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UNITED STATES
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): April 17, 1997
MEDICAL TECHNOLOGY SYSTEMS, INC.
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(Exact name of registrant as specified in its charter)
Florida 0-16594 59-27404462
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(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
12920 Automobile Boulevard, Clearwater, Florida 34622
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (813) 576-6311
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N/A
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(Former name or former address, if changed since last report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
Medical Technology Systems, Inc. (the "Company") sold substantially all of
the assets of its subsidiary, Vanguard Labs, Inc. ("Vanguard") to NCS Health
Care, Inc. This sale was contemplated in Vanguard's plan of reorganization
(the "Plan"), which was confirmed in September 1996.
The sale price was approximately $3.2 million in cash and the assumption
of certain liabilities, estimated to be approximately $820,000. The sale price
was determined through negotiations between the parties. The assets of
Vanguard primarily consist of inventory of generic pharmaceuticals, machinery
and equipment, and two buildings.
It is expected that, pursuant to the Plan, the Company will use the cash
received to reduce indebtedness to its principal lender.
This document and the accompanying exhibit contain statements that
constitute "forward-looking statements" within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the Securities and
Exchange Act of 1934, as amended. The words "believe", "estimate", "expect",
"intend", "anticipate", and similar expressions and variations thereof identify
certain of such forward-looking statements, which speak only as of the dates on
which they were made. The Company undertakes no obligation to publicly update
or revise any forward-looking statements, whether as a result of new
information, future events, or otherwise. Readers are cautioned that any such
forward-looking statements are not guarantees of future performance and involve
risks and uncertainties, and that actual results may differ materially from
those indicated in the forward-looking statements as a result of various
factors. Readers are cautioned not to place undue reliance on these
forward-looking statements.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements of Business Acquired. Not applicable.
(b) Pro Forma Financial Information. Not applicable.
(c) Exhibits. See Index to Exhibits.
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 hereunto duly authorized.
Date: May 2, 1997
MEDICAL TECHNOLOGY SYSTEMS, INC.
(Registrant)
By: /s/ Michael P. Conroy
-----------------------------------
Michael P. Conroy, Vice President
and Chief Financial Officer
Page 2 of 3 Pages
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EXHIBIT INDEX
MEDICAL TECHNOLOGY SYSTEMS, INC.
Current Report on Form 8-K
Dated May 2, 1997
EXHIBIT NO. DESCRIPTION
10.1 Asset Purchase Agreement, dated April 17, 1997.
Page 3 of 3 Pages
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EXHIBIT 10.1
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement is entered into as of April
17th, 1997 ("Agreement"), by and among VANGARD LABS, INC., a Kentucky
corporation ("Seller"), NCS HEALTHCARE OF KENTUCKY, INC., an Ohio corporation
("Buyer"), NCS HEALTHCARE, INC., a Delaware corporation ("NCS"), VANGARD
PHARMACEUTICAL PACKAGING, INC., a Florida corporation and the sole shareholder
of Seller ("Shareholder"), MEDICAL TECHNOLOGY SYSTEMS, INC., a Delaware
corporation and parent corporation of Seller ("MTS"), and JULES J. STINE as
Plan Trustee under the First Amended and Restated Liquidating Plan of Vangard
Labs, Inc., under Chapter 11 of the United States Bankruptcy Code, ("Plan
Trustee").
Recitals:
A. Seller filed a voluntary petition for relief under
Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the
Middle District of Florida, Tampa Division (the "Bankruptcy Court"), on
February 11, 1996, now pending as case number 96-02054 (the "Bankruptcy Case").
B. Seller is presently operating as Debtor in the
Bankruptcy Case.
C. Seller wishes to sell and transfer to Buyer, and
Buyer wishes to purchase from Seller, all of Seller's right, title and interest
in and to certain assets, properties and rights now owned or possessed by
Seller, upon the terms and subject to the conditions of this Agreement.
D. Shareholder owns 100% of the outstanding shares of
the capital stock of Seller.
E. MTS owns 100% of the outstanding shares of the
capital stock of Shareholder, is the ultimate parent of Seller, and is
obligated under the terms of the Plan (as defined below) to transfer certain
real property to Buyer in connection with Buyer's purchase of substantially all
the assets of Seller.
F. NCS owns 100% of the outstanding shares of the
capital stock of Buyer and will benefit from Buyer's purchase of the assets
from Seller.
In consideration of the mutual agreements and covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which the parties hereby acknowledge, the parties hereto agree
as follows:
1. Definitions. As used throughout this Agreement, the
following terms have the following meanings:
1.1 "Accounts Receivable" shall mean any right to
payment for goods sold or leased or for services rendered and all rights to
payment under a Contract.
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1.2 "Affiliate" shall mean, with respect to any
Person, any other Person controlling, controlled by or under common control
with such Person. For purposes of this definition, "control" shall mean the
power to direct, or cause the direction of, the management or policies of any
Person, whether through ownership of securities, by contract or otherwise.
1.3 "Agreement" shall have the meaning set forth
in the preamble to this Agreement.
1.4 "Approvals" shall mean licenses, permits,
consents, authorizations, qualifications, orders or other approvals.
1.5 "Assignment of Contracts" shall mean the
Assignment of the Vangard Non-Competition Agreement and the Assignment of the
Vangard License Agreement, in form and substance acceptable to Buyer.
1.6 "Assignment of Trademarks" shall mean the
Assignment of Seller's intellectual property executed by Seller, in form and
substance acceptable to Buyer.
1.7 "Balance Sheet" shall mean the February 28,
1997 monthly balance sheet of Seller.
1.8 "Bankruptcy Case" shall have the meaning set
forth in the Recitals to this Agreement.
1.9 "Bankruptcy Code" shall mean the United
States Bankruptcy Code, as amended, 11 U.S.C. Section Section 101, et seq.
1.10 "Bankruptcy Court" shall have the meaning set
forth in the Recitals to this Agreement.
1.11 "Benefit Plan" shall mean any employee
benefit plan or arrangement under which Seller has, or in the future could
have, directly, or indirectly through an Affiliate of Seller, any Liability
with respect to any current or former employee of Seller or any such Affiliate.
1.12 "Business Day" shall mean a day which is not
a federal, state or local holiday and on which banks generally are open in
Cleveland, Ohio for the conduct of business.
1.13 "Buyer" shall have the meaning set forth in
the preamble to this Agreement.
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1.14 "Claims" shall have the meaning set forth in
Section 101(5) of the Bankruptcy Code.
1.15 "Closing" shall have the meaning set forth in
Section 8.
1.16 "Closing Date" shall have the meaning set
forth in Section 8.
1.17 "Contemplated Transactions" shall mean the
transactions contemplated by this Agreement.
1.18 "Contracts" shall mean contracts, agreements,
indentures, notes, bonds, loans, instruments, leases, subleases, deeds of
trust, conditional sales contracts, mortgages, franchises, licenses,
commitments or other binding arrangements, express or implied, oral or written,
currently in effect.
1.19 "Debtor" shall mean Seller, Vangard Labs,
Inc., a Kentucky corporation.
1.20 "Facility Lease" shall mean the Lease, dated
August 1, 1993 by and between E. P. Vann and Daryl B. Vann as Lessors, and
Seller as Lessee, regarding the real property and facility located at 603 West
Main Street in Glasgow, Kentucky.
