HomeMy WebLinkAbout00-00119
.
.f
.....
"-
-0. (...
- .c_ - IN TIIE COURT OF COMMON PLEAS
CUMBERLAND COUNTY, PENNSYLVANIA
ROBERT WILSON
RD I, BOX 85
NEWPORT,PA 17074
and
- WILLIAM WILSON
-4997 WESTCHESTER DRIVE
HARRISBURG, P A 17112
PLAINTIFFS
Civil ActionNo..;20oCl - 1/'( C';~-L
~
V.
CONTINUING CARE RX, INC.
1217 SLATE HILL ROAD
CAMP HILL, PENNSYLVANIA 17011
and
STEPHEN PROCTOR
7ALYDARBOULEVARD
DILLSBURG, PA
DEFENDANTS
NOTICE
You have been sued in court. If you wish to defend against the claims set forth in the
following pages, you must take action within twenty (20) days after this Complaint and
Notice are served, by entering a written appearance personally or by an attorney and filing in
writing with the court your defenses or objections to the claims set forth against you. You
are warned that if you fail to do so the case may proceed without you and a judgment may be
entered against you by the court without further notice for any money claimed in the
Complaint or for aily other claim or relief requested by the Plaintiff. You may lose money or
property or other rights important to you.
YOU SHOULD TAKE THIS PAPER TO YOUR LAwYER AT ONCE. IF YOU
DO NOT HAVE A LAWYER OR CANNOT AFFORD ONE, GO TO OR TELEPHONE
THE OFFICE SET FORTH BELOW TO FIND OUT WHERE YOU CAN GET LEGAL
HELP.
Court Administrator
4th Floor, Cumberland County CoUrthouse
Carlisle, P A 17013
(717) 240-6620
HBG\38301.2
<
<..
~
,
IN THE COURT OF COMMON PLEAS
CUMBERLAND COUNTY, PENNSYLVANIA
ROBERT WILSON
RD I, BOX 85
NEWPORT,PA 17074
and
WILLIAM WILSON
4997 WESTCHESTER DRIVE
HARRISBURG, P A 17112
PLAINTIFFS
Civil Action No.
V.
CONTThlUING CARE RX, INC.
1217 SLATE HILL ROAD
CAMP HILL, PENNSYLVANIA 17011
and
STEPHEN PROCTOR
7ALYDARBOULEVARD
DlLLSBURG, PA
DEFENDANTS
NOT1C1A
Le han demandado a usted en la corte. Si usted qui ere defenderse de estas demandas
expuestas en las paginas siguientes, usted tiene viente (20) dias de plazo al partir de la fecha
de la demanda y la notificacion. Usted debe presentar una apariencia escrita 0 en persona 0
por abogado y archivar en la corte en forma escrita sus defensas 0 sus objeciones a las
demandas en contra de su persona. Sea avisado que si usted no se defiende, la corte tomara
medidas y puede entrar una orden contra usted sin previa aviso o-notificacion y por cualquier
queja oalivio que es pedidoen la peticion de demanda. Usted puede perder dinero 0 sus
porpiedades 0 otros derechos importantes para usted.
LLEVE ESTA DEMANDA A UN ABODAGO 1MMEDlATAMENTE. SI NO
TIENE ABOGADO 0 S1 NQ TIENE EL DINERO SUFICIENTE DE P AGAR TAL..
- SERV1CIO; VA Y A EN PERSONA 0 LLAME POR TELEFONO A LA OF1CINA CUY A
DIRECC10NSE ENCUENTRAESC.RITA ABAJO PARA A VERIGUAR DONDE SE
PUEDE CONSEGUIR AS1STENCIALEGAL.
Court Administrator
4th Floor, Cumberland County Courthouse
Carlisle, P A 17013
(717) 240.6620
HBG\38301.2
,
<-
,J.>
.(;.
-~ -=-L
IN THE COURT OF COMMON PLEAS
CUMBERLAND COUNTY, PENNSYLVANIA
ROBERT WILSON
RDI
BOX 85
NEWPORT, P A 17074
and
WILLIAM WILSON
4997 WESTCHESTER DRIVE
HARRISBURG, PA 17112
Civil Action No. .2.ovv../f~ -r~
PLAINTIFFS
v.
CONTINUING CARE RX, INC.
1217 SLATE HILL ROAD
CAMP HILL, PENNSYLVANIA 1701 I
and
STEPHEN PROCTOR
7ALYDARBOULEVARD
DILLSBURG, PA
DEFENDANTS
COMPLAINT
I. PIaintiffWilliam Wilson is an individual residing at 4997 Westchester Drive,
Harrisburg, P A 171 12.
2. Plaintiff Robert Wilson is an individual residing at RD I, Box 85, Newport, PA
17074.
3. Defendant Continuing Care Rx, Inc. is a Pennsylvania Corporation with its
registered office at 12 I 7 Slate Hill Road, Camp Hill, Pennsylvania 170 I I.
HBG\38301.2
,
1(:'
'.
-L
~
4. . Defendant Stephen Proctor is an individual residing at 7 Aldyar Boulevard,
Dillsburg, Pennsylvania Proctor is Chairman 9J the Board of Continuing Care Rx, Inc.
5. Plaintiffs Robert and William Wilson are registered pharmacists who, in
December of 1996, with a third individual, Thomas Trite, founded a corporation called
Continuing Care Rx, Inc. C'CCRxl ").
6. From December 24, 1996, until February 25, 1998, Robert Wilson, William
Wilson and Thomas Trite were the owners and managers ofCCRxI.
7. The business ofCCRxl was to enter into contracts with nursing homes and other
institutions under which CCRx I would provide and distribute prescription drugs to the residents
of the nursing home or other institution.
8. In February of 1998, CCRxl entered into an agreement with PHI, a Pennsylvania
corporation, to provide and distribute prescription drugs at nursing homes owned and operated
by Presbyterian Homes Incorporated, a subsidiary ofPHL
9. In February of 1998, PHI entered into an Asset Purchase Agreement with William
Wilson, Robert Wilson and Thomas Trite under which Pill purchased the business, name and
other assets of CCRx I , subject to certain liabilities, and created a new corporation by the name
Continuing Care Rx, Inc. ("CCRx2") to operate the phannacy business previously operated by
CCRx I. A true and correct copy of that Asset Purchase Agreement is attached hereto and made
a part hereof as Exhibit "A."
10. The Asset Purchase Agreement also provided that the Wilsons and PHI would
enter into an agreed to Management Agreement and an agreed to Stockholders Agreement.
11. On or about February 25, 1998, the Wilsons and Trite entered into a Management
Agreement and a StockhQlders Agreement.
12. Under the Shareholders Agreement, the Wilsons and Trite were to subscribe to
two hundred and fifty (250) shares of stock, twenty.five percent (25%) of the issued stock. A
HBG\38301.2
'-'
-iC
"'-
<.
true and correct copy of that Shareholders Agreement is attached hereto and made a part hereof
as Exhibit "B."
13. Under the Management Agreement, The Wilsons and Trite were engaged by
CCRx2 for a term of five (5) years as "management consultants." A true and correct copy of that
Agreement is attached hereto and made a part hereof as Exhibit "C."
14. Under the Management Agreement, the consulting duties included:
(a) During the Consulting Term [five years], the Management
Consultants [the Wilsons] shall be available to assist [CCRx2] in
the ongoing management of the retail and institutional phannacy
Business to be carried on by [CCRx2], including the total
management of the Business. Specifically, Management
Consultants shall select, hire and train the staff and employees of
Pharmacy, supervise, evaluate and determine the compensation of
such employees, develop operational policies, staffing levels and
budgets, and perform all other functions required to manage and
operate the Business.
(b) Management Consultants agree to provide the consulting
services as defined herein and to use their best efforts and abilities
in performing services, and to give Pharmacy the full benefit of
Management Consultants' knowledge, experience, judgment and
expertise in rendering phannaceuticaI services to the retail and
institutional public.
15. From February 25; 1998, until AugustlO, 1999, the Wilsons provided the
_ consulting services as defined in the Management Agreement, used their best efforts and abilities
in performing services, and gave CCRx2 the full benefit of their knowledge, experience,
judgment and expertise in rendering phannaceutical services to the retail and institutional public.
16. On August 10, 1999, CCRx2, through its Chairman of the Board, Stephen
Proctor, advised William and Robert Wilson that CCRx2 was terminatIng the Management
Agreement as ofthat date.
17. There was no good cause for that termination.
HBG\38301.2
~
,;;.
....
('
Count I
18. Plaintiffs hereby incorporate paragraphs one (I) through seventeen (17) by
reference as if fully set forth herein.
19. By terminating the Management Agreement, CCRx2 breached the Management
Agreement in that that Agreement does not allow termination without cause and there was no
cause for that termination.
20. Under the Management Agreement, each of the Wilsons was and is entitled to at
least one/third (1/3) of the $290,00G ($96,666.66), compensation agreed to for the first year.
21. In fact, as agreed, each of the Wilsons received $115,000 each during the first
year of the Agreement and are, therefore, entitled to at least $115,000 each for each of the four
years remaining under the Agreement.
22. In addition, the Management Agreement provided that:
Periodically, but at least sixty (60) days prior to the end of each year, the parties
shall meet and review the terms and conditions for the next year's compensation
package.
23. Plaintiffs believe that if the required meeting had been held and the parties had
acted in good faith, their compensation under the Agreement would necessarily have been
increased significantly.
24, Plaintiffs are entitled to an amount in excess $115,000 per year for each of the
four years remaining underfue Management Agreement.
WHEREFORE, Plaintiffs respectfully that this Court enter judgment in their favor and
against defendant CCRx2 in an amount in excess of$IOO,OOO.OO.
Count II
25. Plaintiffs hereby incorporate paragraphs one (I) through twenty-four (24) by
reference as if fully set forth herein.
HBG\3830t.2
>G
'>
'"
~
26. The Management Agreement provided that:
Periodically, but at least sixty (60) days prior to the end of each year, the parties
shall meet and review the terms and conditions for the next year's compensation
package.
27. The Wilsons expended extensive time and efforts in developing the business of
CCRxI.
28. The three agreements, the Asset Purchase Agreement, the Management
Agreement and the Shareholder Agreement, were each part of total agreement between the
parties intended ensure that the Wilsons were fully compensated for their time and efforts in
developing the business and assets ofCCRxl that were being transferred under the Asset
Purchase Agreement.
29. Defendant CCRx2 had an implied duty to deal with Plaintiffs in good faith under
the three Agreements.
30. Defendant CCRx2 failed to negotiate the compensation due under the
Management Agreement as required by the Agreement
31. At various times, CCRx2 waived apparent violations of the Management
Agreement which it now claims as a basis for the termination of that Agreement.
32. At various times, the parties to the Management Agreement agreed that there
were aspects of the Management Agreement which should be amended in order to better
accomplish the purposes of the parties.
33. Defendant CCRx2 failed to negotiated amendments to the Management
Agreement which the parties had agreed would be appropriate to accomplish the purposes of the
Agreement and to comply with the Internal Revenue Code.
34. CCRx2 violated its duty to deal in good faith by:
a failing to negotiate future compensation due under the Management
Agreement;
HBG\383012
'"
'c
...
.
b. terminating the Management Agreement without good cause;
c. asserting claims against the Wilsons which had previously been
waived; and
d. failing to negotiate amendments to the Management Agreement which all
of the parties to that Agreement had agreed would be appropriate to
accomplish the purposes of the Agreement
WHEREFORE, Plaintiffs respectfully request that this Court enter judgment in their
favor and against CCRx2 in an amount in excess of$IOO,OOO.
Count III
35. Plaintiffs hereby incorporate paragraphs one (I) through thirty-four (34) by
reference as if fully set forth herein.
36. Steven Proctor caused CCRx2 to wrongfully terminate the Management
Agreement without cause and for reasons having nothing to do with the Wilsons' performance
under the Management Agreement
37. Steven Proctorwrorigfully and tortiously interfered with the Plaintiffs' contractual
relations with CCRx2.
WHEREFORE, Plaintiffs respectfully request that this Court enter judgment in their
favor and against Defendant Proctor in an amount in excess of$100,000.
Respectfully submitted,
Date: 1110 100
~/P
Allen C. Warshaw, Esquire
Attorney IdNo. 17145
Duane, Morris & Heckscher LLP
305 North Front Street, 5th Floor
P.O. Box 1003
Harrisburg, P A 17108-1003
(717) 237.5500
Attorneys for William & Robert Wilson
HBG\38301.2
.~
"-
.:;
'.
ASS~T PURCHASE AGREEMENT
THIS AGREEMENT, made as of the 25th day of February, i998,
among and between CONTINUING CARE Rx, Inc., a Pennsylvania business
corporation ("Sellar"), PHI, a Pennsylvania nonprofit corporation
("Buyer"), and ROBERT WILSON, WILLIAM WILSON AND THOMAS TRITE,
individuals (sometimes referred to as "Pharmacists")
WIT N E SSE T H
WHEREAS, Seller is the owner and operator of a retail and
institutional pharmacy business (the "Business 1\) which has an
office located at 28 South Second Street, Newport, Pennsylvania.
Buyer will or has formed anew Pennsylvania business corporation to
be known as "Continuing Care Rx,. Inc," hereafter referred to as
"Newco." Seller desires to sell to Newco and Buyer desires that
_Newco purchase substantially all of the assets uaed in the
Business. Pharmacists own lOO\" of the outstanding and issued
shares of Seller and are employees of the Business. Pharmacists
desire that seller Sell its assets, including the name "Continuing
Care Rx, Inc.." to Newco. pharmacists will enter into a Management
Agreement with Buyer to manage and operate the business of Newco.
NOW, THEREFORE, in reliance upon the representations and
warranties made herein and for good and valuable consideration,
Seller. Buyer and Pharmacists, intending to be legally bound
hereby, covenant and agree as follows;
ARTICLE I
PLAN OF ACQUISITION
1..1 Purchase and S",leof Assets bv Newco.
(a) Subject to and upon the terms and conditions of this
Agreement, at the Closing, Seller shall transfer, sell, convey,
assign and deliver to Buyer, by instruments in form and substance
satisfactory to Buyer. and Buyer shall purchase from Seller, all of
Seller'S right and title to and interest in the accounts
receivable, equipment, truck leases, furnishing~. inventory,
prescription files, computer hardware, assumption of leases for
leased equipment and space, business records, customer lists,
telephone numbers, pharmaceutical supply contracts, licenses
(subject to compliance with requirements promulgated by the Bureau
of Professional and Occupational Affairs, Pennsylvania Department
of State). goodwill, the corporate name "Continuing Care Rx. Inc.,"
all computer programs, software and data files, Whether stored on-
line or on magnetic tapes or other media, and all books and records
regarding the foregoing (all the assets to be so sold and acquired
being herein called the "Assets").
'''.'
"-
<..
\b) 1'lewco sha.~~ make available.to Seller. and its agents upon
reasonable request such books of account and. records as maY be
necessary for Seller to prepare tax returns and to respond to ar.d
defend audits of tax returns.
~.2 Purchase Price. In consideration of the transfer of the
Assets, Buyer shall pay. to Seller Two Hundred Thousand
($200,000.00) Dollars (the "Purchase Price"), payable as follows:
(al Twenty-five Thousand ($25,000.00) Dollars on March
15, 1998, and Twenty-five Thousand ($25,000.00) Dollars on the 15th
day of the next succeeding five (5) calendar months, for a total of
One Hundred Fifty Thousand ($150,000.00) Dollars;
(b) Two Hundred Fifty shares of Class A $1 par value
stock of Newco, constituting 25\ of the Class A $1 par value stock
to be issued by Newco; and
(el Forty-nine Thousand Seven Hundred and Fifty
($49,750.00) Dollars within forty-five (45) days after the first
anniversary of the Closing, if, as of such first anniversary, Newco
shall have retained all business existing as of the Closing. If
Newco shall not have retained all such existing business, then the
$49,750 shall be reduced $2,000 for every one (1%) percent loss of
business (1. e., a thirty (30%) percent 106s of business would
result in no deferred payment); provided, however, that if and when
an increase of business - is brought on line to counterbalance
losses, and such increase exceeds twenty-five (25%) pe~cent over
the initial amount of business existing at the time of Closing, the
entire amount of retainage shall be released to Seller in such
manner as Seller shall request.
Buyer hereby assumes liability for all accounts payable
arising out of asset purchases. Buyer shall not assume any other
liability or obligation of Seller, contingent or otherwise, other
than going-forward performance obligations under agreements for the
operation of the Business as disclosed to and accepted by Buyer.
1.3 Closinq. The closing bf.thetransactions contemplated
by this Agreement (the "Closing"), shall take place at the offices
of Seller and shall be effective at the close of business on the
Closing Date. The day or: wnich the Closing occurs is _ referred to
as the "ClOSing Date." The parties agree to use theiT. best efforts
to effect the Closing on or before the Closing Date. The parties
shall use their best efforts to have the Closing occur on a date
which is mutually agreeable to the parties, but not later than
February 28, 1998. The Closing Date may be extended at the request
of any party to a dace not later than March 31, 1998.
1.4 Execution and Delivery of Closino Documents. Before the
Closing, each party shall cause to be prepared, and at the Closing
the parties shall execute and deliver, each agreement and
2
"
<
..
instr\lment required by this Agreement to
delivered and not. theretofore accomplished.
be so executed and
At the Closing,
(a) Seller shall execute and deliver to Buyer
assignments, bills of sale, other title and transfer documents as
Buyer shall deem necessary, and possession of the Assets;
(b) Pharmacists and Buyer shall execute a Management
Agreement in the form of Exhibit A attached hereto.
(el Pharmacists and Buyer shall execute a Stockholders'
Agreement in the form of Exhibit B attached hereto.
(dJ Seller shall give Buyer copies of all records in its
possession relating to the Assets, including insurance policies,
tax statements and certificates of occupancy, if any.
(e) Each party shall execute and deliver such other
appropriate and customary documents as the other parties reasonably
may request for the purpose of consummating the transactions
contemplated by this Agreement.
All actions taken at the Closing shall be deemed to have been taken
simultaneously at the time the last of any such actions is taken or
completed.
1.5 Further Assurances. After the Closing, the parties
shall execute and deliver such additional documents and take such
additional actions as may reasonaply be deemed necessary or
advisable by any party to consummate the transactions contemplated
by this Agreement.
1.6 No Assumotion of Liabilities. Except as expressly
provided in this Agreement, Buyer shall not assume any liabilities
of Seller. All such liabilities shall remain the responsibility of
Seller.
1.7 No Brokers. Each party hereby represents and warrants
to the other parties that he or it has not employed any broker.
agent or finder or incurred a.ny liability for any brokerage fees,
agents' commissions or finders' fees in connection with the
transactions contemplated herein.
ARTICLE II
REPRESENTATIONS OF
SELLER AND PHARMACISTS
Seller and Pharmacists. jointly and severally. represent to
Buyer as follows'
3
..
'.
...
2.~ Oroaniza~ion and Good Standina of Seller. Seller
corporation, duly organized, validly subsi!Otingand in
standing under the laws of the Commonwealth of Pennsylvania.
is a
good
2,2 Power and AUI:hority, Seller has the corporate power and
authority and all licenses and permits required by governmental
authorities to own, lease and operate its Business and Assets and
to carryon its Business as currently being conducted.
2.3 Authoritv and Validity. Seller has the corporate power
and authority to execute, deliver and perform its obligations under
this Agreement and the other agreements and documents executed Or
to be executed by Seller in connection with this Agreement. and the
execution, delivery and performance by Seller of this Agreement and
the other agreements and documents executed or to be executed by it
in connection with this Agreement have been duly authorized by all
necessary corporate action. Each Pharmacist has the capacity and
authority to execute, deliver and perform his obligations under
this Agreement and all other agreements and documents he is
executing or will execute in connection herewith.
2.4 Bindinq Effect.. This Agreement and the other agreements
and documents eX8,cuted or to be executed by Seller and Pharmacists.
or any of them, in connection with this Agreement, have been or
will have been duly executed --and delivered by Seller and
Pharmacists, or any of them, and are or will be, when executed and
delivered, the legal, valid and binding obligations of Seller and
Pharmacists, or any of them, enforceable in accordance with their
terms, except that a court may limit:
(a) enforceability under bankruptcy, insolvency or other
similar laws affecting creditors rights;
(b) the availability of certain remedies under equitable
principles of general applicability; and
(c) rights to indemnification due to considerations of
public policy.
2.5 Comoliance with Other Instruments. Neither the
execution and delivery by Seller and Pharmacists of this Agreement
or the other agreements and documents executed or to be executed by
Seller and PhaTmac~sts in connnection with this Agreement, nor the
consummation by Seller and Pharmacists of these agreements or
transactions will be in conJlict with. or constitute a default or
breach under, or permit the termination. or the acceleration of
maturity of, or result in the imposition of.. any lien, claim or
encumbrance upon any Assets or property of Seller.
2.6 Necessary ~oprovals and Consents. No authorization,
consent. permit or license, or approval of, declaration,
registration or filing with. any person, governmental or regulatory
4
"
...
.<
authority or agency is necessary for the execution and delivery by
Pharmacists, or any of them, of this Agreement or the other
agreements executed or to be executed by Pharmacists, or any of
them, in connection with this. A9.reement or the consummation by
Pharmacists, or any of them, of the transactions contemplated
hereby or thereby.
2.7 Seller's Financial Statements. Seller has delivered to
Buyer and will continue to deliver to Buyer until Closing, true,
correct and complete copies of financial statements of Seller (the
"Financial Statements"l, which delivery is hereby acknowledged by
Buyer. The Financial Statements present fairly the assets,
liabilities and financia~ position of Seller a$ of the dates
thereof and the results of operations and changes in financial
position thereof for the periods then ended, in conformity with
generally accepted accounting principles applied on a consistent
basis throughout such periods. Since January 1, 1997, there has
been no change in accounting principles applicable to or methods of
accounting used by Seller. The books and records of Seller have
been and are being maintained in accordance with all applicable
legal and accounting requirements and good business practices,
reflect only valid transactions, are complete and correct in all
material respects, and accurately reflect in all material respects
the basis for the financial-position and results of operations of
seller set forth in the Financial Statements.
2.8 Absence of Certain Chanoes. Since ~anuary I, 1997, to
the best of their knowledge and after reasonable investigatidn,
Seller and Pharmacists have not (except as m-ay result from tt-.e
transactions contemplated by this Agreement)
(a) suffered any change in the Business, results of
operations, working capital, assets, liabilities. condition
(financial or otherwise), or the manner of conducting ics Business,
other than changes in the ordinary course of business, none 0:
which, individually or in the aggregate, have had a material
adverse effect on Seller;
(b) suffered any damage or destruction to or 10S6 of its
Assets not covered by insurance, or received any communicaticn of
any loss of cUBtomers or suppliers, or terminated or lost the
services of any key employees that does or might have a material
adverse effect on the Business, results of operations, assets,
condition (financial or otherwise), or prospects of Seller;
(c) acquired or disposed of any asset, or incurred,
assumed, guaranteed. endorsed, paid or discharged any indebtedness,
liability or obligation, orcsubjected or permitted to be subjected
any material amount of assets to any lien, claim or encumbrance of
any kind, except in the ordinary course of business or pursuant to
agreements in force at the date of this Agreement;
5
.c
c
~
td) forgiven, compromis~d, cancelled, released, waived
or permitted to lapse any material rights or claims;
(e) entered into or terminated any material agreement or
commitment or agreed to make or made any changes in material leases
or agreements other than renewals or extensions thereof and leases,
agreements and commitments entered into in the ordinary course of
business, .
