed to
by Seller in writing.
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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
Seller's financial and legal condition as Buyer deems necessary or advisable to
familiarize itself with Seller and/or matters relating to Seller's history or
operation. Upon reasonable prior notice, each of Seller and IHS shall permit
Buyer and its authorized representatives (including legal counsel and
accountants), to have full access to Seller's books and records during normal
business hours, and Seller will furnish, or cause to be furnished, to Buyer such
financial and operating data and other information and copies of documents with
respect to 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 Seller or which 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 Seller and Seller shall conduct the
Business diligently and in the ordinary course consistent with past practices.
7.2 Negative Covenants of Seller. From the date hereof through the
Closing Date, without the prior written approval of Buyer, which approval shall
not be unreasonably withheld, delayed or conditioned, Seller shall not 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:
(a) cause or permit (to the extent within the control of
Seller) 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 Seller 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 and as would not have a Material Adverse Effect;
(d) fail to comply with any Governmental Regulations
applicable in any respect to the Business or any of the Assets which would have
a Material Adverse Effect;
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(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, or covenant to sell, any of the Assets; or
(g) enter into any agreement, arrangement or commitment to do
any of the things described in any of (a) through (f) above.
7.3 Affirmative Covenants of Seller. From the date hereof and until the
Closing Date, Seller and to the extent relating to any Assets or any portion of
the Business, IHS, shall:
(a) maintain, preserve and protect 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 use
commercially reasonable efforts to perform in all material respects all of
Seller's 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 Seller, or replacements thereof;
(d) use commercially reasonable efforts: to preserve intact
Seller's present business operations and organization; to keep available the
services of Seller's present Employees and agents; and maintain Seller's
relations and good will with doctors, patients, suppliers, vendors, employees,
and any others having business relating to the Business;
(e) not amend, terminate, renew, fail to renew or renegotiate
any Contract, except in the ordinary course of business consistent with past
practice; and
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(f) 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. Seller 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 required by applicable law to purchase and resell all of the controlled
substances and dangerous drugs constituting Assets.
7.5 Supplementary Financial Information. Within forty-five (45) days
after the end of each calendar month between the date of this Agreement and the
Closing Date, Seller shall provide to Buyer unaudited financial statements
(including at a minimum an income statement and balance sheet) for such month
then ended that shall present fairly the results of operations of Seller 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 Seller.
7.6 H-S-R Act. Buyer and Seller have, on or prior to the date hereof,
made 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.
7.7 Nondisclosure of Confidential Information. Seller 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 Seller, IHS, or any agent or employee thereof in
violation of this Section 7.7), 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.
7.8 Exclusivity.
(i) Until the earlier of Closing or the termination of this
Agreement, neither IHS nor Seller, nor any of their respective affiliates, shall
solicit,
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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 Seller.
(ii) 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.
7.9 Notice of Breach. Seller 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.
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 Seller 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. Seller 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 of Seller and
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.
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8.4 Opinions of Counsel. Seller and IHS shall have delivered to Buyer
an opinion in the form attached as Exhibit 8.4 hereto.
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, 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 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 Seller 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 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
Seller 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 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 Bill of Sale and Assignment. 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") substantially in the forms
set forth in Exhibits 8.8-1 and 8.8-2, respectively 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.
8.9 Non-Competition Agreements; Release. IHS, on behalf of itself and
all IHS Subsidiaries, shall have entered into an amended and restated non-
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competition agreement (the "Amended and Restated Non-Competition Agreement")
with Buyer in the form of Exhibit B hereto and shall have delivered the Release
in the form provided for in the Settlement Agreement dated as of the date hereof
between IHS and Buyer (the "Release").
8.10 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.
8.11 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 and the Settlement Agreement between the
parties of even date herewith.
ARTICLE IX: CONDITIONS PRECEDENT
TO THE OBLIGATIONS OF SELLER AND IHS
The obligations of 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 Seller and IHS in writing. Upon
failure of any of the following conditions, Seller and 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.