1.21 "Governmental Body" shall mean any court,
governmental or regulatory body or arbitrator of any state, local, federal or
foreign government.
1.22 "Law" shall mean any federal, state, local or
foreign law, statute, order, ordinance, regulation or other legal requirement.
1.23 "Liabilities" shall mean all liabilities of,
claims against, or obligations or responsibilities of, Seller whether currently
due, accrued, known, unknown, contingent or otherwise.
1.24 "Lien" shall have the meaning set forth in
Section 101(37) of the Bankruptcy Code.
1.25 "MTS" shall have the meaning set forth in the
preamble to this Agreement.
1.26 "MTS Deed" shall mean the good and sufficient
general warranty deed conveying fee simple marketable title to the MTS Real
Property to Buyer, free and clear of all Liens and Claims, except the Permitted
Liens.
1.27 "MTS Real Property" shall mean that certain
parcel of real
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property, located at 890 L. Rogers Wells Boulevard in Glasgow, Kentucky owned
in fee simple by MTS.
1.28 "Order" shall mean any order, judgment,
injunction, award, decree or writ of a Governmental Body.
1.29 "Permitted Liens" shall mean (a) zoning and
other land use ordinances, and (b) any real estate taxes or assessments that
are a lien but not yet due and payable, pursuant to certain Commitments issued
by Chicago Title Insurance Company dated February 25, 1997 for the Vangard Real
Property and March 4, 1997 for the MTS Real Property.
1.30 "Person" shall mean any corporation,
partnership, firm, joint venture, individual, association, trust,
unincorporated organization or other entity.
1.31 "Petition Date" means February 21, 1996, the
date on which Seller filed a voluntary petition under the Bankruptcy Code.
1.32 "Plan" shall mean the First Amended and
Restated Liquidating Plan of Vangard Labs, Inc. under Chapter 11 of the United
States Bankruptcy Code, as confirmed by order entered September 4, 1996.
1.33 "Plan Trustee" shall have the meaning set
forth in the preamble to this Agreement.
1.34 "Post Petition Liabilities" shall mean those
Liabilities of Seller accruing and relating solely to the time period after the
Petition Date.
1.35 "Seller" shall have the meaning set forth in
the preamble to this Agreement.
1.36 "Shareholder" shall have the meaning set
forth in the preamble to this Agreement.
1.37 "Vangard Deed" shall mean the good and
sufficient general warranty deed conveying fee simple marketable title to the
Vangard Real Property to Buyer, free and clear of all Liens and Claims, except
the Permitted Liens.
1.38 "Vangard License Agreement" shall mean the
Vangard License Agreement, dated as of September 5, 1996, by and among Vangard
Labs, Inc., a Kentucky corporation, Medical Technology Systems, Inc., a
Delaware corporation, and The Siegel Family Revocable Trust (together with any
successor trust(s) heretofore or hereafter formed pursuant to trust documents
originally executed by Harold Siegel, including, without limitation, The Todd
Siegel Q-TIP Trust, The Mindy Jo Barth Q-TIP Trust, The Siegel Family Q-TIP
Trust, and The
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Siegel Family By-Pass Trust).
1.39 "Vangard Non-Competition Agreement" shall
mean the Non-Competition Agreement, dated as of September 5, 1996, by and among
Vangard Labs, Inc., a Kentucky corporation, Medical Technology Systems, Inc., a
Delaware corporation, Clearwater Medical Services, Inc., a Florida corporation,
Medical Technology Laboratories, Inc., a Florida corporation, MTS Packaging
Systems, Inc., a Florida corporation, Performance Pharmacy Systems, Inc., a
Florida corporation, Vangard Pharmaceutical Packaging, Inc., a Florida
corporation, Cart-Ware, Inc., a Florida corporation, Medication Management
Systems, Inc., a Florida corporation, Medication Management Technologies, Inc.,
a Florida corporation, MTS Sales & Marketing, Inc., a Florida corporation,
Systems Professionals, Inc., a Florida corporation, Todd E. Siegel, The Siegel
Family Revocable Trust (together with any successor trust(s) heretofore or
hereafter formed pursuant to trust documents originally executed by Harold
Siegel, including, without limitation, The Todd Siegel Q-TIP Trust, The Mindy
Jo Barth Q-TIP Trust, The Siegel Family Q-TIP Trust and The Siegel Family
By-Pass Trust, JADE Partners, and The Siegel Family Partnership.
1.40 "Vangard Real Property" shall mean that
certain parcel of real property located at 101-107 Samson Street in Glasgow,
Kentucky owned in fee simple by Seller.
2. Purchase and Sale of Assets.
2.1 Purchased Assets. Subject to the terms and
conditions of this Agreement and pursuant to Section 363 of the Bankruptcy Code
(and Section 365 of the Bankruptcy Code with regard to the Facility Lease), at
the Closing, Seller, and MTS with regard to the MTS Real Property, hereby
sells, transfers, assigns and delivers to Buyer, free and clear of any and all
Liens and Claims, and Buyer hereby purchases and acquires from Seller, and MTS
with regard to the MTS Real Property, all right, title and interest of Seller,
and MTS with regard to the MTS Real Property, in and to all of the following
properties, assets, and rights owned, used, or acquired for use in connection
with Seller's business, whether tangible or intangible, and whether or not
recorded on Seller's books and records, as the same exist at the Closing
(collectively, the "Purchased Assets"):
(a) All of Seller's cash and cash items, notes and
accounts receivable (trade and other, except $54,684 of the account receivable
from Glasgow Pharmaceutical Corporation);
(b) All raw materials and raw material components used in
the Seller's packaging process and in the Seller's possession or otherwise
reflected on the Seller's books as of the Closing Date, including, without
limitation, any prepaid items;
(c) All inventories related to Seller's business,
including, without limitation, all finished goods and work-in-process
inventories;
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(d) All equipment (including computer equipment), dies,
supplies, furniture, fixtures, leasehold improvements and other fixed or
tangible assets related to Seller's business;
(e) The Vangard Real Property conveyed to Buyer by the
Vangard Deed;
(f) The MTS Real Property conveyed to Buyer by the MTS
Deed;
(g) The Facility Lease, so long as such lease is validly
assigned to Buyer pursuant to Section 365 of the Bankruptcy Code, the Vangard
License Agreement and the Vangard Non-Competition Agreement (collectively, the
"Assumed Contracts");
(h) All regulatory permits, licenses and other documents
of Seller, incident to the operation of its business, to the extent that the
same may be legally assigned;
(i) All software (including, without limitation, source
code and related documentation) know how, patents, trademarks, trade names,
trade dress and service marks, and the goodwill associated with the foregoing,
developments, inventions, and all other intellectual property owned by Seller
(the "Intellectual Property"), except the Intellectual Property subject of the
Vangard License Agreement;
(j) All of Sellers' rights or licenses to use software
(including, without limitation, source code and related documentation) know
how, patents, trademarks, trade names, trade dress, service marks,
developments, inventions and other intellectual property used in, or related
to, Seller's business or the Purchased Assets;
(k) All files, books, records, and data (written,
electronic, or in any other form), related to, or associated with, Seller's
business or the Purchased Assets;
(l) All rights in and to Seller's corporate name and all
variants thereof, and all rights to use of Seller's corporate name as a
trademark, tradename, trade dress or service mark;
(m) All other assets included in the Debtor's Estate (as
defined in Article I of the Plan), and all other assets currently used or
usable in connection with Seller's business, whether owned of record by Seller,
Shareholder, MTS or by any other entity affiliated with MTS, other than the
Retained Assets as provided in Section 2.3 hereof; and
(n) Any and all causes of action associated with the
Purchased Assets described above, with the exception of those causes of action
provided in Section 2.3 hereof.