(f) written up, written down or written off the book
value of any material amount of assets;
(g) declared, paid or set aside for payment any dividend
or distribution with respect to its capital stock;
(hI redeemed, purchased or otherwise acquired or sold,
granted or otherwise disposed of, directly or indirectly, any of
its capital stock or securities or any rights to acquire such
capital stock or securities or agreed to changes in the terms and
conditions of any such rights;
(i) increased the compensation of or paid or accrued any
bonuses to any employees or contributed to any employee benefit
plan, other than in accordance with established written policies,
practices or requirements that have been supplied to Buyer or Newco
contemporaneously herewith;
(j) entered into any employment,
compensation or collective bargaining agreement with
group, other than contracts terminable at will;
consul ting,
any person or
(k)
benefit plan;
entered into, adopted. or amended any employee
officer,
wi th or
.- director
(1) made any loan or advance to any stockholder,
director or employee or to any person or entity associated
in any way affiliated with any stockholder, officer.
or employee;
(m) entered into any other material commitment or
transaction other than in the ordinary course of business.
2.9 Title to Asset!? and Ecruipment. uSeller. has and will
convey to Buyer good and m~rketable title to the Assets, free and
clear of all liensan~ enc:ulnbrances. .. All assets material to the
present operations of Seller are reflected on the Financial
Statements. Immediately after the Closing, Buyer will own or lease
all Assets necessary for the conduct of the Business to be acquired
by Buyer from Seller, as conducted by Seller immediately before the
Closing.
6
"
,
"-
2.. ~o condition of Tancrible Assets. _To the best of the
knowledge Df Seller and Pharmacists, there are nD material defects
in the tangible Assets of Seller as disclosed to Buyer and they are
adequate for the uses to which they are being put or would be put
in the ordinary course of Seller's Business.
2.11 Inventory Good and Salable. The inventories shown on
the Balance Sheet Dr thereafter acquired consist generally of items
of a quantity and quality usable and salable in the ordinary course
of the Business of Seller.
2.12 Contracts. Seller has furnished Dr made available
accurate and complete copies of: all contracts to Buyer. All such
contracts are valid, binding, subsisting and enforceable in
accordance with their respective terms. Neither Seller nor any
Pharmacist has received notice that Seller is in breach or default
under any of such contracts,_ and, to the knowledge of Seller- and
Pharmacists, there is no existing breach nor is there any valid
basis for any claim of default by any party thereunder. The
consummation Df the transactions contemplated hereby will not
affect the continuance in full force and effect_Df such cDntracts.
There is no material dispute, mistake-or misunderstanding among the
parties to any such contract nor are the parties hereto aware of
the potential for any such dispute, mistake or misunderstanding,
and nD penalty has been incurred with respect thereto. Neither
Seller nor any pharmacist has received notice of any plan Dr
intention of any other party to any such contract or agreement to
exercise any right to .cancel or terminate any such contract or
agreement in advance of its normal maturity or termination date,
and neither Seller nor any Pharmacist knows of any fact that would
justify the exercise of such right. All such contracts and
agreements are fully assignable withDut the consent of any third
party.
2.~3 Litiqation an9 Government Claims. There are no pending
suits, claims, actions or other proceedings against. or >lovernmental
investigation or inquiry about Seller or, tD the best of Seller's
knowledge, threatened against or relating to Seller or Pharmacists
which could have a materially adverse effect on the Assets or the
transactions contemplated by this Agreement.
2.14 Judaments. Decrees and Orders in Restraint of Business.
Seller is not a party to or subj ectto any judgment, order or
decree entered in any suit or prDceeding brought by any
governmental agency or by any other person enjoining or restricting
Seller in respect Df any business practice or the acquisitiDn of
any property or the conduct of the Business. Neither Seller nor
Pharmacists knows or has grounds to know of any basis fDr any such
action or of any governmental investigatiDn relating to Seller.
There are no claims against Seller pending or threatened,
anticipated or contemplated, which, if valid, would constitute Dr
7
...
,
"
result in a breach of any representation, warranty, covenant or
agreement set forth herei~.
2.15 Compliance With Laws. To the best of its knowledge,
Seller is substantially in-compliance with all laws applicable to
its Business and Assets, including environmental laws.
2.16 :ERISA. Seller is not in default under and has no
accrued obligations under any employee welfare benefit plan or
employee pension benefit plan within the meaning of ERISA, and has
no formal plan or commitment, whether legally binding or not, to
create any ERISA. plans that would affect any present or former
employee of Seller, or such present: or former employee's dependents
or beneficiaries. Seller has.made all required contributions to
all ERISA plans which it sponsors and maintains. All reports
required by any governmental agency with respect to such plans have
been timely filed.
2.17 Labor Relatione. To the knowledge of Seller and
Pharmacists, Seller is in compliance with all applicable laws
respecting employment and employment practices, terms, conditions
of employment, wages and hours.
2.~8 ~decruate Insurance. All insurable Assets are insured
for Seller's benefit under valid and enforceable policies, in
amounts and against such risks and losses as are customary in
Seller's Business.. Seller shall keep such insurance in effect
until risk of loss shall have passed to Buyer by the terms of this
Agreement.
2.19 Accuracy of Informat ion Furnished. No representation by
seller or Pharmacists in this Agreement nor any. inIornation
relating to Seller delivered by Seller or Pharmacists to Buyer
contains any untrue statement of a material fact. Seller and
pharmacists have disclosed to Buyer all facts known to them that
are to their knowledge material to the Business, operations,
financial condition or prospects of Seller.
2.20 Environment. To the best of its knowledge, Seller has
complied with all statutes, ordinances, rules, regulations,
requirements, orders and decisions issued by any federal, state or
local governmental body or agency established thereby.
2.21 No Fraud or Abuse. Neither Seller nOr ~harmacists have
committed any actor taken any action in violation of the Medicaid
and Medicare laws of the United States, nor, to the best of their
knowledge, are they or anyone of them under investigation for
violation of such statutes. .
2.22 Covenant Not toComDete. (al Management Consultants,
during the Consulting Term and for an additional periOd of six (6)
months thereafter (the "Noncompetition Term"), shall not.,
8
..
\~) Canvass, solicit, or actively pursue business
or employment for provision of pharmaceutical or durable
medical supply services from any of NEWCO's clients;
(21 .Disclose any proprietary or confidential
information of Ph~rmacy or its Parent or the Business
relating to (i) the customers, clients, employees and
accounts of pharmacy or ita Parent or the Business,
including, but not limited to, identity of pharmacy'S or
its Parent' 6 customers if such identity is proprietary or
confidential, or (ii) Pharmacy's or Parent's business
methods, systems, plans, pOlicies and personnel.
(b) It is understood between the parties that ~ndividuals,
and perhaps facilities, have certain freedom of choice of provider
of pharmacy and medical supply services. As such, no violation of
those provisions is intended and the parties hereto agree to
cooperate to avoid violation.
(c) If Pharmacy claims that Management Consultants, or any
one or more of them, have materially violated this covenant not to
compete, then it shall give Management Consultants thirty (30) days
written notice. specifying with reasonable detail the claim
violation. If M~nagement Consultants dispute the claimed
violation, or its materiality, Management consultants shall advise
Pharmacy in writing loIithin .ten (10) days after the thirty-day
notice period, and the dispute promptly shall be referred to
resolution by impartial arbitration conducted under the auspices
and pursuant to the rules of the American Arbitration Association.
Costs and attorneys fees of the prevailing party shall be taxed to
the other party. . Pending such resolution, Pharmacy shall not be
required to continue to make the annual payments set forth in
section 3 hereof, but if Management Consultants prevail at
arbitration, Pharmacy then shall promptly make Management
Consultants whole, with six (6%) percent simple interest, for any
payments of fees withheld.
(d) In addition to any other remedies that Pharmacy and
Parent may have under this agreement for alleged violations of this
section, Pharmacy and Parent may apply to any court of competent
jurisdiction for equitable relief, inclUding specific performance
and injunctions restraining Management Consultants from committing
or continuing any such violation of this Agreement~.
2.23 Change of Name of Seller. _Ae of the Closing, Seller
shall (i) cease doing business under che name "Continuing Care Rx,
Inc." or any other trade names cransferred to Buyer pursuant to
chis Agreement, and (ii) change its name.
9
..
ARTICLE III
REPRESENTATIONS OF BUYER
Buyer represents to Seller Olnd Ph,arma,e,ists that as of the
Closing Date:
3.1 Orqanization and Good Standing of Ne.....co. Buyer is and
Newco will be a corporation duly organized, validly existing and in
good standing under the laws of the Commonwealth of Pennsylvania.
3.2 Power and Authority. Buyer has and Newco will have the
full corporate power and authority and all licenses and permits
required by governmental authorities to own, lease and operate its
properties and assets and to carry on its business as the Business
of Seller is currently being conducted.
3.3 Authority and Validity, Buyer is and Newco will have
the corporate power and authority to execute, deliver and perform
its obligations under this Agreement and the other agreements and
documents executed or to be executed by them in connection with
this Agreement, and the execution, delivery and performance by
Buyer and Newco of this Agreement and the other agreements and
documents executed or to be executed by them in connection with
this Agreement have been duly authorized by all necessary corporate
actions.
3.4 Bindinq Effect. This Agreement and the other agreements
and documents executed or to be executed by Buyer and Newco in
connection with this Agreement have been or will have been duly
executed and delivered by them and will be, when Newco has been
formed, its legal, valid and binding obligations, enforceable in
accordance with their terms, except as (a) enforceability may be
limited by bankruptcy, insolvency or other similar laws affecting
creditors' rights; (b) the availability of certain remedies-may be
limited by equitable principles of general applicability; and (c)
rights to indemnification may be limited by considerations of
public policy.
3,5 Necessary Approvals and Consents. Except for approvals
already obtained or filings or notices already made or given, no
authorization, consent, permit or license, or approval of, or
declaration, registration or filing with, any person or
governmental or regulatory authority or agency will be necessary
for the execution and delivery by Buyer and Newco of this Agreement_
or the other agreements executed or to be executed by Buyer and
Newco in connection with this Agreement or the consummation by it
of the transactions contemplated hereby and thereby.
10
,
.
~
ARTICLE IV
COVENANTS OF SELLER AND PHARMACISTS
Seller and Pharmacises, joinely and severally, covenant with
Buyer as follows: .
4.1 Bulk Sales. Seller eieher has complied with all bulk
sales laws applicable to tnesale contemplated by this Agreement or
will satisfy in full out of the proceeds of this sale the claims of
all of its creditors. Seller shall satisfy auch creditors in full
within ten (10) days of execution hereof and shall provide to Buyer
within fifteen (15) days of execution, evidence of same.
Notwiehstanding the provisions of section 9.15 hereof, Seller
hereby consents to the immediate application by Buyer and Newco for
injunctive relief or damages if the provisions of this subsection
are breached. Seller hereby agrees to indemnify and hold harmless
Buyer and Newco from, and reimburse Buyer and Newco for, any and
all claims, liabilities or obligations which Buyer and Newco may
suffer or incur by reason of any noncompliance with any applicable
bulk sale, fraudulent conveyance or other laws for the protection
of creditors.
4.2 Operation of the Business of Seller, During the period
preceding the Closing Date, ~e1ler and Pharmacists shall:
(a) conduct Seller's operations in the ordinary course
of business consistent with past and current practices of Seller,
and shall use their best efforts to maintain and preserve intact
its business organization and good will, to retain the services of
its key employees, and to maintain satisfactory relationships with
suppliers, distributors, cUstomers and others having business
relationships with Seller;
(b) confer with Buyer on a regular and frequent basis to
report material operational matters and the general status of
ongoing operations;
(c) notify Buyer of any emergency or ather change in the
normal course of Seller's Business and of any governmental
complaints, investigations or hearings (or communications
indicating that the same may be contemplated) if such emergency,
change, complaint, investigation or hearing would be material to
Seller's Business or properties;
(d) not hire or fire any persons. raise or lower the
salary of any person, enter into any employment agreement, or any
agreements with customers of Seller other than in the ordinary
course of business, without the express written consent of Buyer;
~d . .
(e) take no action that, or fail to take any action the
failure Co take which would cause or permit their representations
11
.~
",ontained herein to be untrue in any material respect on. the
Closing Date.
4.4 Cooperation.
best efforts to:
S~ller and Pharmacists shall use their
(a) proceed promptly to make or give the necessary
applications, notices, requests and filings to obtain at the
earliest practicable date and, in any event, before the Closing
Date, the approvals, authorizations and consents necessary to
consummate the transactions contemplated by this Agreement;
(bl cooperate with and keep Buyer informed in connection
with this Agreement; and
(c) take such actions as Buyer may reasonably request to
consummate the transactions contemplated' by this Agreement and
diligently attempt to satisfy, to the extent within their control,
all conditions precedent and subsequent to this Agreement.
4.5 Notice of any Material Chanoe. Seller and Pharmacists
shall, promptly after the first notice of occurrence thereof, but
not later than the Closing Date, disclose the occurrence of any
event or the existence of any facts that:
(a) had such event occurred or such facts existed or
heen known at the date hereof, would have been required to have
been disclosed to Buyer under the provisions of this Agreement;
(b) would make any of their representations in this
Agreement untrUe in.~ny material respect; or
(c) would otherwise constitute a material adverse change
in the Business, results of operation, working capital, Assets,
liabilities or condition (financial or otherwise) of Seller.
4.6 Access: Confidentiality, Prior to the Closing Date,
Seller and t>harmacists shall afford to Buyer and its officers,
employees, accountants, counsel and other authorized
representatives, full access to and the right to inspect, review or
make copies, as appropriate, of Seller's Assets, properties, books,
contracts, commitments and records, view its physical properties,
and communicate with key employees of Seller on a basis reasonably
satisfactory to and with the prior specific approval of Seller.
Seller and Pharmacists will furnish or use their best efforts to
cause its or their representatives to furnish promptly to Buyer
such additional financial and operating data and other documents
and information relating to Seller's business as Buyer or its duly
authorized representatives may from time' to time reasonably
request. Buyer agrees that any and all information it receives
regarding the assets or operation of Seller prior to the Closing
Date are and will be kept confidential except as required to be
12
.
disclosed pursuan~ to a subpoena or other similar ~rder in
conjunction with a legal proceeding.
4.7 Certain prohibited Transactions. prior to the Closing,
Seller will not, and Pharmacists will cause it to not:
(a) purchase, sell or dispose of or grant licenses or
other rights in and to any of the Assets, or make or give any
warranty or guaranty with respect to the products or services of
Seller, other than in the ordinary course of business and
consistent with the practices in existence on the date of this
Agreement;
(b) except in the ordinary course of business, without
Buyer's prior written consent, enter into any material long-term
contracts or commitments; waive any material rights or claims;
modify, amend, cancel or terminate any material agreement, debts or
claims; incur any indebtedness for borrowed money; or make any
loans; assume, guarantee or otherwise become responsible for the
obligations of others;
(cl merge or consolidate with another entity, invest in
or otherwise purchase the business or assets. .of another business
substantially as an entirety, or sell substantially all of its
assets to another person, or enter into any agreements for the
foregoing;
(d) make any contribution to any employee benexit plan
or increase the compensation of or pay bonuses to its employees
other than in accordance with established practices or
requirements, or enter inco employmen~ agreemen~s;
(e) declare or pay any dividends or other payments or
distributions of ahykind on its capital stock or otherwise change
its capital structure;
(f) purchase or otherwise acqu~re. or issue or sell any
shares of capital stock;
(g) grant or issue any options, warrants or rights of
any kind to acquire shares of, or securities convertible into. its
capital stock;
(h) mortgage, pledge or subject to any lien, charge or
other encumbrance any of the Assets; or
(i1 take any other action that might materially impair
the Assets, or take or fail to take any other action that would
cause or permit the representations or warranties made herein to be
untrue in any material respect at the time of Closing,
13
<.
4.10 Consen~s ~o ~ssiqnment, Seller and Pharmacists will use
their best efforts to obtain written consents of contract parties
and vendors on or prior to the Closing Date.
ARTICLE V
CONDITIONS PRECEDENT TO OBLIGATIONS
OF SELLER AND PHARMACISTS
The obligations of seller and Pharmacists to consummate the
transactions contemplated by this Agreement shall be subject to the
satisfaction on or before the Closing Date of each of the following
conditions:
5.1 Compliance. Buyer has, or has caused to be, satisfied
or complied with and performed in all material respects all terms,
covenants and conditions of this Agreement to be complied with or
performed by it on or before the Closing Date.
5.:2 Representations.. All of the representatior:.s made by
Buyer in this Agreemen~ and in all certificates~and other documents
delivered by Euyer -to Seller and Pharmacists pursuant hereto or in
connection with the transactions contemplated hereby are true and
correct in all material respects at the Closing Date, except for
changes contemplated hereby or thereby.
5.3 Absence Qf_Litioation. No order, judgment or decree by
any court or governmental agency or authority shall be in effect
that enjoins, restrains or prohibita the consummation of the
transactions contemplated by this Agreement.
5.4 OPinion of Counsel. Buyer shall deliver to Seller an
opinion of its counsel stating that the transactions contemplated
hereunder are duly authorized and fully enforceable in accordance
with their terms, and that counsel has no knowledge of any breach
of this Agreement by Buyer.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER
Except as may be waived by Buyer, the obligatiQns of Buyer to
consummate the transactions contemplated by this Agreernen~ shall be
subject to the satisfaction on or before the Closing Date, of each
of the following conditions:
6.1 Compliance. Seller and Pharmacists have, or have caused
to be, satisfied or complied with and performed in all material
respects, all terms, covenants and conditions of ~his Agreement to
be complied with or performed by any of them on or before the
Closing Date. Buyer is not obligated to purchase from Seller if
14
,
.
either Seller or pharmacists do not comply with such _-terms,
conditions and covenants.
6.2 Representations. All of the representations made by
Seller and Pharmacists in this Agreement are true and correct in
all material respects as of the date hereof and at the Closing
-Date, with the same force and'effect as if such representations and
warranties had been made at and as of the Closing Date, except for
changes permitted or contemplated hereby or thereby.
6.3 Consents to Transaction. Seller, Pharmacists and Buyer
have received all consents required to be obtained to consummate
the transaction's contemplated .by this Agreement.
6.4 Opinion. Seller shall deliver to Buyer an opinion of
ite counsel, in form and substance satisfactory to Buyer, stating
that the transactions contemplated hereunder are dUly authorized,
fully enforceable in accordance with their terms, that counsel has
no knowledge of any breach of this Agreement, and opining to such
other matters as Buyer may reasonably request.
6_5 Absence of Litiaa~ion, No order. judgment or decree
shall be in effect that prohibits the consummation of the
transactions contemplated by this Agreement or. in the sole
judgment of Buyer, otherwise would materially in~erfere with the
operation of the assets and business of Seller afeer the Closing
Date.
6.6 Material Adverse Chanaes. No material adverse change in
the Business, properties, Assets, liabilities, results of
operations. orcQ~dition, financial or otherwise, of Seller has
occurred.
ARTICLE VI!
INDEMNIFICATION AND REMEDIES
7.1 Indemnification bv Seller and Pharmacis~s. Seller and
Pharmacists, jOintly,and severally, shall indemnify Buyer for all
losses, liabilities. damages, costs and expenses (inCluding
reasonable attorneys' fees) incurred by Buyer resulting from or
arising out of or in connection with the defense by Buyer against
any assertion of liability made against Buyer in connection with
any misrepresentation or breach by Seller or Pharmacists under this
Agreement or under any documents or other agreements executed or
delivered hereto. including but not limited to,
(a) income, franchise, sales, use and other taxes,
including penalties and interest with respect thereto, of or
relating to operations of Seller through the Closing Date,
including those resulting from the sale of the Assets pursuant to
this Agreement;
15
,
(b) contractual liabilities an,d obligations of Seller
not assumed by Buyer pursuant to this Agreement;' <:.r .
(c) any liability under the bulk sales law, or sales tax
of any state or municipality arising out Of or,inconnection with
the sale of the Assets.
7.2 Indemnification bv Buyer and Newco. Buyer and Newco
jointly and severally agree to indemnify, defend and hold harmless
Seller and its officers, directors, employees, successors and
assigns from and against any and all coats, liabilities and damages
resulting from; (i) any and all loases, damages or deficiencies
resulting from any and all, (Al misrepresentationB or breaches of
warranty hereunder on the part of Buyer; (Bl failures by Buyer to
perform or otherwise fulfill any undertaking, covenant or other
agreement or obligation hereunder; (C) liabilities of Buyer arising
subsequent to the Closing; (0) all liabilities of Buyer, regardless
of when such liability arose, which are not expressly assumed
hereunder; and (ii) any and all actions, suits, proceedings,
claims, liabilities, demands, assessments, judgments, costs and
expenses, including reasonable attorney's fees, incident to the
foregoing provision.
ARTICLE VIII
CLOSING
8.1 Closino.
March 31, 1998.
The Closing shall take place on or before
ARTICLE IX
. MISCELLANEOUS
9.1 Expenses. Each of the parties hereto shall pay its or
their own expenses incurred in connection with this Agreement and
the transactions contemplated hereby.
9.2 Entire Aqreement. This Agreement, the Exhibits hereto,
and the other documents. executed or delivered pursuant hereto,
contain the complete agreement among the parties with respect to
the transactions contemplated hereby and supersede all prior
agreements and understandings among the parties with respect to
such transactions. .....
9.3 Countertlarts. Tb.Js Agreement may be executed in any
number of counterparts, each of which when s.o executed and
delivered shall be deemed an original, and such counterparts
together shall constitute only one original.
9.4 Notices. Any notice; demand, request or other
communication that may be oris required to be given by any party
to any other party pursuant to this Agreement shall be in writing
and shall be mailed by first class, registered or certified mail,
16
return receipt requested,.postage prepaid, .or.tr.allsmitted by haqd
delivery, facsimile or telex, addressedasfollows~
If to Seller or Pharmacists,: Continuing Care Rx, Inc.,
28 South Second Street, Newport, Pennsylvania.
If to Buyer: 1217 Slate Hill Road, Camp Hill, PA 17011.
Each party may designate by written notice to all other parties a
new address to which any notice may thereafter be so given, served
or sent. A notice will be deemed given when SO mailed or
transmitted.
9.5 Successors and Assions. This Agreement and the rights,
interests and obligations hereunder shall be binding upon and shall
inure. to the benefit of the parties hereto and their heirs,
personal representatives, successors and assigns.
9.6 Waiver and Other Action, This Agreement may be amended
only by a written instrument executed by the party against which or
whom enforcement of theUamendment is sought.
9.7 Severability. If<iny provision of this Agreement is
held to be illegal, invalid or unenforceable. such provision shall
be severed, and this Agreement shall be construed and enforced as
if such provision were never a part hereof; the remaining
provisions shall remain in full force and effect and shall not be
affected by the illegal, invalid or unenforceable prOVision or by
its severance, and in lieu of such illegal, invalid or
unenforceable prOVision, there shall.be added automatically as part
of this Agreement,. a provision as similar in its terms to such
illegal, invalid or unenforceable provision. as may be pOSSible and
be legal, valid and enforceable.
9.8
agreement
Closing.
Surviv~l. Each representation, lNarranty, covenant,
and indemnity made by any party hereto shall survive the
9.9 Assionabilitv. The obligations of Seller and Pharmacists
under this Agreement shall not be assignable by Seller and
Pharmacists without the prior written consent of Buyer. The
obligations of Buyer under this Agreement shall not be assignable
by Buyer without the prior written consent of Seller and
l'harmacists.
9.10 Assumotion of Oblioations bv Buver. Notwithstanding
anything herein to the contrary, upon due incorporation of Newco,
the parties hereto agree that the rights and obligations of Buyer
hereunder shall be assumed by Newco and shall inure to its benefit
without any further action of any party hereto.
17
9.~~ ~pplicab1e Law., This Agreement shall be governed by,
construed and interpreted in ~ccordance with ,the laws of" the
Commonwealth of Pennsylvania without giving effect to conflict of
laws principles thereof.
9 .~2 Section ane;! Other Headings. The section and other
headings contained in this Agreement are for convenience of
reference purposes only and shall not affect the interpretation or
meaning of this Agreement.
9.13 bmendments. Neither this Agreement nor any provision
hereof shall be modified, changed, discharged or terminated except
by an instrument in writing signed by the party against whom the
enforcement of any modification, change, discharge or termination
is sought.
