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) AUGUST 19, 1996
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COMPSCRIPT, INC.
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(Exact name of registrant as specified in its charter)
FLORIDA 0-20594 65-0506539
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(State or other jurisdiction (Commission File (IRS Employer
or incorporation) Number) Identification No.)
1225 BROKEN SOUND PARKWAY N.W., SUITE A, BOCA RATON, FLORIDA 33487
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(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code (407) 974-8585
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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.
On August 19, 1996 Compscript, Inc. ("Compscript" or the "Company")
consummated a Stock Purchase Agreement with the stockholders of Securx, Inc.
("Securx"), an Ohio corporation (the "Stock Purchase Agreement"). Under the
Stock Purchase Agreement, Compscript acquired all the issued and outstanding
shares of Securx in exchange for 187,500 shares of Compscript's Common Stock.
The Stock Purchase Agreement contains various customary representations
and warranties of the parties. Subject to certain limitations, the former
shareholders of Securx agreed to indemnify Securx and Compscript against losses
and expenses incurred after the closing date due to a breach of the
shareholders' representations, warranties and covenants in the Stock Purchase
Agreement.
In connection with the Stock Purchase Agreement, each shareholder of
Compscript executed a non-competition, non-disclosure agreement. Compscript
entered into employment agreements with Mark Kirasich and Peter Longbons,
Securx's Chief Operating Officer and President, respectively.
Securx is a privately held provider of mail order pharmacy services to
insurers, self-insured companies and third party administrators.
The foregoing summary of the Stock Purchase Agreement is qualified in
its entirety by reference to the Stock Purchase Agreement, a copy of which
follows as an exhibit hereto and incorporated herein by reference.
FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements of Securx are not available at the
time of the filing of this Form 8-K Report . Such required
financial statements will be filed no later than 60 days
after this Report on Form 8-K was required to be filed.
(b) Pro Forma financial information of Securx is not available
at the time of the filing of this Form 8-K Report. The
required pro forma financial statements will be filed not
later than 60 days after this Report on Form 8-K was
required to be filed.
(c) Stock Purchase Agreement dated as of August 19, 1996, by
and among Compscript and the stockholders of Securx, Inc.
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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 hereunto duly authorized.
COMPSCRIPT, INC.
By: /s/ BRIAN A. KAHAN
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Brian A. Kahan
Chief Executive Officer
DATED: August 30, 1996
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EXHIBIT 1
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement ("Agreement") is made as of August 19,
1996, by COMPSCRIPT, INC., a Florida corporation ("Buyer"), MARK J. KIRASICH, an
individual resident in Ohio, PETER LONGBONS, an individual resident in Ohio, and
SOUTHWIND HEALTH PRODUCTS COMPANY, an Ohio corporation (each a Seller,
collectively the "Sellers") and DANIEL ZIVKO, an individual resident in Ohio,
QUENTIN ALEXANDER, an individual resident in Ohio and RAYMOND KRALOVIC, an
individual resident in Ohio (the "Southwind Shareholders") .
RECITALS
Sellers desire to sell, and Buyer desires to purchase, all of the issued
and outstanding shares (the "Shares") of capital stock of SECURX, INC., an Ohio
corporation (the "Company"), for the consideration and on the terms set forth in
this Agreement.
AGREEMENT
The parties, intending to be legally bound, agree as follows:
1. DEFINITIONS
For purposes of this Agreement, the following terms have the
meanings specified or referred to in this Section 1:
"APPLICABLE CONTRACT"--any Contract (a) under which Company has
or may acquire any rights, (b) under which the Company has or may become subject
to any obligation or liability, or (c) by which the Company or any of the assets
owned or used by it is or may become bound.
"BALANCE SHEET"--as defined in Section 3.4.
"BEST EFFORTS"--the efforts that a prudent Person desirous of
achieving a result would use in similar circumstances to ensure that such result
is achieved as expeditiously as possible.
"BREACH"--a "Breach" of a representation, warranty, covenant,
obligation, or other provision of this Agreement or any instrument delivered
pursuant to this Agreement will be deemed to have occurred if there is or has
been (a) any inaccuracy in or breach of, or any failure to perform or comply
with, such representation, warranty, covenant, obligation, or other provision,
or (b) any judgment (by any Person) or other occurrence or circumstance that is
or was inconsistent with such representation,
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warranty, covenant, obligation, or other provision, and the term "Breach" means
any such inaccuracy, breach, failure, claim, occurrence, or circumstance.
"BUYER"--as defined in the first paragraph of this Agreement.
"CLOSING"--as defined in Section 2.3.
"CLOSING DATE"--the date and time as of which the Closing
actually takes place.
"COMPANY"--as defined in the Recitals of this Agreement.
"CONSENT"--any approval, consent, ratification, waiver, or other
authorization (including any Governmental Authorization).
"CONTEMPLATED TRANSACTIONS"--all of the transactions contemplated
by this Agreement, including:
(a) the sale of the Shares by Sellers to Buyer;
(b) the execution, delivery, and performance of the Employment
Agreements, and the Noncompetition Agreements;
(c) the performance by Buyer and Sellers of their respective
covenants and obligations under this Agreement; and
(d) Buyer's acquisition and ownership of the Shares and
exercise of control over the Company.
"CONTRACT"--any agreement, contract, obligation, promise, or
undertaking (whether written or oral and whether express or implied) that is
legally binding.
"DAMAGES"--as defined in Section 10.2.
"DISCLOSURE LETTER"--the disclosure letter delivered by Sellers
to Buyer concurrently with the execution and delivery of this Agreement.
"EMPLOYMENT AGREEMENTS"--as defined in Section 2.4(a)(iii).
"ENCUMBRANCE"--any charge, claim, community property interest,
condition, equitable interest, lien, option, pledge, security interest, right of
first refusal, or restriction of any kind, including any restriction on use,
voting, transfer, receipt of income, or exercise of any other attribute of
ownership.
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"ENVIRONMENT"--soil, land surface or subsurface strata, surface
waters (including navigable waters, ocean waters, streams, ponds, drainage
basins, and wetlands), groundwaters, drinking water supply, stream sediments,
ambient air (including indoor air), plant and animal life, and any other
environmental medium or natural resource.
"ENVIRONMENTAL, HEALTH, AND SAFETY LIABILITIES"--any cost,
damages, expense, liability, obligation, or other responsibility arising from or
under Environmental Law or Occupational Safety and Health Law and consisting of
or relating to:
(a) any environmental, health, or safety matters or conditions
(including on-site or off-site contamination, occupational safety and health,
and regulation of chemical substances or products);
(b) fines, penalties, judgments, awards, settlements, legal or
administrative proceedings, damages, losses, claims, demands and response,
investigative, remedial, or inspection costs and expenses arising under
Environmental Law or Occupational Safety and Health Law;
(c) financial responsibility under Environmental Law or
Occupational Safety and Health Law for cleanup costs or corrective action,
including any investigation, cleanup, removal, containment, or other remediation
or response actions ("Cleanup") required by applicable Environmental Law or
Occupational Safety and Health Law (whether or not such Cleanup has been
required or requested by any Governmental Body or any other Person) and for any
natural resource damages; or
(d) any other compliance, corrective, investigative, or remedial
measures required under Environmental Law or Occupational Safety and Health Law.
The terms "removal," "remedial," and "response action," include
the types of activities covered by the United States Comprehensive Environmental
Response, Compensation, and Liability Act, 42 U.S.C. ss. 9601 et seq., as
amended ("CERCLA").
"ENVIRONMENTAL LAW"--any Legal Requirement that requires or
relates to:
(a) advising appropriate authorities, employees, and the public
of intended or actual releases of pollutants or hazardous substances or
materials, violations of discharge limits, or other prohibitions and of the
commencements of activities, such as resource extraction or construction, that
could have significant impact on the Environment;
(b) preventing or reducing to acceptable levels the release of
pollutants or hazardous substances or materials into the Environment;
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(c) reducing the quantities, preventing the release, or
minimizing the hazardous characteristics of wastes that are generated;
(d) assuring that products are designed, formulated, packaged,
and used so that they do not present unreasonable risks to human health or the
Environment when used or disposed of;
(e) protecting resources, species, or ecological amenities;
(f) reducing to acceptable levels the risks inherent in the
transportation of hazardous substances, pollutants, oil, or other potentially
harmful substances;
(g) cleaning up pollutants that have been released, preventing
the threat of release, or paying the costs of such clean up or prevention; or
(h) making responsible parties pay private parties, or groups of
them, for damages done to their health or the Environment, or permitting
self-appointed representatives of the public interest to recover for injuries
done to public assets.
"ERISA"--the Employee Retirement Income Security Act of 1974 or
any successor law, and regulations and rules issued pursuant to that Act or any
successor law.
"FACILITIES"--any real property, leaseholds, or other interests
currently or formerly owned or operated by the Company and any buildings,
plants, structures, or equipment (including motor vehicles, tank cars, and
rolling stock) currently or formerly owned or operated by the Company.
"GAAP"--generally accepted United States accounting principles,
applied on a basis consistent with the basis on which the Balance Sheet and the
other financial statements referred to in Section 3.4(b) were prepared.
"GOVERNMENTAL AUTHORIZATION"--any approval, consent, license,
permit, waiver, or other authorization issued, granted, given, or otherwise made
available by or under the authority of any Governmental Body or pursuant to any
Legal Requirement.
"GOVERNMENTAL BODY"--any:
(a) nation, state, county, city, town, village, district, or
other jurisdiction of any nature;
(b) federal, state, local, municipal, foreign, or other
government;
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(c) governmental or quasi-governmental authority of any nature
(including any governmental agency, branch, department, official, or entity and
any court or other tribunal);
(d) multi-national organization or body; or
(e) body exercising, or entitled to exercise, any administrative,
executive, judicial, legislative, police, regulatory, or taxing authority or
power of any nature.
"HAZARDOUS ACTIVITY"--the distribution, generation, handling,
importing, management, manufacturing, processing, production, refinement,
Release, storage, transfer, transportation, treatment, or use (including any
withdrawal or other use of groundwater) of Hazardous Materials in, on, under,
about, or from the Facilities or any part thereof into the Environment, and any
other act, business, operation, or thing that increases the danger, or risk of
danger, or poses an unreasonable risk of harm to persons or property on or off
the Facilities, or that may affect the value of the Facilities or the Company.
"HAZARDOUS MATERIALS"--any waste or other substance that is
listed, defined, designated, or classified as, or otherwise determined to be,
hazardous, radioactive, or toxic or a pollutant or a contaminant under or
pursuant to any Environmental Law, including any admixture or solution thereof,
and specifically including petroleum and all derivatives thereof or synthetic
substitutes therefor and asbestos or asbestos-containing materials.
"INTELLECTUAL PROPERTY ASSETS" --as defined in Section 3.22.
"INTERIM BALANCE SHEET"--as defined in Section 3.4.
"IRC"--the Internal Revenue Code of 1986 or any successor law,
and regulations issued by the IRS pursuant to the Internal Revenue Code or any
successor law.
"IRS"--the United States Internal Revenue Service or any
successor agency, and, to the extent relevant, the United States Department of
the Treasury.
"KNOWLEDGE"--an individual will be deemed to have "Knowledge" of
a particular fact or other matter if:
(a) such individual is actually aware of such fact or other
matter; or
(b) a prudent individual could be expected to discover or
otherwise become aware of such fact or other matter.
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A Person (other than an individual) will be deemed to have
"Knowledge" of a particular fact or other matter if any individual who is
serving, as a director, officer, partner, executor, or trustee of such Person
(or in any similar capacity) has, or at any time had, Knowledge of such fact or
other matter.
"LEGAL REQUIREMENT"--any federal, state, local, municipal,
foreign, international, multinational, or other administrative order,
constitution, law, ordinance, principle of common law, regulation, statute, or
treaty.
"NONCOMPETITION AGREEMENTS"--as defined in Section 2.4(a)(iv).
"OCCUPATIONAL SAFETY AND HEALTH LAW"--any Legal Requirement
designed to provide safe and healthful working conditions and to reduce
occupational safety and health hazards, and any program, whether governmental or
private (including those promulgated or sponsored by industry associations and
insurance companies), designed to provide safe and healthful working conditions.
"ORDER"--any award, decision, injunction, judgment, order,
ruling, subpoena, or verdict entered, issued, made, or rendered by any court,
administrative agency, or other Governmental Body or by any arbitrator.
"ORDINARY COURSE OF BUSINESS"--an action taken by a Person will
be deemed to have been taken in the "Ordinary Course of Business" only if:
(a) such action is consistent with the past practices of such
Person and is taken in the ordinary course of the normal day-to-day operations
of such Person;
(b) such action is not required to be authorized by the board of
directors of such Person (or by any Person or group of Persons exercising
similar authority); and
(c) such action is similar in nature and magnitude to actions
customarily taken, without any authorization by the board of directors (or by
any Person or group of Persons exercising similar authority), in the ordinary
course of the normal day-to-day operations of other Persons that are in the same
line of business as such Person.
"ORGANIZATIONAL DOCUMENTS"--(a) the articles or certificate of
incorporation and the code of regulations of a corporation and (b) any amendment
to any of the foregoing.