To the extent necessary for Buyer to acquire all right, title and
interest in and to the Purchased Assets, MTS and Shareholder, hereby (i)
consent to such sale, transfer, assignment and delivery to Buyer, (ii) agree to
execute and deliver any and all necessary documentation, either before or after
the Closing, to vest in Buyer all right, title and interest in and to the
Purchased
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Assets, and (iii) acknowledge that, except for the MTS Real Property, Seller
owns or has the right to use and transfer all of the Purchased Assets.
2.2 Conditions to Transfer. The parties agree
that (i) Seller shall not sell and Buyer shall not purchase the Retained Assets
of Seller described in Section 2.3 hereof, and (ii) Seller shall assign and
Buyer shall assume only the Assumed Contracts. As a condition precedent both
to the assignment of the Assumed Contracts and to Buyer's obligation to
consummate the Contemplated Transactions on the terms provided herein, Seller
must (a) cure, at no cost to Buyer, all defaults under Section 365 of the
Bankruptcy Code on or before the Closing Date, (b) provide notice to all
appropriate parties in interest of the Contemplated Transactions, and (c)
obtain an Order of the Bankruptcy Court, in form acceptable to Buyer, approving
the assignment and assumption of the Assumed Contracts. In confirmation of the
foregoing sale, assignment and transfer, the parties shall execute and deliver
at the Closing, as appropriate, any and all documents necessary to sell, assign
and transfer to Buyer all right and title in and to the Purchased Assets.
2.3 Retained Assets. Seller shall retain, and
Buyer shall not purchase (i) any rights of Seller arising under this Agreement,
(ii) Seller's corporate minute books, stock records, and tax returns or other
similar corporate books and records, and those records originals of which
Seller is required to maintain under applicable laws (provided, copies of the
same as they relate to Seller's business are included among the Purchased
Assets), (iii) any rights or obligations arising under that certain agreement,
dated November 5, 1993 by and among Seller, Medical Technology Systems, Inc.
and Creighton Products Corporation, (iv) all rights and obligations under any
and all Contracts of Seller, except for the Assumed Contracts, (v) the shares
of capital stock held by Seller in Glasgow Pharmaceutical Corporation, (vi)
avoidance actions of Seller or the Plan Trustee, and (vii) Seller's rights to
any tax refunds described in the Plan (collectively, the "Retained Assets").
3. Liabilities of Seller.
3.1 Payment for Certain Post-Petition
Liabilities. At the Closing, Buyer will pay, by wire transfer of immediately
available funds to an account designated by the Plan Trustee, an amount equal
to $673,000 for settlement by the Plan Trustee of any and all Post-Petition
Liabilities (the "Liability Payment"), except for the Chargebacks (defined
below).
3.2 Assumed Chargeback Liabilities. On the
Closing Date Buyer will assume responsibility for payment, as they become due,
of the following to the extent that they accrue and relate solely to the period
after the Petition Date: chargebacks, customer returns, Medicaid rebates, and
Admin fee rebates (collectively the "Chargebacks").
3.3 Assumed Contract Liabilities. On the Closing
Date, Buyer agrees to assume, and hereby assumes, only those liabilities of
Seller arising after the Petition Date under the Assumed Contracts to the
extent (a) such contract liabilities accrue and relate solely to the period
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after the Closing, and (b) the corresponding benefits therefrom are validly
assigned to and received by Buyer pursuant to Section 365 of the Bankruptcy
Code, or otherwise.
3.4 Retained Liabilities. Notwithstanding
anything in this Agreement to the contrary, Buyer shall not assume or become
responsible for any liability or obligation of Seller of any nature whatsoever,
whether known or unknown, accrued, absolute, contingent or otherwise, or any
claim against Seller, except to the extent specifically assumed by Buyer
pursuant to Section 3.
3.5 Proration of Expenses. The parties hereto
agree to prorate the expenses set forth on Schedule 3.5 as of the Closing Date,
and make the corresponding payment, as required by such proration.
4. Purchase Price. The aggregate purchase price (the
"Purchase Price") for the Purchased Assets shall be paid by Buyer delivering to
Seller, at the Closing by wire transfer in immediately available funds to an
account designated by the Plan Trustee, the sum of $3,200,000 less the $50,000
deposit previously delivered to the Plan Trustee by Buyer as an earnest money
deposit.
5. Representations and Warranties of Seller, Shareholder
and MTS. Seller, Shareholder and MTS hereby jointly and severally represent
and warrant to Buyer and NCS, as follows:
5.1 Organization, Authority and Capacity.
5.1.1 Seller is a corporation duly
incorporated and validly existing under the laws of the Commonwealth of
Kentucky, and has full corporate power and authority to own, lease and operate
its assets and properties and carry on its business as and where such assets
and properties are now owned or leased and as such business is presently being
conducted. Except for a 50% ownership interest in Glasgow Pharmaceutical
Corporation, Seller does not own, directly or indirectly, any equity ownership
interest in any corporation or other type of business organization or
association.
5.1.2 Shareholder is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Florida, and has full corporate power and authority to execute and deliver
this Agreement and all other documents required by this Agreement to be
executed and delivered in accordance with its and their terms.
5.1.3 MTS is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware, and has full corporate power and authority to execute and deliver
this Agreement and all other documents required by this Agreement to be
executed and delivered in accordance with its and their terms.
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5.1.4 Subject to and after giving effect
to the approval of the Bankruptcy Court (including satisfying any conditions
imposed by the Bankruptcy Court) and compliance with applicable requirements of
the Bankruptcy Code, Seller, Shareholder and MTS have full corporate power and
authority to execute and deliver this Agreement and all other documents
contemplated hereby and to perform fully its obligations hereunder and
thereunder in accordance with its and their terms, and such execution, delivery
and performance by them has been approved by all requisite corporate and
shareholder action. This Agreement and all other documents contemplated hereby
has been duly executed and delivered by Seller, Shareholder and MTS and
constitutes the legal, valid and binding obligation of Seller, Shareholder and
MTS, enforceable against Seller, Shareholder and MTS in accordance with its
terms.
5.2 No Consents or Conflicts. Except for the
approval of the Bankruptcy Court, no consent of, or filing with, any
governmental authority or third party is required in connection with the
execution, delivery or performance of this Agreement or any of the other
agreements, instruments or documents to be delivered by or on behalf of Seller,
Shareholder or MTS in connection herewith. Subject to Bankruptcy Court
approval, neither the execution or delivery nor the performance of this
Agreement or any of the other agreements, instruments or documents to be
delivered by or on behalf of Seller, Shareholder or MTS in connection herewith
conflicts with, violates or results in any breach of: (i) any judgment, decree,
order, statute, rule or regulation applicable to Seller, Shareholder or MTS,
(ii) any instrument to which Seller, Shareholder or MTS is a party or by which
Seller or any of its assets is bound, or (iii) any provision of the Articles of
Incorporation or the By-Laws of Seller, Shareholder or MTS.