9,14 ~uccesaion Clause. . The covenants herein contained shall
bind, and the benefits and advantages shall inure to, the
reapecti ve heirs, executors, administrators, successors and assigns
of the parties hereto,
9.15 Dispute Resolution.
(a) If a dispute arises between Seller and Pharmacists
on the one hand and Buyer and Newco on the other hand regarding (i)
interpretation of this Agreement, (iil the reasonableness of any
action taken or judgment that any p~rty makes in any instance where
that party has agreed in this Agreement to be reasonable in taking
that action or making that jUdgment, (iii) the reasonableness of
any cost or expense that one party seeks to charge the other in
accordance with the terms of this Agreement, or (iv) whether any
party has defaulted in respect of any of the obligations it or he
has undertaken under the terms of this Agreement (collectively, a
"Dispute"), no party hereto milY initiate litigation to resolve chI;!
Dispute, but the Dispute shall be determined by arbitration in the
City of Harrisburg, Pennsylvania, in accordance with the Commercial
Arbitration Rules of the American Arbitration Association ("AM" 1
then in effect, by a sole arbitrator who (A) has the qualifications
and experience set forth in subsection (b) hereof, and (9) is
selected as provided in subsection (c) hereof. The arbitrator
shall base his award on the terms of this Agreement and shall
endeavor to follow the law and judicial precedents which a United
States District Judge sitting in the Middle. District of
Pennsylvania would apply in the event the Dispute were. litigated in
such court. The arbitrator shall render the award in writing and
shall include t;.he findings of fact and conclusions of law upon
which the award is based. The arbitration shall be governed by the
substantive laws of the Commonwealth of Pennsylvania applicable to
contracts made or to be performed therein, and by the Federal
Arbitration Act, Title 9, U.~. Code, without regard to conflicts of
law rules, and judgment upon the award rendered by the arbitrator
may be entered in any court having jurisdiction thereof,
18
thl kny person nominated or recommended to serve as an
arbitrator hereunder shall be a neutral and impartial lawyer with
excellent academic and professional credentials, with training and
experience as an arbitrator, who is or has been a partner in or
counsel to a highly respected law firm for at least fifteen years
as a practicing attorney specializing in general corporate and
commercial matters. .
(cl The arbitrator shall be selected as provided in this
subsection (c) and otherwise in accordance with AAA's Commercial
Arbitration Rules then in effect, except that any party Shall be
entitled to strike on a peremptory basis, for any reason or no
reason, any and all of the names of potential arbitrators on the
list submitted to the parties by the AAA as being qualified in
accordance with the criteria Bet forth in sUbsection (bJ hereof_
In the event that the parties cannot agree on a mutually acceptable
arbitrator from one or more lists submitted by the AAA, the
President of the AAA shall designate three person who, in his or
her opinion, meet the criteria Bet forth in subsection (b) hereof,
which designees may include persons named on any lists submitted by
AAA. Seller and Pharmacists on the one hand, and Buyer and Newco
on the other hand, shall be entitled to strike one of such three
designees on a peremptory basis, indicating their order of
preference with respect to the remaining designees, and a selection
Qf the arbitrators shall be made from among such designees which
have not been so stricken by any party in accordance with their
indicated order of mutual preference.
(d) If multiple Disputes are pending concurrently, the
parties may consolidate those Disputes for purposes of arbitraton
as described above. ' . ,. .' ...... ..< .:"
(e) The arbitration specified herein is' .the sole and
exclusive procedure for the resolution of Disputes to ~hich this
section 9.15 is intended to apply. Either party may seek a
preliminary injunction or other preliminary judicial relief,
however, - .if in that: party's judgment, such action is necessary for
the sole purpose of aVOiding irreparable harm. Despi te such
action, the parties shall continue to participate in good faith in
the arbitration procedure set forth above.
(f1 The provisions of this section 9.15 shall survive
the termination of this Agreement.
19
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
A?~~
Secretary
::~I~~~{~ELLER
President
PHI. BUYER AND NEWCO
By;~L ~-
C-Presi nt .'..
(~~ ~)
/2(.,;t ;&if~
Robert Wilson, PHARMACIST
(!lft~ 1t~
W 1 iam Wilson, PHARMACIST
~ --/
~~ ~
Tho~B Trite, PHARMAC ST
f:\HOME\SOK\PHARMACY
i/2S/H
20
.,
.-
CONTINUING CARX Rx,INC.
STOCKHOLDERS' AGREEMENT
THIS STOCKHOLDERS' AGREEMENT, made the 25th day of
February, 1998, by and among PHI, a Pennsylvania nonprofit
corporation ("PHI"), ROBERT WILSON, WILLIAM WILSON AND THOMAS
TRITE, individuals ("Pharmacists"), collectively referred to
hereinafter as "Stockholders."
WIT N E SSE T H
WHEREAS, PHI is ehe purchaser of the business, name and other
assets of Continuing Care Rx, Inc., a Pennsylvania business
corporation, and intends to operate a pharmacy business through a
new corporation to be formed by PHI under the name "Continuing Care
Rx, Inc." ("Newco"); and
W1IEREAS, PH! will subscribe to seven hundred and fifty (750)
shares of Class A $1 par value stocl<: of Neweo (.Stock") and
Pharmacists will subscribe eo two hundred and fifty (250) shares of
Class A $1 par value stock of Newco; and
WHEREAS, Stockholders wish to provide a market for their
Stock; and
WHEREAS, PHI and pharmacists desire to insure the continuity
and harmonious management of Newco by imposing certain restrictions
and obligations on each Stockholder with respect to the ownership,
transfer or other disposition of their Stock.
NOW, THEREFORE, in consideration of the promises and mutual
covenants contained herein, and in consideration of the
declarations of Stockholders to be fully bound hereby, it is agreed
by and among Stockholders as follows:
~. Rcatricti,?n on Tran(ilfer. The parties do not want the
Stack of Newco to be made generally available to persons other than
the present Stockholders and those parties to whom PHI may sell two
hundred and forty (240) shares of its Stock. Therefore, no
Stockholder shall sell, assign, transfer, encumber or otherwise
dispose of (hereinafter referred to collectively.as "Transfer") any
of its or his Stock which it or he may own or may hereafter
acquire, unless the Stockholder desiring to make the Transfer
(hereinafter called "Transferor") shall have first offered PHI and
other stockholders the right to purchase as set forth in Section 2
and elsewhere herein; except that no consent of any stockholder
shall be required for PH! co transfer up to two hundred and forty
(240) shares of its Stock to other parties who agree to be bound by
the terma of this Agreement. However, if PHI desires to dispose of
more or all of its shares in Newco. then and in such event, PHI
shall be bound by the same terms and conditions relating to other
stockholders. This Agreement will supersede any restrictions on
Transfers of Stock Bet forth in the Bylaws of Newco where terms may
differ from those contained herein. No attempted encumbrance or
transfer of any shares of Newco's Stock not in accordance with the
terms of this Agreement shall be reflected on Newco's books.
2. Transfers Durinq Lifetime. If a Transferor wishes to
Transfer any or all of its or his Stock during its existence or his
lifetime, it or he shall notify Newco and all of the Remaining
Stockholders by a written statement of intention to transfer and
the name and address of any prospective purchaser, assignee,
transferee, lienor or recipient of any other disposition, the
number of shares of Stock involved in the proposed Transfer, and
the price and terms of such proposed Transfer.
Upon receipt of this notification, Newco or the Remaining
Stockholders. whichever the case may be, shall notify the
Transferor of its or their intention to purchase some or all of the
offered Stock within-.Ehirty (30) days of receiving such notice on
the same terms and conditions as set forth in the offer being
reviewed.
If the notification involves all of the Transferor's Stock.
then Newcoshall have first choice to purchase all of such stock.
Otherwise. the Rel1laining Stockholders shall have the right to
purchase such Stock as is involved in proportion to their
respective ownership of Stock (excluding the offered Stock), or in
such other proportion as they shall agree upon.
3. Death. Dissolution. Disability. Bankruoccv, In the event
a Stockholder dies, dissolves. becomes by reason of total
disability unable to carry out hig normal duties in the business of
Newco, is adjudicated a bankrupt, then upon the first to occur of
such occurrences, the Stockholder shall be deemed to have requested
Newco or the Remaining Stockholders to purchase its or his Stock,
and Newco and the ~emaining Stockholders shall be deemed to have
given notice of their intent to purchase the S~ock, as if the
notice required in section 2 above had been given. For these
purposes, "total disability" shall mean the inability to perform
adequately the professional and other assigned duties as defined in
the Management Agreement executed by each individual Stockholder
and Newco.
4. Sale Price. The sale price for Stock, where no bona fide
third party offer to purchase exists, shall be the fair market
value of the shares of offered Stock as determined by an
independent certified public accountant ("CPA"l agreed to by all
parties. This valuation shall be based upon transfer of a similar
percentage interest in publicly traded pharmacy companies. Newco
will provide such data ae the CPA deems necessary or useful to make
such determination of the fair market value of the offered Stock.
The fees and reimbursed expenses charged. by the CI?A in the
valuation under this section ahall be borne Bolely by Newco. The
aale price for the Stock shall be paid in cash or by check at the
Closing.
S. Failure to Purchase, If a right to purchase provided in
sections 2 and. 3 hereof is not exercised by Newco or the Remaining
Stockholders by giving the required notice, the Transferor may make
a bona fide Transfer of any such unaccepted Stock to the
prospective purchaser, aasignee, transferee. lienor or recipient of
any other disposition named in the Consent Request, but only in
strict accordance with the terms therein stated. If the Transferor
shall fail to make such Transfer to such prospective purchaser,
assignee, transferee, lienor or recipient of any other disposition
within thirty (30) days following the expiration of the time
provided for the acceptance by the Remaining Stockholders, such
Stock shall again become subject to the terms and restrictions of
this Agreement.
6. Closing. The Closing shall take place at the office of
Newco or at such other pla~e as shall be agreed upon, within ninety
(90) days of the date of notice of intent to Transfer.
7. Delivervof Sto~k, Upon the payment to the Transferor of
the purchase price, the Transferor shall sign and deliver the StOck
of the Stockholder to the purchasing Stockholders. Each
Stockholder appoints Newco. through ita Secretary or such other
officer as its Board of Directors may designate, ae his or its
agent and attorney. in-fact to execute and deliver all documents
needed to convey his Or its Stock if SUCh selling stockholder is
not present at the Closing. This power of attorney is coupled with
an interest and does not terminate on Stockholder's disability or
death, and continues for so long as this Agreement ie in effect.
8. Restrictive Endorsement. Each certificate representing
Stock now or hereafter held by Stockholders shall bear a
conspicuous legend. in Substantially the following form: "The
transfer of the Stock represented by the within certificate is
restricted under the terms of an Agreement dated February 25, 1996,
a copy of which is on file at the office of Neweo.'
9. Terminatinq t;he Aqreement. ThieAgreement shall tertninate
upon the occu~rence of any of the following events: (a) cessation
of Newco's business; (bl dissolution of Newco; (c) whenever there
is only one surviving Stockholder bound by the terms hereOf; (d)
voluntary agreement of all parties who are then bound by the terms
hereof; or (e) upon election of Stockholders, if another
Stockholder violates any provision of this Agreement. Upon the
termination of this Agreement. each Stockholder shall surrender its
J
or his certificates to Newco and Newco shall issue to it or him in
lieu thereof new certificates for an equal number of shares of
Stock without the endorsement set forth in section 8 hereof.
10. Continuation of Restrictions. This Agreement shall
continue to apply to shares of Stock transferred by any
Stockholder, and any other Stockholder may require as a condition
of such a Transfer that the transferee e~cute an agreement
substantially identical in form to this Agreement (which may be
accomplished by a certificate of acceptance and adoption of this
Agreement), to which all of the transferee's GhareB of Stock will
be subject, and which agreement will be treated as a part of this
Agreement.
11. Books and Records. Books of account shall be maintained
by Newco and proper entries made therein of all sales, purchases,
receipts, payments, transacti.ons and property of Newco , and the
books and records of Newco shall be retained at the principal place
of business of Newco. Each Stockholder shall have free access at
all reasonable times to all books and records maintained relative
to Newco's business.
12 _ Accountino, The fiscal year of Newco shall be from
January 1 to December 31 each year. On the 31st day of December,
commencing in the year in which this Agreement is executed, and on
the 31st day of December in each succeeding year, a general
accounting shall be made and taken by Stockholders of all revenues,
purchases, receipts, payments and transactions of Newco during the
preceding fiscal year, and of all the capital property and current
liabilities of Newco.
13. Profits and Lasses. Distribution of profits shall be at
least quarterly made at such time and in such amounts as are
determined by the Board ,of Directors of Newco. Each StockhOlder
shall be entitled to a division of profits, if any, in the same
proportion as the number of shares of the class owned by that
Stockholder related to the total number of shares issued by Newco.
14. Invalid Provisions. The invalidity or unenforceability
of any particular provision of this Agreement shall not affect the
other provisions hereof, and this Agreement shall ~e construed in
all respects aa if such invalid or unenforceable provisions were
omitted.
15. Modification, No
Agreement shall be valid unless
the parties hereto.
change or ~odification of this
it is in writing and signed by all
16. Notices. Any and all notices, designations, consents,
offers, acceptances or any.other communication provided for herein
shall be given in writing by registered or certified mail, return
"
:
receipt requested, which shall be addressed to
Stockholders at their place of business or residence,
other address as may be des~gnated by it or him. Each
shall be deemed given at the time it is mailed.
17. Beneti t. This Agreement shall be binding upon ehe
parties, their heirs,. legal representatives, successors and
assigns. Each individual Stockholder in furtherance hereof agree a
to execute a Will directing his executor to perform this ~greement
and to execute all documents necessary to effectuate the purposes
of this Agreement, but the failure to execute such Will shall not
affect the rights of any Stockholder or the obligations of any
estate, as provided in this Agreement.
the other
or to such
such notice
18. Governinq Law. This Agreement shall be governed by,
construed and interpreted in accordance with the la....s of the
Commonwealth of Pennsylvania without giving effect to conflict of
laws principles thereof.
19. Specific Performance. _The parties agree that the Stock
is unique, that failure to perform the obligations under this
Agreement will result in irreparable damage to the other parties
and that specific performance of these obligations may be obtained
upon terms and conditions contained herein by a suit in equity.
20. Waiver. The failure of any party to insist on compliance
or enforcement of any provision of this Agreement shall not affect
its validity or enforceability or constitute a waiver of future
enforcement of that provision or of any other provision of this
Agreement.
21. Copies. More than one (1) copy of this Agreement may be
executed, and all parties agree and acknowledge that each executed
copy shall be a duplicate original.
5
.'
IN WITNESS WHEREOF. the part ies have agreed to and have
executed this Agreement as of the day and year first above written.
PHI
,~f!J;::
<
13y:
~:~7@-arf!?~
C~~ ~~ rf'
ir~ {)w-f
Robert Wilson, PHARMACIST
;JJ;;kv/jJ;~
William wilson, PHARMACIST
C/~~
Thomas Trite, PHARMACIST
Agreed and acknowledged by the following persons who are not
themselves parties to this Agreement, but who are the corporation
whose shares are the subject of this Agreement and the spouses of
parties to this Agreement, who themselves have read thiD Agreement
and who agree that they will be bound by all of its provisions,
including (but not.limited to) restrictions on Transfer and
establishment of value of the Stock for all purposes.
Continuing Care RzP Inc. (Newco)
By: ~L:~
c. .
I!t/~ /It%:
F:\HOMB\JOK\ST~
~I2S/9!
"'---'
OCTC28-99 THU 8: 12 AM . PRESBYTERIAN HOMES
FAX NQ 7177637617
P. 2
','""
.,
",-".
MANAGEMENT AGREEMENT
BETWEEN
CONTINUING CARE RX, INC.
AND
ROBERT WILSON, WILLIAM WILSON AND THOMAS TRITE
THIS AGREEMENT, made as of the 25th day of February, 1998,
among and between CONTINUING CARE Roo, INC., a Pennsylvania business
corporation ("Pharmacy"), and ROBERT WILSON, WILLIAM WILSON and
THOMAS TRITE, individuals (c.ollectively referred to as "Management
Consultants") .
WIT N E SSE T H
~ HEREAS ,
institutional
products and
services; and
Pharmacy has been formed ;0 do retail and
business in the field of pharmaceuticals and related
services and desires to contract. for management
.~HEREAS, Management Cop.sultants are iL..~ependent contractors
and l~censed pharmacists in the Commonwealth of Pennsylvania who
have expertise in managing and operating a retail and institutional
pharmacy business (the "Business").
"'-"
NOW, THEREFORE, in reliance upon the representations and
warranties made herein and for good and valuable consideration,
Pharmacy and Management Consultants, intending to be legally bound
hereby, covenant and agree as follows: .
1. Nature of Manaqement Consultant position.
(a) Pharmacy desires, upon the
Consultants' Business, to make use of
expertise.
purchase of Management
Management Consul tan ts'
(b) Pharmacy shall retain Management Consultants, and
Management Consultantssha11 accept such retainage from Pharmacy
for a period of five (5) years (the "Consulting Term") to undertake
such duties and to perform such services as reasol'l."bly may be
_ assigned to them by the Board of Directors of Pharmacy or by its
officers, as further defined in section 2 hereof.
(c) Management Consultants shall be independent contractors
and not employees of Pharmacy and, subject only to the terms of
section 2 hereof, shall determine their own method of operation in
accomplishing such tasks as may be assigned. Management
Consultants shall not be entitled to receive any compensation, /.
commissions or benefits from Newco other than those expressly
provided in this Agreement.
. u~'['l~-YY THU 8: 13 AM PRESBYTERiAN HOMES
FAX NQ 7177637617.
P. 3
..
.~, -
(d) Pharmacy agrees chat Managemenc Cons.ultancs have the
right. to act as consultants for, or be employed in any other
~ capacity by, any other parties concerning any subject. matter.
2. Scooeof Consultino Duties.
(a) During the Consulting Term, Management Consultants shall
be available to assist ~harmacy in the ongoing management of the
retail and institutional pharmacy Business to be carried on by
Pharmacy, including the total management of the Business.
Specifically, Management Consultants shall select, hire and train
the staff and employees of Pharmacy, supervise, evaluate and
determine the compensation of such employees, develop operational
policies, staffing levels and budgets, and perform all other
functions re~ired to manage and operate the Business.
(b) M~~agement consultants agree to provide t~e consulting
services as defined herein and to use their best efforts and
abilities in performing the services, and to give Pharmacy the full
benefit of Management Consultants' knowledge, experience, judgment
and expertise in rendering pharmaceutical services to the retail
and instit.'~tional public._
(c) It is agreed between the parties that Management
Consultants are independent contractors. They shall not hold
themselves out as employees, partners or agents of Pharmacy for any
purpose whatsoever. Management Consultants control the manner and
means of performing the services and are responsible for the full,
adequate and timely completion of the services.
......
(d) During the course of this Agreement, Management
Consultants agree to maintain as confidential any cop~es,
abstracts, documents, summaries of any papers or any other material
of a confidential nature which may come into their possession in
the course of their consulting relationship with Pharmacy.
3. Fees.
(al Pharmacy shall pay to Management Consultants a total
annual payment of Two Hundred Ninety Thousand ($290,000.00) Dollars
for each year of the Consultant Term distributed in. ~welve (~2)
equal monthly installments payableon the first day of each and
every month. The hours of service of Management Consultants on any
given day shall be those which meet the reasonable needs of the)
Business and shall not be established by Pharmacy. peri.odicallY,
but at least sixty (60) days prior to the end of each year, the
parties shall meet and review the terms and conditions for the next
year's compensation package.
(b)
employees,
disability
None of the
including but
insurance,
benefits provided by Pharmacy to its
n_Qt limited to medical, life, accident or
pensions, unemployment or workers'
"-"
2
. OGT-2&-99 THU 8: 13 AM PRESBYTERIAN HOMES
.
FAX NO.717763'7617
P. 4
<
, '
'-
compensation or profit sharing plans, shall be available to
Management Consultants. Management Consultants, however, are not
precluded from purchasing medical, life, accident or disability
insurance at their own expense if it can be purchased as part of a
group plan. N"o withholding of federal or state income taxes,
social security, or related contributions shall be made from
payments made to Management Consultants. Management Consultants
are solely responsible for payment of the taxes and contributions
due to governmental bodies as a result of payments received by them
under this Agreement '._ . .-..
(c) Pharmacy shall pay Management Consultants for any
reasonable travel, marketing and other expenses relating to the
Business. Pharmacy will reimburse Management Consultants for
expenses for onp (l) national educational meeting per year.
4. Covenant ~ot to Compete. (a) Management Consuj tants,
during the Consulting Term and for an additional period of 'ix (6)
months thereafter (the "Noncompetition Term"), shall not:
'-'
(1) Canvass, solicit, or actively pursue business
or em~loyment for Rrovision of pharmaceutical ,r durable
medical supply services from any of NEWCO's clr~nts;
(2) Disclose any prbprietary or confidential
information of Pharmacy or its Parent or the Business
relating to (i) the customers, clients, employees and
accounts of Pharmacy or its Parent or the Business,
including, but not limited to, identity of Pharmacy's or
its Parent's customers if such identity is proprietary or
confidential, or (ii) Pharmacy's or Parent's business
methods, systems, plans, policies and personnel.
(b) It is understood between the parties that individuals,
and perhaps facilities, have certain freedom of choice of provider
of pharmacy and medical supply services. As such. no violation of
those, provisions i6 intended and the parties hereto agree to
cooperate to avoid violation.
(c) If pharmacy claims that Managemen~ Consultants, or any
one or more of them, have materially violated this covenant not to
compete, then it shall give Management Consultants thirty (30) days
written notice specifying with reasonable detail the claim
violation. If Management Consultants dispute the claimed
violation, or its materiality, Management Consultants shall advise
Pharmacy in writing within ten (10) days after the thirty-day
notice period, and the dispute promptly shall be referred to
resolution by impartial arbitration conducted under the auspices
and pursuant to the rules of the American Arbitration Association.
Costa and attorneys fees of the prevailing party shall be taxed to
the other party. Pending such resolution, Pharmacy shall not be
required to continue to make the annual payments set forth in
"-'
3
.
.OCT::.28-99 THU 8: 14 AM PRESBYTERIAN HOMES
<
FAX N~ 7177637617
p, 5
, -'-
\.,...'
section 3 hereof, but if Managementc Consulcants prevail at
arbitration, Pharmacy then shall promptly make Management
Consultants whole. with six (6%) percent simple interest, for any
payments of fees withheld.
(d) In addition to any other remedies that Pharmacy and
~arent may have under this agreement for alleged violations of this
section. Pharmacy and Parent may apply to any court of competent
jurisdiction for equitable relief, including specific performance
and injunctions reBtr~ining Management Consultants from committing
or continuing any such violation of this Agreement.
6. Validitv. If for. any reason any provision of this
Agreement shall be determined to be invalid or unenforceable, the
validity and effect 0f t~e other provisions shall not be affected.
Without limiting the gen~rality of the foregoing, the invalidity .)f
Management Consultants' covenant not to compete, set forth .cn
section 4 above, shall n Jt affect Pharmacy's obligation to make t ae
payments to Management Consultants set forth in section 3 above in
respect to any year if Management Consultants shall in fact
strictly observe such covenant during such year notwithstanding its
invalidity.
7. Waiver of Brea<.:h. The waiver by Pharmacy or by Managen'(~nt
Consultants of a breach of any provision of this Agreement by the
other party shall not operate, or be construed, as a waiver of any
other breach of such other party. .-.
.......
8. Termination Circumstances. This Agreement shall terminate
immediately upon Transfer by the Management Consultants, without
substitution of a like number of Management Consultants, of their
shares of Class A $~ par value stock of Pharmacy during the
Consulting Term. In such event, Pharmacy's then remaining
obligation shall Cease. In the event of the death of one or more
of the Management Consultants, the surviving Management Consultants
and Pharmacy shall negotiate anew Management Agreement to provide
for continuing management services for Pharmacy.
9. Assiqnment. .This Agreement shall inure to the benefit of,
and be binding upon, Pharmacy~ its successors and assigns. This
Agreement shall be binding on Management Consultants,.their heirs,
executors or administrators, and legal representatives, but shall
not be assignable by Management Consultants and the obligations of
Management Consultants may not be delegated.