"PERSON"--any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union, or other entity
or Governmental Body.
"PLAN"--as defined in Section 3.13.
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"PROCEEDING"--any action, arbitration, audit, hearing,
investigation, litigation, or suit (whether civil, criminal, administrative,
investigative, or informal) commenced, brought, conducted, or heard by or
before, or otherwise involving, any Governmental Body or arbitrator.
"RELATED PERSON"--with respect to a particular individual:
(a) each other member of such individual's Family;
(b) any Person that is directly or indirectly controlled by
such individual or one or more members of such individual's Family;
(c) any Person in which such individual or members of such
individual's Family hold (individually or in the aggregate) a Material
Interest; and
(d) any Person with respect to which such individual or one or
more members of such individual's Family serves as a director, officer, partner,
executor, or trustee (or in a similar capacity).
With respect to a specified Person other than an individual:
(a) any Person that directly or indirectly controls, is directly
or indirectly controlled by, or is directly or indirectly under common control
with such specified Person;
(b) any Person that holds a Material Interest in such
specified Person;
(c) each Person that serves as a director, officer, partner,
executor, or trustee of such specified Person (or in a similar capacity);
(d) any Person in which such specified Person holds a Material
Interest;
(e) any Person with respect to which such specified Person
serves as a general partner or a trustee (or in a similar capacity); and
(f) any Related Person of any individual described in clause
(b) or (c).
(g) For purposes of this definition, (a) the "Family" of an
individual includes (i) the individual, (ii) the individual's spouse, (iii) any
other natural person who is related to the individual or the individual's spouse
within the second degree, and (iv) any other natural person who resides with
such individual, and (b) "Material Interest" means direct or indirect beneficial
ownership (as defined in Rule 13d-3 under the Securities Exchange Act of 1934)
of voting securities or other voting interests representing at least 5% of the
outstanding voting power of a Person or equity securities
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or other equity interests representing at least 5% of the outstanding equity
securities or equity interests in a Person.
"RELEASE"--any spilling, leaking, emitting, discharging,
depositing, escaping, leaching, dumping, or other releasing into the
Environment, whether intentional or unintentional.
"REPRESENTATIVE"--with respect to a particular Person, any
director, officer, employee, agent, consultant, advisor, or other representative
of such Person, including legal counsel, accountants, and financial advisors.
"SECURITIES ACT"--the Securities Act of 1933 or any successor
law, and regulations and rules issued pursuant to that Act or any successor law.
"SELLERS"--as defined in the first paragraph of this Agreement.
"SHARES"--as defined in the Recitals of this Agreement.
"SOUTHWIND SHAREHOLDERS"--as defined in the first paragraph of
this Agreement.
"SUBSIDIARY"--with respect to any Person (the "Owner"), any
corporation or other Person of which securities or other interests having the
power to elect a majority of that corporation's or other Person's board of
directors or similar governing body, or otherwise having the power to direct the
business and policies of that corporation or other Person (other than securities
or other interests having such power only upon the happening of a contingency
that has not occurred) are held by the Owner or one or more of its Subsidiaries;
when used without reference to a particular Person, "Subsidiary" means a
Subsidiary of the Company.
"TAXES"--all taxes however denominated, including any interest,
penalties or additions to tax that may become payable in respect thereof,
imposed by any governmental body, which taxes shall include, without limiting
the generality of the foregoing, all income taxes, payroll and employee
withholding taxes, unemployment insurance, social security, sales and use tax,
excise taxes, franchise taxes, gross receipts taxes, occupation taxes, real and
personal property taxes, stamp taxes, transfer taxes, workmen's compensation
taxes and any other obligation of the same or a similar nature, and "Tax" shall
meet any one of them.
"TAX RETURN"--any return (including any information return),
report, statement, schedule, notice, form, or other document or information
filed with or submitted to, or required to be filed with or submitted to, any
Governmental Body in connection with the determination, assessment, collection,
or payment of any Tax or in
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connection with the administration, implementation, or enforcement of or
compliance with any Legal Requirement relating to any Tax.
"THREAT OF RELEASE"--a substantial likelihood of a Release that
may require action in order to prevent or mitigate damage to the Environment
that may result from such Release.
"THREATENED"--a claim, Proceeding, dispute, action, or other
matter will be deemed to have been "Threatened" if any demand or statement has
been made (orally or in writing) or any notice has been given (orally or in
writing), or if any other event has occurred or any other circumstances exist,
that would lead a prudent Person to conclude that such a claim, Proceeding,
dispute, action, or other matter is likely to be asserted, commenced, taken, or
otherwise pursued in the future.
2. SALE AND TRANSFER OF SHARES; CLOSING
2.1 SHARES
Subject to the terms and conditions of this Agreement, at
the Closing, Sellers will sell and transfer the Shares to Buyer, and Buyer will
purchase the Shares from Sellers free and clear of all liens, claims, charges
and encumbrances of whatever nature. The Purchase Price shall be allocated among
the Sellers in proportion to their ownership of the Shares.
2.2 PURCHASE PRICE
The purchase price (the "Purchase Price") for the Shares
will be 187,500 shares of the Common Stock, par value $.0001 per share (the
"Compscript Common Stock") of the Buyer.
2.3 CLOSING
The purchase and sale (the "Closing") provided for in this
Agreement will take place at the offices of Buyer's counsel at 200 East Las Olas
Boulevard, Suite 1900, Fort Lauderdale, Florida, at 10:00 a.m. (local time) on
the later of (i) August 19, 1996 or (ii) at such other time and place as the
parties may agree. Subject to the provisions of Section 9, failure to consummate
the purchase and sale provided for in this Agreement on the date and time and at
the place determined pursuant to this Section 2.3 will not result in the
termination of this Agreement and will not relieve any party of any obligation
under this Agreement.
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2.4 CLOSING OBLIGATIONS
At the Closing:
(a) Sellers will deliver to Buyer:
(i) certificates representing the Shares, duly
endorsed (or accompanied by duly executed stock powers), for transfer to Buyer;
(ii) employment agreements in the form of Exhibit
2.4(a)(iii), executed by Mark J. Kirasich and Peter Longbons (collectively,
"Employment Agreements");
(iii) noncompetition agreements in the form of
Exhibit 2.4(a)(iv), executed by Sellers (collectively, the "Noncompetition
Agreements");
(iv) a certificate executed by Sellers
representing and warranting to Buyer that each of Sellers' and Southwind
Shareholders' representations and warranties in this Agreement was accurate in
all respects as of the date of this Agreement and is accurate in all respects as
of the Closing Date as if made on the Closing Date; and
(v) the resignations of the Company's officers
and directors and the appointment of such new directors and officers as Buyer
shall direct;
(b) Buyer will deliver to Sellers:
(i) a certificate executed by Buyer to the
effect that, except as otherwise stated in such certificate, each of Buyer's
representations and warranties in this Agreement was accurate in all respects as
of the date of this Agreement and is accurate in all respects as of the Closing
Date as if made on the Closing Date; and
(ii) the Employment Agreements, executed by
Buyer.
2.5 TAX FREE STATUS
The parties intend to treat this as a tax-free transaction
under Section 368 of the Internal Revenue Codes.
3. REPRESENTATIONS AND WARRANTIES OF SELLERS AND
SOUTHWIND SHAREHOLDERS
Sellers and the Southwind Shareholders hereby jointly and
severally represent and warrant to Buyer as follows:
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3.1 ORGANIZATION AND GOOD STANDING
(a) The Company is a corporation duly organized,
validly existing, and in good standing under the laws of its jurisdiction of
incorporation, with full corporate power and authority to conduct its business
as it is now being conducted, to own or use the properties and assets that it
purports to own or use, and to perform all its obligations under Applicable
Contracts. The Company is duly qualified to do business as a foreign corporation
and is in good standing under the laws of each state or other jurisdiction in
which either the ownership or use of the properties owned or used by it, or the
nature of the activities conducted by it, requires such qualification except
where the failure to so qualify would not have a material adverse effect on the
Company.
(b) Sellers have delivered to Buyer copies of the
Organizational Documents of the Company, and are complete and accurate copies
of such instruments, as currently in effect.
3.2 AUTHORITY; NO CONFLICT
(a) This Agreement constitutes the legal, valid, and
binding obligation of Sellers, enforceable against Sellers and Southwind
Shareholders in accordance with its terms. Upon the execution and delivery by
Sellers and Southwind Shareholders of the Employment Agreements and the
Noncompetition Agreements (collectively, the "Sellers' Closing Documents"), the
Sellers' Closing Documents will constitute the legal, valid, and binding
obligations of Sellers and Southwind Shareholders, enforceable against Sellers
and Southwind Shareholders in accordance with their respective terms. Sellers
and Southwind Shareholders have the absolute and unrestricted right, power,
authority, and capacity to execute and deliver this Agreement and the Sellers'
Closing Documents and to perform their obligations under this Agreement and the
Sellers' Closing Documents.
(b) Neither the execution and delivery of this
Agreement nor the consummation or performance of any of the Contemplated
Transactions will, directly or indirectly (with or without notice or lapse of
time):
(i) contravene, conflict with, or result in a
violation of (A) any provision of the Organizational Documents of the Company,
or (B) any resolution adopted by the board of directors or the shareholders of
the Company;
(ii) contravene, conflict with, or result in a
violation of, or give any Governmental Body or other Person the right to
challenge any of the Contemplated Transactions or to exercise any remedy or
obtain any relief under, any Legal Requirement or any Order to which the Company
or any Seller, or any of the assets owned or used by the Company, may be
subject;
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(iii) contravene, conflict with, or result in a
violation of any of the terms or requirements of, or give any Governmental Body
the right to revoke, withdraw, suspend, cancel, terminate, or modify, any
Governmental Authorization that is held by the Company or that otherwise relates
to the business of, or any of the assets owned or used by, the Company;
(iv) cause Buyer or the Company to become subject
to, or to become liable for the payment of, any Tax other than in the ordinary
course of the Company's business;
(v) to Seller's and to Southwind Shareholder's
knowledge cause any of the assets owned by the Company to be reassessed or
revalued by any taxing authority or other Governmental Body;
(vi) contravene, conflict with, or result in a
violation or breach of any provision of, or give any Person the right to declare
a default or exercise any remedy under, or to accelerate the maturity or
performance of, or to cancel, terminate, or modify, any Applicable Contract; or
(vii) result in the imposition or creation of any
Encumbrance upon or with respect to any of the assets owned or used by the
Company.
No Seller, Southwind Shareholders or the Company is
or will be required to give any notice to or obtain any Consent from any Person
in connection with the execution and delivery of this Agreement or the
consummation or performance of any of the Contemplated Transactions, other than
has been obtained.
(c) Sellers are acquiring the Compscript Common Stock
for their own account and not with a view to their distribution within the
meaning of Section 2(11) of the Securities Act. Each Seller is an "accredited
investor" or is otherwise qualified to evaluate the risks of entering into this
Agreement as such term is defined in Rule 501(a) under the Securities Act. Each
Seller acknowledges that each certificate representing the Compscript Common
Stock acquired pursuant to the transactions contemplated by this Agreement shall
bear a restrictive legends as set forth below:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE FEDERAL SECURITIES LAWS AND
MAY NOT BE SOLD, TRANSFERRED OR HYPOTHECATED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER
SUCH LAWS AS MAY BE APPLICABLE, OR, IN THE OPINION OF
COUNSEL REASONABLY SATISFACTORY TO COMPSCRIPT, INC.
THAT AN EXEMPTION FROM REGISTRATION EXISTS."
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3.3 CAPITALIZATION
The authorized equity securities of the Company consist
of 850 shares of common stock, without par value per share, of which 500 shares
are issued and outstanding and constitute the Shares. Sellers are and will be on
the Closing Date the record and beneficial owners and holders of the Shares,
free and clear of all Encumbrances. Schedule 3.3 sets forth the number of shares
owned by each Seller. No legend or other reference to any purported Encumbrance
appears upon any certificate representing equity securities of the Company. All
of the outstanding equity securities of the Company have been duly authorized
and validly issued and are fully paid and nonassessable. There are no Contracts
relating to the issuance, sale, or transfer of any equity securities or other
securities of the Company. None of the outstanding equity securities or other
securities of the Company was issued in violation of the Securities Act or any
other Legal Requirement. The Company does not own, or has any Contract to
acquire, any equity securities or other securities of any Person or any direct
or indirect equity or ownership interest in any other business.
3.4 FINANCIAL STATEMENTS
Sellers have delivered to Buyer: (a) an audited balance
sheet of the Company as of December 31, 1995 (the "Balance Sheet") and the
related audited statements of loss, shareholders' equity, and cash flows for the
period from inception July 27, 1995 to December 31, 1995, together with the
report thereon of Prijatel and Koss, independent certified public accountants,
and (b) an unaudited balance sheet of the Company as of June 30, 1996 (the
"Interim Balance Sheet") and the related unaudited income statement, statements
of loss and shareholders' equity for the six months then ended. Such financial
statements and notes fairly present in all material respects the financial
condition and the results of operations, changes in shareholders' equity, and
cash flow of the Company as of the respective dates of and for the periods
referred to in such financial statements, all in accordance with GAAP. The
financial statements referred to in this Section 3.4 reflect the consistent
application of such accounting principles throughout the periods involved. No
financial statements of any Person other than the Company are required by GAAP
to be included in the financial statements of the Company.