5.3 Notice Provided. All parties in interest of
the Contemplated Transactions have been provided notice of the Contemplated
Transactions and the sale of the assets of Seller free and clear of all Liens,
Claims and encumbrances pursuant to Sections 363 and 365 of the Bankruptcy
Code.
5.4 Title to Purchased Assets. Except for the
MTS Real Property which is owned by MTS, Seller owns all of the Purchased
Assets free and clear of all Liens, Claims, or other restrictions or
limitations of any kind whatsoever affecting the ability to use or transfer the
Purchased Assets. Except for the Permitted Liens, all Liens, Claims, or other
restrictions or limitations are fully released and canceled as of the Closing.
5.5 Ownership of Seller and Shareholder.
Shareholder owns, free and clear of all Liens and Claims, all of the issued and
outstanding capital stock of Seller. MTS owns, free and clear of all Liens and
Claims, all of the issued and outstanding capital stock of Shareholder.
5.6 Assets Owned. Except for the acquisition and
disposition of assets in the ordinary course of business consistent with
Seller's past practice, the Purchased Assets include all of the fixed assets
reflected on the Balance Sheet less the Retained Assets, and except for the
Retained Assets, comprise all of those assets which are used to operate
Seller's business in
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the ordinary course as presently conducted. Since the date of the Balance
Sheet, there has not been any damage to or disposition (except for the sale of
inventory in the ordinary course of business consistent with past practice) or
loss (whether or not covered by insurance) of any asset of Seller.
5.7 Compliance with Laws. Seller is not in
violation of any Law, including, without limitation, any Law pertaining to
Medicare or Medicaid reimbursement (except as to payments to providers that may
have been modified by the Plan), environmental protection, infectious or
biomedical waste, occupational health or safety, employee benefits, or
employment practices. Seller has all permits and licenses necessary to conduct
its business. All such permits and licenses are in full force and effect, and
no proceeding is pending or, to the knowledge of Seller, Shareholder or MTS,
threatened, to revoke or limit any of them.
5.8 No Litigation. Except as set forth on
Schedule 5.8, there is no claim, litigation, investigation or proceeding
pending or, to the knowledge of Seller, Shareholder or MTS, threatened against
Seller. There are no pending or, to the knowledge of Seller, Shareholder or
MTS, threatened controversies, grievances or claims by any employee or former
employee of Seller with respect to their employment, compensation, benefits or
working conditions.
5.9 Condition. To the knowledge of Seller, all
of the items of tangible property included among the Purchased Assets are in
good operating condition, normal wear and tear excepted, neither require nor
are reasonably expected to require any special or extraordinary expenditures to
remain in such condition beyond normal maintenance, and are capable of being
used for their intended purposes in the ordinary course of business consistent
with past practice.
5.10 Taxes. All tax returns, reports and
declarations (hereinafter collectively, "Tax Returns") required by any
governmental authority to be filed in connection with the properties, business,
income, expenses, net worth and franchises of Seller have been timely filed,
and such returns are correct and complete in all respects. All tax due in
connection with the properties, business, income, expenses, net worth and
franchises of Seller has been paid, other than tax which is not yet due or
which, if due, is not yet delinquent or is being contested in good faith, and
for which in all cases reserves have been established in the Balance Sheet
which are sufficient to cover the payment of all such tax. There are no tax
claims, audits or proceedings pending in connection with the properties,
business, income, expenses, net worth and franchises of Seller, and, to the
knowledge of Seller, there are no such threatened claims, audits or
proceedings.
5.11 Employee Benefits. All employee welfare
benefit plans as defined in Section 3(1) of the Employee Retirement Income
Security Act of 1974 ("ERISA") ("Welfare Plans"), employee pension benefit
plans as defined in Section 3(2) of ERISA ("Pension Plans"), and all other
employee benefit programs or arrangements of any type ("Other Plans"), written
or unwritten (collectively, the "Plans") maintained by Seller or to which
Seller contributes ("Seller's Plans") are listed on Schedule 5.11. In
addition, Schedule 5.11 separately sets forth any Plans which Seller, or any
affiliate or predecessor of Seller, maintained or contributed to within the six
years preceding the date hereof. Except as disclosed on Schedule 5.11:
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5.11.1 The Seller's Plans comply, in all
material respects, with all applicable provisions of any laws, rules, or
regulations, including, without limitation, the Internal Revenue Code of 1986,
as amended (the "Code"), and ERISA, and have so complied during all prior
periods during which any such provisions were applicable. Without limiting the
foregoing, any Seller's Plan, and any related trust, intended to meet the
requirements for tax-favored treatment under the Code (including, without
limitation, Sections 401 and 501 and Subchapter B of the Chapter 1 of the Code)
meets and for all prior periods has met, such requirements in all material
respects.
5.11.2 Seller and any other party
involved in the administration of any of the Seller's Plans (i) has complied in
all material respects with the provisions of ERISA, the Code and other laws,
rules and regulations applicable to such party, whether as an employer, plan
sponsor, plan administrator, or fiduciary of any of the Seller's Plans or
otherwise, (including without limitation the provisions of ERISA and the Code
concerning prohibited transactions), and (ii) has administered the Seller's
Plans in accordance with their terms. Seller has made all contributions
required of it by any law (including, without limitation, ERISA) or contract
under any of the Seller's Plans and no unfunded liability exists with respect
to any of the Seller's Plans.
5.11.3 Seller has no responsibility or
liability, contingent or otherwise, with respect to any Plans or any employee
benefits other than under the Seller's Plans listed on Schedule 5.11. Seller
has the right to amend or terminate, without the consent of any other person,
any Seller's Plan, except as prohibited by law and any applicable collective
bargaining agreement. Neither Seller, nor any affiliate or predecessor of
Seller, maintains or has ever maintained or been obligated to contribute to (i)
any defined benefit pension plan (as such term is defined in Section 3(35) of
ERISA), (ii) any multiemployer plan (as such term is defined in Section 3(37)
of ERISA), (iii) any severance plan or policy, or (iv) any arrangement
providing medical or other welfare benefits to retirees or other former
employees or their beneficiaries, except as required under part 6 of Subtitle B
of Title I of ERISA or Section 4980B(f) of the Code (hereinafter collectively
referred to as "COBRA").
5.11.4 There are no actions, suits or
claims pending (other than routine claims for benefits) or, to the knowledge of
Seller, any actions, suits, or claims (other than routine claims for benefits)
which could reasonably be expected to be asserted, against any of the Seller's
Plans, or the assets thereof, or against Seller or any other party with respect
to any of the Seller's Plans.
5.12 Conflicts. Except for the Vangard License
Agreement and the packaging business presently conducted by MTS or its
Affiliates, neither MTS nor its Affiliates, has any direct or indirect
interest in any business enterprise which does business with Seller or competes
with Seller in any manner.
5.13 Absence of Certain Business Practices.
Neither Seller nor any
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shareholder, director, officer, employee or agent of Seller, nor any other
person acting on its behalf, directly or indirectly, has given or agreed to
give any gift or similar benefit to any customer, supplier, governmental
employee or other person which (i) might subject Seller to any damage or
penalty in any civil, criminal or governmental litigation or proceeding, (ii)
if not given in the past, might have had an adverse effect on the assets,
properties, business or operations of Seller, or (iii) if not continued in the
future, might adversely affect Seller's assets, operations or its prospects or
which might subject Seller to suit or penalty in any private or governmental
litigation or proceeding.