~O. Entire Aareement. This Agreement represents the entire
understanding of tbe parties on its subject matter. This Agreement
may not be amended except by a writing signed by the party against
whom enforcement of any amendment is sought.
"-
4
.
. OCT-LB-99 THU 8: l4 AM
PRESBYTERIAN HOMES
FAX NO.
7177637617
,
P. 6
.
'-'
11. Applicable Law, The parties agree that this Agreement
shall be construed and enforced pursuant to the laws of the
Commonwealth of Pennsylvania.
IN WITNESS WHEREOF, the parties have set their hands as of the
day and year first above written.
~{J~
(UA' . &(~ 1,'
CONTINUING CARE Rx, INC.
BY:/?~.L - ~
';;;; !iwJ
Robert Wilson
/1lzt1t/)m14J;L
William Wilson
.-/
b~~~
.. Thomas. te
F:\HOME\JOK\MGT^GTPH
~ 2/2s/,a
\....-
,
.'
.
.
VERIFICATION
I, William Wilson, hereby aver and state that I have read the foregoing document
which has been drafted by my counseL The factual statements contained therein are true and
correct to the best of my knowledge, information and belief although the language is that of my
counsel and, to the extent that the content of the foregoing document is that of counsel, I have
relied upon counsel in making this verification.
This statement is made subject to the penalties of 18 Pa. C.S.A. ~ 4904 relating to
unsworn falsification to authorities, which provides that if! make knowingly false statements, I
may be subject to criminal penalties.
4/;}f; l{ll; /fIk
William Wilson
HBG\40497.1
.
.
.
.
VERIFICATION
I, Robert Wilson, hereby aver and state that I have read the foregoing document which
has been drafted by my counsel. The factual statements contained therein are true and correct to
the best of my knowledge, information and belief although the language is that of my counsel
and, to the extent that the content of the foregoing document is that of counsel, I have relied
upon counsel in making this verification.
This statement is made subject to the penalties of 18 Pa. C.S.A. ~ 4904 relating to
unsworn falsification to authorities, which provides that if I make knowingly false statements, I
may be subject to criminal penalties.
JUd wJ4
Robert Wilson
HBG\40497. t
.
.
,
"
.
CERTIFICATE OF SERVICE
On this6f\day of January, 2000, I, Sherry L. Weigel, a secretary in the law offices
of Duane, Morris & Heckscher LLP, hereby certify that I have served this day true
and correct copies of the foregoing COMPLAINT in the above.captioned matter, by
depositing same in the United States First Class Mail, postage prepaid, in Harrisburg,
Pennsylvania, to those persons and addresses indicated below:
David B. Disney, Esquire
McNees, Wallace & Nurick
100 Pine Street
P.O. Box 1166
Harrisburg, PA l7108-1166
~
. :i./JJ..
Sherry L. 'Nt i el '?
HBG\38301.2
~
~~~ r?
>- tr> (;; &!
a: c
'.....;:. J J ~
,... :3....-- g:
(5 lVC? C'; ,-'~,-~ ~
, >~..-.:: ~Q
LL: ',:..J ~-- ...,~..._,
, (l~
~~~..' :~'~ ?-::; o . -:,j
c...;:: '..0 9- 4 ~ '=t:j
I IlJ. "-7
CE', ! ~ fftQ ~ & ~
". <:.: ~..:_~ ~:.L ~
~. bJ
" Cl ::J
0 0 (.)
-<,.
".
- ----~~~
LAW OFFICES OF
~'"
DUANE, MORRIS B HECKSCHER LLP
.:...-,,~
305 NORTH F'RONT STREET, P.O. BOX IOO~
HARRISBURG. PA 17108-1003
~ -
.(:: i
,
J
'...
.
IN THE COURT OF COMMON PLEAS
CUMBERLAND COUNTY, PENNSYLVANIA
ROBERT WILSON
and
WILLIAM WILSON
CIVIL ACTION NO. 2000-119
Plain tiffs,
v.
CONTINUING CARE RX, INC.
CIVIL TERM
and
STEPHEN PROCTOR
Defendants.
ORDER
AND NOW, this _ day of
,2000, upon consideration of the
Plaintiffs' Complaint, the Defendants' Preliminary Objections, and any Memoranda submitted in
support or in opposition to the Preliminary Objections, the Defendants' Preliminary Objections
are GRANTED, Count III of Plaintiffs' Complaint is DISMISSED with prejudice, and
Defendant Stephen Proctor is DISMISSED from this case.
BY THE COURT:
J.
,
IN THE COURT OF COMMON PLEAS
CUMBERLAND COUNTY, PENNSYL VANIA
ROBERT WILSON
and
WILLIAM: WILSON
CIVIL ACTION NO. 2000.119
Plaintiffs,
v.
CONTINUING CARE RX, INC.
CIVIL TERM:
and
STEPHEN PROCTOR
Defendants.
PRELIMINARY OBJECTIONS OF
DEFENDANTS CONTINUING CARE RX. INC. AND STEPHEN PROCTOR
The Defendants, Continuing Care Rx, Inc. and Stephen Proctor, by theirattomeys,
McNees, Wallace & Nurick, hereby file these Preliminary Objections to Plaintiffs' Complaint.
In support of the Preliminary Objections, the Defendants assert the following:
L On or about January 6, 2000, the Plaintiffs, Robert and William Wilson, filed a
Complaint containing three (3) counts.l Count I is a breach of contract claim against Defendant
Continuing Care Rx, Inc. Count II is a claim against Continuing Care Rx, Inc. for breach of the
implied duty of good faith. COl!l)t III is a claim.against Stephen Proctor for intentional
Interference with the performance of a contract.
1 The Complaint was incorrectly served by U.S. frrst-class maiL
-1-
A. Count III (Intentional Interference With The Performance Of A Contract)
Does Not State A Valid Claim For Relief.
2. These Preliminary Objections challenge the legal sufficiency of Count III. In addition,
because Counts I and II are not against Stephen Proctor, the Defendants seek dismissal of
Stephen Proctor from this case.
3. In Count III, the Plaintiffs assert that, "Steven Proctor [2] caused CCRx2['] to
wrongfully terminate the Management Agreement without cause and for reasons having nothing
to do with the Wilsons' performance under the Management Agreement." (Complaint, at '36).
They further allege that, "Proctor wrongfully and tortiously interfered with the Plaintiffs'
contractual relations with CCRx2." (Complaint, at '37).
4. The Plaintiffs and the Defendants were parties to and/or involved in three (3)
contracts: The Asset Purchase Agreement, the Stockholders' Agreement, and the Management
Agreement. The Management Agreement is the only contract at issue in Count III of the
Plaintiffs' Complaint.
5. Continuing Care Rx, Inc. entered into the Management Agreement with the Plaintiffs
and Thomas Trite' in order to employ them as Management Consultants. Stephen Proctor signed
the Management Agreement as President of Continuing Care Rx, Inc.
2 Mr. Proctor's first mune is spelled "Stephen."
3 CCRx2 is not a legal entity. CCRx2 is the term that Plaintiffs use when referring to
Continuing Care Rx, Inc. after its assets and name were purchased by PHI.
· Thomas Trite is stilI employed as a management consultant for Continuing Care Rx,
Inc. He is not a party to this action.
-2-
6. The Plaintiffs' Complaint alleges that, "Proctor is Chairman ofthe Board of
Continuing Care Rx, Inc." (Complaint, at '4).
7. In Count III of their Complaint, the Plaintiffs allege that Stephen Proctor is liable to
them because he wrongfully and tortiously interfered with the Management Agreement with
Continumg Care Rx, Inc. This allegation is legally insufficient and does not state a valid claim
for relief.
8. The Pennsylvania Superior Court has previously held as follows:
To sustain a cause of action for intentional interference with business relations, it
must be alleged that: (1) there is an existing contractual relationship between the
plaintiff and a third party; (2) the defendant interfered with the performance of
that contract by inducing a breach or otherwise causing the third party not to
perform; (3) the defendant was not privileged to act in this manner; and (4) the
plaintiff suffered pecuniary loss as a result of the breach of contract.
AI Hamilton Contractin'l (;0. v. Cowder, 434 Pa. Super. 491, 644 A.2d 188, 191 (1994) (citing
Triffin v. Janssen, 426 Pa. Super. 57, 63, 626 A.2d 571, 574 (1993)) (emphasis added).
9. "Essential to the right of recovery on this theory is the existence ofa contractual
relationship between the plaintiff and a party other than the defendant." Nix v. Temple
University of the Commonwealth System of Higher Education, 408 Pa. Super. 369,596 A.2d
1132,1137 (1991).
10. "[A] corporation cannot tortiously interfere with a contract to which it is a party."
llix, 408 Pa. Super. 369, 596 A.2d at 1137.
11. "Where employees or agents for the corporation act within the scope oftheir
employment or agency, the employees, the agents and the corporation are one and the same;
there is no third party." Rutherford v. Presbyterian-University Hospital, 417 Pa. Super. 316, 612
-3-
A.2d 500, 508 (Pa. Super. 1992); see also Maier v. Maretti, 448 Pa. Super. 276, 671 A.2d 701,
707 (1996); Curran v. Children's Service Center ofWyominji County. Inc., 396 Pa. Super. 29,
578 A.2d 8, 13 (1990); Daniel Adams Associates v. Rimbach Publishing:. Inc., 360 Pa. Super. 72,
519 A.2d 997, 1002 (1987).
12. In this case, Plaintiffs entered into the Management Agreement with Continuing Care
Rx, Inc., and Stephen Proctor signed on behalf of Continuing Care Rx. If the Management
Agreement is valid, then Stephen Proctor was necessarily acting as an agent of Continuing Care
Rx, Inc. when he terminated the Management Agreement with Plaintiffs.
13. A corporate agent cannot be held liable for intentional interference with the
performance of his corporation's contract ifhe acted within the scope of his authority. As a
result, the Plaintiffs cannot maintain a cause of action against Stephen Proctor for intentional
interference with the Management Agreement.
B. The Plaintiffs' Complaiut Does Not Assert Any Valid Causes Of Actiou
Against Stephen Proctor, And He Should Be Dismissed From This Case.
14. Counts I and II of the Complaint allege a breach of contract and breach ofthe
implied duty of good faith and request judgment against Continuing CareRx, Inc.
15. Counts I and II do l1fl1. request judgment against Stephen Proctor.
16. Stephen Proctor cannot be held Jiable for breach of contract or breach of the implied
duty of good faith. When Proctor signed the Asset Purchase Agreement, the Stockholders'
Agreement, and the Management Agreement, he was acting as an agent of Continuing Care Rx,
Inc.
-4-
~ .
17. "Where a party contracts with a corporation through a corporate agent who acts
within the scope of his authority and reveals his principal, the corporate principal alone is liable
for breach of the contract." Daniel Adams Associates. Inc., 360 Pa. Super. 72, 519 A.2d at
I 000-01 (emphasis added); see also In re Estate of Duran, 692 A.2d 176, 179 (Pa. Super. 1997).
18. Count III does not state a valid cause of action, and Counts I and II do not state
claims against Stephen Proctor.
WHEREFORE, Defendants, Continuing Care Rx, Inc. and Stephen Proctor, request that
Defendants' Preliminary Objections be granted, that Count III of Plaintiffs' Complaint be
dismissed with prejudice, and that Stephen Proctor be dismissed from_this case.
Respectfully submitted,
McNEES, WALLACE & NURICK
/7
/;J (I
1;7
//j
0:......,..-' /
\ ~/ !
'Micnael Kelley, Esq. /
Attorney I.D. No. 58~54
Charles T. Young, Esq.
Attorney 1.0. No. 80680
100 Pine Street
P.O. Box 1166
Harrisburg, PA 17108-1166
(717) 232-8000
By
Attorneys for Defendants Continuing Care Rx, Inc.
and Stephen Proctor
Dated: February ~ 2000
-5-
,
CERTIFICATE OF SERVICE
,
,
I hereby certify that on this date a true and correct copy of the foregoing document was
served by hand delivery upon the following:
Allen C. Warshaw, Esquire
Duane, Morris & Heckscher, L.L.P.
305 North Front Street, 5th Floor
P.O. Box 1003
Harrisburg, P A 171 08-1 003
Charles T. Young, Jr., Es%~'
...~
t/
Of Counsel for Defendants Continuing
Care Rx, Inc. and Stephen Proctor
Dated: February ~, 2000
~
\ (
.
b
""
,
L-
<-
IN THE COURT OF COMMON PLEAS
CUMBERLAND COUNTY, PENNSYLVANIA
ROBERT WILSON
RD I, BOX 85
NEWPORT, PA 17074
and
WILLIAM WILSON
4997 WESTCHESTER DRIVE
HARRISBURG, P A 17112
PLAINTIFFS
Docket No. 2000-119 - Civil Term
v.
CONTINUING CARE RX, INC.
1217 SLATE HILL ROAD
CAMP HILL, PENNSYLVANIA 17011
and
STEPHEN PROCTOR
7 AL YDAR BOULEVARD
DILLSBURG, PA
DEFENDANTS
NOTICE
You have been sued in court. If you wish to defend against the claims set forth in the
following pages, you must take action within twenty (20) days after this Amended Complaint
and Notice are served, by entering a written appearance personally or by ~ an attorney and
filing in writing with the court your defenses or objections to the claims set forth against you.
You are warned that if you fail to do so the case may proceed without you and a judgment
may be entered against you by the court without further notice for any money claimed in the
Amended Complaint or for any other claim or relief requested by the Plaintiff. You may lose
money or property or other rights important to you.
YOU SHOULD TAKE THIS PAPER TO YOUR LAWYER AT ONCE. IF YOU
DO NOT HAVE A LAWYER OR CANNOT AFFORD ONE, GO TO OR TELEPHONE
THE OFFICE SET FORTH BELOW TO FIND OUT WHERE YOU CAN GET LEGAL
HELP.
Court Administrator
4th Floor, Cumberland County Courthouse
Carlisle, PA 17013
(717) 240-6620
HBG\44531.1
,
..
(
,
.L
(.
IN THE COURT OF COMMON PLEAS
CUMBERLAND COUNTY, PENNSYLVANIA
ROBERT WILSON
RD I, BOX 85
NEWPORT, P A 17074
and
WILLIAM WILSON
4997 WESTCHESTER DRIVE
HARRISBURG, PA 17112
Docket No. 2000-119 - Civil Term
PLAINTIFFS
V.
CONTINUING CARE RX, INC.
1217 SLATE illLL ROAD
CAMP HILL, PENNSYLVANIA 17011
and
STEPHEN PROCTOR
7 AL YDAR BOULEVARD
DILLS BURG, PA
DEFENDANTS
NOTICIA
Le han demandado a usted en la corte. Si usted qui ere defenderse de estas demandas
expuestas en las paginas siguierites, usteQ tiene viente (20) dias de plazo al partir de la fecha
de la demanda y la notificacion. Usted debe presentar una apariencia escrita 0 en persona 0
por abogado y archivar en la corte en forma escrita sus defensas 0 sus objeciones a las
demandas en contra de su persona. Sea avisado que si usted no se defiende, la corte tomara
medidas y puede entrar una orden contra usted sin previo aviso 0 notificacion y por cliiLIquier
queja 0 iLlivio que es pedido en la peticion de demanda. Usted puede perder dinero 0 sus
porpiedades 0 otros derechos importantes para usted.
LLEVE ESTA DEMANDA A UN ABODAGO IMMEDIATAMENTE. SI NO
TIENE ABOGADO 0 SrNO TIENE EL DINERO SUFICIENTE DE PAGAR TAL
SERVICIO, VA Y A EN PERSONA 0 LLAME POR TELEFONO A LA OFICINA CUY A
DIRECCION SE ENCUENTRA ESCRITA ABAJO PARA AVERIGUAR DONDE SE
PUEDE CONSEGUIR ASlSTENCIA LEGAL.
Court Administrator
4th Floor, Cumberland County Courthouse
Carlisle, P A 17013
(717) 240-6620
HBG\44S31.T
..
~
{
~-
<
IN THE COURT OF COMMON PLEAS
CUMBERLAND COUNTY, PENNSYLVANIA
ROBERT WILSON
RD I
BOX 85
NEWPORT, PA 17074
and
WILLIAM WILSON
4997 WESTCHESTER DRIVE
HARRISBURG,PA 17112
Docket No. 2000-119 - Civil Term
PLAINTIFFS
V.
CONTINUING CARE RX, INC.
1217 SLATE HILL ROAD
CAMP HILL, PENNSYLVANIA 17011
and
STEPHEN PROCTOR
7ALYDARBOULEVARD
DILLSBURG, PA
DEFENDANTS
AMENDED COMPLAINT
1. Plaintiff William Wilson is an individual residing at 4997 Westchester Drive,
Harrisburg, P A 17112.
2. Plaintiff Robert Wilson is an individual residing at RD I, Box 85, Newport, PA
17074.
3. Defendant Continuing Care Rx, Inc. is a Pennsylvania Corporation with its
registered office at 1217 Slate Hill Road, Camp Hill, Pennsylvania l70ll.
HBG\44531.1
w
i.:.
"
...-
-<.
4. Defendant Stephen Proctor is an individual residing at 7 Aldyar Boulevard,
Dillsburg, Pennsylvania. Proctor is Chairman of the Board of Continuing Care Rx, Inc.
5. Plaintiffs Robert and William Wilson are registered pharmacists who, in
December of 1996, with a third individual, Thomas Trite, founded a corporation called
Continuing Care Rx, Inc. ("CCRxl ").
6. From December 24, 1996, until February 25, 1998, Robert Wilson, William
Wilson and Thomas Trite were the owners and managers of CCRxl.
7. The business of CCRxl was to enter into contracts with nursing homes and other
institutions under which CCRxl would provide and distribute prescription drugs to the residents
of the nursing home or other institution.
8. In February of 1998, CCRxl entered into an agreement with PHI, a Pennsylvania
corporation, to provide and distribute prescription drugs at nursing homes owned and operated
by Presbyterian Homes Incorporated, a subsidiary ofPH1.
9. In February of 1998, PHI entered into an Asset Purchase Agreement with William
Wilson, Robert Wilson and Thomas Trite under which PHI purchased the business, name and
other assets of CCRxl, subject to certain liabilities, and created a new corporation by the name
Continuing Care Rx, Inc. ("CCRx2") to operate the pharmacy business previously operated by
CCRxl. A true and correct copy ofthat Asset Purchase Agreement is attached hereto and made
a part hereof as Exhibit" A."
10. The Asset Purchase Agreement also provided that the Wilsons and PHI would
enter into an agreed to Management Agreement and an agreed to Stockholders Agreement.
11. On or about February 25,1998, the Wilsons and Trite entered into a Management
Agreement and a Stockholders Agreement.
12. Under the Shareholders Agreement, the Wilsons and Trite were to subscribe to
two hundred and fifty (250) shares of stock, twenty-five percent (25%) of the issued stock. A
HBG\44531.1
.
'-
<
4.~~-
~
true and correct copy of that Shareholders Agreement is attached hereto and made a part hereof
as Exhibit "8."
13. Under the Management Agreement, The Wilsons and Trite were engaged by
CCRx2 for a term offive (5) years as "management consultants." A true and correct copy of that
Agreement is attached hereto and made a part hereof as Exhibit "C."
14. Under the Management Agreement, the consulting duties included:
(a) During the Consulting Term [five years], the Management
Consultants [the Wilsons] shall be available to assist [CCRx2] in
the ongoing management Qfthe retail and institutional pharmacy
Business to be carried on by [CCRx2], including the total
management of the Business. Specifically, Management
Consultants shall select, hire and train the staff and employees of
Pharmacy, supervise, evaluate and determine the compensation of
such employees, develop operational policies, staffing levels and
budgets, and perform all other functions required to manage and
operate the Business. ~
(b) Management Consultants agree to provide the consulting
services as defined herein and to use their best efforts and abilities
in performing services, and to give Pharmacy the full benefit of
Management Consultants' knowledge, experience, judgment and
expertise in rendering pharmaceutical services to the retail and
institutional public.
15. From February 25,1998, until August 10, 1999, the Wilsons provided the
consulting services as defined in the Management Agreement, used their best efforts and abilities
in performing services, and gave CCRx2 the full benefit of their knowledge, experience,
judgment and expertise in rendering pharmaceutical services to the retail and institutional public.
16. On August 10, 1999, CCRx2, through its Chairman of the Board, Stephen
Proctor, advised William and Robert Wilson that CCRx2 was terminating the Management
Agreement as ofthat date.
17. There was no good cause for that termination.
HBG\44531.1
..
...
,
'""~
...
Count I
18. Plaintiffs hereby incorporate paragraphs one (I) through seventeen (17) by
reference as if fully set forth herein.
19. By terminating the Management Agreement, CCRx2 breached the Management
Agreement in that that Agreement does not allow termination without cause andthere was no
cause for that termination.
20. Under the Management Agreement, each of the Wilsons was and is entitled to at
least one/third (113) of the $290,000 ($96,666.66), compensation agreed to for the first year.
21. In fact, as agreed, each of the Wilsons received $115,000 each during the first
year of the Agreement and are, therefore, entitled to at least $115,000 each for each of the four
years remaining under theAgreement.
22. In addition, the Management Agreement provided that:
Periodically, but at least sixty (60) days prior to the end of each year, the parties
shall meet and review the terms and conditions for the next year's compensation
package.
23. Plaintiffs believe that if the required meeting had been held and the parties had
acted in good faith, their compensation under the Agreement would necessarily have been
increased significantly.
24. Plaintiffs are entitled to an amount in excess $115,000 per year for each of the
four years remaining under the Management Agreement.
WHEREFORE, Plaintiffs respectfully that this Court enter judgment in their favor and
against defendant CCRx2 in an amount in eXccess of $1 00,000.00.
Count II
25. Plaintiffs hereby incorporate paragraphs one (1) through twenty-four (24) by
reference as if fully set forth herein.
HBG\44S31.1
"
'"
..
,
26. The Management Agreement provided that:
Periodically, but at least sixty (60) days prior to the end of each year, the parties
shall meet and review the terms and conditions for the next year's compensation
package.
27. The Wilsons expended extensive time and efforts in developing the business of
CCRx1.
28. The three agreements, the Asset Purchase Agreement, the Management
Agreement and the Shareholder Agreement, were each part of total agreement between the
parties intended ensure that the Wilsons were fully eompensated for their time and efforts in
developing the business and assetsofCCRxl that were being transferred under the Asset
Purchase Agreement.
29. Defendant CCRx2 had an implied duty to deal with Plaintiffs in good faith under
the three Agreements.
30. Defendant CCRx2 failed to negotiate the compensation due under the
Management Agreement as required by the Agreement.
31. At various times, CCRx2 waived apparent violations of the Management
Agreement which it now cJaims as a basis for the termination of that Agreement.
32. At various times, the parties to the Management Agreement agreed that there
were aspects of the Management Agreement which should be amended in order to better
accomplish the purposes of the parties.
33. Defendant CCRx2 failed to negotiated amendments to the Management
Agreement which the parties had agreed would be appropriate to accomplish the purposes ofthe
Agreement and to comply with the Internal Revenue Code.
34. CCRx2 violated its duty to deal in good faith by:
a. failing to negotiate future compensation due under the Management
Agreement;
HBG\44S31.1
~
"-
,
'"
<
b. terminating the Management Agreement without good cause;
c. asserting claims against the Wilsons which had previously been
waived; and
d. failing to negotiate amendments to the Management Agreement which aU
of the parties to that Agreement had agreed would be appropriate to
accomplish the purposes of the Agreement.
WHEREFORE, Plaintiffs respectfully request that this Court enter judgment in their
favor and against CCRx2 in an amount in excess of$IOO,OOO.
Respectfully submitted,
Date: 04>>/&0
(}IL/L--
Allen C. Warshaw, Esquire
AttorneyldNo.17l45
Duane, Morris & Heckscher LLP
305 North Front Street, 5th Floor
P.O. Box 1003
Harrisburg, P A 17108-1003
(717) 237-5500
Attorneys for William & Robert Wilson
HBG\44531.1
.