3.5 BOOKS AND RECORDS
The books of account, minute books, stock record books,
and other records of the Company, all of which have been made available to
Buyer, are complete and correct in all material respects. At the Closing, all of
those books and records will be in the possession of the Company.
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3.6 TITLE TO PROPERTIES; ENCUMBRANCES
Part 3.6 of the Disclosure Letter contains a complete and
accurate list of all real property, leaseholds, or other interests therein
owned by the Company. Sellers have delivered or made available to Buyer copies
of the deeds and other instruments (as recorded) by which the Company acquired
such real property and interests, and copies of all title insurance policies,
opinions, abstracts, and surveys in the possession of Sellers or the Company and
relating to such property or interests. The Company owns (with good and
marketable title in the case of real property, subject only to the matters
permitted by the following sentence) all the properties and assets (whether
real, personal, or mixed and whether tangible or intangible) that they purport
to own located in the facilities owned or operated by the Company or reflected
as owned in the books and records of the Company, including all of the
properties and assets reflected in the Balance Sheet and the Interim Balance
Sheet (except for assets held under capitalized leases disclosed or not required
to be disclosed in Part 3.6 of the Disclosure Letter and personal property sold
since the date of the Balance Sheet and the Interim Balance Sheet, as the case
may be, in the Ordinary Course of Business), and all of the properties and
assets purchased or otherwise acquired by the Company since the date of the
Balance Sheet (except for personal property acquired and sold since the date of
the Balance Sheet in the Ordinary Course of Business and consistent with past
practice), which subsequently purchased or acquired properties and assets
(other than inventory and short-term investments) are listed in Part 3.6 of the
Disclosure Letter. Except as disclosed in Part 3.6 of the Disclosure Letter, all
material properties and assets reflected in the Balance Sheet and the Interim
Balance Sheet are free and clear of all Encumbrances and are not, in the case
of real property, subject to any rights of way, building use restrictions,
exceptions, variances, reservations, or limitations of any nature except, with
respect to all such properties and assets, (a) mortgages or security interests
shown on the Balance Sheet or the Interim Balance Sheet as securing specified
liabilities or obligations, with respect to which no default (or event known to
Sellers or the Southwind Shareholders that, with notice or lapse of time or
both, would constitute a default) exists, (b) mortgages or security interests
incurred in connection with the purchase of property or assets after the date
of the Interim Balance Sheet (such mortgages and security interests being
limited to the property or assets so acquired), with respect to which no default
(or event known to Sellers or the Southwind Shareholders that, with notice or
lapse of time or both, would constitute a default) exists, (c) liens for current
taxes not yet due, and (d) with respect to real property, (i) minor
imperfections of title, if any, none of which is substantial in amount,
materially detracts from the value or impairs the use of the property subject
thereto, or impairs the operations of the Company, and (ii) zoning laws and
other land use restrictions that do not impair the present or anticipated use of
the property subject thereto. All buildings, plants, and structures owned by the
Company lie wholly within the boundaries of the real property owned by the
Company and do not encroach upon the property of, or otherwise conflict with
the property rights of, any other Person.
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3.7 CONDITION AND SUFFICIENCY OF ASSETS
The buildings, plants, structures, and equipment of the
Company are structurally sound, are in good operating condition and repair, and
are adequate for the uses to which they are being put, and none of such
buildings, plants, structures, or equipment is in need of maintenance or repairs
except for ordinary, routine maintenance and repairs that are not material in
nature or cost. The building, plants, structures, and equipment of the Company
are sufficient for the continued conduct of the Company's businesses after the
Closing in substantially the same manner as conducted prior to the Closing.
3.8 ACCOUNTS RECEIVABLE
All accounts receivable of the Company that are reflected
on the Balance Sheet or the Interim Balance Sheet or on the accounting records
of the Company as of the Closing Date (collectively, the "Accounts Receivable")
represent or will represent valid obligations arising from sales actually made
or services actually performed in the Ordinary Course of Business. Unless paid
prior to the Closing Date, to the best of Sellers and the Southwind Shareholders
knowledge, the Accounts Receivable to the best of Sellers and the Southwind
Shareholders knowledge, are or will be as of the Closing Date current and
collectible net of the respective reserves shown on the Balance Sheet or the
Interim Balance Sheet or on the accounting records of the Company as of the
Closing Date (which reserves are adequate and calculated consistent with past
practice and, in the case of the reserve as of the Closing Date, will not
represent a greater percentage of the Accounts Receivable as of the Closing Date
than the reserve reflected in the Interim Balance Sheet represented of the
Accounts Receivable reflected therein and will not represent a material adverse
change in the composition of such Accounts Receivable in terms of aging).
Subject to such reserves, to the best of Sellers and the Southwind Shareholders'
knowledge, each of the Accounts Receivable either has been or will be collected
in full, without any set-off, within one hundred twenty days after the day on
which it first becomes due and payable. There is no contest, claim, or right of
set-off, other than returns in the Ordinary Course of Business, under any
Contract with any obligor of an Accounts Receivable relating to the amount or
validity of such Accounts Receivable. Part 3.8 of the Disclosure Letter contains
a complete and accurate list of all Accounts Receivable as of the date of the
Interim Balance Sheet, which list sets forth the aging of such Accounts
Receivable.
3.9 INVENTORY
All inventory of the Company, whether or not reflected in
the Balance Sheet or the Interim Balance Sheet, consists of a quality and
quantity usable and salable in the Ordinary Course of Business in all material
respects, except for obsolete items and items of below-standard quality, all of
which have been written off or written down to net realizable value in the
Balance Sheet or the Interim Balance Sheet or on the
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accounting records of the Company as of the Closing Date, as the case may be.
All inventories not written off have been priced at the lower of cost or market.
The quantities of each item of inventory (whether raw materials,
work-in-process, or finished goods) are not excessive, but are reasonable in the
present circumstances of the Company.
3.10 NO UNDISCLOSED LIABILITIES
The Company has no liabilities or obligations of any
nature (whether known or unknown and whether absolute, accrued, contingent, or
otherwise) except for liabilities or obligations reflected or reserved against
in the Balance Sheet or the Interim Balance Sheet and current liabilities
incurred in the Ordinary Course of Business since the respective dates thereof.
3.11 TAXES
(a) The Company has filed or caused to be filed (on a
timely basis since July 1995) all Tax Returns that are or were required to be
filed by it pursuant to applicable Legal Requirements. Sellers have delivered to
Buyer copies of, and Part 3.11 of the Disclosure Letter contains a complete and
accurate list of, all such Tax Returns filed since July 1995. The Company has
paid, or made provision for the payment of, all Taxes that have or may have
become due pursuant to those Tax Returns or otherwise, or pursuant to any
assessment received by Sellers or the Company, except such Taxes, if any, as are
listed in Part 3.11 of the Disclosure Letter and are being contested in good
faith and as to which adequate reserves (determined in accordance with GAAP)
have been provided in the Balance Sheet and the Interim Balance Sheet.
(b) No United States federal and state income Tax
Returns of the Company subject to such Taxes have been audited by the IRS or
relevant state tax authorities or are closed by the applicable statute of
limitations. Part 3.11 of the Disclosure Letter contains a complete and accurate
list of all audits of all such Tax Returns, including a reasonably detailed
description of the nature and outcome of each audit. All deficiencies proposed
as a result of such audits have been paid, reserved against, settled, or, as
described in Part 3.11 of the Disclosure Letter, are being contested in good
faith by appropriate proceedings. Part 3.11 of the Disclosure Letter describes
all adjustments to the United States federal income Tax Returns filed by the
Company for all taxable years since July 1995, and the resulting deficiencies
proposed by the IRS. Except as described in Part 3.11 of the Disclosure Letter,
no Seller or the Company has given or been requested to give waivers or
extensions (or is or would be subject to a waiver or extension given by any
other Person) of any statute of limitations relating to the payment of Taxes of
the Company or for which the Company may be liable.
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(c) The charges, accruals, and reserves with respect
to Taxes on the respective books of the Company are adequate (determined in
accordance with GAAP) and are at least equal to the Company's liability for
Taxes. There exists no proposed tax assessment against the Company except as
disclosed in the Balance Sheet or in Part 3.11 of the Disclosure Letter. No
consent to the application of Section 341(f)(2) of the IRC has been filed with
respect to any property or assets held, acquired, or to be acquired by the
Company. All Taxes that the Company is or was required by Legal Requirements to
withhold or collect have been duly withheld or collected and, to the extent
required, have been paid to the proper Governmental Body or other Person.
(d) All Tax Returns filed by (or that include on a
consolidated basis) the Company are true, correct, and complete in all material
respects. There is no tax sharing agreement that will require any payment by the
Company after the date of this Agreement. the Company is not, or within the
five-year period preceding the Closing Date has been, an "S" corporation.
3.12 NO MATERIAL ADVERSE CHANGE
Since the date of the Balance Sheet, there has not been
any material adverse change in the business, operations, properties, prospects,
assets, or condition of the Company, and no event has occurred or circumstance
exists that may result in such a material adverse change.
3.13 EMPLOYEE BENEFITS
The Company (i) has not contributed to any pension, profit
sharing, option, or other incentive plan or any other type of employee benefit
plan, (ii) maintains or has maintained, is or was a party to, or other
participates or participated in, on its own behalf or on behalf of any former
employees, any pension, profit sharing, option or other incentive plan, or any
other type of employee benefit plan, or (iii) has any obligation to, or
customary arrangement with, former employees, if any, for bonuses, incentive,
compensation, vacation, severance pay, sick pay, sick leave, insurance, service
award, relocation, disability, or other benefits, whether oral or written.
3.14 COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL
AUTHORIZATIONS
(a) Except as set forth in Part 3.14 of the Disclosure
Letter to best of Sellers' and Southwind Shareholders' knowledge:
(i) the Company is, and at all times since
July, 1995 has been, in full compliance with each Legal Requirement that is or
was applicable to it or to the conduct or operation of its business or the
ownership or use of any of its assets;
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(ii) no event has occurred or circumstance exists
that (with or without notice or lapse of time) (A) may constitute or result in a
violation by the Company of, or a failure on the part of the Company to comply
with, any Legal Requirement, or (B) may give rise to any obligation on the part
of the Company to undertake, or to bear all or any portion of the cost of, any
remedial action of any nature; and
(iii) The Company has not received, at any time
since July 1995, any notice or other communication (whether oral or written)
from any Governmental Body or any other Person regarding (A) any actual,
alleged, possible, or potential violation of, or failure to comply with, any
Legal Requirement, or (B) any actual, alleged, possible, or potential obligation
on the part of the Company to undertake, or to bear all or any portion of the
cost of, any remedial action of any nature.
(b) To the best of Shareholders' and Southwind
Shareholders' knowledge, Part 3.14 of the Disclosure Letter contains a complete
and accurate list of each Governmental Authorization that is held by the Company
or that otherwise relates to the business of, or to any of the assets owned or
used by, the Company. Each Governmental Authorization listed or required to be
listed in Part 3.14 of the Disclosure Letter is valid and in full force and
effect.
(i) The Company is, and at all times since
July, 1995 has been, in full compliance with all of the terms and requirements
of each Governmental Authorization identified or required to be identified in
Part 3.14 of the Disclosure Letter;
(ii) no event has occurred or circumstance exists
that may (with or without notice or lapse of time) (A) constitute or result
directly or indirectly in a violation of or a failure to comply with any term or
requirement of any Governmental Authorization listed or required to be listed in
Part 3.14 of the Disclosure Letter, or (B) result directly or indirectly in the
revocation, withdrawal, suspension, cancellation, or termination of, or any
modification to, any Governmental Authorization listed or required to be listed
in Part 3.14 of the Disclosure Letter;
(iii) the Company has not received, at any time
since July, 1995, any notice or other communication (whether oral or written)
from any Governmental Body or any other Person regarding (A) any actual,
alleged, possible, or potential violation of or failure to comply with any term
or requirement of any Governmental Authorization, or (B) any actual, proposed,
possible, or potential revocation, withdrawal, suspension, cancellation,
termination of, or modification to any Governmental Authorization; and
(iv) all applications required to have been
filed for the renewal of the Governmental Authorizations listed or required to
be listed in Part 3.14 of the Disclosure Letter have been duly filed on a timely
basis with the appropriate
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Governmental Bodies, and all other filings required to have been made with
respect to such Governmental Authorizations have been duly made on a timely
basis with the appropriate Governmental Bodies.
The Governmental Authorizations listed in
Part 3.14 of the Disclosure Letter collectively constitute all of the
Governmental Authorizations necessary to permit the Company to lawfully conduct
and operate their businesses in the manner they currently conduct and operate
such businesses and to permit the Company to own and use its assets in the
manner in which they currently own and use such assets.