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9.3 Delivery of Closing Certificate. An authorized officer of Buyer
shall have executed and delivered to Seller and IHS a certificate, dated the
Closing Date, upon which Seller 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 Seller and IHS
an opinion, dated the Closing Date, of its counsel, in the form attached as
Exhibit 9.4 hereto.
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, and no injunction or other
order or decree of any Government Authority shall be in effect which prohibits
Seller 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 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. Seller 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 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.
9.8 Lender Consent. IHS shall have received the written consent of its
senior secured lenders to the transactions contemplated hereunder, which consent
IHS shall use commercially reasonable efforts to obtain.
9.9 Non-Competition Agreement; Release. Buyer shall have entered into
the Amended and Restated Non-Competition Agreement and the Release.
9.10 Undertaking. Buyer shall have executed and delivered to Seller an
Undertaking to assume Assumed Liabilities (the "Undertaking") substantially in
the form set forth in Exhibit 9.10.
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9.11 Other Documents. Buyer shall have furnished Seller with all other
documents, certificates and other instruments required to be furnished to any of
them by Buyer pursuant to the terms hereof and the Settlement Agreement between
the parties of even date herewith.
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 nine (9)
months after the Closing notwithstanding any investigation at any time made by
or on behalf of the other party. 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) Seller and IHS jointly and severally shall indemnify,
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 attorneys' 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 Seller
and/or IHS contained in Article VII hereof;
(ii) any failure to fulfill any agreement or covenant
on the part of Seller and/or IHS (not covered by clause (i) above)
under this Agreements 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 Seller (other than
Assumed
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Liabilities) or any taxing authority or other entity asserting any
similar claim against Seller; and
(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, defend and hold harmless Seller 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 after the Closing Date, arising from,
in connection with or with respect to the following items:
(i) (A) any misrepresentation, breach of any
warranty, or (B) 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, including
Buyer's failure to obtain proper Licenses or consents to assignments of
Contracts; and
(iii) 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 clauses (a) (i) (A)
(and to the extent applicable thereto clause (iii)) and (b) (i) (A) (and to the
extent applicable thereto clause (iii)) of this Section 10.2 must be asserted by
written notice by a date which is nine (9) months following the Closing Date.
(d) Notwithstanding anything herein to the contrary, Seller
and IHS shall not have any liability under Section 10.2(a)(i)(A) unless the
aggregate amount of Losses to the indemnified parties based on, attributable to
or resulting from the failure of the representations and warranties of Seller
and IHS hereunder to be true and correct exceeds $250,000 and, in such event,
Seller and IHS shall be required to pay the full amount of such Losses including
the first $250,000. At any time, the aggregate liability of Seller for
indemnification under Section 10.2(a)(i)(A) of this Agreement and the
Transaction Documents shall not exceed (i) $9,500,000, less (ii) the aggregate
amount that previously shall have been paid to Buyer pursuant to the
indemnification provisions of this Agreement by Seller.
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(e) Notwithstanding anything to the contrary contained in this
Agreement, Seller shall not 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 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
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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
setoff 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, neither IHS nor Seller
shall disclose, to any person or entity, or make use of, without the
authorization of Buyer, any nonpublic pricing strategies or records of Seller,
any proprietary data or trade secrets owned by Seller and included in the Assets
or any financial or other information about 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, Seller 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
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foregoing shall not apply to general advertisements or other appeals seeking
employees generally made to the public.
(c) 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, Seller shall have access to the books and records pertaining
to its 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) may be offered employment by Buyer
in its discretion. Buyer agrees to indemnify, and on demand defend and hold
Seller 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. Buyer's foregoing
indemnification obligations shall not apply to the extent that any notifications
are required by reason of actions taken by Seller or IHS.
(b) By no later than December 31, 1998, 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 Seller 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
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actual fixed costs and claims incurred after the Closing with respect to
Employees and their qualified beneficiaries.