<C
,
,,*;,-
'-
VERIFICATION
I, William Wilson, hereby aver and state that I have read the foregoing document
which has been drafted by my counsel. Thc factual statements contained therein are true and
correct to the best of my knowledge, information and belief although the language is that of my
counsel and, to the extent that the content of the foregoing document is that of counsel, I have
relied upon counsel in making this verification.
This statement is made subject to the penalties of 18 Pa. C.8A. ~ 4904 relating to
unsworn falsification to authorities, which provides that if! make knowingly false statements, I
may be subj ect to criminal penalties.
/!!j~ If! ~
William Wilson
HBG\40497.1
.
<.
<{
VERIFICATION
I, Robert Wilson, hereby aver and state that I have read the foregoing document which
has been drafted by my counsel. The factual statements contained therein are true and correct to
the best of my knowledge, information and belief although the language is that of my counsel
and, to the extent that the content of the foregoing document is that of counsel, I have relied
upon counsel in making this verification.
This statement is made subject to the penalties of 18 Pa. C.s.A. ~ 4904 relating to ~
unsworn falsification to authorities, which provides that in make knowingly false statements, I
may be subject to criminal penalties.
HBG\40497.1
<
.
.
ASSET PURCaASE AGREE~
THIS AGREEMENT, made as of the ~5th day of February, 1998,
among and between CONTINUING_CARE Rx, Inc., a Pennsylvania business
corporation ("Seller"), PHI, a Pennsylvania nonprofit corporation
("Buyer"), and ROBERT WILSON, WILLIAM WILSON AND THOMAS TRITE,
individuals (sometimes referred to as "Pharmacists").
WIT N E SSE T H
WHEREAS, Seller is the owner and operator of a retail and
institutional pharmacy business (the "Business") which has an
office located at 28 South Second Street, Newport, Pennsylvania.
Buyer will or has formed a new Pennsylvania business corporation to
be known as "continuing Care Rx,' Inc," hereafter referred to as
"Newco." Seller desires to sell to Newco and Buyer desires that
Newco purchase substantially all of the assets used in the
Business. Pharmacists own lOO\" of the outstanding and issued
shares of Seller ana are employees of the Business. pharmacists
desire that seller sell its assets, including the name "Continuing
Care Rx, Inc.," to Newco. Pharmacists will enter into a Management
Agreement with Buyer to manage and operate the business of Newco.
NOW, THEREFORE, in reliance upon the representations and
warranties made herein and for good and valuable consideration,
Seller, Buyer and Pharmacists, intending to be legally bound
hereby, covenant and agree as follows;
ARTICLE I
PLAN OF ACQUISITION
1.1 Purchase qn~ Sale of Assets by Newco.
(a) Subject to and upon the terms and conditions of this
Agreement, at the Closing, Seller shall transfer, sell, convey,
assign and deliver to Buyer, by instruments in form and substance
satisfactory to Buyer, and Buyer shall purchase from Seller, all of
Seller's right and title to and interest in the accounts
receivable, equ~prnent, truck leases, furnishing~. inventory,
prescription files, computer hardware, assumption o'f leases for
leased equipment and space, business records, customer lists,
telephone numbers, pharmaceutical supply contracts, licenses
(subject to compliance with requirements promulgated by the Bureau
of~ Professional and Occupational Affairs , Pennsylvania Department
of State), goodwill, the corporate name "Continuing Care Rx, Inc.,"
allcomput.er pro-grams, software and data files, whether stored on-
line or on magnetic tapes or other media, and all books and records
regarding the fo~~going (all the assets to be so sold and acquired
being herein called the "Assets").
. ,
(bl Newco shall make available.to Seller' and its agents upon
reasonable request such books of account and ~ records as ma,y be
necessary for Seller to prepare tax returns and to respond to a~d
defend audits of tax returns.
,
1.2 Purchase Price. In consideration of the transfer of the
Assets, Buyer shall pay to Seller Two ~undred Thousand
($200,000.00) Dollars (the "Purchase Price"), payable as follows:
(a) Twenty-five Thousand ($25,000.00) Dollars on March
15, 1998, and Twenty-five Thousand ($25,000_00) Dollars on the 15th
day of the next succeeding five (5) calendar months, for a total of
One Hundred Fifty Thousand ($150,000_00) Dollars;
(b) Two ~undred Fifty shares of Class A $1 par value
stock of Newco, constituting 25\ of the Class A $1 par value stock
to be issued by Newco; and -
(e) Forty-nine Thousand Seven Hundred and Fifty
($49,750,00) Dollars within forty-five (45) days after the first
anniversary of the Closing, if, as of such first anniversary, Newco
shall have retained all busine!;ls existing as of the Closing. If
Newco shall not have retained all such existing business, then the
$49,750 shall be reduced $2,000 for every one (1%) percent loss of
business (i.e., a thirty (30%-) percent loss of business would
result in no deferred payment] ; provided, however, that if and when
an increase of business is brought on line to counterbalance
losses, and such increase exceeds twenty-five (25%) percent over
the initial amount of business existing at the time of Closing, the
entire amount of retainage shal'l be released to Seller in such
manner as Seller shall request. -
Buyer hereby assumes liability for all accounts payable
arising out of asset purchases. Buyer shall not assume any other
liability or obligation of Seller, contingent or otherwise, other
than going-forward performance 6l:Jligations under agreements for the
operation of the Business as disclosed to and accepted by Buyer,
1.3 Closinq. The closing of the transactions contemplated
by this Agreement (the "Closing"), shall take place at the offices
of Seller and shall be effective at the close of business on the
Closing Date. The day on which the Closing occurs is referred to
as the "Cl.osing Date." the parties agree to use their.best efforts
to effect the Closing on or before the Closing Date. The parties
shall use their best efforts to have the Closing occur on a date
which is mutually agreeable to the parties, but not later than
February 28, 1998. The Closing Date may be extended at the request
of any party to~", date not later than March 31, 1998.
1.4 E~ecution and Delivery of Closinq Documents. Before the
Closing, each party shall cause to be prepared, and at the Closing
the parties shall execute and deliver, ~-each agreement and
2
,
,
.
.
be so executed and
At the. c.fosing,
in.st.rume.nt required by this Agreement to
delivered and not theretofore accomplished.
(a) Seller shall execute and deliver to Euyer
assignments, bills of sale, other title and transfer documents as
Buyer shall deem necessary, and possession of the Assets;
(b) Pharmacists and Buyer shall execute a Management
Agreement in the form of Exhibit A attached hereto.
(e) Pharmacists and Buyer shall execute a Stockholders'
Agreement in the form of Exhibit B attached hereto.
(d) Seller shall give Buyer copies of all records in its
possession relating to the Assets, including insurance policies,
tax statements and certificates of occupancy, if any.
(e) Each party shall execute and deliver such other
appropriate and customary documents as the other parties reasonably
may request for the purpose of consummating the transactions
contemplated by chis Agreement.
All actions taken at the Closing shall be deemed to have been taken
simultaneously at the time the last of any such actions is taken or
completed. ~
1.5 Further Assurances. After the Closing, the parties
shall execute and deliver such additional documents and take such
additional actions as may reasonably be deemed necessary or
advisable by any party to consummate the transactions contemplated
by this Agreement.
1.6 No Assumption of Liabilitie$. Except as expressly
provided in this Agreement, Buyer shall not assume any liabilities
of Seller. All such liabilities shall remain the responsibility of
Seller.
1.7 No Brokers. Each party hereby represents and warrants
to the other parties that he or it has not employed any broker,
agent or finder or incurred any liability for- any brokerage fees,
agents' commissions or finders' fees in connection with the
transactions contemplated herein.
ARTICLE II
REPRESENTATIONS OF
SELLER AND PHARMACISTS
Seller and Pharmacists, jointly and severally, represent to
Buyer as follows:
3
,
.
2.~ OrQaniza~ion and Good Standinq of Seller. Seller is a
corporation, duly organized, validly subsisting and ~ in good
standing under the laws of the Commonwealth of Pennsylvania.
2.2 Power and Authority, Seller has the corporate power and
authority and all licenses and permits required by governmental
authorities to own, lease and operate its Business and Assets and
to carryon its Business as currently being conducted.
2.3 Authority and Validity, Seller has the corporate power
and authority to execute, deliver and perform its obligations under
this Agreement and the other agreements and documents executed or
to be executed by Seller in connection with this Agreement, and the
execution, delivery and performance by Seller of this Agreement and
the other agreements and documents executed or to be executed by it
in connection with this Agreement have been duly authorized by all
necessary'corporate action. Each Pharmacist has the capacity and
authority to execute, deliver and perform his obligations under
this Agreement and all other agreements and documents he is
executing or will execute in connection herewith.
2.4 Eindinq Effect. This Agreement and the other agreements
and documents executed or to be executed by Seller and Pharmacists,
or any of them, in connection with this Agreement, have been or
will have been duly exeCuted and delivered by Seller and
Pharmacists, or any of them, and are or will be, when executed and
delivered, the legal, valid and binding obligations of Seller and
Pharmacists, or any of them, enforceable in accordance with their
terms, except that a court may limit:
(a) enforceability under bankruptcy, insolvency or other
similar laws affecting creditors rights;
(b) the availability of certain remeaies under equitable
principles of general applicability; and
(c) rights to indemnification due to con$iderations of
public pol icy.
2.5 Comoliance with Other Instruments. Neither the
execution and delivery by Seller and Pharmacists of this Agreement
or the other agreements and documents executed or to be executed by
Seller and Pharmacists in connnection with this Agreement, nor the
consumma~tion by Seller and Pharmacists of these agreements or
transactions will be in conflict with, or constitute a default or
breach under, or permit the termination or the acceleration of
maturity of. or result in the imposition of any lien, claim or
encumbrance upon any Assets or property of Seller.
2.6 Necessary Approvals and Consents. No authorization,
consent. permit or license, or approval of, declaration,
registration or filingw1th, any person, governmental or regulatory
4
c
,
,
au~hori~y or agency is necessary for the execution and delivery by
Pharmacists, or any of them, of this Agreement or the other
agreements executed or to be executed by Pharmacists, or any of
them, in connection with this. Agreement or the consummation by
Pharmacists, or any of them, of the transactions -contemplated
hereby or thereby,
2.7 Seller's Financial Statements, Seller has delivered to
Buyer and will continue to deliver to Buyer until Closing, true.
correct and complete copies of financial statements of Seller (the
"Financial Statements"l. which delivery is hereby acknowledged by
Buyer. The Financial Statements present fairly t.he assets,
liabilities and financial posi.tion of Seller as of the dates
thereof and the results of operations and changes in financial
position thereof for the periods then ended, in conformity with
generally accepted accounting principles applied on a consistent
basis throughout such peri.ods. Since January 1, 1997, there has
been no change in accounting principles applicable to or methods of
accounting used by Seller. The books and records of Seller have
been and are being maintained in accordance with all applicable
legal and accounting requirements and good business practices,
reflect only valid tra-nsactions, are complete and correct in all
material respects, and accurately reflect in all material respects
the basis for the financial position and results of operations of
Seller set forth in the Financial Statements.
2.8 Absence of c~rtain Chanqes. Since January 1, 1997, to
the best of their knowledge and after reasonable investigation,
Seller and Pharmacists have not (exCept as may result from tr.e
transactions contemplated by this Agreement)
(a) suffered any change ~in the Business, results of
operations, working capital, assets, liabilities, condi,-:'..on
(financial or otherwise). or the manner of conducting its Business,
other than changes in the ordinary course of bus iness, none of
which, individually or in the aggregate, have had a mat.erial
adverse effect on Seller;
(b) suffered any damage or destruction to or loss of ies
Assets not covered by insurance, or received any communication of
any loss of customers or suppliers, or terminated or lost the
services of any key employees that does or might have a material
adverse effect on the Business, results of operations, assets,
condition (financial or otherwise), or prospects of Seller;
(c) acquired or disposed of any asset, or incurred.
assumed, guaranteed. endorsed, p~id or discharged any indebtedness,
liability or obligation, or subjected or permitted to be subjected
any material amount of assets to any lien, claim or encumbrance of
any kind. except in t~e ordinary course of business or pursuant to
agreements in force at the date of this Agreement;
5---
,
ld) forgiven, compromis~d, cancelled. released, waived
or permitted to lapse any material righ~s or claims;
(e) entered into or terminated any material agreement or
commitment or agreed to make or made any changes in material leases
or agreements other than renewals or extensions thereof and leases,
agreements and commitments entered into in the ordinary Course of
business;
(fl . written up, written down or written off the book
value of any material amount of assets;
(9) declared, paid or set aside for payment any dividend
or distribution with respect to its capital stock;
(hl redeemed, purchased or otherwise acquired or sold,
granted or otherwise disposed of, directly or indirectly, any of
its capital stock or securities or any rights to acquire such
capital stock or securities or agreed to changes in the terms and
conditions of any such rights; ~
(i 1 increased the compensation of or paid or accrued any
bonuses to any employees or contributed to any employee benefit
plan, other than in accordance with established written policies,
practices or requirements that have been supplied to Buyer or Newco
contemporaneously herewith; ~
(j) entered into any emplo_yment.
compensation or collective bargaining agreement with
group, other than contracts terminable at will;
consulting~,
any person or
(k)
benefit plan;
(l) made any loan or advance to any stockholder.
director or ~employee or to any person or enti ty associated
in any way affiliated with any stockholder. officer.
or employee;
entered into, adopted ~ or amended any employee
officer,
wi th or
director
(m) entered into any other mat;erial commitment; or
transaction other than in the ordinary course of business.
2.9 Title to Assets and Eauipment .- Seller. has and will
convey to Buyer good and marketable title to the Assets, free and
clear of all liens and encumbrances. All assets material to the
present operations of Seller are reflectea on the Financial
Statements. Immediately after the Closing, Buyer will own or lease
all Assets necessary for the conduct of the Business to be acquired
by Buyer from Seller, as conducted by Seller immediately before the
Closing.
6
<. _ ~c co'ndit.ion of Tanaible Assets.' To the best of the
knowledge of Seller and Pharmacists, there are no material defects
in the tangible Assets of Seller as disclosed to Buyer and they are
adequate for the uses to which they are being put or would be put
in the ordinary course-of Seller's Business.
2.~1 Inventorv Good and Salable. The inventories shown on
the Balance Sheet or thereafter acquired consist generally of items
of a quantity and quality usable and salable in the ordinary course
of the Business of Seller.
2.12 Contracts. Seller has furnished or ~ made available
accurate and complete copies of all contracts to Buyer. All such
contracts are valid, binding, subsisting and enforceable in
accordance with their respective terms. Neither Seller nor any
Pharmacist has received notice that Seller is in breach or default
under any of such contracts, and, to the knowledge of Seller and
Pharmacists, there is no existing breach nor is there any valid
basis fCir any claim of default by any party thereunder. The
consummation of the transactions contemplated hereby wi 11 not
affect the continuance in full force and effect of such contracts.
There is no material dispute, mistake or misunderstanding among the
parties to any such contract nor are the parties hereto aware of
the potential for any such dispute, mistake or misunderstanding,
and no penalty has been incurred with respect thereto. Neither
Seller nor any Pharmacist has received notiCe of any plan or
intention of any other party to any such contract or agreement to
exercise any right to cancel or terminate any such contract or
agreement in advance of its normal maturity or termination date,
and neither Seller~nor any Pharmacist knows of any fact that would
justify the exercise of such right. All such contracts and
agreements are fully assignable without the consent of any third
party.
2.13 Litioation and Government Claims. There_are no pending
suits, claims, actions or other proceedingsagal.nst or governmental
investigation or inquiry about Seller or, to the best of Seller's
knowledge, threatened against or relating to Seller or Pharmacists
which could have a materially adverse. effect on the Assets or the
transactions contemplated by this Agreement.
2.14 yudaments. Decrees and Orders in Restraint of Business.
Seller is not a party ~ tCi or subj ect to any judgment, order or
decree entered in any suit or proceeding brought by any
governmental agency or by any other person enjoining or restricting
Seller in respect of any business practice or the acquisition of
any property or the conduct of the Business. Neither Seller nor
Pharmacists knows or has grounds to know of any basis for any such
action or of any governmental investigation relating to Seller_
There are no claims against Seller pending or threat.ened,
anticipated or contemplatea, which, if valid, would constitute or
7
, ,
result in a breaeh of any representation, warranty, covenant or
agreement set forth herein.
2.15 Compliance With Laws. To the best of its knowledge,
Seller is substantially in compliance with all ~aws applicable to
its Business and Assets, including environmental laws.
2.1.6 ERISA. Seller is not. in default under and has no
accrued obligations under any employee welfare benefit plan or
employee pension benefit plan within the meaning of ERISA, and has
no formal plan or commitment, whet.her legally binding or not, to
create any ERISA plans that would affect any present or former
employee of Seller, or such present or former employee's dependents
Or beneficiaries. Seller has made all required contri~ut.ions to
all ERISA plans which it sponsors and maintains. All reports
required by any government.al agency with respect to such plans have
been timely filed,
2. ~ 7 Labor Rel<lt.ions. To the knowledge of Seller and
Pharmacists, Seller is in compliance with all applicable laws
respecting employment and employment practices, terms, condit.ions
of employment, wages and hours.
2.18 Adequat.e Insurance. All insurable Assets are insured
for Seller's benefit under valid and enforceable policies, in
amounts and against. such risks ano losses as are cust.omary in
Seller'" Business. Seller shall keep such insurance in effect
until risk of loss shall have passed t.o Buyer by the terms of this
Agreement.
2.19 Accuracy of Informat ~on Furnished. No representation by
Seller or Pharmacists in this Agreement nor any information
relating to seller- delivered by Seller or -?harmacists to Buyer
contains any unt.rue s-tatement. of a mat.erial fact.. Seller and
Pharmacists have disclosed to Buyer all facts known to t.hem that
are to their kno\Nledge material to the Eusiness, ope rat ions,
financial condition or prospect.s of Seller.
2.20 Environment. To the best of its knowledge, Seller has
complied with all stat.utes, ordinances, rules, regulations,
requirements, orders and decisions issued by any federal, state or
local governmental body or agency established thereby.
2.21 No Fraud or Abuse. Neither Seller nor Pharmacists have
committed any act or taken any action in violation of the Medicaid
and Medicare laws of the United States, nor,Uto the best of their
knowledge, are they or anyone of them under investigation for
violation of such statutes.
:2.22 Covenant Not to Com1;>ete. (a) Management Consultants,
during the Consulting Term and for an additional period of six (6)
months thereafter (the "Noncompet.ition Term"), shall not:
8
,~
\~} Canvass, solicit, or actively purSue business
or employment for provision of pharmaceutical or durable
medical supply services from any of NEWCO's clients;
(2) Disclose any proprietary or confidential
information of Ph~rmacy or its Parent or the Business
relating to (i) the customers, clients, employees and
accounts of Pharmacy or ita Parent or the Business,
including, but not limited to, identity of Pharmacy's or
its Parent' e customers if such identity is proprietary or
confidential, or (ii) Pharmacy's or Parent's business
methods, systems, plans, policies and personnel.
(bl It is understood between the parties that individuals,
and perhaps facilities, have certain freedom of choice of provider
of pharmacy and medical supply services. As such, no violation of
those provisions is intended and the parties hereto agree to
cooperate to avoid violation.
(el If Pharmacy claims that Management Consultants, or any
one or more of them, have materially violated this covenant not to
compete, then it shall give Management Consultants thirty (30) days
written noticespec1fying with reasonable detail the claim
violation. If Management Consultants dispute the claimed
violation, or its materiality, Management ConSUltants shall advise
Pharmacy in writing within ten (10) days after the thirty-day
notice period, and the dispute promptly shall be referred to
resolution by impartial arbitration conducted under the auspices
and pursuant to the rules of the American Arbitration Association.
Costs and attorneys fees of the prevailing party shall be taxed to
the other party, . Pending such resolution, Pharmacy shall not be
required to continue. to make the annual payments set forth in
section 3 hereof, but. if Management Consultants prevail at
arbitration, Pharmacy then shall promptly make Management
Consultants whole, with six (6%) percent simple interest, for any
payments of fees withheld.
(dl In addition to any other remedies that Pharmacy and
PaTent may have under this agreement for alleged violations of this
section, Pharmacy and Parent may apply to any court of competent
jurisdiction for equitable relief, inclUding specific performance
and injunctions restraining Management Consultants from committing
or continuing any such violat ion of this Agreement",.
2.23 Chanqe of Name of Seller. As of the Closing, Seller
shall (i) cease doing business under the name "Continuing Care Rx,
Inc." or any other trade names transferred to Buyer pursuant to
this Agreement, and (ii) change its name.
9
ARTICLE III
REPRESENTATIONS OF BUYER
Euyer represents to Seller ~ndPh.arrna.c.i8ts that as of the
Closing Date:
3.1 Orqanization and Good StandinQ of Newco. Buyer is and
Newco will be a corporation duly organized, validly existing and in
good standing under the laws of the Commonwealth of Pennsylvania.
3.2 Power and Authoritv. Buyer has and Newco will have the
full corporate power and authority and all licenses and permits
required by governmental authorities to own, lease and operate its
properties and assets and to carry on its business as the Business
of seller is currently being conducted.
3.3 ~uthoritv and Validity. Buyer is and Newco will have
the corporate power and authority to execute, deliver and perform
its Obligations under this Agreement and the other agreements and
documents executed or to be executed by them in connection with
this Agreement, and the execution, delivery and performance by
Buyer and Newco of this Agreement and the other agreements and
documents executed or to be executed by them in connection with
this Agreement have been duly authorized by all necessary corporate
actions.
3.4 Bindinq Effect. This Agreement and the other agreements
and documents executed or to be executed by Buyer and Newco in
connection with this Agreement have been or will have been duly
executed and delivered by them and will be, when Newco has been
formed, its legal, valid and binning obligations, enforceaole in
accordance with their terms, except as (a) enforceability may be
limited by bankruptcy, insolvency or other similar laws affecting
creditors' rights; (bl the availability of certain remedieS may be
limited by equitable principles of general applicability; and (c)
rights to indemnification may be limited by considerations of-
public policy.
3.5 Neces~arv Ap1;lrovals and Consents. Except for approvals
already obtained or filings or notices already made or given. no
authorization, consent, permit or license, or approval of, or
declaration, registration or filing wIth. any person or
governmental or regulatory authority or agency will be necessary
for the execution and delivery by Buyer and Newco of this Agreement
or the other agreements executed or to be executed by Buyer and
Newco in connectiop with this Agreement or the consummation by it
of the transactions contemplated hereby and thereby.
lO
ARTICLE IV
COVENANTS OF SELLER AND PHARMACISTS
Seller and Pharmacists, jointly and severally, covenant with
Buyer as follows:
4.1 Bulk Sales. Seller either has complied with all bulk
sales laws applicable to the sale contemplated by this Agreement or
will satisfy in full out of the proceeds of this sale the claims of
all of its creditors. Seller shall satisfy such creditors in full
within ten (10) daya of execution hereof and shall provide to Buyer
within fifteen (IS) days of execution, evidence of same.
Notwithstanding the provisions of section 9.15 hereof, Seller
hereby consente to the immediate application by Buyer and Newco for
injunctive relief or damages if the provisions of this subsection
are breached. Seller hereby agrees to indemnify and hold harmless
Buyer and Newco from, and reimburse Buyer and Newco for, any and
all claims, liabilities or obligations which Buyer and Newco may
suffer or incur by reason of any noncompliance with any applicable
bulk sale, fraudulent conveyance or other laws for the protection
of creditors.