5.14 Brokers and Finders. No broker, finder or
other person or entity acting in a similar capacity has participated on behalf
of Seller, Shareholder or MTS in bringing about the transactions contemplated
herein, rendered any services with respect hereto, or been in any way involved
herewith, except for Management Resources Group, which obligation owed to such
entity, if any, shall be determined by an Order of the Bankruptcy Court.
5.15 Intellectual Property. Seller has not
granted any rights in any of its Intellectual Property to any third party.
5.16 Contracts. The Assumed Contracts are in full
force and effect, Seller, Shareholder or MTS, to the extent that each is a
party, has performed all obligations required to be performed by it or them to
date, and there is no default of any kind or nature thereunder by Seller,
Shareholder or MTS, as the case may be, and Seller, Shareholder and MTS are not
aware of any default thereunder by any other party thereto, except defaults of
the type referred to in Section 365(b)(2) of the Bankruptcy Code. Seller is
able to assign the Assumed Contracts in accordance with Section 365(b) and (f)
of the Bankruptcy Code, or otherwise.
5.17 No Misrepresentations. No representation or
warranty specifically made by each of Seller, Shareholder or MTS in this
Agreement, the Schedules or Exhibits hereto, or any certificate or document
delivered to Buyer or NCS contains any untrue statement of a material fact or
omits to state a fact required to be stated therein or herein or necessary to
make the statements and facts contained therein or herein, in light of the
circumstances under which they are made, not false or misleading. Copies of
all documents delivered or made available to Buyer or NCS by Seller,
Shareholder or MTS were complete and accurate copies of such documents.
5.18 MTS Real Property.
5.18.1 Title. MTS has good and clear fee
simple and marketable title to the MTS Real Property evidenced in the
appropriate public records, free from all easements, rights-of-way, liens,
security interests, encumbrances and defects of any kind, except for the
Permitted Liens. All real estate taxes, assessments, water and sewer charges
and other municipal utility charges pertaining to the MTS Real Property, to the
extent due and owing, have been paid in full.
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5.18.2 Zoning. The MTS Real Property is
presently zoned to permit the Seller's business and all other current uses of
the premises; said zoning is pursuant to statute or ordinance, not pursuant to
any variance or conditional permit granted with respect to the MTS Real
Property, and does not require any further approval nor any other action by any
party.
5.18.3 Assessments. To the knowledge of
MTS, all assessments now a lien are shown on the taxing authority's records,
and no improvements (site or area) have been installed, the cost of which is to
be assessed against the MTS Real Property in the future. MTS has not been
notified of possible future improvements by any public authority, any part of
the cost of which would or might be assessed against the MTS Real Property, or
of any contemplated future assessments of any kind. To the knowledge of MTS,
all of the streets, roads and avenues adjoining and/or adjacent to the MTS Real
Property are publicly owned and maintained without assessment or charge to MTS,
and the MTS Real Property has direct access to dedicated roads and/or streets.
5.18.4 Utilities. To the knowledge of MTS,
all utility services necessary for the operation of any business currently
conducted at the MTS Real Property, including water supply, storm and sanitary
sewer facilities, gas, electric and telephone facilities, reach the MTS Real
Property through adjoining public streets or, if they pass through adjoining
private land, do so in accordance with valid, permanent, non-terminable public
or private easements.
5.18.5 Liens/Condition of Premises. The
MTS Real Property is free from mechanic's liens or the possibility of the
rightful filing thereof. The buildings constructed on the MTS Real Property,
to the knowledge of MTS, contain no structural defects. The MTS Real Property
has not been damaged by fire or other casualty except for such damage which has
been fully repaired and restored prior to the date of this Agreement. To the
knowledge of MTS, all equipment, systems, and appliances located at or on the
MTS Real Property and owned by MTS are in good working order, including,
without limitation, heating, ventilation, plumbing, electrical and air
conditioning systems, and wiring, paving, and other amenities. To the
knowledge of MTS, the roof and the foundation of the buildings on the MTS Real
Property are water tight and free from leaks, seepages and moisture. MTS has
received no notice of taking, condemnation, betterment or assessment, actual or
proposed, with respect to any of the MTS Real Property, and no such taking,
condemnation, betterment or assessment has occurred. Buyer acknowledges that
it did not request MTS to take any specific actions with respect to the
representations made in this Section 5.18.5.
5.18.6 Permits. All applicable permits,
declarations, and other evidences of compliance from regulatory authorities
required to be maintained for the MTS Real Property, for the sale of the MTS
Real Property to Buyer, and for the operation and use of the MTS Real Property,
for the Seller's business including, without limitation, those regulating the
division of real property and environmental matters, have been obtained. All
warranties (which have not by their terms expired) in favor of MTS from
contractors having constructed said improvements are in full force and effect
and MTS has complied with the terms of the same. To the knowledge of MTS,
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there are no defects in the improvements being a part of the MTS Real Property
or the materials or workmanship furnished in the construction thereof, and said
improvements were constructed in substantial conformity with the plans and
specifications of said improvements.
5.18.7 Real Property Taxes. All federal,
state and local tax returns (including tax returns concerning "gross receipts")
required to be filed with respect to the MTS Real Property have been timely,
duly and accurately completed and filed. All federal, state and local taxes
arising in connection with the ownership and operation of the MTS Real Property
have been paid in full, and to the knowledge of MTS, no tax certiorari or audit
proceedings are currently pending with respect to the MTS Real Property. MTS
has received no notice of any increase in either the tax rate or property
assessment with respect to the MTS Real Property at the federal, state or local
level.
5.18.8 Use. The MTS Real Property, and the
current uses, operation, maintenance and management thereof, are not in
violation of any restrictive covenant, agreement or permit applicable thereto,
or to the knowledge of MTS, of any building code, ordinance, statute,
regulation or requirement of any governmental authority having jurisdiction
thereof, and MTS has received no notices regarding any such violation.
5.18.9 Compliance with Laws. MTS is not in
default with respect to any law, administrative rule, regulation, judgment,
decision, order, writ, injunction, decree or demand of any court or any
governmental authority, and the consummation of the transactions contemplated
herein will not conflict with, or constitute a breach of or default under, any
of the foregoing or any agreement or instrument applicable to the MTS Real
Property. There is no litigation or claim pending or threatened against or
involving the MTS Real Property, and, to the knowledge of MTS, there are no
facts or circumstances which could give rise to any such claim or litigation.
5.18.10 Leases. The MTS Real Property is
subject to no leases or rights of occupancy, except with respect to Seller.
MTS has no contract for services or supplies, or otherwise relating to the
ownership, operation or management of the MTS Real Property, including (but not
limited to) labor, management, rubbish removal, exterminating, vending
machines, employment or elevator maintenance contracts.
5.19 Vangard Real Property.
5.19.1 Title. Seller has good and clear
fee simple and marketable title to the Vangard Real Property evidenced in the
appropriate public records, free from all easements, rights-of-way, liens,
security interests, encumbrances and defects of any kind, except for the
Permitted Liens. All real estate taxes, assessments, water and sewer charges
and other municipal utility charges pertaining to the Vangard Real Property, to
the extent due and owing, have been paid in full.