3.15 LEGAL PROCEEDINGS; ORDERS
(a) There is no other than as set forth in Part 3.15
of the Disclosure Letter Proceeding:
(i) that has been commenced by or against the
Company or that otherwise relates to or may affect the business of, or any of
the assets owned or used by, the Company; or
(ii) that challenges, or that may have the effect
of preventing, delaying, making illegal, or otherwise interfering with, any of
the Contemplated Transactions.
To the Knowledge of Sellers, Southwind
Shareholders, and the Company, (1) no such Proceeding has been Threatened, and
(2) no event has occurred or circumstance exists that may give rise to or serve
as a basis for the commencement of any such Proceeding.
(b) (i) there is no Order to which the Company, or
any of the assets owned or used by the Company, is subject;
(ii) no Seller or is subject to any Order that
relates to the business of, or any of the assets owned or used by, the Company;
and
(iii) no officer, director, agent, or employee of
the Company is subject to any Order that prohibits such officer, director,
agent, or employee from engaging in or continuing any conduct, activity, or
practice relating to the business of the Company.
(c) (i) the Company is, and at all times since
July, 1995 has been, in full compliance with all of the terms and requirements
of each Order to which it, or any of the assets owned or used by it, is or has
been subject;
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(ii) no event has occurred or circumstance
exists that may constitute or result in (with or without notice or lapse of
time) a violation of or failure to comply with any term or requirement of any
Order to which the Company, or any of the assets owned or used by the Company,
is subject; and
(iii) the Company has not received, at any time
since July, 1995, any notice or other communication (whether oral or written)
from any Governmental Body or any other Person regarding any actual, alleged,
possible, or potential violation of, or failure to comply with, any term or
requirement of any Order to which the Company, or any of the assets owned or
used by the Company, is or has been subject.
3.16 ABSENCE OF CERTAIN CHANGES AND EVENTS
Except as set forth in Part 3.16 of the Disclosure
Schedule, since the date of the Balance Sheet, the Company has conducted its
businesses only in the Ordinary Course of Business and there has not been any:
(a) change in the Company's authorized or issued
capital stock; grant of any stock option or right to purchase shares of capital
stock of the Company; issuance of any security convertible into such capital
stock; grant of any registration rights; purchase, redemption, retirement, or
other acquisition by the Company of any shares of any such capital stock; or
declaration or payment of any dividend or other distribution or payment in
respect of shares of capital stock;
(b) amendment to the Organizational Documents of the
Company;
(c) payment or increase by the Company of any bonuses,
salaries, or other compensation to any shareholder, director, officer, or
(except in the Ordinary Course of Business) employee or entry into any
employment, severance, or similar Contract with any director, officer, or
employee;
(d) adoption of, or increase in the payments to or
benefits under, any profit sharing, bonus, deferred compensation, savings,
insurance, pension, retirement, or other employee benefit plan for or with any
employees of the Company;
(e) damage to or destruction or loss of any asset or
property of the Company, whether or not covered by insurance, materially and
adversely affecting the properties, assets, business, financial condition, or
prospects of the Company;
(f) entry into, termination of, or receipt of notice
of termination of (i) any license, distributorship, dealer, sales
representative, joint venture, credit, or similar agreement, or (ii) any
Contract or transaction involving a total remaining commitment by
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or to the Company of greater than $5,000 (other than orders for Company goods
in the ordinary course of business;
(g) sale (other than sales of inventory in the
Ordinary Course of Business), lease, or other disposition of any asset or
property of the Company or mortgage, pledge, or imposition of any lien or other
encumbrance on any material asset or property of the Company, including the
sale, lease, or other disposition of any of the Intellectual Property Assets
other than the lien of Valley Drug;
(h) cancellation or waiver of any claims or rights
with a value to the Company in excess of $5,000;
(i) material change in the accounting methods used by
the Company; or
(j) agreement, whether oral or written, by the Company
to do any of the foregoing.
3.17 CONTRACTS; NO DEFAULTS
(a) Part 3.17(a) of the Disclosure Letter contains a
complete and accurate list, and Sellers have delivered or have caused the
Company to deliver to Buyer true and complete copies, of:
(i) each Applicable Contract that involves
performance of services or delivery of goods or materials by the Company of an
amount or value in excess of $5,000;
(ii) each Applicable Contract that involves
performance of services or delivery of goods or materials to the Company of an
amount or value in excess of $5,000;
(iii) each Applicable Contract that was not
entered into in the Ordinary Course of Business and that involves expenditures
or receipts of the Company in excess of $5,000;
(iv) each lease, rental or occupancy agreement,
license, installment and conditional sale agreement, and other Applicable
Contract affecting the ownership of, leasing of, title to, use of, or any
leasehold or other interest in, any real or personal property (except personal
property leases and installment and conditional sales agreements having a value
per item or aggregate payments of less than $5,000 and with terms of less than
one year);
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(v) each licensing agreement or other Applicable
Contract with respect to patents, trademarks, copyrights, or other intellectual
property, including agreements with current or former employees, consultants, or
contractors regarding the appropriation or the non-disclosure of any of the
Intellectual Property Assets;
(vi) each collective bargaining agreement and
other Applicable Contract to or with any labor union or other employee
representative of a group of employees;
(vii) each joint venture, partnership, and other
Applicable Contract (however named) involving a sharing of profits, losses,
costs, or liabilities by the Company with any other Person;
(viii) each Applicable Contract containing
covenants that in any way purport to restrict the business activity of the
Company or any Affiliate of the Company or limit the freedom of the Company or
any Affiliate of the Company to engage in any line of business or to compete
with any Person;
(ix) each Applicable Contract providing for
payments to or by any Person based on sales, purchases, or profits, other than
direct payments for goods and other agreements for commissions in the Ordinary
Course of Business;
(x) each power of attorney that is currently
effective and outstanding;
(xi) each Applicable Contract entered into other
than in the Ordinary Course of Business that contains or provides for an express
undertaking by the Company to be responsible for consequential damages;
(xii) each Applicable Contract for capital
expenditures in excess of $5,000;
(xiii) each written warranty, guaranty, and or
other similar undertaking with respect to contractual performance extended by
the Company other than in the Ordinary Course of Business; and
(xiv) each amendment, supplement, and modification
(whether oral or written) in respect of any of the foregoing.
Part 3.17(a) of the Disclosure Letter sets
forth reasonably complete details concerning such Contracts, including the
parties to the Contracts, the amount of the remaining commitment of the Company
under the Contracts.
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(b) (i) no Seller (and no Related Person of any
Seller) has or may acquire any rights under, and no Seller has or may become
subject to any obligation or liability under, any Contract that relates to the
business of, or any of the assets owned or used by, the Company; and
(ii) no officer, director, agent, employee,
consultant, or contractor of the Company is bound by any Contract that purports
to limit the ability of such officer, director, agent, employee, consultant, or
contractor to (A) engage in or continue any conduct, activity, or practice
relating to the business of the Company, or (B) assign to the Company or to any
other Person any rights to any invention, improvement, or discovery.
(c) Each Contract identified or required to be
identified in Part 3.17(a) of the Disclosure Letter is in full force and effect
and is valid and enforceable in accordance with its terms except for violations
of which would not have a material adverse effect on the Company.
(d) (i) the Company is, and at all times has been,
in full compliance with all applicable terms and requirements of each Contract
under which the Company has or had any obligation or liability or by which the
Company or any of the assets owned or used by the Company is or was bound except
for violations of which would not have a material adverse effect on the Company;
(ii) each other Person that has or had any
obligation or liability under any Contract under which the Company has or had
any rights is, and at all times has been, in full compliance with all applicable
terms and requirements of such Contract;
(iii) no event has occurred or circumstance exists
that (with or without notice or lapse of time) may contravene, conflict with, or
result in a violation or breach of, or give the Company or other Person the
right to declare a default or exercise any remedy under, or to accelerate the
maturity or performance of, or to cancel, terminate, or modify, any Applicable
Contract; and
(iv) the Company has not given to or received
from any other Person, at any time, any notice or other communication (whether
oral or written) regarding any actual, alleged, possible, or potential violation
or breach of, or default under, any Contract.
(e) There are no renegotiations of, attempts to
renegotiate, or outstanding rights to renegotiate any material amounts paid or
payable to the Company under current or completed Contracts with any Person and
no such Person has made written demand for such renegotiation.
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(f) The Contracts relating to the sale, design,
manufacture, or provision of products or services by the Company have been
entered into in the Ordinary Course of Business and to the best of Sellers and
to the Southwind Shareholders knowledge have been entered into without the
commission of any act alone or in concert with any other Person, or any
consideration having been paid or promised, that is or would be in violation of
any Legal Requirement.
3.18 INSURANCE
(a) Sellers have delivered or have caused the Company
to deliver to Buyer:
(i) true and complete copies of all policies of
insurance to which the Company is a party or under which the Company, or any
director of the Company, is or has been covered at any time within the five (5)
years preceding the date of this Agreement;
(ii) true and complete copies of all pending
applications for policies of insurance; and
(iii) any statement by the auditor of the
Company's financial statements with regard to the adequacy of such entity's
coverage or of the reserves for claims.
(b) Part 3.18(b) of the Disclosure Letter describes:
(i) any self-insurance arrangement by or
affecting the Company, including any reserves established thereunder;
(ii) any contract or arrangement, other than a
policy of insurance, for the transfer or sharing of any risk by the Company; and
(iii) all obligations of the Company to third
parties with respect to insurance (including such obligations under leases and
service agreements) and identifies the policy under which such coverage is
provided.
(c) Part 3.18(c) of the Disclosure Letter sets forth,
by year, for the current policy year and each of the years since July 1995
preceding policy years:
(i) a summary of the loss experience under each
policy;
(ii) a statement describing each claim under an
insurance policy for an amount in excess of $5,000, which sets forth:
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(A) the name of the claimant;
(B) a description of the policy by
insurer, type of insurance, and period of coverage; and
(C) the amount and a brief description
of the claim; and
(iii) a statement describing the loss experience
for all claims that were self-insured, including the number and aggregate cost
of such claims.
(d) (i) To the best of Sellers and to the Southwind
Shareholders' knowledge, all policies to which the Company is a party or that
provide coverage to either Seller, the Company, or any director or officer of
the Company:
(A) are valid, outstanding, and
enforceable;
(B) are issued by an insurer that is
financially sound and reputable;
(C) taken together, provide adequate
insurance coverage for the assets and the operations of the Company for all
risks normally insured against by a Person carrying on the same business or
businesses as the Company;
(D) are sufficient for compliance with
all Legal Requirements and Contracts to which the Company is a party or by which
any of them is bound;
(E) will continue in full force and
effect following the consummation of the Contemplated Transactions; and
(F) do not provide for any retrospective
premium adjustment or other experienced-based liability on the part of the
Company.
(ii) The Company has not received (A) any refusal
of coverage or any notice that a defense will be afforded with reservation of
rights, or (B) any notice of cancellation or any other indication that any
insurance policy is no longer in full force or effect or will not be renewed or
that the issuer of any policy is not willing or able to perform its obligations
thereunder.
(iii) The Company has paid all premiums due, and
have otherwise performed all of their respective obligations, under each policy
to which the Company is a party or that provides coverage to the Company or
director thereof.
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(iv) The Company has given notice to the insurer
of all claims that may be insured thereby.
3.19 ENVIRONMENTAL MATTERS
(a) The Company is, and at all times has been, in full
compliance with, and has not been and is not in violation of or liable under,
any Environmental Law. No Seller or the Company has any basis to expect, nor
has any of them or to the best of their knowledge, any other Person for whose
conduct they are or may be held to be responsible received, any actual or
Threatened order, notice, or other communication from (i) any Governmental Body
or private citizen acting in the public interest, or (ii) the current or prior
owner or operator of any Facilities, of any actual or potential violation or
failure to comply with any Environmental Law, or of any actual or Threatened
obligation to undertake or bear the cost of any Environmental, Health, and
Safety Liabilities with respect to any of the Facilities or any other properties
or assets (whether real, personal, or mixed) in which the Company has had an
interest, or with respect to any property or Facility at or to which Hazardous
Materials were generated, manufactured, refined, transferred, imported, used, or
processed by the Company, or any other Person for whose conduct they are or may
be held responsible, or from which Hazardous Materials have been transported,
treated, stored, handled, transferred, disposed, recycled, or received.
(b) There are no pending or, to the knowledge of
Sellers and the Company, threatened claims, encumbrances, or other restrictions
of any nature, resulting from any Environmental, Health, and Safety Liabilities
or arising under or pursuant to any Environmental Law, with respect to or
affecting any of the Facilities or any other properties and assets (whether
real, personal, or mixed) in which the Company has or had an interest.
(c) No Seller to its knowledge or the Company has any
basis to expect, nor has any of them or any other Person for whose conduct they
are or may be held responsible, received, any citation, directive, inquiry,
notice, Order, summons, warning, or other communication that relates to
Hazardous Activity, Hazardous Materials, or any alleged, actual, or potential
violation or failure to comply with any Environmental Law, or of any alleged,
actual, or potential obligation to undertake or bear the cost of any
Environmental, Health, and Safety Liabilities with respect to any of the
Facilities or any other properties or assets (whether real, personal, or mixed)
in which the Company had an interest, or with respect to any property or
facility to which Hazardous Materials generated, manufactured, refined,
transferred, imported, used, or processed by Sellers, the Company, or any other
Person for whose conduct they are or may be held responsible, have been
transported, treated, stored, handled, transferred, disposed, recycled, or
received.