4.2 OperatiOn of th~ Business of Seller. During che period
preceding the Closing Date, Seller and Pharmacists shall ;
(a) conduct Seller's operations in the ordinary course
of business consistent with past and current practices of Seller,
and shall use their best efforts to maintain and preserve intact
its business organization and good will, to retain the services of
its key employees, and to maintain satisfactory relationships with
suppliers, distributors, customers and others having business
relationships with Seller;
(b) confer with Buyer on a regular and frequent basis to
report material operational matters and the general status of
ongoing operations;
(c) notify Buyer of any emergency or other change in the
normal course of Seller's Business and of any governmental
complaints, investigations or hearings (or ~ communications
indicating that the same may be contemplated) if such emergency,
change, complaint, investigation or hearing would be material to
Seller's Business or properties;
(d) not hire or fire any persons. raise or lower the
salary of any person, enter into any employment agreement, or any
agreements with customers of Seller 5~ther than in the ordinary
course of business, without the express written consent of Buyer;
and
(e) take no action that. or fail to take any action the
failure to take whicb would cause or permit their representations
11
contained herein to ~be untrue ~n any m'ateri"al respect on the
Closing Date.
4.4 Cooperation.
best efforts to:
Seller and Pharmacists shall use their
(a) proceed promptly to make or ~ give the necessary
applications, notices, requests and filings to obtain at the
earliest practicable date~and. in any event, before the Closing
Date, the approvals, authorizations and consents necessary to
consummate the transactions contemplated by this Agreement;
(b) cooperate with and keep Buyer informed in connection
with this Agreement; and
(c) take such actions as Buyer may reasonably request to
consummate the transactions contemplated' by this Agreement and
diligently attempt to satisfy, to the extent within their control,
all conditions precedent and subsequent to this Agreement.
4.5 Notice of any Material Chanae. Seller and Pharmacists
shall, promptly after the fIrst notice of occurrence thereof, but
not later than the Closing Date, disclose the occurrence of any
event or the existence of any facts that:
been
been
(a)
known at
disclosed
had such event occurred or such facts existed or
the date hereof. would have been required to have
to Buyer under the provisions of this Agreement;
(b) would make -any of their representations in this
Agreement untrue in any material respect; or
(e) would otherwise constitute a material adverse change
in the Business, results of operation, working capital, Assets,
liabilities or condition (financial or otherwise) of Seller.
4.6 Access: Confidentiality, Prior to the Closing Date,
Seller and Pharmacists shall afford to Buyer and its officers,
employees, accountants, counsel and other authorized
representatives, full access to and the right to inspect, review or
make copies, as appropriate, of Seller' s Assets. properties ,books,
contracts, commitments and records, view its physical properties,
and communicate with key employees of Seller on a basis reasonably
satisfactory to and with the prior specific approval of Seller.
Seller and Pharmacists will furnish or use their best efforts to
cause its or their representatives to-furnish promptly to Buyer
such additional financial and operating data and other documents
and information relating to_SeIler's business as Buyer or its duly
authorized representatives ~ may from~time u to time reasonably
request. Buyer agrees that any and all information it receives
regarding the assets or operation of Seller prior to the Closing
Date are and will be kept confidential exc~pt as requ~red to be
12
disclosed pursuant to ~_a subpoena or other similar order in
conjunction with a legal proceeding.
4.7 Certain pl:"ohibited Transactions. Prior to the Closing,
Seller will not, and Pharmacists will cause it to not:
(a) purchase, sell or dispose of or grant licenses or
other rights in and to any of the Assets, or make or give any
warranty or guaranty with respect to the products or services of
seller, other than in the ordinary course of business and
consistent with the practices in existence on the date of this
Agreement;
(b) except in the ordinary course of business, without
BUyer's prior written consent, enter into any material long-term
contracts or commitments; waive any material rights or claim",;
modify, amend, cancel or terminate any material agreement, debts or
claims " incur any indebtedness for borrowed money; or make any
loans; assume, guarantee or otherwise become responsible for the
obligations of others;
(c) merge or consolidate with another entity, invest in
or otherwise purchase the business or assets of another business
substantially as an entirety, or sell substantially all of its
assets to another~ person, or enter into any agreements for the
foregoing;
(d) make any contribution to any employee
or increase the compensation of or pay bonuses to
other than in accordance with established
requirements, or enter into employment agreements;
benefit plan
its employees
practices or
(e) declare or pay any dividends or other payments or
distributions of any kind on its capital stock or otherwise change
its capital structure;
(f) purChase or otherwise acquire, or issue or sell any
shares of capital stock;
(g) grant or issue any options, warrants or rights of
any kind to acquire shares of, or securities convertible into, its
capital stock;
lh) mortgage, pledge or subject to any lien, charge or
other encumbrance any of the Assets; or
(i) take any other action that might materially impair
the Assets, or take or fail to take any other action that would
cause or permit the representations or warranties made herein to be
untrue in any material respect at the time of Closing,
13
4.10 Consents to l\..ssignment. Seller and Pharmaci13ts will use
their best efforts to obtain written consents of contract parties
and vendors on or prior to the Closing Date.
ARTICLE V
CONDITIONS PREC~DENT TO OBLIGATIONS
OF SELLER AND PHARMACISTS
The obligations of Seller and Pharmacists to consummate the
transactions contemplated by this Agreement shall be subject to the
satisfaction on or before the Closing Date of each of the following
conditions:
5.1 Compliance. Buyer has. or has caused to be, satisfied
or complied with and performed in all material respects all terms,
covenants and conditions of this Agreement to be complied with or
performed by it on or before the Closing Date:~
5.2 Representations. All of the representations made by
Buyer in this Agreement and in all certificates and other documents
delivered by Buyer to Seller and Pharmacists pursuant hereto or in
connection with the transactions contemplated hereby are true and
correct in all material respects at the Closing Dace, except for
changes contemplated hereby or thereby.
5.3 Absence of Litioation. No order, judgment or decree by
any court or governmental agency or authority shall be in effect
that enjoins, restrains or prohibits the consummation of the
transactions contemplated by this Agreement.
5.4 QQinion of Counsel. Buyer shall deliver to Seller an
opinion of its counsel stating that the transactions contemplated
hereunder are duly authorized and fully enforceable in accordance
with their terms, and that counsel has no knowledge of any breach
of this Agreement by Buyer.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGAT!ONS OF BUYER
Except as may be waived by Buyer. the obligati~ns of Buyer to
consummate the transactions contemJSlated by this Agreement shall be
subject to the satisfaction on or before the Closing Date, of each
of the following conditions:
6.1 Comoliance. Seller and Pharmacists have, or have caused
to be. satisfied or complied with and performed in all material
respects, all terms, covenants and conditions of this Agreement to
be complied with or performed by any of them 01]. or before the
Closing Date. Buyer is not obligated to purchase from seller if
l4
eit.ne:r Se.ller or Ph_armacists ~ do not co'mply' with such ..terms,
conditions and covenants.
6.2 Representations. _ All of the representations made by
Seller and I?harmacistsinthis Agreement are true and correct in
all material respects as -of the date hereof and at the Closing
Date, with the same force and effect as if such representations and
warranties had been made at and as of the Closing Date, except for
changes permitted or contemplated hereby or thereby.
6.3 Coneents to Transaction. Seller. Pharmacists and Buyer
have received all consents required to be obtained to consummate
the transactions contemplated by this Agreement.
6.4 OPinion. Seller shall deliver to Buyer an opinion of
its counsel. in form and substance satisfactory to Buyer, stating
that the transactions contemplated hereunder are duly authorized,
fully enforceable in accordance with their terms, that counsel has
no knowledge of any breach of this Agreement, and opining to such
other matters as Buyer may reasonably request.
6.5 Absence of LitiGation. No order, judgment or decree
shall be in effect that prohibits the consummation of ehe
transactions contemplated by this Agreement or, in the sole
judgment of Buyer, otherwise would materially interfere with the
operation of the assets and business ofEell~r after the Closing
Date.
6.6 Material Adverse Chanqes. No material adverse change in
the Busines_s, properties, Assets, liabilities, results of
operations. or condition, financial or otherwise, of Seller has
occurred.
ARTICLE VII
INDEMNIFICATION AND REMEDIES
7.1 Indemnification by Seller and Pharmacists. Seller and
Pharmacists. jointly. and severally. shall indemnify Buyer for all
losses. liabilities, damages, costa and expenses (inCluding
reasonable attorneys' fees) incurred by Buyer resulting from or
arising out of or in connection with the defenSe by Buyer against
any assertion of liability made against Buyer in connection with
any misrepresentation or breach by Seller or pharmacists under this
Agreement or under ~any documents or other agreement's executed or
delivered hereto, including but not limited to:
(al income, franchise, sales, use and other taxes,
including penalties and interest with respect thereto, of or
relating to operations of Seller through the Closing Dace,
including those resulting from the sale of the Assets pursuant to
this Agreement;
15
"
(bl contractual liabilitiesa~d obiigations of Seller
not assumed by Buyer pursuant to this Agreement; or ~
(c) any liability under the bulk sales law, or sales tax
of any state or municipality arising out of or.in connection with
the sale of the Assets.
7.2 Indemnification bv Buver and Newco. Buyer and Newco
jointly and severally agree to indemnify, defend and hold harmless
Seller and its officers, directors, employees, successors and
assigns from and against any and all costs, liabilities and damages
resulting from; (i) any and all losses, damages or deficiencies
resulting from any and all: (A) misrepresentations or breaches of
warranty hereunder on the part of Buyer; (B) failures by Buyer to
perform or otherwise fulfill any undertaking, covenant or other
agreement or obligation hereunder; (el liabilities of Buyer arising
subsequent to the Closing; (D) all liabilities of Buyer, regardless
of when such liability arose, which are not expressly assumed
hereunder; and (ii) any and all actions, suits, proceedings,
claims, liabilities, demands, assessments, judgments, costs and
expenses, including reasonable attorney's fees, incident to the
foregoing provisiorL
ARTICLE VIII
CLOSING
8.1
March 31,
Clasing.
1998.
The Closing shall take place on or before
ARTICLE IX
. MISCELLANEOUS
9.1 Expenses. Each of the parties hereto shall pay its or
their own expenses incurred in connection with this Agreement and
the transactions contemplated hereby.
9.2 Entire Aoreement. This Agreement, the Exhibits hereto,
and the other documents executed or delivered pursuant hereto,
contain the complete agreement among the parties with respect to
the transactions contemplated hereby -~and supersede all prior
agreements and understandings among the parties with respect to
such transactions.
9 _ 3 Coun~roarts. This Agreement may be executed in any
number of counterparts, each of which when so executed and
delivered shall be deemed an original, and such counterparts
together shall constitute only one original.
9.4 Notices. Any notice; demand, request or other
communication that maY~De or is required to be given by any party
to any other party pursuant to this Agreement shall be in writing
and shall be mailed by first class, registered or certified mail,
16
. .
re~urn re~e~pt requested,.postage prepaid, 'or.tr.~smitted by ha~d
delivery, facsimile or telex, add~essed as followB~
If to Seller or Pharmacist?.' Contjnuing Care Rx, Inc.,
28 South Second Street, Newport, pennsylvania.
If to Buyer: 1217 Slate Hill Road, Camp Hill, PA 17011.
Each party may designate by written notice to all other parties a
new address to which any notice may thereafter be SO given, served
or sent. A notice will be deemed given when so mailed or
transmitted.
9.5 Successors and Assigns. This Agreement and the rights,
interests and obligations hereunder shall be binding upon and shall
inure to the benefit of the parties hereto and their heirs,
personal representatives, successors and assigns.
9.6 Waiver and Other Action. This Agreement may be amended
only by a written instrument executed by the party against which or
whom enforcement of the amendment is sought.
9.7 Severabilitv.If any provision of this Agreement. is
held to be illegal, invalid -or"unenforceable, such provision shall
be severed, and this Agreement shall be construed and enforced as
if such provision were never a part hereof; the remaining
provisions shall remain in full force and effect and shall not be
affected by the illegal, invalid or unenforceable prOVision or by
its severance, and in lieu of such illegal, invalid or
unenforceable provision, there shall.be ad~ed automatically as part
of this Agreement,. a prOVision as similar in ~ its terms to such
illegal, invalid or unenforceable provision as may be pOSSible and
be legal, valid and enforceable.
9.8
agreement
Closing.
Survival. Ea"ch representation, warranty, covenant,
and indemnity made by any party hereto shall survive the
9.9 ~5siqnabilitv. The obligations of Seller and Pharmacists
under this Agreement shall not be assignable by seller and
Pharmacists without the prIor "written consent of Buyer. The
obligations of Buyer under this Agreement shall not be assignable
by Buyer without the "prior written consent of Seller and
Pharmacists.
9.10 Assumotion of Obliaations bv Buyer. NQtwithstanding
anything herein to the contrary, upon due incorporation of Newco,
the parties hereto agree that the rights and obligations of Buyer
hereunder shall be assumed by Newco and shall inure to its benefit
without any further action of any party hereto.
17
9.1.1. 1>,.'0-01 icable Law., Thi.s Agreement aha'll be governed by,
construed and. interpreted in a,cco.rdance~ .with .the laws of.. the
Commonwealth of Pennsylvania without giving effect to conflict of
laws principles thereof.
9.1.2 Section and Other HeadinQ"s. The section and other
headings contained in this Agreement are for convenience of
reference purposes only and shall not affect the interpretation or
meaning of this Agreement.
9.13 bmendments. Neither this Agreement nor any provision
hereof shall be modified, changed, discharged or terminated except
by an instrument in writing signed by the party against whom the
enforcement of any modification, change, disoharge or termination
is sought.
9.14 Succession Clause. The covenants
bind, and the benefits and advantages
respective heirs, executors, administrators,
of the parties hereto.
9.lS Dispute Resolution.
(a) If a dispute arises between Seller and Pharmacists
on the one hand and Buyer and Newco on the other hand regarding (i)
interpretation of this Agreement, (ii) the reasonableness of any
action taken or judgment that any party makes in any instance where
that party has agreed in this Agreement t-o be reasonable in taking
that action or making t.hat judgment., (Hi) the reasonableness of
any cost or expense that one party seeks to charge the other in
accordance with the terms of this Agreement, or (iv) whether any
party has defaulted in respect. of any of the obligations it or he
has undertaken under the terms of this Agreement (collectively, a
"Dispute"), no party hereto may initiate litigation to resolve the
Dispute, but the Pispute shall be determined by arbitration in the
City of Harrisburg, pennsylvania, in accordance with the Commercial
Arbitration Rules of the American Arbitration Association ("AAA")
then in effect, by a sole arbitrator who (A) has the qualifications
and experience set forth in subsection (b) hereof, and (8) is
selected as provided in subsection (cl hereof. ~ The arbitrator
shall base his award on the terms of this Agref;!ment and shall
endeavor to follow the law arid judicial precedents which a United
States District Judgc_ sitting in the Middle. District of
Pennsylvania would apply in the event the Dispute were' litigated in
such court. The arbitrator shall render the award in writing and
shall include the findings of fact: and conclusiOns of law upon
which the award is based. The arbitration shall be governed by the
substantive laws of the Commonwealth of Pennsylvania applicable to
contracts made or to be performed therein, and by the Federal
Arbitration Act, Title 9, U.S. Code, ",i~thout regard to conflicts of
law rules, and judgment upon the award rendered by the arbitrator
may be entered in any court having jurisdiction thereof.
herein contained shall
shall inure to, the
successors and assigns
16
-- " -
lbl Any'person nominated or recommended to serve as an
arbitrator hereunder shall be a neutral and impartial lawyer with
excellent academic and professional credentials, with training and
experience as an arbitrator, who is or has been a partner in or
counsel to a highly respected law firm for at least fifteen years
as a practicing attorney specializing in general corporate and
commercial matters. ~
(c) The arbitrator shall be selected as provided in this
subsection (c) and otherwise in accordance with AAA's Commercial
Arbitration Rules then in effect, except that any party shall be
entitled to strike on a peremptory basis, for any reason or no
reason, any and all of the names of potential arbitrators on the
list submitted to the parties by the MA as being qualified in
accordance with the criteria set forth in subsection (b) hereof_
In the event that the parties cannot agree on a mutually acceptable
arbitrator from one or more lists submitted by the AAA, the
President of the AAA shall designate three person who, in his or
her opinion, meet the criteria set forth in subsection (b) hereof,
which designees may include persons named on any lists submitted by
AAA. Seller and Pharmacists on the one hand, and Buyer and Newco
on the other hand, shall be entitled to strike one of such three
designees on a peremptory basis, indicating their order of
preference with respect to the remaining deSignees, and a selection
of the arbitrators shall be made from among such designees which
have not been so stricken by any party in accordance with their
indicated order of mutual preference.
(d) If multiple Disputes are pending concurrently, the
parties may consolidate those Disputes for purposes of arbitrator.
as described above _ . . ~
(c) The arbitration specified herein is' 'the sole ar.d
exclusive procedure for the resolution of Disputes to which this
section 9.15 is intended to apply. Either party may seek a
preliminary injunction or other preliminary judicial relief,
however, if in that party's judgment, such action is necessary for
the sole purpose of avoiding irreparable harm. Despite such
action, the parties shall continue to participate in goad faith in
the arbitration procedure set forth above.
(fl The provisions of this section 9.15 shall survive
the termination of this Agreement.
19
IN WITNESS WrlBREOF, the parties her>eto ~~ have executed this
Agreement as of the day and year first above written.
?--L~ .
Secretary - ...
(ru ~ ~)
r:\HOHZ\JDK\P~~CY
1.12~/u
. ::~I7f};11{;gELLER
President
PRI. ButER AND NEWCO
By; ~L.. ~-
t.-Presi nt '
@.7t #(4~
Robert Wileon, PHARMACIST
@ft14t~ $'Ji:
W 1 iam Wileon. PHARMACIST
~ ~
~~~~.~
Thomas Trite, PHARMACIST
20
CONTINUING CARE Rx,INC.
STOCKHOLDERS' AGREEMENT
THIS STOCKHOLDERS' AGREEMENT, made the 25th day of
February, 199B, by and among PHI, a Pennsylvania nonprofit
corporation ("PHI"), ROBERT WILSON, WILLIAM WILSON AND THOMAS
TRITE, individuals ("pharmacists"), collectively referred to
hereinafter as "stockholders."
WIT N E SSE T H
WHEREAS, PHI is the purchaser of the business, name and other
assets of Continuing Care Rx, Inc., a Pennsylvania business
corporation, and intends to operate a pharmacy business through a
new corporation to be formed l;Jy PHI under the name 'Continuing Care
Rx, Inc." ("Newco"); and
ontEREAS, PH! will subscribe to seven hundred and fifty (750)
shares of Class A $1 par value stock of Newco (' Stock') and
pharmacists will subscribe to two hundred and fifty (250) shares of
Class A $1 par value stocK of Newco; and
WHEREAS, Stockholders wish to provide a market ~ for their
StocK; and
. onlERBAS, PHI and pharmacists desire to insure the continuity
and harmonious management of Newco by imposing certain rcetrictions
and obligations on each Stockholder with respect to the ownership,
transfer or other disposition of their Stock.
NOW, THEREFORE, in consideration of the promises and mutual
covenants contained herein, and in conoideration of the
declarations of Stockholders to be fully bound hereby, it is agreed
by and among Stockholders as follows:
1. Restricti<;>n on Transfer. The parties do not want the
Stock of NewcQ to be made generally available to persons other than
the present Stockholders and those parties to whom PHI may sell two
hundred and forty (240) shares of its Stock. Therefore, no
Stockholder shall sell. assign, transfer, encumber or otherwise
dispose of (hereinafter referred to collectively.as "Transfer") any
of its or his stock which it or he may own or may hereafter
acquire, unless the Stockholder desiring to make the Transfer
(hereinafter called "Transferor") shall have first offered PHI and
other stockholder-s-l;he right to purchase as Bet forth in Section :2
and elsewhere herein; except that no consent of any Stockholder
-'
shall be required for PHI to transfer up to two hundred and forty
(240) shares of its Stock to other parties who agree to be bound by
the terms of this Agreement. However, if PHI deeires to dispose of
more or all of its shares in Newco, then and in euch event, PH!
shall be bound by the same terms and conditions relating to other
stockholders. This Agreement will supersede any restrictions on
Transfers of Stock set forth in the Bylaws of Newco where terms may
differ from those contained herein. No attempted encumbrance or
transfer of any shares of Newco's Stock not in accordance with the
ter~s of this Agreement shall be reflected on Newco'e books.
2. Transfers Durincr Lifetime, If a Transferor wishes to
Transfer any or all of its or his Stock during its existence or his
lifetime, it or he shall notify Newco and all of the Remaining
Stockholders by a written statement of intention to transfer and
the name and address of any prospective purchaser. assignee,
transferee, lienor or recipient of any other disposition, the
number of shares of Stock involved in the proposed Transfer, and
the price and terms of such proposed Transfer.
Upon receipt of this notification, New-co or the Remaining
stockholders, whichever the case may be, shall notify the
Transferor of its or their intention to purchase some or all of the
offered Stock within thirty (30) days of receiving such notice on
the same terms and conditions as set forth in the offet" being
reviewed.
If the notification involves all of the Transferor's Stock,
then Newco shall have first choice to purchase all of such stock.
Otherwise, the Remaining Stockholders shall have the right to
purchase such Stock as is involved in proportion to their
respective ownership of stock (excluding the offered Stock), or in
such other proportion as they shall agree upon.
3. peath. Dissolution. Disability, BankruDtcv. In the event
a Stockholder dies, dissolves, becomeaby reason of total
disability unable to carry out his normal duties in the business of
Newco, is adjudicated a bankrupt, then upon the first to occur of
such occurrences, the Stockholder shall be deemed to have requested
Newco or the Remaining Stockholders to purchase its or his Stock,
and Newco and the Remaining Stockholders shall be deemed to have
given notice of their intent to purchase the St'Qck, as if the
notice required in section " above had been given. For these
purposes, "total disability" shall mean the inability to perform
adequately the professional and other assigned duties as defined in
the Management Agreement executed by each individual Stockholder
and Newco.
4. Sale Price. The sale price for Stock, where no bona fide
third party offer to purchase exists, shall be the fair market
value of- the shares of offered Stock as determined by an
independent certified public accountant ("CPA") agreed to by all
parties. This valuation shall be based upon transfer of a similar
percentage interest in publicly traded pharmacy companies. Newco
will provide such data as the CPA deems necessary or useful to make
such determination of the fair market value of the offered StocK.
The fees and reimbursed expenses charged by the CPA in the
valuation under this section shall be borne solely by Newca. The
sale price for the Stock shall be paid in cash or by check at the
Closing.
S. Failure to ?urchase. If a right to purchase provided in
sections 2 and 3 hereof is not exercised by Newco or the Remaining
StOckholders by giving the required notice, the Transferor may make
a bona fide Transfer of any such unaccepted Stock to the
prospective purchaser, assignee, transferee, lienor or recipient of
any other disposition named in the Consent Requeat, but only in
strict accordance with the terms therein stated. If the Transferor
shall fail to make such Transfer to such prospective purchaser,
assignee, transferee, lienor or recipient of any other disposition
within thirty (30) days following the expiration of the time
provided for the acceptance by the Remaining Stockholders, such
Stock shall again become subject to the terms and restrictions of
this Agreement.
6. ClosinG, The Closing shall take place at the office of
Newco or at such other place as shall be agreed upon, within ninety
(901 days of the date Qf--notice of intent to Transfer.
7. Delivery of Stock. Upon the payment to the Transferor of
the purchase price, the Transferor shall sign and deliver the Stock
of the Stockholder to the purchasing Stockholders. Each
Stockholder appoints Newco, through its Secretary or such other
officer as its Board of Directors may designate, as his or its
agent and attorney-in-fact to execu~e and deliver all documents
needed to convey his or its stock if such selling Stockholder is
not present at the Closing. This power of attorney is coupled with
an interest and doee not terminate on Stockholder's disability or
death. and continues for so long as this Agreement is in effect.
6. Restrictive Endorsement. Each certificate representing
Stock now or hereafter held by Stockholders shall bear a
conspicuous le<]end in substantially the following form: "The
transfer of the Stock represented by the within certificate il'l
restricted under the terms of an Agreement dated February 25. 1996.
a copy of which is on file at the office of Newco."