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5.19.2 Zoning. The Vangard Real Property
is presently zoned to permit the Seller's business and all other current uses
of the premises; said zoning is pursuant to statute or ordinance, not pursuant
to any variance or conditional permit granted with respect to the Vangard Real
Property, and does not require any further approval nor any other action by any
party.
5.19.3 Assessments. To the knowledge of
Seller, all assessments now a lien are shown on the taxing authority's records,
and no improvements (site or area) have been installed, the cost of which is to
be assessed against the Vangard Real Property in the future. Seller has not
been notified of possible future improvements by any public authority, any part
of the cost of which would or might be assessed against the Vangard Real
Property, or of any contemplated future assessments of any kind. To the
knowledge of Seller, all of the streets, roads and avenues adjoining and/or
adjacent to the Vangard Real Property are publicly owned and maintained without
assessment or charge to Seller, and the Vangard Real Property has direct access
to dedicated roads and/or streets.
5.19.4 Utilities. To the knowledge of
Seller, all utility services necessary for the operation of any business
currently conducted at the Vangard Real Property, including water supply, storm
and sanitary sewer facilities, gas, electric and telephone facilities, reach
the Vangard Real Property through adjoining public streets or, if they pass
through adjoining private land, do so in accordance with valid, permanent,
non-terminable public or private easements.
5.19.5 Liens/Condition of Premises. The
Vangard Real Property is free from mechanic's liens or the possibility of the
rightful filing thereof. The buildings constructed on the Vangard Real
Property, to the knowledge of Seller, contain no structural defects. The
Vangard Real Property has not been damaged by fire or other casualty except for
such damage which has been fully repaired and restored prior to the date of
this Agreement. To the knowledge of Seller, all equipment, systems, and
appliances located at or on the Vangard Real Property and owned by Seller are
in good working order, including, without limitation, heating, ventilation,
plumbing, electrical and air conditioning systems, and wiring, paving, and
other amenities. To the knowledge of Seller, the roof and the foundation of
the buildings on the Vangard Real Property are water tight and free from leaks,
seepages and moisture. Seller has received no notice of taking, condemnation,
betterment or assessment, actual or proposed, with respect to any of the
Vangard Real Property, and no such taking, condemnation, betterment or
assessment has occurred. Buyer acknowledges that it did not request Seller to
take any specific actions with respect to the representations made in this
Section 5.19.5.
5.19.6 Permits. All applicable permits,
declarations, and other evidences of compliance from regulatory authorities
required to be maintained for the Vangard Real Property, for the sale of the
Vangard Real Property to Buyer, and for the operation and use of the Vangard
Real Property, for the Seller's business including, without limitation, those
regulating the division of real property and environmental matters, have been
obtained. All warranties (which have not by their terms expired) in favor of
Seller from contractors having constructed said
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improvements are in full force and effect and Seller has complied with the
terms of the same. To the knowledge of Seller, there are no defects in the
improvements being a part of the Vangard Real Property or the materials or
workmanship furnished in the construction thereof, and said improvements were
constructed in substantial conformity with the plans and specifications of said
improvements.
5.19.7 Real Property Taxes. All federal,
state and local tax returns (including tax returns concerning "gross receipts")
required to be filed with respect to the Vangard Real Property have been timely,
duly and accurately completed and filed. All federal, state and local taxes
arising in connection with the ownership and operation of the Vangard Real
Property have been paid in full, and to the knowledge of Seller, no tax
certiorari or audit proceedings are currently pending with respect to the
Vangard Real Property. Seller has received no notice of any increase in either
the tax rate or property assessment with respect to the Vangard Real Property at
the federal, state or local level.
5.19.8 Use. The Vangard Real Property, and
the current uses, operation, maintenance and management thereof, are not in
violation of any restrictive covenant, agreement or permit applicable thereto,
or to the knowledge of Seller, of any building code, ordinance, statute,
regulation or requirement of any governmental authority having jurisdiction
thereof, and Seller has received no notices regarding any such violation.
5.19.9 Compliance with Laws. Seller is not
in default with respect to any law, administrative rule, regulation, judgment,
decision, order, writ, injunction, decree or demand of any court or any
governmental authority, and the consummation of the transactions contemplated
herein will not conflict with, or constitute a breach of or default under, any
of the foregoing or any agreement or instrument applicable to the Vangard Real
Property. There is no litigation or claim pending or threatened against or
involving the Vangard Real Property, and, to the knowledge of Seller, there are
no facts or circumstances which could give rise to any such claim or
litigation.
5.19.10 Leases. The Vangard Real Property
is subject to no leases or rights of occupancy. Seller has no contract for
services or supplies, or otherwise relating to the ownership, operation or
management of the Vangard Real Property, including (but not limited to) labor,
management, rubbish removal, exterminating, vending machines, employment or
elevator maintenance contracts.
5.20 Ownership of Assets. Except for the
Intellectual Property subject to the License Agreement being assigned hereunder
and the MTS Real Property being conveyed hereunder, MTS and its Affiliates
(other than Seller) do not own, have any interest in, or Claim against, any of
the assets used to operate Seller's business as presently conducted, or in any
of the assets located at the MTS Real Property, the Vangard Real Property, or
the property subject to the Facility Lease.
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6. Representations and Warranties of Buyer and NCS.
Buyer and NCS jointly and severally represent and warrant to Seller,
Shareholder and MTS as follows:
6.1 Organization and Authority of Buyer and NCS.
Buyer is a corporation duly incorporated, validly existing and in good standing
under the laws of the State of Ohio, and has full corporate power and authority
to execute, deliver and perform this Agreement in accordance with its terms.
NCS is a corporation duly incorporated and validly existing under the laws of
the State of Delaware and has full corporate power and authority to execute,
deliver and perform this Agreement in accordance with its terms. Buyer is
qualified to do business in the Commonwealth of Kentucky. This Agreement and
the transactions contemplated by this Agreement, have been authorized by all
necessary corporate action of Buyer and NCS. This Agreement has been duly
executed and delivered by Buyer and NCS and constitutes the legal, valid and
binding obligation of Buyer and NCS, enforceable against Buyer and NCS in
accordance with its terms.
6.2 No Consents or Conflicts. No consent of, or
filing with, any governmental authority or third party is required in
connection with the execution, delivery or performance of this Agreement by
Buyer and NCS. Neither the execution or delivery nor the performance of this
Agreement or any of the other agreements, instruments or documents to be
delivered by or on behalf of Buyer and NCS in connection herewith conflicts
with, violates or results in any breach of: (i) any judgment, decree, order,
statute, rule or regulation applicable to Buyer or NCS, (ii) any instrument to
which Buyer or NCS is a party or by which either is bound, or (iii) any
provision of the Articles of Incorporation or the By-Laws of Buyer or NCS.
6.3 Brokers and Finders. No broker, finder or
other person or entity acting in a similar capacity has participated on behalf
of Buyer or NCS in bringing about the transactions contemplated herein,
rendered any services with respect thereto or been in any way involved
therewith.
6.4 No Misrepresentation. No representation or
warranty made by Buyer or NCS in this Agreement, the Schedules or Exhibits
hereto, or any certificate or document delivered to Seller, Shareholder or MTS
contains any untrue statement of a material fact or omits to state a fact
required to be stated therein or herein or necessary to make the statements and
facts contained therein or herein, in light of the circumstances under which
they are made, not false or misleading. Copies of all documents delivered or
made available to Seller, Shareholder or MTS were complete and accurate copies
of such documents.