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(d) No Seller to its knowledge or the Company, or any
other Person for whose conduct they are or may be held responsible, has any
Environmental, Health, and Safety Liabilities with respect to the Facilities or
with respect to any other properties and assets (whether real, personal, or
mixed) in which the Company (or any predecessor), has or had an interest, or at
any property geologically or hydrologically adjoining the Facilities or any such
other property or assets.
(e) To the best of Sellers and to Southwind
Shareholders knowledge, there are no Hazardous Materials present on or in the
Environment at the Facilities or at any geologically or hydrologically adjoining
property, including any Hazardous Materials contained in barrels, above or
underground storage tanks, landfills, land deposits, dumps, equipment (whether
moveable or fixed) or other containers, either temporary or permanent, and
deposited or located in land, water, swamps, or any other part of the Facilities
or such adjoining property, or incorporated into any structure therein or
thereon. No Seller to its knowledge, the Company, any other Person for whose
conduct they are or may be held responsible, or any other Person, has permitted
or conducted, or is aware of, any Hazardous Activity conducted with respect to
the Facilities or any other properties or assets (whether real, personal, or
mixed) in which the Company has or had an interest.
(f) There has been no Release or, to the knowledge of
Sellers and the Company, Threat of Release, of any Hazardous Materials at or
from the Facilities or at any other locations where any Hazardous Materials were
generated, manufactured, refined, transferred, produced, imported, used, or
processed from or by the Facilities, or from or by any other properties and
assets (whether real, personal, or mixed) in which the Company has or had an
interest, or any geologically or hydrologically adjoining property, whether by
Sellers, the Company, or any other Person.
(g) The Company has delivered to Buyer true and
complete copies and results of any reports, studies, analyses, tests, or
monitoring possessed or initiated by Sellers or the Company pertaining to
Hazardous Materials or Hazardous Activities in, on, or under the Facilities, or
concerning compliance by the Company, or any other Person for whose conduct they
are or may be held responsible, with Environmental Laws.
3.20 EMPLOYEES
(a) Part 3.20 of the Disclosure Letter contains a
complete and accurate list of the following information for each employee or
director of the Company, including each employee on leave of absence or layoff
status: employer; name; job title; current compensation paid or payable and any
change in compensation since December 31, 1995; vacation accrued; and service
credited for purposes of vesting and eligibility to participate under the
Company's pension, retirement, profit-sharing, thrift-savings, deferred
compensation, stock bonus, stock option, cash bonus, employee stock
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ownership (including investment credit or payroll stock ownership), severance
pay, insurance, medical, welfare, or vacation plan, other Employee Pension
Benefit Plan or Employee Welfare Benefit Plan, or any other employee benefit
plan or any Director Plan.
(b) No employee or director of the Company is a party
to, or is otherwise bound by, any agreement or arrangement, including any
confidentiality, noncompetition, or proprietary rights agreement, between such
employee or director and any other Person ("Proprietary Rights Agreement") that
in any way adversely affects or will affect (i) the performance of his duties as
an employee or director of the Company, or (ii) the ability of the Company to
conduct its business, including any Proprietary Rights Agreement with Sellers or
the Company by any such employee or director. To Sellers' Knowledge, no
director, officer, or other key employee of the Company intends to terminate his
employment with the Company.
(c) Part 3.20 of the Disclosure Letter also contains a
complete and accurate list of the following information for each retired
employee or director of the Company, or their dependents, receiving benefits or
scheduled to receive benefits in the future: name, pension benefit, pension
option election, retiree medical insurance coverage, retiree life insurance
coverage, and other benefits.
3.21 LABOR RELATIONS; COMPLIANCE
The Company has not been or is a party to any collective
bargaining or other labor Contract. There has not been, there is not presently
pending or existing, and to Sellers' or Southwind Shareholders' knowledge there
is not Threatened, (a) any strike, slowdown, picketing, work stoppage, or
employee grievance process, (b) any Proceeding against or affecting the Company
relating to the alleged violation of any Legal Requirement pertaining to labor
relations or employment matters, including any charge or complaint filed by an
employee or union with the National Labor Relations Board, the Equal Employment
Opportunity Commission, or any comparable Governmental Body, organizational
activity, or other labor or employment dispute against or affecting any of the
Company or their premises, or (c) any application for certification of a
collective bargaining agent. No event has occurred or circumstance exists that
could provide the basis for any work stoppage or other labor dispute. There is
no lockout of any employees by the Company, and no such action is contemplated
by the Company. The Company has complied in all material respects with all Legal
Requirements relating to employment, equal employment opportunity,
nondiscrimination, immigration, wages, hours, benefits, collective bargaining,
the payment of social security and similar taxes, occupational safety and
health, and plant closing. The Company to its knowledge is not liable for the
payment of any compensation, damages, taxes, fines, penalties, or other amounts,
however designated, for failure to comply with any of the foregoing Legal
Requirements.
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3.22 CERTAIN PAYMENTS
To the best of its knowledge the Company or director,
officer, agent, or employee of the Company, with or acting for or on behalf of
the Company, has not directly or indirectly (a) made any contribution, gift,
bribe, rebate, payoff, influence payment, kickback, or other payment to any
Person, private or public, regardless of form, whether in money, property, or
services (i) to obtain favorable treatment in securing business, (ii) to pay for
favorable treatment for business secured, (iii) to obtain special concessions or
for special concessions already obtained, for or in respect of the Company or
any Affiliate of the Company, or (iv) in violation of any Legal Requirement, (b)
established or maintained any fund or asset that has not been recorded in the
books and records of the Company.
3.23 DISCLOSURE
(a) No representation or warranty of Sellers or the
Southwind Shareholders in this Agreement and no statement in the Disclosure
Letter omits to state a material fact necessary to make the statements herein or
therein, in light of the circumstances in which they were made, not misleading.
(b) To the best of Seller's or Southwind Shareholders'
knowledge, there is no fact known to either Seller or a Southwind Shareholders
that has specific application to either Seller, a Southwind Shareholders or the
Company (other than general economic or industry conditions) and that materially
adversely affects or materially threatens, the assets, business, prospects,
financial condition, or results of operations of the Company that has not been
set forth in this Agreement or the Disclosure Letter.
3.24 RELATIONSHIPS WITH RELATED PERSONS
No Seller or any Related Person of Sellers or of the
Company has had any interest in any property (whether real, personal, or mixed
and whether tangible or intangible), used in or pertaining to the Company's
businesses. No Seller or any Related Person of Sellers or of the Company is, or
has owned (of record or as a beneficial owner) an equity interest or any other
financial or profit interest in, a Person that has (i) had business dealings or
a material financial interest in any transaction with the Company or (ii)
engaged in competition with the Company with respect to any line of the products
or services of the Company (a "Competing Business") in any market presently
served by the Company. Except as set forth in Part 3.25 of the Disclosure
Letter, no Seller or any Related Person of Sellers or of the Company is a party
to any Contract with, or has any claim or right against, the Company.
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3.25 BROKERS OR FINDERS
Sellers to the Company and their agents have incurred no
obligation or liability, contingent or otherwise, for brokerage or finders'
fees or agents' commissions or other similar payment in connection with this
Agreement.
3.26 WORKING CAPITAL
At the closing, the Company shall have a working capital
of not less than zero, assuming that all Section 3.27 scheduled obligations are
not included in the definition of current liabilities, and the obligations of
the Company to Valley Drug Company have been satisfied in full, and all legal
and accounting fees set forth in the Company's June 30, 1996 accounts receivable
statement are the obligations of Seller, except for $5,000 of legal fees on
account of the Valley Drug Company matter.
3.27 CERTAIN INDEBTEDNESS OR OBLIGATIONS. The following
liabilities shall exist as of the closing date (i) $311,400 to Southwind Health
Products Co.; (iii) $22,000 to Merc Human Health Corporation; and (iv) $39,000
to North Shore Leasing, Inc. With respect to the indebtedness to Southwind
Health Products Co., the Company shall execute a promissory note with Southwind,
a copy of which is set forth as Exhibit 3.27 and which is attached hereto.
4. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Sellers as follows:
4.1 ORGANIZATION AND GOOD STANDING
Buyer is a corporation duly organized, validly existing,
and in good standing under the laws of the State of Florida.
4.2 AUTHORITY; NO CONFLICT
(a) This Agreement constitutes the legal, valid, and
binding obligation of Buyer, enforceable against Buyer in accordance with its
terms. Upon the execution and delivery by Buyer of the Employment Agreements,
(the "Buyer's Closing Documents"), the Buyer's Closing Documents will constitute
the legal, valid, and binding obligations of Buyer, enforceable against Buyer in
accordance with their respective terms. Buyer has the absolute and unrestricted
right, power, and authority to execute and deliver this Agreement and the
Buyer's Closing Documents and to perform its obligations under this Agreement
and the Buyer's Closing Documents.
(b) Except as set forth in Schedule 4.2, neither the
execution and delivery of this Agreement by Buyer nor the consummation or
performance of any of the
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Contemplated Transactions by Buyer will give any Person the right to prevent,
delay, or otherwise interfere with any of the Contemplated Transactions pursuant
to:
(i) any provision of Buyer's Organizational
Documents;
(ii) any resolution adopted by the board of
directors or the shareholders of Buyer;
(iii) any Legal Requirement or Order to which
Buyer may be subject; or
(iv) any Contract to which Buyer is a party or
by which Buyer may be bound.
Except as set forth in Schedule 4.2, Buyer
is not and will not be required to obtain any Consent from any Person in
connection with the execution and delivery of this Agreement or the consummation
or performance of any of the Contemplated Transactions.
4.3 INVESTMENT INTENT
Buyer is acquiring the Shares for its own account and not
with a view to their distribution within the meaning of Section 2(11) of the
Securities Act.
4.4 CERTAIN PROCEEDINGS
There is no pending Proceeding that has been commenced
against Buyer and that challenges, or may have the effect of preventing,
delaying, making illegal, or otherwise interfering with, any of the Contemplated
Transactions. To Buyer's Knowledge, no such Proceeding has been Threatened.
4.5 BROKERS OR FINDERS
Buyer and its officers and agents have incurred no
obligation or liability, contingent or otherwise, for brokerage or finders' fees
or agents' commissions or other similar payment in connection with this
Agreement and will indemnify and hold Sellers harmless from any such payment
alleged to be due by or through Buyer as a result of the action of Buyer or its
officers or agents.
5. COVENANTS OF SELLERS PRIOR TO CLOSING DATE
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5.1 ACCESS AND INVESTIGATION
Between the date of this Agreement and the Closing Date,
Sellers will, and will cause the Company and its Representatives to, (a) afford
Buyer and its Representatives and prospective lenders and their Representatives
(collectively, "Buyer's Advisors") full and free access to the Company's
personnel, properties (including subsurface testing), contracts, books and
records, and other documents and data, (b) furnish Buyer and Buyer's Advisors
with copies of all such contracts, books and records, and other existing
documents and data as Buyer may reasonably request, and (c) furnish Buyer and
Buyer's Advisors with such additional financial, operating, and other data and
information as Buyer may reasonably request.
5.2 OPERATION OF THE BUSINESS OF THE COMPANY
Between the date of this Agreement and the Closing Date,
Sellers will, and will cause the Company to:
(a) conduct the business of the Company only in the
Ordinary Course of Business;
(b) use their Best Efforts to preserve intact the
current business organization of the Company, keep available the services of the
current officers, employees, and agents of the Company, and maintain the
relations and good will with suppliers, customers, landlords, creditors,
employees, agents, and others having business relationships with the Company;
(c) confer with Buyer concerning operational matters
of a material nature; and
(d) otherwise report periodically to Buyer concerning
the status of the business, operations, and finances of the Company.
5.3 NEGATIVE COVENANT
Except as otherwise expressly permitted by this Agreement,
between the date of this Agreement and the Closing Date, Sellers will not, and
will cause the Company not to, without the prior consent of Buyer, take any
affirmative action, or fail to take any reasonable action within their or its
control, as a result of which any of the changes or events listed in Section
3.16 is likely to occur.
5.4 REQUIRED APPROVALS
As promptly as practicable after the date of this
Agreement, Sellers will, and will cause the Company to, make all filings
required by Legal Requirements to
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be made by them in order to consummate the Contemplated Transactions. Between
the date of this Agreement and the Closing Date, Sellers will, and will cause
the Company to, (a) cooperate with Buyer with respect to all filings that Buyer
elects to make or is required by Legal Requirements to make in connection with
the Contemplated Transactions, and (b) cooperate with Buyer in obtaining all
consents identified in Schedule 4.2.