(c) Seller 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. Seller
shall provide, in accordance with ERISA, 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 Licensure Power of Attorney. At the request of Buyer, Seller shall
execute such powers of attorney as Buyer may reasonably deem necessary to allow
Buyer to utilize any licenses or permits of 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 Seller's
execution of such instrument, Buyer shall also provide Seller 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 Seller 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 Seller.
10.8 Transition Services Agreement. At the Closing, the parties shall
enter into a Transition Services Agreement in the form of Exhibit 10.8 hereto.
10.9 Cooperation - Further Assistance. From time to time, as and when
reasonably requested by Buyer after the Closing, Seller 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 anything to the contrary contained herein, Seller
shall not be required to obtain any consents to transfers of contracts or
licenses.
ARTICLE XI: TERMINATION
11.1 Termination. This Agreement may be terminated at any time at or
prior to the time of Closing by:
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(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 8.10 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 9.7 hereof;
(c) as otherwise provided in this Agreement; or
(d) the mutual consent of Buyer and IHS.
11.2 Effect of Termination. 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 Seller 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).
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.
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 or other persons or entities to which all
or any portion of the Assets are to be assigned or transferred hereunder.
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,
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<PAGE> 42
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.
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 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: PharMerica, Inc.
3611 Queen Palm Dr.
Tampa, FL 33619
Attn: Chairman
With a copy to: Weil, Gotshal & Manges, LLP
767 Fifth Avenue
New York, New York 10153
Attn: Peter Gruenberger, Esq.
Norman D. Chirite, Esq.
and
Harwell Howard Hyne Gabbert &
Manner, PC.
1800 First American Center
315 Deaderick Street
Nashville, TN 37238
Attn: Mark Manner, Esq.
If to any Seller or IHS: Integrated Health Services, Inc.
10065 Red Run Boulevard
Owings Mills, MD 21117
Attn: Chairman and Chief Executive Officer
With a copy to: Blass & Driggs, Esqs.
461 Fifth Avenue, 19th Floor
New York, New York 10017
Attn: Michael S. Blass, Esq.
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Such addresses may be changed by providing written notice as provided in this
Section 12.4.
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 Seller 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.
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 and except persons
indemnified pursuant to Article X hereof.
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. To the extent
inconsistent herewith, the provisions of the Settlement Agreement and of the
Confidentiality Agreement dated as of the date hereof among Buyer, IHS and
Counsel Corporation shall supersede this Section.
12.9 Specific Performance. The parties acknowledge and agree that money
damages would not be a sufficient remedy for any breach of this Agreement by IHS
or Seller and that Buyer shall be entitled to equitable relief, including
injunction and specific performance, as a remedy for any such breach or
prospective breach. To the extent inconsistent herewith, the provisions of the
Settlement Agreement shall supersede this Section.
[SIGNATURES ON THE FOLLOWING PAGE]
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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.
PHARMERICA, INC.
By: /s/ DAVID L. REDMOND
---------------------------------
David L. Redmond, EVP & CFO
INTEGRATED HEALTH SERVICES, INC.
By:
---------------------------------
Name:
Title:
NATIONAL INSTITUTIONAL PHARMACY SERVICES, INC.
By:
---------------------------------
Name:
Title:
<PAGE> 45
EXHIBIT A
FORM OF NON-NEGOTIABLE PROMISSORY NOTE
Dated: August 19, 1998
FOR VALUE RECEIVED, the undersigned, PHARMERICA, INC., a Delaware
corporation (the "Payor"), HEREBY PROMISES TO PAY TO NATIONAL INSTITUTIONAL
PHARMACY SERVICES, INC. (the "Payee"), in lawful money of the United States of
America and in immediately available funds, the principal amount of FOUR MILLION
FIVE HUNDRED THOUSAND DOLLARS ($4,500,000) on August 19, 2003.
Interest shall be due on the principal amount at the rate of 10% per
annum, payable in monthly installments of $37,500.00, beginning on September 19,
1998 and ending on August 19, 2003.