7. Survival of Representations and Warranties. The
representations, warranties and covenants contained in this Agreement or in any
document, certificate, instrument, Schedule or Exhibit delivered in connection
herewith, shall survive the Closing, regardless of any investigation made by
any party hereto at any time. As of the Closing Date, Buyer and NCS
acknowledge that their officers, who have been involved in the negotiation of
this Agreement, have no actual
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knowledge of any specific breach of the representations or warranties made by
Seller, Shareholder or MTS under this Agreement.
8. Closing; Closing Date. The consummation of
Contemplated Transactions (the "Closing") will take place simultaneous with the
execution and delivery of this Agreement by all of the parties hereto as of the
date hereof (the "Closing Date"), at such place and time as the parties hereto
mutually agree.
8.1 Closing Deliveries of Seller. At the
Closing, Seller shall have delivered, or caused to be delivered, to Buyer the
following documents, duly executed by Seller, Shareholder or MTS, as
appropriate, (a) the Assignment of Trademarks, (b) the MTS Deed, (c) the
Vangard Deed, (d) the Assignment of Contracts, (e) all documentation necessary
to effectuate a change of Seller's corporate name to permit Buyer to use
Seller's name (and all trade names or variants thereof) in the Commonwealth of
Kentucky and in all other states, if any, where Seller is conducting its
business, and (f) such other documents that Buyer may reasonably request in
order to consummate the Contemplated Transactions.
8.2 Closing Deliveries of Buyer. At the Closing,
Buyer shall have delivered, or caused to be delivered, to Seller the following
documents, duly executed by Buyer (a) the Assignment of Contracts, and (b) such
other documents that Seller may reasonably request in order to consummate the
Contemplated Transactions.
9. Confidentiality. All parties to this Agreement shall
at all times hold in strictest confidence the terms of this Agreement and any
and all non-public information concerning the products, services, business,
representatives, suppliers and customers of Seller, Buyer or any of its
affiliated companies.
10. Post-Closing Agreements / Further Assurances. The
parties hereto acknowledge and agree to the following:
10.1 That Buyer may not have all required
licenses, permits and other governmental authorizations to take title to all of
the Purchased Assets and to hereafter operate all aspects of Seller's business.
Seller agrees to cooperate with Buyer in timely obtaining such licenses,
permits and other governmental authorizations, and further agrees that Buyer
may operate Seller's business under the authority of any of Seller's licenses,
permits or other governmental authorizations of the type that Buyer has not yet
obtained, provided, that such operation does not violate applicable laws or
regulations, and that Buyer indemnifies and holds Seller harmless against any
and all liability, loss, damage or deficiency resulting from Seller's good
faith performance of these obligations.
10.2 To execute and deliver to any other party any
and all documents and instruments, and do and perform such acts, in addition to
those expressly provided for herein, as may be necessary or appropriate to
carry out or evidence the transactions contemplated by this
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Agreement, whether before, at or after the Closing.
10.3 That the Closing is conditioned upon: (i)
Seller obtaining no less than $66,785 in cash to conduct its business until the
Closing Date at that level of operations described in the document listing the
"Minimum Recommended Expenditures from 3/22 through 4/4" prepared by Mr. Herb
DeBarba, and (ii) the Bankruptcy Court entry of an order approving (a) the sale
of the Purchased Assets free and clear of any and all Liens and Claims, and (b)
the Contemplated Transaction.
10.4 Seller covenants and agrees to forward to
Buyer, within five (5) business days of Seller's receipt of the same, any and
all payments which Seller may receive in respect of the accounts receivable or
any payments which relate or pertain to sales by Buyer after the Closing, which
payments are delivered to Seller or are otherwise received by Seller. In the
event that Buyer at any time receives checks payable to Seller for amounts owed
to Buyer, Buyer shall deliver such checks to Seller and Seller shall endorse
such checks to Buyer or remit to Buyer the amounts represented by such checks
within five (5) business days of Seller's receipt of same. In the event that
Buyer at any time receives checks for amounts owed to Seller, Buyer shall
deliver such checks to Seller or remit to Seller the amounts represented by
such checks within five (5) business days of Buyer's receipt of same.
10.5 Seller shall, within fourteen (14) days after
the Closing Date, provide such notices of continuation of health coverage as
are required to be provided to any of Seller's employees, former employees, or
the beneficiaries or dependents of such employees or former employees, under
COBRA, in such form as Seller and Buyer shall jointly prepare.
11. Assignment of Contracts, Rights, Etc.
Notwithstanding anything contained in this Agreement to the contrary, this
Agreement will not constitute an agreement to assign any contract or claim or
any right or benefit arising thereunder or resulting therefrom if an attempted
assignment thereof, without the consent of a third party thereto, would
constitute a breach thereof or in any way affect the rights of Buyer
thereunder. Seller, Shareholder and MTS shall use their best efforts to obtain
the consent of the other party to any of the foregoing to the assignment
thereof to Buyer in all cases that such consent is required for assignment or
transfer. If such consent is not obtained, Seller, Shareholder and MTS agree
to cooperate with Buyer in any reasonable arrangement designed to provide for
Buyer the benefits thereunder, including, but not limited to, having (a) Buyer
act as an agent for Seller, and (b) Seller enforce for the benefit of Buyer any
and all rights of Seller against the other party thereto arising out of the
cancellation by such other party or otherwise.
12. Indemnification.
12.1 Seller agrees to indemnify and hold Buyer
harmless from and against (i) any and all loss, damage, liability or deficiency
resulting from or arising out of any inaccuracy in or breach of any
representation, warranty, covenant, or obligation made or incurred
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by Seller herein, (ii) any imposition or attempted imposition by a third party
upon Buyer of any liability or obligation of Seller which Buyer did not
specifically agree to assume pursuant to Section 3 hereof, (iii) any and all
loss, damage, liability or deficiency resulting from or arising out of the
generation, production, treatment, transportation, use, or storage before the
Closing of, or the presence of for whatever reason on the date hereof, at (a)
the Seller's facilities or the real property on which they are located, (b) the
MTS Real Property, or (c) the Vangard Real Property, of any substances which
could result in damage to the environment or danger to the health and safety of
the public, and (iv) any and all costs and expenses (including reasonable
attorneys' and accountants' fees) related to any of the foregoing.
12.2 Shareholder agrees to indemnify and hold
Buyer harmless from and against (i) any and all loss, damage, liability or
deficiency resulting from or arising out of any inaccuracy in or breach of (a)
any covenant or obligation made or incurred by Shareholder herein, or (b) a
representation or warranty contained in Sections 5.1.2 (Organization,
Authority, Capacity), 5.1.4 (Organization, Authority, Capacity), 5.2 (No
Consents or Conflicts), 5.3 (Notice Provided), 5.5 (Ownership of Seller and
Shareholder), 5.11 (Employee Benefits), 5.12 (Conflicts), 5.16 (Contracts), and
5.20 (Ownership of Assets), and (ii) any and all costs and expenses (including
reasonable attorneys' and accountants' fees) related to any of the foregoing.