5.5 NOTIFICATION
Between the date of this Agreement and the Closing Date,
each Seller will promptly notify Buyer in writing if such Seller becomes aware
of any fact or condition that causes or constitutes a Breach of any of Sellers'
representations and warranties as of the date of this Agreement, or if such
Seller or the Company becomes aware of the occurrence after the date of this
Agreement of any fact or condition that would (except as expressly contemplated
by this Agreement) cause or constitute a Breach of any such representation or
warranty had such representation or warranty been made as of the time of
occurrence or discovery of such fact or condition. Should any such fact or
condition require any change in the Disclosure Letter if the Disclosure Letter
were dated the date of the occurrence or discovery of any such fact or
condition, Sellers will promptly deliver to Buyer a supplement to the Disclosure
Letter specifying such change. During the same period, each Seller will promptly
notify Buyer of the occurrence of any Breach of any covenant of Sellers in this
Section 5 or of the occurrence of any event that may make the satisfaction of
the conditions in Section 7 impossible or unlikely.
5.6 PAYMENT OF INDEBTEDNESS BY RELATED PERSONS
Except as expressly provided in this Agreement, Sellers
will cause all indebtedness owed to the Company by any Seller or any Related
Person of either Seller to be paid in full prior to Closing.
5.7 NO NEGOTIATION
Until such time, if any, as this Agreement is terminated
pursuant to Section 9, Sellers will not, and will cause the Company and each of
their Representatives not to, directly or indirectly solicit, initiate, or
encourage any inquiries or proposals from, discuss or negotiate with, provide
any non-public information to, or consider the merits of any unsolicited
inquiries or proposals from, any Person (other than Buyer) relating to any
transaction involving the sale of the business or assets (other than in the
Ordinary Course of Business) of the Company, or any of the capital stock of the
Company, or any merger, consolidation, business combination, or similar
transaction involving the Company and will promptly notify Buyer of any such
expression of interest.
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5.8 BEST EFFORTS
Between the date of this Agreement and the Closing Date,
Sellers will use their Best Efforts to cause the conditions in Sections 7 and 8
to be satisfied.
6. COVENANTS OF BUYER PRIOR TO CLOSING DATE
6.1 APPROVALS OF GOVERNMENTAL BODIES
As promptly as practicable after the date of this
Agreement, Buyer will, and will cause each of its Related Persons to, make all
filings required by Legal Requirements to be made by them to consummate the
Contemplated Transactions. Between the date of this Agreement and the Closing
Date, Buyer will, and will cause each Related Person to, cooperate with Sellers
with respect to all filings that Sellers are required by Legal Requirements to
make in connection with the Contemplated Transactions, and (ii) cooperate with
Sellers in obtaining all consents identified in Part 3.2 of the Disclosure
Letter; provided that this Agreement will not require Buyer to dispose of or
make any change in any portion of its business or to incur any other burden to
obtain a Governmental Authorization.
6.2 BEST EFFORTS
Except as set forth in the proviso to Section 6.1, between
the date of this Agreement and the Closing Date, Buyer will use its Best Efforts
to cause the conditions in Sections 7 and 8 to be satisfied.
7. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE
Buyer's obligation to purchase the Shares and to take the other
actions required to be taken by Buyer at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by Buyer, in whole or in part):
7.1 ACCURACY OF REPRESENTATIONS
All of Sellers' representations and warranties in this
Agreement (considered collectively), and each of these representations and
warranties (considered individually), must have been accurate in all material
respects as of the date of this Agreement, and must be accurate in all material
respects as of the Closing Date as if made on the Closing Date, without giving
effect to any supplement to the Disclosure Letter.
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7.2 SELLERS' PERFORMANCE
All of the covenants and obligations that Sellers are
required to perform or to comply with pursuant to this Agreement at or prior to
the Closing (considered collectively), and each of these covenants and
obligations (considered individually), must have been duly performed and
complied with in all material respects.
7.3 CONSENTS
Each of the Consents identified in Part 3.2 of the
Disclosure Letter, and each Consent identified in Schedule 4.2, must have been
obtained and must be in full force and effect.
7.4 ADDITIONAL DOCUMENTS
Each of the following documents must have been delivered
to Buyer:
(a) an opinion of Hermann, Cahn and Schneider, dated
the Closing Date, in the form of Exhibit 7.4(a);
(b) such other documents as Buyer may reasonably
request for the purpose of (i) enabling its counsel to provide the opinion
referred to in Section 8.4(a), (ii) evidencing the accuracy of any of Sellers'
representations and warranties, (iii) evidencing the performance by either
Seller of, or the compliance by either Seller with, any covenant or obligation
required to be performed or complied with by such Seller, (iv) evidencing the
satisfaction of any condition referred to in this Section 7, or (v) otherwise
facilitating the consummation or performance of any of the Contemplated
Transactions.
7.5 NO PROCEEDINGS
Since the date of this Agreement, there must not have
been commenced or Threatened against Buyer, or against any Person affiliated
with Buyer, any Proceeding (a) involving any challenge to, or seeking damages
or other relief in connection with, any of the Contemplated Transactions, or (b)
that may have the effect of preventing, delaying, making illegal, or otherwise
interfering with any of the Contemplated Transactions.
7.6 NO CLAIM REGARDING STOCK OWNERSHIP OR SALE PROCEEDS
There must not have been made or Threatened by any Person
any claim asserting that such Person (a) is the holder or the beneficial owner
of, or has the right to acquire or to obtain beneficial ownership of, any stock
of, or any other voting,
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equity, or ownership interest in, any of the Company, or (b) is entitled to all
or any portion of the Purchase Price payable for the Shares.
7.7 NO PROHIBITION
Neither the consummation nor the performance of any of the
Contemplated Transactions will, directly or indirectly (with or without notice
or lapse of time), materially contravene, or conflict with, or result in a
material violation of, or cause Buyer or any Person affiliated with Buyer to
suffer any material adverse consequence under, (a) any applicable Legal
Requirement or Order, or (b) any Legal Requirement or Order that has been
published, introduced, or otherwise proposed by or before any Governmental Body.
7.8 ACCOUNTANTS' LETTER
On or before the Closing Date, the Buyer shall receive
from the Company's accountants, in their capacity as auditors to the Company, a
letter informing substance satisfactory to Buyer stating that the transaction
contemplated by this Agreement, is eligible to be accounted for as a pooling of
interests.
7.9 NO INJUNCTION
There must not be in effect in the legal requirement where
any injunction or other Order that (a) prohibits the sale of the Shares by
Sellers to Buyer, and (b) has been adopted or issued, or has otherwise become
effective, since the date of this Agreement.
8. CONDITIONS PRECEDENT TO SELLERS' OBLIGATION TO CLOSE
Sellers' obligation to sell the Shares and to take the other
actions required to be taken by Sellers at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by Sellers, in whole or in part):
8.1 ACCURACY OF REPRESENTATIONS
All of Buyer's representations and warranties in this
Agreement (considered collectively), and each of these representations and
warranties (considered individually), must have been accurate in all material
respects as of the date of this Agreement and must be accurate in all material
respects as of the Closing Date as if made on the Closing Date.
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8.2 BUYER'S PERFORMANCE
(a) All of the covenants and obligations that Buyer is
required to perform or to comply with pursuant to this Agreement at or prior to
the Closing (considered collectively), and each of these covenants and
obligations (considered individually), must have been performed and complied
with in all material respects.
(b) Buyer must have delivered each of the documents
required to be delivered by Buyer pursuant to Section 2.4.
8.3 CONSENTS
Each of the Consents identified in Part 3.2 of the
Disclosure Letter must have been obtained and must be in full force and effect.
8.4 NO INJUNCTION
There must not be in effect any Legal Requirement or any
injunction or other Order that (a) prohibits the sale of the Shares by Sellers
to Buyer, and (b) has been adopted or issued, or has otherwise become effective,
since the date of this Agreement.
9. TERMINATION
9.1 TERMINATION EVENTS
This Agreement may, by notice given prior to or at the
Closing, be terminated:
(a) by either Buyer or Sellers if a material Breach of
any provision of this Agreement has been committed by the other party and such
Breach has not been waived. Such breach shall, if capable of cure, not have been
cured within ten (10) days after receipt by the party in breach or the notice
from the non-breaching party setting forth in detail the nature of such breach;
(b) (i) by Buyer if any of the conditions in
Section 7 has not been satisfied as of the Closing Date or if satisfaction of
such a condition is or becomes impossible (other than through the failure of
Buyer to comply with its obligations under this Agreement) and Buyer has not
waived such condition on or before the Closing Date; or (ii) by Sellers, if any
of the conditions in Section 8 has not been satisfied of the Closing Date or if
satisfaction of such a condition is or becomes impossible (other than through
the failure of Sellers to comply with their obligations under this Agreement)
and Sellers have not waived such condition on or before the Closing Date;
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(c) by mutual consent of Buyer and Sellers; or
(d) by either Buyer or Sellers if the Closing has not
occurred (other than through the failure of any party seeking to terminate this
Agreement to comply fully with its obligations under this Agreement) on or
before September 30, 1996, or such later date as the parties may agree upon.
9.2 EFFECT OF TERMINATION
Each party's right of termination under Section 9.1 is in
addition to any other rights it may have under this Agreement or otherwise, and
the exercise of a right of termination will not be an election of remedies. If
this Agreement is terminated pursuant to Section 9.1, all further obligations of
the parties under this Agreement will terminate, except that the obligations in
Sections 11.1 and 11.3 will survive; provided, however, that if this Agreement
is terminated by a party because of the Breach of the Agreement by the other
party or because one or more of the conditions to the terminating party's
obligations under this Agreement is not satisfied as a result of the other
party's failure to comply with its obligations under this Agreement, the
terminating party's right to pursue all legal remedies will survive such
termination unimpaired.
10. INDEMNIFICATION; REMEDIES
10.1 SURVIVAL; RIGHT TO INDEMNIFICATION NOT AFFECTED BY
KNOWLEDGE
All representations, warranties, covenants, and
obligations in this Agreement, the Disclosure Letter, the supplements to the
Disclosure Letter, the certificate delivered pursuant to Section 2.4(a)(v), and
any other certificate or document delivered pursuant to this Agreement will
survive the Closing for one (1) year subject to Section 10.5 hereof. The right
to indemnification, payment of Damages or other remedy based on such
representations, warranties, covenants, and obligations will not be affected by
any investigation conducted with respect to, or any Knowledge acquired (or
capable of being acquired) at any time, whether before or after the execution
and delivery of this Agreement or the Closing Date, with respect to the accuracy
or inaccuracy of or compliance with, any such representation, warranty,
covenant, or obligation. The waiver of any condition based on the accuracy of
any representation or warranty, or on the performance of or compliance with any
covenant or obligation, will not affect the right to indemnification, payment of
Damages, or other remedy based on such representations, warranties, covenants,
and obligations.
10.2 INDEMNIFICATION AND PAYMENT OF DAMAGES BY SELLERS
Sellers and the Southwind Shareholders jointly and
severally, will indemnify and hold harmless Buyer, the Company, and their
respective Representatives,
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shareholders, controlling persons, and affiliates (collectively, the
"Indemnified Persons") for, and will pay to the Indemnified Persons the amount
of, any loss, liability, claim, damage (including incidental and consequential
damages), expense (including costs of investigation and defense and reasonable
attorneys' fees) or diminution of value, whether or not involving a third-party
claim (collectively, "Damages"), arising, directly or indirectly, from or in
connection with:
(a) any Breach of any representation or warranty made
by Sellers or the Southwind Shareholders in this Agreement (without giving
effect to any supplement to the Disclosure Letter), the Disclosure Letter, the
supplements to the Disclosure Letter, or any other certificate or document
delivered by Sellers pursuant to this Agreement;
(b) any Breach of any representation or warranty made
by Sellers or the Southwind Shareholders in this Agreement as if such
representation or warranty were made on and as of the Closing Date (without
giving effect to any supplement to the Disclosure Letter), other than any such
Breach that is disclosed in a supplement to the Disclosure Letter and is
expressly identified in the certificate delivered pursuant to Section 2.4(a)(v)
as having caused the condition specified in Section 7.1 not to be satisfied;
(c) any Breach by any Seller or the Southwind
Shareholders of any covenant or obligation of such Seller in this Agreement;
(d) any product shipped or any services provided by
the Company prior to the Closing Date except to the extent that such damages
are reimbursed by any applicable insurance coverage; or
(e) any claim by any Person for brokerage or finder's
fees or commissions or similar payments based upon any agreement or
understanding alleged to have been made by any such Person with either Seller a
Southwind Shareholder or the Company (or any Person acting on their behalf) in
connection with any of the Contemplated Transactions.
The remedies provided in this Section 10.2 will
not be exclusive of or limit any other remedies that may be available to Buyer
or the other Indemnified Persons.