The principal amount of the indebtedness evidenced hereby shall be
subject to offset or reduction for the amount of any claims of the Payor arising
under the Asset Purchase Agreement dated August 19, 1998 among Payor, Payee and
Integrated Health Services, Inc. ("IHS"), the Amended and Restated Preferred
Provider Agreement dated August 19, 1998 between Payor and IHS, or the Amended
and Restated Non-Competition Agreement dated August __, 1998 among Payor and
IHS.
THIS NOTE IS NON-NEGOTIABLE AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED,
PLEDGED OR OTHERWISE ENCUMBERED WITHOUT THE PRIOR WRITTEN CONSENT OF THE PAYOR.
Demand, presentment, protest and notice of non-payment and protest are
hereby waived by the Payor.
This Note shall be governed by, and construed and interpreted in
accordance with, the law of the State of Delaware.
PHARMERICA, INC.
By:
--------------------------------
Title:
39
<PAGE> 1
Exhibit 99
FOR IMMEDIATE RELEASE
August 20, 1998
Contact:
David Redmond
or
Charles O'Neill
PharMerica
(800) 237-7676
PHARMERICA ACQUIRES NATIONAL INSTITUTIONAL
PHARMACEUTICAL SERVICES INC. FROM INTEGRATED HEALTH
SERVICES
Acquisition Will Add Approximately 14,500 Beds and Expand Network
to 41 States
TAMPA, Fla., Aug. 20, 1998 - PharMerica (Nasdaq: DOSE), one of the nation's
leading providers of pharmacy services, is expanding its pharmacy network to
include three new states and more than 14,500 beds with the acquisition today of
National Institutional Pharmaceutical Services Inc. (NIPSI) in Albuquerque,
N.M., reported C. Arnold Renschler, M.D., president, chairman and chief
executive officer of PharMerica. Terms of the acquisition were not disclosed.
NIPSI, an institutional pharmacy, is being acquired from Integrated Health
Services (IHS), which has 32 pharmacies in 10 states, including nine long-term
care pharmacies and 23 in-house hospital pharmacies. The acquisition of NIPSI
expands PharMerica's pharmacy network to 41 states and further solidifies
PharMerica's preferred providerrelationship with IHS.
"The consummation of our agreement to acquire NIPSI from IHS supports our
strategy of targeting larger, more-impactful transactions," said Renschler. "In
addition to improving our geographic coverage and operating benefits by
acquiring this high-quality pharmacy, the transaction provides an entrance into
two growing rehabilitation markets, Nevada and New Mexico, enhances our
opportunity to provide drug services and infusion therapy in those two markets
and provides access to the specialty hospital business."
PharMerica is one of the nation's foremost providers of quality,
cost-effective pharmacy products and services to the long-term care, assisted
living, subacute and skilled nursing industries (servicing approximately 381,000
beds), as well as online pharmacy (serving approximately 165,000 patients) and
mail-service workers' compensation (serving approximately 82,000 patients),
including the catastrophically injured population.
<PAGE> 2
Headquartered in Tampa, Fla., PharMerica operates more than 160 pharmacy
facilities located in 37 states. The company was created by the combination of
Capstone Pharmacy Services and Pharmacy Corporation of America in December 1997.
For more information about PharMerica, please call 1-800-237-7676, ext. 6788, or
visit PharMerica's corporate site at www.pharmerica.com.
This release involves forward-looking statements with respect to acquisition
prospects, development of preferred provider relationships, and other plans and
expectations on the part of the company. The accuracy of these statements
involves a number of risks and uncertainties, including but not limited to the
availability of acquisition prospects and financing for such prospects, changing
economic and market conditions that would impact such prospects or financing
related thereto, changes in governmental reimbursement regulations and laws that
could impair or hinder the entering into of strategic alliances of preferred
provider agreements, as well as other risk factors detailed in the company's
Securities and Exchange Commission finding, to which recipients of this release
are referred for additional information concerning the company and its
prospects.