9. Terminatina the Aqreement. This Agreement shall terminate
upon the Occurrence ofan~ of the follOWing events: (a) cessation
of Newco's business; (b) dissolution of Newco; (c) whenever there
is only one surviving Stockholder bound by the terms hereof; (dJ
voluntary agreement of all parties who are then bound by the terms
hereof; or (e) upon election of Stockholders, if another
Stockholder violates any provision of this Agreement. Upon the
termination of this Agreement, each StOckholder shall surrender its
3
"
or his certificates to Newco and Newco shall issue to it or him in
lieu thereof new certificates for an equal number of shares of
Stock without the endorsement set forth in section 8 hereof.
10. Continuation of Restrictions. This Agreement shall
continue to apply to shares of Stock trane~erred by any
Stockholder, and any other Stockholder may require a9 a condition
of~ such ~ a Transfer that the transferee execute an agreement
substantially identical in form to this Agreement (which may be
accomplished by a certificate of acceptance and adoption of this
~greement), to which all of the transferee's shares of Stock will
be subject, and which agreement will be treated as a part of this
Agreement.
11. Books and Records. BooKa of account shall be maintained
by Newco and proper entries made therein of all sales, purchases,
receipts, payments, transactions and property of Newco, and the
books and records of Newco shall be retained at the principal place
of business of Newco. Each Stockholder shall have free access at
all reasonable times to all books and records maintained relative
to NewCo's business.
12. Accountinq, The fiscal year of Newco shall be from
January 1 to December 31 each year. On the 31st day of December,
commencing in the year in which this Agreement is executed, and on
the ~lst day of December ~ in each succeeding year, a general
accounting shall be made and taken by Stockholders of all revenues,
purchases, receipts, payments and transactions of Newco during the
preceding fiscal year, and of all the capital property and current
liabilities of Newco.
13. Profits and Losses. Distribution of profits shall be at
least quarterly made at ~ such time and in such amounts as are
determined by the Board of Directors of Newco. Each Stockholder
shall be entitled to a division of profits, if any. in the same
proportion aa the number of sharea of the class owned by that
Stockholder related to the total number of shares issued by Newco.
14. Invalid Provisions, The invalidity or unenforceability
of any particular provision of this Agreement shall not affect the
other provisions hereof, and this Agreement shall b.e construed in
all respects ao if sucn_ invalid or unenforceable provisions were
omitted.
15. Modification, No
Agreement shall be valid unless
the parties hereto.
change or modification of this
itia in writing and signed by all
16. Notices. Any and all notices, designations, consents,
offers, acceptances or any other communication provided for herein
shall be given in writing by registered or certified mail, return
"
receipt requested, which shall be addressed to
Stockholders at their place of business or residence,
other address as may be designated by it or him. Each
shall be deemed given at the time it is mailed.
17. Eenefi t. This Agreement shall be binding upon the
parties, their heirs. legal representatives, successors and
assigns. Each individual Stockholder in furtherance hereof agrees
to execute a Will directing his executor to perform this Agreement
and to execute all documents necessary to effectuate the pUrposes
of this Agreement. but the failure to execute such Will shall not
affect the rights of any Stockholder or the obligations of any
estate, as provided in this Agreement.
the other
or to such
such notice
18. Governinq La.... This Agreement shall be governed by,
construed and interpreted in accordance with the laws of the
Commonwealth of Pennsylvania ...ithout giving effect to conflict of
laws principles thereof.
19. Specific Performance. The parties agree that the Stock
is unique, that failure to perform the obligations under this
Agreement ...ill result in irreparable damag~ to the other parties
and that specific performance of these obligations may be obtained
upon terms and conditions contained herein by a suit in equity.
20. Waiver, The failure of any party to insist on compliance
or enforcement of any provision of this Agreement shall not affect
its validity or enforceability or constitute a waiver of future
enforcement of that proviSion or of any other provision of this
Agreement. -
21. Copies. More than one (1) copy of this Agreement may be
executed, and all parties agree and acknowledge that each executed
copy shall be a duplicate original.
5
.
IN WITNESS WHEREOF. t.he part.ies have agreed to and have
execut.ed t.his Agreement as of t.he day and year first. above writ.t.en.
l'Hl:
,~;:- ;2~
(
By;
(j:47@arf?~ ,
C~~ ~~rJ'
trJt IJw-f
Robert. Wilson, PHARMACIST
/lhbl//fI;Pm
William wilson, PHARMACIST
G~~
Thomas Trite. PHARMACIST
Agreed and aCknowledged by the following persons who are not
themselves parties to this Agreement, but who are the corporation
whose shares are the subject of this Agreement and the spouses of
part.ies t.o this Agreement. who themselves have read this Agreement
and who agree th~t. t.hey will be bound by all of its provisions,
including (but not limited to) restrictions on Transfer and
establishment of value of the stock for all purposes.
Continuing care~ Ine. (Ne.....cO)
By;~L ~
i1/;/~ /It%:
F;\~~\JC~\STCKAGT1
:u~s/liI8
---OcF2ij-9~ '1 liD 8:TTAr-rRUllTITRl AN HOM-[S-
FAX NO. 7177637617
P. 2
"
"'-', -
MANAGEMENT AGREEMENT
BETWEEN
CONTINUING CARE RX, INC.
AND
ROBERT WILSON, WILLIAM WILSON AND THOMAS TRITE
THIS AGREEMENT, made as of the 25th day of February, 1998,
among and between CONTINUING CARE Rx, INC., a Pennsylvania business
corporation (" Pharmacy"), and ROBERT WILSON, WILLIAM WILSON and
THOMAS TRITE, individuals (collectively referred to as "Management
Consultants") .
WIT N E SSE T H
~ HEREAS ,
institutional
products and
services; and
Pharmacy has been formed :0 do retail and
business in the field of pharmaceuticals and related
services and desires to contract for management.
'~HEREAS, Management Consultants are iL,.~ependentcontractors
and l~censed pharmacists in the Commonwealth of Pennsylvania who
have expertise in managing and operating a retail and institutional
pharmacy business (the "Business").
NOW, THEREFORE, in reliance upon the representations and
"-" warranties made h.erein and for good and valuable consideration,
Pharmacy and Management Consultants, intending to be legally bound
hereby, covenant and agree as follows:
1. Nature of ManaqemenC'Consultant posi~ion.
(a)
Consultants'
expertise.
Pharmacy desires, upon .the purchase of Management
Business, to make use of Management Consultants'
(b) Pharmacy shall retain Management Consultants, and
Management Consultants shall accept such retainage from Pharmacy
for a period of five (5) years (the "Consulting Term") to undertake
such duties and to perforrrC-such services as reasol'l.;e.bly may be
assigned to them by the Board of Directors of Pharmacy or by its
officers, as further defined in section 2 hereof. ~
(c) Management Consultants shall be independent contractors
and not employees of Pharmacy and, subject only to the terms of
section 2 hereof, shall determine their own method of operation-in
accomplishing such tasks as may be _assigned. Management
Consultants shall not be entitled to receive any compensation, I
commissions or benefits from Newco other t_han those expressly ..
provided in this Agreement.
--....
uvr-LtI-tltI'l'tlU B: \3 AM-PRESgnfRfANHOMES
FAX NQ 7]77637617
P. 3
,/ 'J'
(d) Pharmacy agrees chat Managemenc Consultancs have the
right to act as consultants for, or be employed in any other
~ capacity by, any other parties concerning any subject matter.
2. Seopeo! Consultinq Duties.
(aJ During the Consulting Term, Management Consultants shall
be available to assist Pharmacy in the ongoing management of the~
retail and institutional pharmacy Business to be carried on by
Pharmacy, including the total management of the Business.
Specifically, Management Consultants shall select, hire and train
the staff and employees of Pharmacy, supervise, evaluate and
determine the compensation of such employees, develop operational
policies, staffing levels and budgets, and perform all other
functions re'1uiredtoUmanage and operate the Business.
(b) Mi''..1agement Consultants agree to provide t'le consulting
services as defined herein and to use their best efforts and
abilities in performing the _~ervices, and to give Pharmacy the full
benefit of Management Consultants' knowledge, experience, judgment
and expertise in rendering pharmaceutical services to the retail
and instit,'.ltional public.
(c) It is agreed between the parties that Management
Consultants are independent contractors. They shall not hold
themselves out as employees, partners or agents of pharmacy for any
purpose whatsoever. Management Consultants control the manner and
means of performing the services and are responsible for the full,
-adequate and timely completion of the services.
I......
(d) During the course of this Agreement, Manage~ent
Consultants agree to maintain as confidential any cop~es,
abstracts, documents, summaries of any papers or any other material
of a confidential nature which may come into their possession in
the course of their consulting relationship with Pharmacy.
3. Fees.
(a) Pharmacy shall pay to Management Consultants a total
annual payment of Two Hundred Ninety Thousand ($290,000.00) Dollars
for each year of the Consultant Term distributed in. twelve (12)
equal monthly installments payableon the first day of each and
every month. The hours of sentYce -of Management Consl.lltants on any
given day shall be those which meet the reasonable needs of they
Business and sh.all not be established by pharmacy. periOdiCallY,)
but at least sixty (60) days prior to the end of each year, the
parties shall meet and review the terms and conditions for the next
year's compensation package._
(b)
employees,
disability
None of the
including but
insurance,
benefits provided by Pharmacy to its
not limited to medical, life, accident or
-pensions, unemployment or workers'
"-"
2
OCT~28-99 TliU 8:l3 AM PRESBYTERIAN liOMES
FAX NO. 7177637617
. .
,
"
,
. ,
. .
P. 4
compensation or profit sharing plans, shall be available to
Management Consultants. Management consultants, however, are not
~ precluded from ~urchasing medical, life, accident or_ disability
insurance at their own expense if it can be purchased as part OI a
group plan. No withholding of federal or state income taxes,
social security, or related contributions shall be made from
payments made to Management ~onsultants. Management Consultants
are solely responsible Ior payment of the taxes and contributions
due to governmental bodies as a result of payments received by them
under this Agreement '__ ~ -
(c) Pharmacy shall pay Management Consultants for any
reasonable travel, marketing and other expenses relating to the
Business. Pharmacy will reimburse Management Consultants ,for
expenses for on~ (J) national educational meeting per year.
4. Cov~enant ~6t to Compete. (a) Management ConsuJ tants,
during the consult~ng Term and for an additional period of 'ix ;(6)
months thereaft.er (the "Noncompetit.ion Term") ,~shall not:
(1) Canvass, solicit, or actively pursue business
or em~)oyrnent for provision of pharmaceutical ,r durable
medical supply services from any of NEWCO's cl.i.r-mts;
(2) Disclose any proprietary or confidential
information of Pharmacy or its Parent or t.he Business
relating t.o (i) t.he customers, clients, employees and
accounts of Pharmacy or its Parent or the Business,
including, but not limited to, identity of Pharmacy's or
its Parent.'s customers if such identity is proprietary or
confidential, or (ii) Pharmacy's or Parent's business
methods, systems, plans, policies and personnel.
......
(b) It is understood between the parties that individuals,
and perhaps facilities, have certain freedom of choice of provider
of pharmacy and medical supply services. As such, no violation of
those, provisions is intended and the parties hereto agree to
cooperat.e t.o avoid violation. -
(c) If Pharmacy claims that Management Consultants, or any
one or more of them, have mat.erially violated this covenant not to
compet.e, then it shall give Management Consultants thirty (30) days
written notice specifying with reasonable detail the claim
violation. If Management Consultants dispuce the Claimed
violation, or its materiality, Management Consultants shall advise
Pharmacy in writing within ten (10) days aft.er the thirty-day
notice period, and the dispute promptly shall be referred to
resolution by impartial arbit.ration conducted under t.he auspices
and pursuant to the rules of the American Arbitration Association_
Costs and attorneys fees of the prevailing party shall be taxed t.o
t.he other party_ Pending such resolution, Pharmacy shall not be
required to continue to make the annual payments set fort~ in
.........
3
v
I.-
"-
UCT-:1B-99 THU 8: 14 AM PRESBYTERiAN HOMES
FAX NO. 7177637617
P. 5
'-
..
section 3 hereof, but if Management Consultants prevail at
arbitration, Pharmacy then shall promptly make Management
Consultants whole, with six (6%) percent simple interest, for any
payments of feeS withheld. .
(d) In addition to any other remedies that Pharmacy and
Parent may have under this agreement for alleged violations of this
section, Pharmacy and Parent may apply to any court of competent
jurisdiction for eQuitable relief, including specific performance
and injunctions restr~ining Management consultants from committing
or continuing any such violation of this Agreement.
6. Validitv. If for any reason any provision of this
Agreement shall be determined to be invalid or unenforceable, the
validity and effect 0f the~-other provisions shall not be affected.
Without limiting the gen~rality of the foregoing, the invalidity .jf
Management Consultants' covenant not to compete, set forth .en
section 4 above, shall nJt affect Pharmacy's obligation to make lae
payments to Management Consultants set forth in section 3 above in
respect to any year if Management Consultants shall in fact
strictly observe such covenant during such year notwithstanding its
invalidity. ~
7. Waiver of Brea,-,h. The waiver by Pharmacy or by Managen".nt
Consultants of a preach of any provision of this Agreement by the
other party shall not operate, or be construed, as a waiver of any
other breach of such other party.
8 . Termination Circumstances. This Agreement shall terminate
immediately upon Transfer by the Management Consultants, without
substitution of alike number of Management Consultants, of their
shares of Class A $l par value stock of Pharmacy during the
Consulting Term. In such event,. Pharmacy's then remaining
obligation shall cease. In the event of the death of one or more
of the Management. Consultants, the surviving Management Consultants
and Pharmacy shall negotiate a new Management-Agreement to provide
for cnntinuing management serVices for Pharmacy.
9. Assionment. This Agreement shall inure to the benefit of,
and be binding upon, Pharmacy, its successors and 'assigns. This
Agreement shall be binding on Management Consultants, 'their heirs,
executors or administrators, ana legal representatives, but shall
not be assignable by Management Consultants and the obligatiops of
Management Consultants may not be delegated.
lO. Entire Aoreement. This Agreement represents the entire
understanding of the parties on its subject matter. This Agreement
may not be amended except by a writing signed by the party against
whom enforcement of any amendment is sought.
4
OCT=LB-99 THU 8:\4 AM PRESBYTERIAN HOMES
FAX NQ 7177637617
P. 6
"
. .
. .
l .'. ,
:I, I '.---
'-r
ll. Applicable Law. The parties agree that this Agreement
shall be construed and enforced pursuant to the laws of the
Commonwealth of Pennsylvania.
IN WITNESS WHEREOF, the parties have set their hands as of the
day and year first above written.
"-~-
CONTINUING CARE Rx, INC.
BY:/2-~L ~ ~
~; fi;wJ
Robert Wilson
/l!JjjUft4n;JZL
William wilson
............
b ~;;ez~
Thomas te
~()~
c' a.A" Jk:<d) 1,'
v
F:\~OHE\JDK\MGTAGTPH
2/25/98
\.;..--
. '
Y f' .,
. ,
VERIFICATION
I, William Wilson, hereby aver and state that I have read the foregoing document
which has been drafted by my counsel. The factual statements contained therein are true and
correct to the best of my knowledge, information and belief although the language is that of rny
counsel and, to the extent that the content of the foregoing document is that of counsel, I have
relied upon counsel in making this verification.
This statement is made subject to the penalties of 18 Pa. C.S.A. S 4904 relating to
unsworn falsification to authorities, which provides that in make knowingly false statements, I
may be subject to criminal penalties.
/j/ " '/{);.,.
,/ )',;1& !/Jl' 4,--
William Wilson
HBG\40497.1
.
7 Ii. ~ .
" .1 .,.
VERIFICATION
1, Robert Wilson, hereby aver and state that I have read the foregoing document which
has been drafted by my counsel. The factual statements contained therein are true and correct to
the best of my knowledge, information and beliefalthough the language is that of my counsel
and, to the extent that the content of the foregoing document is that of counsel, I have relied
upon counsel in making this verification.
This statement is made subject to the penalties of 18 Pa. C.S.A. ~ 4904 relating to
unsworn falsification to authorities, which provides that if I make knowingly false staternents, I
may be subject to criminal penalties.
IUd wJ2z
Robert Wilson
HBQ\40497.1
, .
,
,
~ 1I t .,
CERTIFICATE OF SERVICE
On this011ay of January, 2000, I, Sherry L. Weigel, a secretary in the law offices
, </!. fI
of Duane, Morris & Heckscher LLP, hereby certify that I have served this day true
and correct copies of the foregoing COMPLAINT in the above-captioned matter, by
depositing same in the United States First Class Mail, postage prepaid, in Harrisburg,
Pennsylvania, to those persons and addresses indicated below:
David B. Disney, Esquire
McNees, Wallace & Nurick
100 Pine Street
P.O. Box 1166
Harrisburg, PA 17108-1166
- - HBG\38301.2
. ..
. ,
f 'J. ..
~ .... .,.
CERTIFICATE OF SERVICE
On this ~ of February, 2009, I, Sherry L. Weigel, a secretary in the law offices
of Duane, Morris & Heckscher LLP, he-rebycertify that I have served this day true
and correct copies of the foregoing AMENDED COMPLAINT in the above-captioned
matter, by depositing same in the United States First Class Mail, postage prepaid, in
Harrisburg, Pennsylvania, to those persons and addresses indicated below:
Mr. Michael R. Kelley, Esquire
McNees, Wallace & Nurick
100 Pine Street
P.O. Box 1166
Harrisburg, PA 17108-1166
HBG\44S31.1
>-
cc
~i;
t~~
~- -~-
...:...,.,.
1.-.1 '_-'~
L.lli
,
_::-
)
)
',-
,~
[t-
U
c<>
...:l
en
~
~:s;;
C,Z
',- :<C
C)~
--:--;(1)
~:-,:z
;.r.Z
'_Utu
I-~CL
=s
o
.~
~
0"
N
C!:O
W
'-'-
,......
5
to..... ..,.
LAW Ol""F"I=S or
or" ~ 1!
~~A~;~H ~~~~l~R~E~:~K:o:~~o~1~
HARRISBURG. PA 17108'1003 ----..--
~-
'.
.
PRAECIPE FOR LISTING CASE FOR ARGUMENT
(Must be typewritten and sul:mitted in dlJ:t>1 icate)
TO THE PROTHONOTARY OF CUMBERLAND COUNTY:
Please list the within matter for the next Argunent Court.
---------------------------------------------------------------------------------------
CAPTION OF CASE
(entire caption must be stated in full)
ROBERT & WILLIAM WILSON,
( Plaintiff)
vs.
CONTINUING CARE RX, INC.,and
STEPHEN PROCTOR,
(Defendant)
.:l.ooo- //9
C?/c..> ~L
No. ~; 1/9 Civil
2000
w:
1. State matter to be argued (Le.. plaintiff's rrotion for ne>; trial. defendant's
demurrer to ccmplaint, etc.):
Defendants' Preliminary Objections
2. Identify ~=unsel who will argue case:
Allen c~ Warshaw, Esq., Duane, Morris & Heckscher LLP
305~orth Front St., 5th Floor, P.O. Box 1003
Harrisburg, PA 17108-1003
(717-237-5500)
Michael R. Kelley, Esquire, McNees, Wallace & Nurick
100 Pine St" P.O. Box 1166
Harrisburg, PA 17108-1165
(717-237-5322)
3. I will notify all parties in writing within t-..o days that this case has
been listed for argunent.
(a) for plaintiff:
Address:
(b) for defendant:
Address:
4. J\rgUTent COUrt Date:
April 19, 2000
McNEES, WALLACE & NURICK
Dated: February 25, 2000
" \Mj.J R, ~,
A~~Jrney for Defendants
.,.... t" >-
cc 0J Z
c en ::;)<
~ '::,~ R- ;, ~...... o' .
"'''''''' "..... ;~ m
I.~ C::_ "'"
0"" 2;&:;
'" :'::J:z
r:z:
" ~ = ulW
J...! ron...
'-'-- :2
,~ a :::;J
-' 0 <:..)
v
\
ROBERT WILSON
and
WILLIAM WILSON
v.
.
.
IN THE COURT OF COMMON PLEAS
CUMBERLAND COUNTY, PENNS\'L V ANIA
CIVIL ACTION NO. 2000-119
Plaintiffs,
CONTINUING CARE RX, INC.
and
STEPHEN PROCTOR
CIVIL TERM
Defendants.
WITHDRAWAL OF APPEARANCE
Please withdrawal our appearance as counsel for Defendant Stephen
Proctor in this case.
Date:~\\3 \ o~
McNEES, WALLACE & NURICK
{(.
Michael Kelley, Esquire
Attorney !.D. 58854
Charles T. Young, Esquire
Attorney 1.0. 80680
100 Pine Street
P.O. Box 1166
Harrisburg, PA 17108-1166
(717) 232-8000
ENTRY OF APPEARANCE
Please enter our appearance as counsel for Defendant Stephen Proctor in
.....
"
.
.
this case.
McAleese, McGoldrick & Susanin, P,C.
Date: z...{VO( ()D
'~t~
Daniel J. Brenn n, Esquire
Attorney I.D. 68923
John A. Adams, Esquire
Attorney J.D. 79330
Suite 240 - Executive Terrace
455 South Gulph Road
King of Prussia, PA 19406
(610) 337-4510
2
>- <\1 >-
0:
-:---:... ..::;' t:;:
~ .c...
wQ ::..J
C)(:-~, 0"::;
H=:f: .:l:: 02
CL <
()i--:.:: a;::;
an z:>-
- -::-i::: ..:1' .s~
UJQ
EEhl} c:: n::z
~ :';E Ww
- fQr-~
tL. a ~
., 0 a 0
Joo
r
.
.
<
,
SHERIFF'S RETURN - OUT OF COUNTY
CASE NO, 2000-00119 P
COMMONWEALTH OF PENNSYLVANIA:
COUNTY OF CUMBERLAND
WILSON ROBERT ET AL
VS
CONTINUING CARE RX INC ET AL
R. Thomas Kline
, Sheriff or Deputy Sheriff who being
duly sworn according to law,s~ays, that he made a diligent search and
and inquiry for the within named DEFENDANT
, to wit:
PROCTOR STEPHEN
but was unable to locate Him
in his bailiwick. He therefore
deputized the sheriff of YORK
County, Pennsylvania, to
serve the within COMPLAINT & NOTICE
1st, 2000, thlsof[lcewas in receipt of the
On March
attached return from YORK
Sheriff's Costs:
Docketing
OUr: of County
Surcharge
Dep. York Co
18.00
9.00
10.00
82.40
.00
119.40
62/29/2000
DUANE, "MORRIS
"O~~
R. ~-"I'hOmaS Kli~
Sheriff of Cumberland County
& HECKSCHER
Sworn and subscribed to hefore me
day of 7~~
A.D.
this .<L....T
;l /J1.JV
C)'I'<
(). IJ.", p P,.. ~
prothonota y
. -
SHERIFF'S RETURN - REGU~R
CASE NO: 2000-00119 P
COMMONWEALTH OF PENNSYLVANIA:
COUNTY OF CUMBERLAND
WILSON ROBERT ET AL
VS
CONTINUING CARE RX INC ET AL
CPL. MICHAEL BARRICK
Sheriff or Deputy Sheriff of
Cumberland County, Pensylvania, who being duly sworn according to law,
says, the within COMPLAINT & NOTICE
was served upon
CONTINUING CARE RX INC
the
DEFENDANT
, at 0015:32 HOURS, on the 3rd day of February, 2000
at 1217 SLATE HILL ROAD
CAMP HILL, PA 17011
by handing to
~COTT HABECKER (CONTROLLER)
a~true and attested copy of COMPLAINT & NOTICE
together with
and at the same time directing His attention to the contents thereof.
Sheriff's Costs:
Docketing
S_ervice
Affidavit
Surcharge
So Answers:
6.00
8. 68.~
.00
10.00
.00
2-L68
~~~t:~~
R: Thomas Kline
02/29/2000
DUANE, MORRIS & HECKSCHER
SWDrn and Subscribed to before
By:
~~~/
me this d./~
day of
~~ .1..t,-,n~ A.D.
C) _h.f2 /1.u..,/;.\ /f~~
I Prothonotary"
""'"~' -j
.