10.3 INDEMNIFICATION AND PAYMENT OF DAMAGES BY SELLERS--
ENVIRONMENTAL MATTERS
In addition to the provisions of Section 10.2, Sellers
and the Southwind Shareholders, jointly and severally, will indemnify and hold
harmless Buyer, the Company, and the other Indemnified Persons for, and will pay
to Buyer, the
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Company, and the other Indemnified Persons the amount of, any Damages (including
costs of cleanup, containment, or other remediation) arising, directly or
indirectly, from or in connection with:
(a) any Environmental, Health, and Safety Liabilities
arising out of or relating to: (i) (A) the ownership, operation, or condition at
any time on or prior to the Closing Date of the Facilities or any other
properties and assets (whether real, personal, or mixed and whether tangible or
intangible) in which Sellers or the Company has or had an interest, or (B) any
Hazardous Materials or other contaminants that were present on the Facilities or
such other properties and assets at any time on or prior to the Closing Date; or
(ii) (A) any Hazardous Materials or other contaminants, wherever located, that
were, or were allegedly, generated, transported, stored, treated, Released, or
otherwise handled by Sellers or the Company or by any other Person for whose
conduct they are or may be held responsible at any time on or prior to the
Closing Date, or (B) any Hazardous Activities that were, or were allegedly,
conducted by Sellers or the Company or by any other Person for whose conduct
they are or may be held responsible; or
(b) any bodily injury (including illness, disability,
and death, and regardless of when any such bodily injury occurred, was incurred,
or manifested itself), personal injury, property damage (including trespass,
nuisance, wrongful eviction, and deprivation of the use of real property), or
other damage of or to any Person, including any employee of Sellers or the
Company or any other Person for whose conduct they are or may be held
responsible, in any way arising from or allegedly arising from any Hazardous
Activity conducted or allegedly conducted with respect to the Facilities or the
operation of the Company prior to the Closing Date, or from Hazardous Material
that was (i) present or suspected to be present on or before the Closing Date on
or at the Facilities (or present or suspected to be present on any other
property, if such Hazardous Material emanated or allegedly emanated from any of
the Facilities and was present or suspected to be present on any of the
Facilities on or prior to the Closing Date) or (ii) Released or allegedly
Released by Sellers or the Company or any other Person for whose conduct they
are or may be held responsible, at any time on or prior to the Closing Date.
Buyer will be entitled to control any Cleanup, any
related Proceeding, and, except as provided in the following sentence, any other
Proceeding with respect to which indemnity may be sought under this Section 10.3
with the advice and assistance and approval of Seller, such approval not to be
unreasonably withheld. The procedure described in Section 10.9 will apply to any
claim solely for monetary damages relating to a matter covered by this Section
10.3.
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<PAGE>
10.4 INDEMNIFICATION AND PAYMENT OF DAMAGES BY BUYER
Buyer will indemnify and hold harmless Sellers, and will
pay to Sellers the amount of any Damages arising, directly or indirectly, from
or in connection with (a) any Breach of any representation or warranty made by
Buyer in this Agreement or in any certificate delivered by Buyer pursuant to
this Agreement, (b) any Breach by Buyer of any covenant or obligation of Buyer
in this Agreement, or (c) any claim by any Person for brokerage or finder's fees
or commissions or similar payments based upon any agreement or understanding
alleged to have been made by such Person with Buyer (or any Person acting on its
behalf) in connection with any of the Contemplated Transactions.
10.5 TIME LIMITATIONS
If the Closing occurs, Sellers and the Southwind
Shareholders will have no liability (for indemnification or otherwise) with
respect to any representation or warranty, or covenant or obligation to be
performed and complied with prior to the Closing Date, unless on or before one
year from the Closing Date Buyer notifies Sellers of a claim specifying the
factual basis of that claim in reasonable detail to the extent then known by
Buyer. A claim for indemnification or reimbursement not based upon any
representation or warranty or covenant or obligation to be performed and
complied with prior to the Closing Date may be made on or before one year from
the Closing Date. If the Closing occurs, Buyer will have no liability (for
indemnification or otherwise) with respect to any representation or warranty, or
covenant or obligation to be performed and complied with prior to the Closing
Date, unless on or before one year from the Closing Date Sellers notify Buyer of
a claim specifying the factual basis of that claim in reasonable detail to the
extent then known by Sellers.
10.6 LIMITATIONS ON AMOUNT--SELLERS
Notwithstanding anything to the contrary contained in this
Agreement, in no event shall the aggregate liability of the Sellers and the
Southwind Shareholders under this Agreement exceed $1,500,000; Buyer shall seek
indemnity for Damages solely from the shares of Compscript's Common Stock
received by Sellers hereunder. In the event that Sellers are unable to deliver
shares free and clear of any liens, charges or encumbrances, other than
restrictions on sale described in paragraph 3.2(c) above, to satisfy a claim for
Damages, Buyer may seek indemnity directly from Sellers up to the dollar
limitation set forth above . For purposes of satisfying a claim for Damages, any
Compscript shares owned by Sellers or the Southwind Shareholders shall be valued
at $8.00 per share irrespective of the market price of such shares. Furthermore,
Buyer shall have no right to damages or indemnification until the aggregate of
all Damages (other than Damages arising under Section 3.3) exceeds Twenty-Five
Thousand Dollars ($25,000.00).
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<PAGE>
10.7 LIMITATIONS ON AMOUNT--BUYER
Notwithstanding anything to the contrary contained in this
Agreement, in no event shall the aggregate liability of the Buyer under this
Agreement exceed $1,500,000. Notwithstanding anything to the contrary, Sellers
shall have no right to indemnification until the aggregate of all Damages
exceeds $25,000.
10.8 PROCEDURE FOR INDEMNIFICATION--THIRD PARTY CLAIMS
(a) Promptly after receipt by an indemnified party
under Section 10.2, 10.4, or (to the extent provided in the last sentence of
Section 10.3) Section 10.3 of notice of the commencement of any Proceeding
against it, such indemnified party will, if a claim is to be made against an
indemnifying party under such Section, give written notice to the indemnifying
party of the commencement of such claim, but the failure to notify the
indemnifying party will not relieve the indemnifying party of any liability that
it may have to any indemnified party, except to the extent that the indemnifying
party demonstrates that the defense of such action is prejudiced by the
indemnifying party's failure to give such notice.
(b) If any Proceeding referred to in Section 10.8(a)
is brought against an indemnified party and it gives notice to the indemnifying
party of the commencement of such Proceeding, the indemnifying party will,
unless the claim involves Taxes, be entitled to participate in such Proceeding
and, to the extent that it wishes (unless (i) the indemnifying party is also a
party to such Proceeding and the indemnified party determines in good faith that
joint representation would be inappropriate, or (ii) the indemnifying party
fails to provide reasonable assurance to the indemnified party of its financial
capacity to defend such Proceeding and provide indemnification with respect to
such Proceeding), to assume the defense of such Proceeding with counsel
reasonably satisfactory to the indemnified party and, after notice from the
indemnifying party to the indemnified party of its election to assume the
defense of such Proceeding, the indemnifying party will not, as long as it
diligently conducts such defense, be liable to the indemnified party under this
Section 10 for any fees of other counsel or any other expenses with respect to
the defense of such Proceeding, in each case subsequently incurred by the
indemnified party in connection with the defense of such Proceeding. If the
indemnifying party assumes the defense of a Proceeding, (i) it will be
conclusively established for purposes of this Agreement that the claims made in
that Proceeding are within the scope of and subject to indemnification; (ii) no
compromise or settlement of such claims may be effected by the indemnifying
party without the indemnified party's consent unless (A) there is no finding or
admission of any violation of Legal Requirements or any violation of the rights
of any Person and no effect on any other claims that may be made against the
indemnified party, and (B) the sole relief provided is monetary damages that are
paid in full by the indemnifying party; and (iii) the indemnified party will
have no liability with respect to any compromise or settlement of such claims
effected without its consent. If notice is given to an
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<PAGE>
indemnifying party of the commencement of any Proceeding and the indemnifying
party does not, within twenty days after the indemnified party's notice is
received, give written notice to the indemnified party of its election to assume
the defense of such Proceeding, the indemnifying party will be bound by any
determination made in such Proceeding or any compromise or settlement effected
by the indemnified party unless it is established that the indemnifying party
was not obligated to give indemnification.
(c) Notwithstanding the foregoing, if an indemnified
party determines in good faith that there is a reasonable probability that a
Proceeding may adversely affect it or its affiliates other than as a result of
monetary damages for which it would be entitled to indemnification under this
Agreement, the indemnified party may, by notice to the indemnifying party,
assume the exclusive right to defend, compromise, or settle such Proceeding at
its sole expense.
10.9 PROCEDURE FOR INDEMNIFICATION--OTHER CLAIMS
In the event that a party becomes entitled to exercise its right of
indemnification pursuant to this Section 10, the following procedure shall
apply:
(a) The indemnified party shall give written notice to the indemnifying
party of a claim for Damages for indemnity and its intention to invoke the
indemnification procedures hereunder ("Claim Notice") which Claim Notice shall
contain a description of the amount, costs, timing and the manner of effecting
the payment or indemnification;
(b) The indemnifying party shall have a period of twenty (20) days from
receipt of the Claim Notice to object in writing to the Claim for
indemnification, which objection shall set forth in reasonable detail the
objection thereof, and thirty (30) days from the date of such rejection to
resolve such Claim to the mutual satisfaction of the parties.
(c) If no written objection is received or, if received, agreement is
reached during the 30-day period referred to in Subsection (b) above, (the
"Resolution"), (i) the indemnified party thereon shall have the right to recover
such Claim;
(d) If no agreement is reached during the Resolution period with respect
to a specific Claim, then the specific matter or matters in dispute shall be
submitted to arbitration in accordance with the provisions of this Agreement.
11. POST CLOSING OBLIGATIONS
In order to make available to the Sellers the benefits
of Rule 144 and any other similar rule or regulation of the Commission that may
at the time permit Sellers to sell the shares of Compscript Common Stock to the
public without registration, the Company agrees to use its reasonable efforts to
(i) make and keep public information available, as those terms are understood in
the definition of Rule 144 under
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the Securities Act; and (ii) file with the Securities and Exchange Commission in
a timely manner all reports and other documents required of the Buyer under the
Securities Act and the Securities Exchange Act of 1934; and (iii) take such
other steps as are reasonably necessary to permit the sale of such securities
under Rule 144.
12. GENERAL PROVISIONS
12.1 EXPENSES
Except as otherwise expressly provided in this Agreement,
each party to this Agreement will bear its respective expenses incurred in
connection with the preparation, execution, and performance of this Agreement
and the Contemplated Transactions, including all fees and expenses of agents,
representatives, counsel, and accountants. Sellers will cause the Company not to
incur any out-of-pocket expenses in connection with this Agreement and Sellers
shall be responsible for all legal and accounting fees of the Company in
connection with this Agreement and the transaction contemplated hereby. In the
event of termination of this Agreement, the obligation of each party to pay its
own expenses will be subject to any rights of such party arising from a breach
of this Agreement by another party.
12.2 PUBLIC ANNOUNCEMENTS
Any public announcement or similar publicity with respect
to this Agreement or the Contemplated Transactions will be issued, if at all, at
such time and in such manner as Buyer determines. Unless consented to by Buyer
in advance or required by Legal Requirements, prior to the Closing Sellers
shall, and shall cause the Company to, keep this Agreement strictly confidential
and may not make any disclosure of this Agreement to any Person. Sellers and
Buyer will consult with each other concerning the means by which the Company's
employees, customers, and suppliers and others having dealings with the Company
will be informed of the Contemplated Transactions, and Buyer will have the right
to be present for any such communication.
12.3 CONFIDENTIALITY
Between the date of this Agreement and the Closing Date,
Buyer and Sellers will maintain in confidence, and will cause the directors,
officers, employees, agents, and advisors of Buyer and the Company to maintain
in confidence, any written, oral, or other information obtained in confidence
from another party or the Company in connection with this Agreement or the
Contemplated Transactions, unless (a) such information is already known to such
party or to others not bound by a duty of confidentiality or such information
becomes publicly available through no fault of such party, (b) the use of such
information is necessary or appropriate in making any filing or obtaining any
consent or approval required for the consummation of the Contemplated
44
<PAGE>
Transactions, or (c) the furnishing or use of such information is required by
or necessary or appropriate in connection with legal proceedings.
If the Contemplated Transactions are not consummated,
each party will return as much of such written information as the other party
may reasonably request.
12.4 NOTICES
All notices, consents, waivers, and other communications
under this Agreement must be in writing and will be deemed to have been duly
given when (a) delivered by hand (with written confirmation of receipt), (b)
sent by telecopier (with written confirmation of receipt), provided that a copy
is mailed by registered mail, return receipt requested, or (c) when received by
the addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the appropriate addresses and telecopier
numbers set forth below (or to such other addresses and telecopier numbers as a
party may designate by notice to the other parties):
Sellers: Daniel R. Zivko
8562 Billings Road
Kirtland, Ohio 44094
Facsimile No.: ________________
with a copy to: Hermann, Cahn & Schneider
1301 East 9th Street
Cleveland, Ohio 44114
Attention: Robert Warren, Jr., Esq.
Facsimile No.: (216) 781-1030
Buyer: Compscript, Inc.
1225 Broken Sound Parkway, N.W.
Suite A
Boca Raton, Florida 33481
Attention: Brian Kahan, Chief Executive Officer
Facsimile No.: (407) 994-6105
with a copy to: Atlas, Pearlman, Trop & Borkson, P.A.
200 East Las Olas Boulevard, Suite 1900
Fort Lauderdale, Florida 33301
Attention: Joel D. Mayersohn, Esq.