12.3 MTS agrees to indemnify and hold Buyer
harmless from and against (i) any and all loss, damage, liability or deficiency
resulting from or arising out of any inaccuracy in or breach of (a) any
covenant or obligation made or incurred by MTS herein, or (b) a representation
or warranty contained in Sections 5.1.3 (Organization, Authority, Capacity),
5.1.4 (Organization, Authority, Capacity), 5.2 (No Consents or Conflicts), 5.3
(Notice Provided), 5.5 (Ownership of Seller and Shareholder), 5.11 (Employee
Benefits), 5.12 (Conflicts), 5.16 (Contracts), 5.18 (MTS Real Property), and
5.20 (Ownership of Assets), (ii) any and all loss, damage, liability or
deficiency resulting from or arising out of the generation, production,
treatment, transportation, use, or storage before the Closing of, or the
presence of for whatever reason on the date hereof, at the MTS Real Property,
of any substances which could result in damage to the environment or danger to
the health and safety of the public, and (iii) any and all costs and expenses
(including reasonable attorneys' and accountants' fees) related to any of the
foregoing.
12.4 Buyer and NCS jointly and severally agree to
indemnify and hold Seller, Shareholder and MTS harmless from and against (i)
any and all loss, damage, liability or deficiency resulting from or arising out
of any inaccuracy in or breach of any representation, warranty, covenant, or
obligation made or incurred by Buyer or NCS herein, (ii) any imposition or
attempted imposition by a third party upon Seller, Shareholder or MTS of any
liability or obligation that Buyer specifically agreed to assume pursuant to
Section 3 hereof, and (iii) any and all costs and expenses (including
reasonable attorneys' and accountants' fees) related to any of the foregoing.
12.5 If any legal proceedings shall be instituted
or any claim is asserted by any third party in respect of which any party
hereto may be entitled to indemnity hereunder, the party asserting such right
to indemnity shall give the party from whom indemnity is sought written
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notice thereof. A delay in giving notice shall only relieve the recipient of
liability to the extent the recipient suffers actual prejudice because of the
delay. The party from whom indemnity is sought shall have the right, at its
option and expense, to participate in the defense of such a proceeding or
claim, but not to control the defense, negotiation or settlement thereof, which
control shall at all times rest with the party asserting such right to
indemnity, unless the proceeding or claim involves only money damages and the
party from whom indemnity is sought:
(a) irrevocably acknowledges in writing complete
responsibility for and agrees to indemnify
the party asserting such right to indemnity,
and
(b) furnishes satisfactory evidence of the
financial ability to indemnify the party
asserting such right to indemnity,
in which case the party from whom indemnity is sought may assume such control
through counsel of its choice and at its expense, but the party asserting such
right to indemnity shall continue to have the right to be represented, at its
own expense, by counsel of its choice in connection with the defense of such a
proceeding or claim. If the party from whom indemnity is sought does not
assume control of the defense of such a proceeding or claim, the entire defense
of the proceeding or claim by the party asserting such right to indemnity, any
settlement made by the party asserting such right to indemnity, and any
judgment entered in the proceeding or claim shall be deemed to have been
consented to by, and shall be binding on, the party from whom indemnity is
sought as fully as though it alone had assumed the defense thereof and a
judgment had been entered in the proceeding or claim in the amount of such
settlement or judgment, except that the right of the party from whom indemnity
is sought to contest the right of the other to indemnification under this
Agreement with respect to the proceeding or claim shall not be extinguished.
If the party from whom indemnity is sought does assume control of the defense
of such a proceeding or claim, it will not, without the prior written consent
of the party asserting such right to indemnity, settle the proceeding or claim
or consent to entry of any judgment relating thereto which does not include as
an unconditional term thereof the giving by the claimant to the party asserting
such right to indemnity a release from all liability in respect of the
proceeding or claim. The parties hereto agree to cooperate fully with each
other in connection with the defense, negotiation or settlement of any such
proceeding or claim.
13. Amendments; Binding Effect. The Agreement (including
each Schedule and Exhibit hereto) may not be amended or modified except by a
document in writing signed by all parties hereto. This Agreement and the
rights and obligations of each party hereunder shall be binding upon and shall
inure to the benefit of the respective successors and assigns of each of the
parties hereto.
14. Notices. Any notice or other communication given
hereunder shall be in writing and personally delivered, sent by United States
Registered or Certified Mail, or sent by a nationally recognized courier
service, addressed as follows:
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If to Seller, Shareholder or Mr. Todd Siegel
MTS, to: 12920 Automobile Blvd.
Clearwater, Florida 34622
With a copy to: Massari & Bell
4830 West Kennedy Blvd., Suite 695
Tampa, Florida 33609-2574
Attn: Dominic Massari, Esq.
If to the Plan Trustee, to: Mr. Jules Joseph Stine
580 Conway Forest Drive, N.W.
Atlanta, GA 30327-3523
If to Buyer or NCS: NCS HealthCare, Inc. (Attn:
President)
3201 Enterprise Parkway, Suite 220
Beachwood, Ohio 44122
With a copy to: Calfee, Halter & Griswold LLP
1400 McDonald Investment Center
800 Superior Avenue
Cleveland, Ohio 44114-2688
Attention: Robert A. Ross, Esq.
Delivery of any notice shall be deemed made on the date of its actual
delivery if personally delivered, and on the date indicated in the return
receipt or courier's records as the date of its delivery or first attempted
delivery if sent by mail or courier. Any party may change its address for
notice by delivery of written notice thereof in the manner provided herein.
15. Miscellaneous. This Agreement together with each
Schedule and Exhibit hereto sets forth the exclusive statement of the agreement
among the parties concerning the subject matter hereof, and there are no
agreements or understandings between or among any of the parties hereto
concerning such subject matter other than as set forth herein. The headings to
the various provisions of this Agreement are for reference purposes only and
shall not be construed as affecting the meaning or interpretation of this
Agreement. This Agreement may be executed in multiple counterparts, each of
which shall be deemed and original, and all of which together shall constitute
one and the same document. This Agreement shall be governed by and construed
in accordance with the laws of the State of Ohio without regard to any conflict
of laws provisions.
16. NCS Guaranty. NCS hereby unconditionally guaranties
the payment and performance of any and all of Buyer's liabilities and
obligations hereunder and those under any other agreements or documents
delivered in connection with this Agreement. Seller, Shareholder, or MTS may
seek remedies directly from NCS without first exhausting their remedies against
Buyer.
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IN WITNESS WHEREOF, the parties have executed this Asset
Purchase Agreement on the date first written above.
VANGARD LABS, INC.
By:
--------------------------------------------
Todd E. Siegel, President
VANGARD PHARMACEUTICAL
PACKAGING, INC.
By:
--------------------------------------------
Todd E. Siegel, President
MEDICAL TECHNOLOGY SYSTEMS, INC.
By:
--------------------------------------------
Todd E. Siegel, President
JULES J. STINE AS PLAN TRUSTEE UNDER
THE FIRST AMENDED AND RESTATED
LIQUIDATING PLAN OF VANGARD LABS, INC.,
UNDER CHAPTER 11 OF THE UNITED STATES
BANKRUPTCY CODE
-----------------------------------------------
Jules J. Stine, Plan Trustee
NCS HEALTHCARE OF KENTUCKY, INC.
By:
---------------------------------------------
Calvin Hunsicker, Vice President
NCS HEALTHCARE, INC.
By:
---------------------------------------------
Calvin Hunsicker, Vice President
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