Facsimile No.: (954) 766-7800
45
<PAGE>
12.5 ARBITRATION
In controversy or claim arising out of or relating to
this Agreement or its breach, shall be settled by arbitration in accordance with
the governing rules of the American Arbitration Association. Said arbitration
shall be conducted in an expeditious manner, and the parties agree that a final
arbitration hearing shall be conducted on the first available date of the
arbitrators after the parties have completed discovery. In the event of an
arbitration proceeding, the arbitration shall solely occur in Palm Beach County,
Florida. In the event of litigation of arbitration arising out of this
Agreement, the prevailing party shall be entitled to recover any and all
reasonable attorneys' fees and costs incurred both at the arbitration level
and/or any appeal of the arbitration.
12.6 FURTHER ASSURANCES
The parties agree (a) to furnish upon request to each
other such further information, (b) to execute and deliver to each other such
other documents, and (c) to do such other acts and things, all as the other
party may reasonably request for the purpose of carrying out the intent of this
Agreement and the documents referred to in this Agreement.
12.7 WAIVER
The rights and remedies of the parties to this Agreement
are cumulative and not alternative. Neither the failure nor any delay by any
party in exercising any right, power, or privilege under this Agreement or the
documents referred to in this Agreement will operate as a waiver of such right,
power, or privilege, and no single or partial exercise of any such right, power,
or privilege will preclude any other or further exercise of such right, power,
or privilege or the exercise of any other right, power, or privilege. To the
maximum extent permitted by applicable law, (a) no claim or right arising out of
this Agreement or the documents referred to in this Agreement can be discharged
by one party, in whole or in part, by a waiver or renunciation of the claim or
right unless in writing signed by the other party; (b) no waiver that may be
given by a party will be applicable except in the specific instance for which it
is given; and (c) no notice to or demand on one party will be deemed to be a
waiver of any obligation of such party or of the right of the party giving such
notice or demand to take further action without notice or demand as provided in
this Agreement or the documents referred to in this Agreement.
12.8 ENTIRE AGREEMENT AND MODIFICATION
This Agreement supersedes all prior agreements between the
parties with respect to its subject matter (including the Letter of Intent
between Buyer and Sellers dated March 22, 1996) and constitutes (along with the
documents referred to in this Agreement) a complete and exclusive statement of
the terms of the agreement
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<PAGE>
between the parties with respect to its subject matter. This Agreement may not
be amended except by a written agreement executed by the party to be charged
with the amendment.
12.9 DISCLOSURE LETTER
(a) The disclosures in the Disclosure Letter, and
those in any Supplement thereto, must relate only to the representations and
warranties in the Section of the Agreement to which they expressly relate and
not to any other representation or warranty in this Agreement.
(b) In the event of any inconsistency between the
statements in the body of this Agreement and those in the Disclosure Letter
(other than an exception expressly set forth as such in the Disclosure Letter
with respect to a specifically identified representation or warranty), the
statements in the body of this Agreement will control.
12.10 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS
Neither party may assign any of its rights under this
Agreement without the prior consent of the other parties except that Buyer may
assign any of its rights under this Agreement to any Subsidiary of Buyer.
Subject to the preceding sentence, this Agreement will apply to, be binding in
all respects upon, and inure to the benefit of the successors and permitted
assigns of the parties. Nothing expressed or referred to in this Agreement will
be construed to give any Person other than the parties to this Agreement any
legal or equitable right, remedy, or claim under or with respect to this
Agreement or any provision of this Agreement. This Agreement and all of its
provisions and conditions are for the sole and exclusive benefit of the parties
to this Agreement and their successors and assigns.
12.11 SEVERABILITY
If any provision of this Agreement is held invalid or
unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement will remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.
12.12 SECTION HEADINGS, CONSTRUCTION
The headings of Sections in this Agreement are provided
for convenience only and will not affect its construction or interpretation. All
references to "Section" or "Sections" refer to the corresponding Section or
Sections of this Agreement. All words used in this Agreement will be construed
to be of such gender or number as
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the circumstances require. Unless otherwise expressly provided, the word
"including" does not limit the preceding words or terms.
12.13 TIME OF ESSENCE
With regard to all dates and time periods set forth or
referred to in this Agreement, time is of the essence.
12.14 GOVERNING LAW
This Agreement will be governed by the laws of the State
of Florida without regard to conflicts of laws principles.
12.15 COUNTERPARTS
This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
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<PAGE>
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first written above.
BUYER: SELLERS:
COMPSCRIPT, INC.
By:/S/ BRIAN A. KAHAN /S/ PETER LONGBONS
------------------------ ----------------------------
BRIAN A. KAHAN PETER LONGBONS
Chief Executive Officer
/S/ MARK J. KIRASICH
----------------------------
MARK J. KIRASICH
SOUTHWIND HEALTH PRODUCTS
COMPANY
By:/S/ DANIEL R. ZIVKO
----------------------------
Name: DANIEL R.ZIVKO
----------------------------
Its: CHAIRMAN
----------------------------
/S/ DANIEL ZIVKO
----------------------------
DANIEL ZIVKO
/S/ QUENTIN ALEXANDER
----------------------------
QUENTIN ALEXANDER
/S/ RAY KRALOVIC
----------------------------
RAY KRALOVIC
49
<PAGE>
EXHIBIT "A"
LIST OF SHAREHOLDERS
--------------------
NAME OF SHAREHOLDER NUMBER OF SHARES
- ------------------- ----------------
Peter Longbons 464
Mark J. Kirasich 18
Southwind Health Products Company 18
Exhibit 2
DISCLOSURE LETTER
August 19, 1996
CompScript
1225 Broken Sound Parkway, N.W.
Suite A
Boca Raton, FL 33481
Gentlemen:
We refer to the Stock Purchase Agreement (the "Agreement"") to be
entered into today between the undersigned individuals ("Sellers"), and the
Southwind Shareholders (as such term is defined in the Agreement) and CompScript
("Buyer") pursuant to which Sellers are to sell and Buyer is to purchase all of
the issued and outstanding capital stock of SECURx (the "Company") as provided
in the Agreement.
This letter constitutes the Disclosure Letter referred to in Section 3
of the Agreement. The representations and warranties of Sellers in Section 3 of
the Agreement are made and given subject to the disclosures in this Disclosure
Letter. The disclosures in this Disclosure Letter are to be taken as relating to
the representations and warranties in the section of the Agreement to which they
expressly relate and to no other representation or warranty in the Agreement.
Terms defined in the Agreement are used with the same meaning in this
Disclosure Letter. References to Appendices are to the Appendices to this
Disclosure Letter.
By reference to Section 3 of the Agreement (using the number in such
Section), the following matters are disclosed:
3.1 ORGANIZATION AND GOOD STANDING
(a) as stated
(b) Sellers have delivered to Buyers copies of the
Organization Documents of the Company, and are complete
and accurate copies of such instruments, as currently in
effect.
3.2 AUTHORITY; NO CONFLICT
(a) as stated
(b) as stated
(c) as stated
<PAGE>
3.3 CAPITALIZATION
Number of shares owned by each Seller are as follows:
Southwind Health Products Company 464 shares
Mark J. Kirasich 18 shares
Peter A. Longbons 18 shares
3.4 FINANCIAL STATEMENTS
(a) audited balance sheets of the Company as of December 31,
1995 from July 25, 1995 inception through December 31,
1995, and the related audited statements of loss, changes
in shareholders' equity, and cash flow for the fiscal year
ended, together with the report thereon of Prijatel &
Koss, independent certified public accountants.
(b) same as (a)
(c) an unaudited balance sheet of the Company as of June 30,
1986 (the "Interim Balance Sheet") and the related
unaudited statements of loss and changes in shareholders'
equity, for the six months then ended.
3.5 BOOKS AND RECORDS
as stated
3.6 TITLE TO PROPERTIES; ENCUMBRANCES
Listing of all property and assets - Exhibit A included in this
document
Valley Drug Judgment
North Shore Leasing Company Lien
3.7 CONDITION AND SUFFICIENCY OF ASSETS
as stated
3.8 ACCOUNTS RECEIVABLE
Listing of all Accounts Receivable and the aging of such provided
to CompScript on site visit of July 29, 1996
3.9 INVENTORY
as stated
2
<PAGE>
3.10 NO UNDISCLOSED LIABILITIES
as stated
3.11 TAXES
(a) all required tax returns have been filed (on a timely
basis since July 1995) pursuant to applicable Legal
Requirements. Seller has delivered copies of all such
returns to CompScript on site visit of July 29, 1995.
(b) no United States federal and state income Tax Returns of
the Company have been audited by the IRS or relevant tax
authorities.
(c) as stated
(d) as stated
3.12 NO MATERIAL AND ADVERSE CHANGE
as stated
3.13 EMPLOYEE BENEFITS
(i) as stated
(ii) as stated
(iii) as stated
3.14 COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL
AUTHORIZATIONS
(a) as stated
(b) as stated
The following governmental authorizations held by the Company
are all in good standing:
DEA registration number BS478577 expires 2-28-99
Ohio State Board of Pharmacy 02-859450 expires 12-31-06
3.15 LEGAL PROCEEDINGS; ORDERS
Valley Drug Judgment
3
<PAGE>
3.16 ABSENCE OF CERTAIN CHANGES AND EVENTS
(a) as stated
(b) as stated
(c) as stated
(d) as stated
(e) as stated
(f) as stated
(g) as stated
(h) as stated
(i) as stated
(j) as stated
3.17 CONTRACTS; NO DEFAULTS
A listing of all contracts presently in effect for the Company
are as follows:
Independent Consulting Agreement NML Group Services - Lee
McManus
Purchasing Contract - PDM Corporation
BCM Participating Pharmacy Agreement
PCS, Inc. Supplemental Agreement
Services agreement - Ameriscript, Inc.
Services agreement - Molded Fiber Glass Companies
Services agreement - Illinois Central Hospital Association
Normandy Development - Facility lease
AT&T Telephone Lease
GMAC Automobile Lease
Schedule of Commissions
3.18 INSURANCE
Sellers have delivered to Buyer true and complete copies of all
policies of insurance to which the Company is a party or under
which the Company is or has been covered at any time. Such
policies include the following:
Commercial Insurance Policy #CPP5512135C issued by The
CINCINNATI COMPANIES
Commercial Umbrella Liability Policy #CCC 4374587 issued by the
CINCINNATI COMPANIES
4
<PAGE>
"Key Man" Insurance Policies VALLEY FORCE LIFE INSURANCE COMPANY
Policy #V100090273 - Mark J. Kirasich
"Key Man" Insurance Policies VALLEY FORCE LIFE INSURANCE COMPANY
Policy #V100090274 - Peter A. Longbons
3.19 ENVIRONMENTAL MATTERS
as stated
3.20 EMPLOYEES
Complete and accurate list of employee information provided to
CompScript on site visit of July 29, 1996. Employment Agreements
for Mark J. Kirasich and Peter A. Longbons enclosed.
3.21 LABOR RELATIONS; COMPLIANCE
as stated
3.22 CERTAIN PAYMENTS
(a) as stated
3.23 DISCLOSURE
(a) as stated
(b) This includes the uncertainties of such factors as changes
in healthcare regulations, changes in management structure
of referral sources, ability to close pending business and
changes in competition and competition strategies in our
industry.
These uncertainties and business risks include but are
limited to, (1) PCS Health Systems adding their own
managed care pharmacy, (2) DrugCard, AmericScript, and PCS
continuing to refer mail service business to CompScript,
(3) Commercial Intertech maintaining their independence,
(4) Administrative Service Consultants support of
CompScript, (5) the bankruptcy proceedings filed on behalf
of Fretter, (6) the loss of "funded" COBRA YES! retiree
business, and (7) loss of the Zollner "Funders" business.
The PCS business is a large percentage of the Company's
existing business, with the vast majority of PCS referrals
coming from ASC, a TPA located in Cleveland and Findlay,
Ohio. ASC prefers to PCS (retail) and Securx (mail
service), knowing that PCS has their own mail service
pharmacy. Any change in the referral pattern would
adversely affect the Company.
5
<PAGE>
3.24 RELATIONSHIP WITH RELATED PERSONS
as stated
3.25 BROKERS OR FINDERS
as stated
3.26
as stated
3.27 TESTIFIED INDEBTEDNESS OR OBLIGATIONS
as stated
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first written above.
BUYER: SELLERS:
COMPSCRIPT, INC.
By:/S/ BRIAN A. KAHAN /S/ PETER LONGBONS
-------------------------- -----------------------------
BRIAN A. KAHAN PETER LONGBONS
Chief Executive Officer
/S/ MARK J. KIRASICH
----------------------------
MARK J. KIRASICH
SOUTHWIND HEALTH PRODUCTS
COMPANY
By:/S/ DANIEL ZIVKO
----------------------------
Name: DANIEL ZIVKO
----------------------------
Its: CHAIRMAN
----------------------------
/S/ DANIEL ZIVKO
----------------------------
DANIEL ZIVKO
/S/ QUENTIN ALEXANDER
----------------------------
QUENTIN ALEXANDER
/S/ RAY KRALOVIC
----------------------------
RAY KRALOVIC
8