,
":..... '<:
,
IN THE COURT OF COMMON PLEAS
CUMBERLAND COUNTY, PENNSYLVANIA
ROBERT WILSON
R.D. 1, Box 85
Newport, PA 17074
and
WILLIAM WILSON
4997 Westchester Drive
Harrisburg, PA 17112
CIVIL ACTION NO. 2000-119
Plaintiffs,
v.
CONTINUING CARE RX, INC.
1217 Slate Hill Road
Camp Hill, PA 17011
CIVIL TERM
Defendants.
8 C> 0
s: 0 "Tl
'"?
;:f;CJ i:;; :-=1
lrn = i j'--:;;Q
:z: :n
:ze- N g'n
~"!?: -.J C,?
~C5 0
-0 ::::.to
~o ::::~ o::D
:>;0 ~ z~
~ 0"
=< ~
0 ~
and
STEPHEN PROCTOR
7 AIydar Boulevard
Dillsburg, PA
STIPULATION AND ORDER
In their Complaint, Plaintiffs asserted a cause of action against Defendant
Stephen Proctor (Count III). Plaintiffs have since filed an Amended Complaint which
contains no causes of action against Defendant Stephen Proctor. Accordingly, the
parties agree that Stephen Proctor shall be removed from the caption of this matter.
Further, the parties agree that all references in the Amended Complaint to Stephen
'-..--.~~ .1._=- ~
Proctor as a Defendant shall be stricken.
~c~~.
Allen C. Warshaw, Esquire (1.0. 17145)
Duane, Morris & Heckscher LLP
305 N. Front Street, 5th Floor
P.O. Box 1003
Harrisburg, PA 17108-1003
(717) 237-5500
Attorney for Plaintiffs
Date:
6/U/oD
IT IS SO ORDERED:
rJj~
J.
.....
ffll;u1t~
Damel J. Brenn n, Esquire (1.0. 68923)
McAleese, McGoldrick & Susanin, P.C.
Suite 240 - Executive Terrace
455 S. Gulph Road
King of Prussia, PA 19406
(610) 337-4510
Attorney for Stephen Proctor
Date:
3 (11{01J
1'\..f 2fC- t 2. L), 2-660
Date
~.')..'b p
~
2
~ ct> ~~
M
1-'- N
~Q
~- :c ~~
.2 a..
9" ;;;~
_0 .,..,
bO: N ::.
ti.lo.... ~~
:::::!t<.J oc
~-_. "'"
..L ::L
>-
U- C>
Q 0 --
"
- ----~ --~--~'---------'=-
---- ----
~
<' ".~
LAW OF'FICC~-;;=-~--=---:--~-~- ~. ~---:-,-.-.:-_.-
DUANE, MORRiS Iii HECKSCHER LLP
305 NORTH FRONT STREET. P.O. BOX 1003
HARRISBURG. PA 17108-1003
.,-
MAR 2 4 20~
"
.
COUNTY OF YORK
OFFICE OF THE SHERIFF
SERVICE CALL
(717) 771-9601
28 EAST MARKET ST., YORK, PA 17401
SHERIFF SERVICE INSTRUCTIONS
PROCESS RECEIPT, and AFFIDAVIT OF RETURN PLEASE TYPE ONLY LINES 1 TO 12
DO NOT DETACH ANY COPIES.
1. PLAINTIFF/Sf 2. COURT NUMBER 2uOO1l9 Civil
Robert Wilson, et. al. 4. TYPE OF WRIT OR COMPLAINT
3. DEFENDANT/S!
Continuing Care RX, Inc. , et. a.l. Notice & Complaint
SERVE t 5. NAME OF INDIVIDUAL, COMPANY, CORPORATION, ETC. TO SERVE OR DESCRIPTION OF PROPERTY TO BE LEVIED, ATTACHED, OR SOLD.
. Stephen Proctor
6. ADDRESS (STREET OR AFD WITH BOX NUMBER, APT NO., Girt, aORD, T\lVP., STATE AND ZIP CODE
AT \TIn7 Alydar Boulevard, Dillsburg, PA 17019 C
7.INDlCATESE~ICE: o PERSONAL o PERSON IN CHARGE }ODEPUTIZE Cu@~~. ~d <fr?OSTED';...., o OTHER
NOW 19 _I, SHERIFF OFX~R~cOUNT herittof ,
vork COUNTY to execut c ~ding:c'
to law. This deputation being made at the request and risk of the plaintiff. ~.; f';'~ , -
r-, '
8. SPECIAL INSTRUCTIONS OR OTHER INFORMATION THAT WILL ASSIST IN EXPEDITING SERVICE: P -
CumberJ..end~:;
OUT OF COUNTY ::3 :0;
CUMBERLAND
(j:' ~
!---'"
ADVANCE FEE PAID BY CUMBERLAND CTY
,~
CJ
-n
NOTE ONLY APPLICABLE ON WRIT OF EXECUTION: N.B. WAIVER OF WATCHMAN M Any deputy sheriff levying upon or attaching any property under within writ may leave
same without a watchman, in custody of whomever is found in possession, after notifying person of levy or attachment, without liability on the part ot such deputy or the sheriff to any
plaintiff herein for any loss, destruction, or removal of any property before sheriff's sale thereof.
9. lYPE N.AME AND ADDRESS of ATTORNEY/ORIGINATOR and SIGNATURE
Allen C. Warshaw, Esq.
305 N. Front st., 5th FIr., PO Box 1003, Harrisburg, PA 17108 (7l7) 237-5500
12. SEND NOTICE OF SERVICE COPY TO NAME AND ADDRESS BELOW: (This area must be completed if notice is to be mailed).
10. TELEPHONE NUMBER
11. DATE FILED
1/28/00
Cumberland County Sheriff
SPACE BELOW FOR USE OF THE SHJ:RIFF ONLY - DO NOT WRITE BELOW THIS LINE
13.1 acknowledge receipt of the writ SIGNATURE OF AUTHORIZED CLERK i 14. Date Reaeived t~. Fx~rqt~~Hearing Date
or complaint as indicated above. J. Ludwig 2/3/0 12 /
16. HOW SERVEO, PERSONAL cv{"
RESIDENCE
POSTEO (
POE( )
SHERIFF'S OFF ( )
OTHER ( I
SEE REMARKS
Notarial Seal
James V. Vangreen, Notary Public
York, York County, PA
My Commission Expires Jan. 22, 2001
44_ Signature af
De . Sheriff
~2000 45. Signature of ark
County Sheriff
William M. Hose
1~olary Public 46. Signature of Foreign
MY COMMlssrON EXPIRES Coun Sheriff
50.1 ACKNOWLEQGE RECEIP1:0F THE. SHERIFF'S RETURN SIGNATURE
OF AUTHORIZ-Ep.I.SSUJN~A,UT:HORITY AND TITLE
1. WHITE -lssuiri,g~~~l;ty~._ 2."PINK'-~ Attorney 3_ CANARY - Sheriff's Office 4. BLUE - Sheriff's Office
25th
,
47. Date
41. AFFIRMED and subscribed to before me this
43.
f/.
;t:;~~~
48. te
42. day o!
~ February ~
2/25/00
49. Date
51. Date Received
.....
i. \..
~r
COUNTY ci: YORK
OFFICE OF THE SHERIFF
SERVICE CALL
(717) 771-9601
-,/'
28 EAST MARKET ST., Y<JRK, PA 17401
- - u_ ~~ ~~ - -- .~ ~" ....~._w
SHERIFF SERYICE _ INSTRUCTIONS
PLEASE TYPE ONLY LINES 1 TO 12
PROCESS RECEIPT, and AFFIDAVIT OF RETURN DO NOT DETACH ANY COPIES.
..----
1. PlAlNTIFF7S1 2. COURT NUMBER 'P'_'l)-! ,l-J C_~ ", I
.Rubert Wilson, .et; a-1. 4. TYPE OF WRtT OR COMPLAINT -
3. DEFENDAI'lT/SJ .~ d - - ---~ U~
-
Continuing Ca1:e RX, Inc., et. al. N~.t, ,~p. "- ("' ';~""'t' 1 0 1 n ~ -
SERVE . 1;. NAME OF INOIVrDUAL:COMPAN'iCORPOFUlTlON.ETC. TOSti\vE OR DESCRIf'TIONOF PRO~ERTY,O eE'1.EVIED. ATTi6~iED: O"R SOLD.
~; r-r.pnen Proctor - - -
. " 6. ADDRESS (STREET OR AFD WITH BOX NUMBER, A-pi N-O" CITY, BORO. TWP" STATE AND ZIP CODe
.-
AT I );:'.l1t( Alydar Boulevard, D~llsnur_g, PA 1}O19
, -.. - --,-_.-- - _.,-- .. -....~
.~ -~ .:_- . ~~ ~~ ...
~~
Q PERSON.tN CA~RGE ?'J;] ~plJII~E _:__:...",:ml-1!E![r~_ ,_ Q 1ST t! A$.S MAIl,. _.o.F~P~T(;Q_~. . 9 OTHER
J9 I. SHE FF OE'YORl!: CpUlllTY, PA, do ,tlereby deputize the sheriff of
'f~rk / . -:couN'tyto eX!!l<~_Wdt and mak'UeluIlljh.<mLo~Qrding
to law. This deputatio? being made at the request and risk of the plaintiff. _ ~
8. SP~CIAL IN,~TRUC~!=,~S bR ~EA,lN_~ORM~~I,~N .~~~~_"~1~5~'_~ I~"~~EDIT~~~ ,S~~VICE:.
~
7. INDICATE_SERVICE:
NOW
D PERSONAL
_--S.l:lEFlIFE__DF L..YYUl.~__C.OLlIlI~':(
~'.
Cumbe f i'ilndO~
cor OF CDONTY
C'lHlERLlIND
AOV1lN:::E FEE PAID BY 1IDf",li=--LAND CTY
j -. ~-q.- q
NOTE ONLY~PUCABLE ON WRIT OF EXECUTION: - N:S. WAWe-FfOFWATCHMAN - Any deputy - sher~ iewyfng upo~ or attachin~(any property under WithYii wrlf'm-;iy leave
same without ~ watchman, in custody of whomever, Is found in possesSion, after notifying person of levy or ~ttachment, ~jthoulljability on the part 01 such deputy or the sheriff to any
plaintiff herein for any loss, destruction, or removal Qf any property belore.,sheriff's sale thereof . ~
9. TIP!; tjAMCJYljD ADDRE~ of _ATrORNEY/OfUGINATOR and SIGNJ\TURE ,;;
Allen C. l".arSllClW, Esq. '. .
305 s: Front st. 5th Plr., PO Box 1003, HarJ;i~'. PA 17108. 7:71 237-5500
12. SEND ,~OTlCE OF SERVI~E COPY TO NAME ,AND ADDRESS BELC?:~Y: (This 0-' ":lust be c..ompleted If notice Is to be mailed).
nd Sh iff' ~~ " ... ~ ~ ~~"
Cumberla County er - ~~ . . ~ ~ ,c~- ~'.... "~..... ..:~. ~ _ ~ ,..L" ~ -:..
.ii>' . SPAC. ELQWI"OR!)SJ: OFTH S E F 0 LV" Q.9)IOT\'JRIT];_BELOW THIS LINE
13.1 acknowledge receipt of the writ SIGNATURE OF A ORlZE CLERK 1~. pat) .R~ceived \,5., E~ir~3?["I!Hearing Dale
or complaint as indicated above. J. LUdwi..? L! : I') .. L! '. ! )
_'-C~
10. TELEPHONE NUMBER
11. DATE FILED
..~
1/2bjO()
-..
POSTED L j
POE('
OTHER ( )
SEE REMARKS
22. REMARKS:-
......
"
Surcharge 32. Total Costs 33. Cost Due or Refund
St
39. Tota
.'; :/(..,
ue Of Refu
j.. .
~c"i ~
42. day of
43J~ _
41.AFFIRM~nj:i subScrIbed-to before me ~~
,:,~-
-.;:~
44. Signature of
47. Da.,
at ...,..',>,
!i!"1"';
45. Signature or
County Sheriff
,
.- f,' . _...~_.,. ili-=-.
',' . ,~IN~~~ Public 46. Signature of
MY COMMISSION EXPIRE Cou Sher'
SO. I ACKNOWCEDGE RECEIPT OF THE SAERIFF"'$ RE; iM/lrSIGN-ATl1~
OF AUTHQRlZED ISSUING AUTHO~llY AND IlrL~ c ~. i
1. WHITE ~ IssuTrig AuYlority ~. PINK. Attomey 3. CANARY - Sheriff's
: ~ f
,
"
./.;1
___-- <f. -~-.
}.) I}
49. Date
oreign
51. Date Received
'.lll.llE;J:;heriff'S Offf'C$
l !-
~~:.h' "
"'I" :r. "..
--
.-#"; .
IN THE COURT OF C01\IMON PLEAS
CUMBERLAND COUNTY, PENNSYLVANIA
ROBERT WILSON
and
WILLIAM WILSON,
Plaintiffs
CIVIL ACTION NO. 2000-119
v.
CONTINUING CARE Rx, INC.,
CIVIL TERM
Defendant
NOTICE TO PLEAD
TO: ROBERT WILSON and WILLIAM WILSON, Plaintiffs, and
ALLEN WARSHAW, ESQUIRE, their attorney
YOU ARE HEREBY NOTIFIED TO FILE A WRITTEN RESPONSE TO THE
ENCLOSED ANSWER WITH NEW MATTER AND COUNTERCLAIM WITHIN TWENTY
(20) DAYS FROM SERVICE HEREOF OR A JUDGMENT MAYBE ENTERED AGAINST
YOU.
McNEES, WALLACE & NURICK
BY_t1;1J r( ~
Michael R. Kelley
I.D. # 58854
David B. Disney
LD. #10200
100 Pine Street
P. O. Box 1166
Harrisburg, PA 17108-1166
(717) 232-8000
-Af("\\ ~ ~ ~Ot)
Attorneys for Defendant Continuing Care Rx,
Inc.
IN THE COURT OF COMMON PLEAS
CUMBERLAND COUNTY, PENNSYLVANIA
ROBERT WILSON
and
WILLIAM WILSON,
Plaintiffs
CIVIL ACTION NO. 2000-119
v.
CONTINUING CARE Rx, INC.,
CIVIL TERM
Defendant
ANSWER WITH NEW MATTER AND COUNTERCLAIM
OF CCRx TO PLAINTIFFS' AMENDED COMPLAINT
ANSWER
Count I
1. Admitted.
2. Admitted.
3. Admitted.
4. Admitted.
5. Admitted.
6. Admitted.
7. Denied. Defendant Continuing Care Rx, Inc. ("CCRx" or "Answering Defen-
dant") is without knowledge or information sufficient to form a belief as to the truth of the
averments contained in this Paragraph, and same are therefore denied.
8. Admitted in part and denied in part. It is admitted that on February 25, 1998, PHI
and Robert Wilson, William Wilson and Thomas Trite into a Stockholders' Agreement. It is
further admitted that on February 25, 1998, Continuing Care RX, Inc. and Robert Wilson,
WilIiam Wilson and Thomas Trite entered into an Asset Purchase Agreement. It is further
admitted that on February 25, 1998, Continuing Care RX, Inc. and Robert Wilson, William
Wilson and Thomas Trite enfered into a Management Agreement. The remainder of this
paragraph is denied, as it purports to summarize or paraphrase one or all of the above-referenced
agreements. Those agreements are writings which speak for themselves. If this paragraph refers
to an agreement other than the ones referenced above, it is denied thatsuch agreement exists.
9. Admitted in part and denied in part. It is admitted that on February 25, 1998, PHI
and William Wilson, Robert Wilson and Thomas Trite entered into an Asset Purchase Agree-
ment. It is further admitted that the agreement is attached to the Complaint as Exhibit "A". The
remainder of the allegations contained in this paragraph are denied as they purport to summarize
or paraphrase the Agreement. The Agreement is a writing which speaks for itself.
10. Admitted.
11. Admitted.
12. Admitted in part and denied in part. It is admitted that a Stockholders' Agreement
was entered into by the parties. It is admitted that the Agreement is attached to the Amended
Complaint as Exhibit "B". The remaining averments of this Paragraph are denied, as they
purport to summarize or paraphrase a writing which speaks for itself.
13. Admitted.
-2-
14. Admitted in part and denied in part. It is admitted that the Management Agree-
ment contains some of the language quoted in this Paragraph. It is denied that the Management
Agreement is limited to the language quoted in this Paragraph. The Management Agreement is a
writing which speaks for itself. Focusing on some terms to the exclusion of others is an
inaccurate and/or incomplete statement ofthe terms ofthe Agreement.
15. Denied. It is denied that the Wilsons used their best efforts and abilities in
performing the services required under the Management Agreement. Answering Defendant
incorporates its New Matter and Counterclaim herein.
16. Admitted.
17. Denied. It is denied that "good cause" was required to terminate the Management
Agreement. Furthermore, Answering Defendant had good cause for the termination of the
Wilsons. Answering Defendant incorporates its New Matter and Counterclaim herein.
18. Answering Defendant incorporates ifs answers to paragraphs I through 18 above
as if set forth in full.
19. Denied. It is denied that Answering Defendant breached the Management
Agreement, or that the Management Agreement requires "cause" for termination. Answering
Defendant incorporates its New Matter and Counterclaim herein.
20. Denied. It is denied that the Wilsons are entitled to any compensation as set forth
under the Management Agreement. The Wilsons have violated the terms of the Management
Agreement, the Asset Purchase Agreement, and the Stockholders' Agreement, and, therefore, are
not entitled to any compensation under the Management Agreement.
- 3 -
21. Denied. Answering Defendant incorporates its answer to Paragraph 20 as set
forth above.
22. Admitted in part and denied in part. Admitted that the Management Agreement
contains the language cited. Denied that it contains all of the language in the Management
Agreement. The Management Agreement is a writing which speaks for itself and no further
answer is required.
23. Denied. The Wilsons committed numerous breaches ofthe agreements between
the parties; therefore, compensation for the Wilsons would not have increased. Answering
Defendant incorporates its New Matter and Counterclaim herein.
24. Denied. Plaintiffs are entitled to no compensation. The Wilsons have breached
the Management Agreement, the Asset Purchase Agreement, and the Stockholders' Agreement.
Accordingly, they are not entitled to any money provided for them in the Management Agree-
ment.
WHEREFORE, Defendant Continuing Care Rx, Inc. respectfully requests that this Court
enter judgment in its favor and against Plaintiffs, and that it be awarded costs of suit.
Count II
25. Answering Defendant hereby incorporates its answers to Paragraphs 1 through 24
above as if set forth in full.
26. Admitted in part and denied in part. It is admitted that the Management Agree-
ment contains the language quoted in this section. The remainder of this Paragraph is denied.
The Management Agreement is a writing which speaks for itself.
-4-
27. Denied. Answering Defendant is without knowledge or information sufficient to
form a belief as to the truth ofthe averments that the Wilsons expended extensive time and
efforts in developing the business ofthe original corporation, CCRx.
28. Denied. The agreements referenced in this Paragraph are writings which speak
for themselves and Plaintiffs' characterization of the agreements is specifically denied.
29. This Paragraph contains legal conclusions which require no response. The
implied duty of good faith is an issue of law and Answering Defendant is not required to either
admit or deny that it acted in good faith. Plaintiffs have the burden of proving this allegation at
triaL By way of further answer, Answering Defendant asserts that, at all times relevant, it acted
in good faith in dealing with the Wilsons under the agreements between them.
30. Denied. In fact, the Wilsons are the only parties to the agreements who acted in
bad faith. The Wilsons made outrageous demands for increased compensation. The Wilsons
were not entitled to such increased compensation under any fair or reasonable reading ofthe
agreements.
31. Denied. Answering Defendant has never waived, either orally or in writing, any
violations of the Management Agreement.
32. Denied. The allegations ofthis Paragraph are vague and, therefore, cannot be
answered. Plaintiffs assert that there were agreements between the parties that "aspects of the
Management Agreement" should be amended. Such an allegation does not provide sufficient
information to properly respond. By way of further answer, paragraph 10 of the Management
Agreement requires that all amendments must be in writing and signed by the parties.
-5-
33. Denied. This Paragraph contains vague allegations which cannot be answered. In
any event, there was never any agreement, orally or in writing, to modify the Management
Agreement. To the extent that any negotiations took place to do so, a negotiation is not an
agreement and has no legal or equitable effect on the relationship between the parties.
34. Denied. This Paragraph contains conclusions oflaw which require no response.
If a response is deemed reqnired, it is denied that CCRx violated any duty of good faith.
Specifically, it is denied that it violated its duty to act in good faith to negotiate future compensa-
tion under the Management Agreement. On the contrary, the Wilsons acted in bad faith in
seeking an outrageous increase in their compensation. It is denied that the Answering Defendant
terminated the Management Agreement without good cause. ~ the New Matter and Counter-
claim set forth herein. It is denied that Answering Defendant has waived any claims against the
Wilsons. It is also denied that Answering Defendant had any obligation to negotiate amend-
ments to the Management Agreement, or that it in any way improperly failed to do so.
WHEREFORE, Defendant Continuing Care RX, Inc. respectfully requests that this
Court enter a judgment in its favor and against Plaintiffs, and that it be awarded costs of suit.
NEW MATTER
35. The Amended Complaint fails to set forth a valid claim against CCRx for breach
of contract.
36. CCRx has fulfilled all of its promises and obligations under the Management
Agreement.
-6-
37. At all tirnes relevant, CCRx acted in good faith in dealing with Plaintiffs.
38. Plaintiffs are barred from asserting a claim against CCRx for acting in bad faith,
because they have acted in bad faith.
39. An action for a breach of an implied duty of good faith is an equitable one; such a
claim is barred under the circumstances of this case because Plaintiffs have "unclean hands."
40. The Management Agreement specifically identifies the Wilsons as "independent
contractors", and states that they are not to receive employee benefits such as medical, life,
accident or disability insurance, pensions, unemployment or workers' compensation or profit
sharing plan. (ManagernerifAgreement, pp. 1,2,3).
41. Plaintiffs violated the specific terms ofthe Management Agreement by directing
CCRx, without the knowledge or consent of the Board of Directors ofCCRx, to treat them as
employees and to provide them with employee benefits which have a value of more than
$50,000.
42.
The Wilsons received employee benefits, in direct violation ofthe Management
Agreement, secretly and without seeking approval of the Board of Directors ofCCRx.
43. In order to cover their knowing violation of the Management Agreement and
unjust compensation, Plaintiffs delayed, despite requests from or on behalf of the Board, to
provide information to the Board of Directors which would have disclosed their improper
compensation.
44. The Board of Directors ofCCRx did not became aware ofthe fact that Plaintiffs
were treating themselves as employees until such information was dislosed in an audit report.
-7-
45. Under the Management Agreement, the Wilsons had the obligation to "select, hire
and train the staff and employees of pharmacy, supervise, evaluate and determine the compensa-
tion of such employees, develop operational policies, staffmg levels and budgets, and perform all
other functions required to manage and operate the business." (Management Agreement, '2(a)).
46. Under the Management Agreement, the Wilsons agreed "to provide the consulting
services as defined herein and to use their best efforts and abilities in performing the services,
and to give pharmacy the full benefit of management consultants' knowledge, experience,
judgment and expertise in rendering pharmaceutical services to the retail and institutional
public." (Management Agreement, '2(b )).
47. Regrettably, the Wilsons failed in their obligations as set forth above.
48. The Wilsons bungled the purchase of a satellite pharmacy (known as the Topton
Pharmacy) by:
(a) Entering into an agreement in haste and without proper review of
the agreement by legal counsel;
(b) paying for the license ofthe pharmacy to be purchased, when a
new license could have been obtained at a much reduced cost;
(c) Failing to properly account for the inventory purchased at the
Topton Pharmacy which, upon a subsequent inspection, disclosed that CCRx pur-
chased a number of outdated pharmaceutical products;
(d) Negotiating the purchase of the assets of Topton and a license
without obtaining approval of the Board of Directors; and
- 8 -
(e) Negotiating and submitting a deposit, purportedly on behalf of
CCRx, for the Topton Pharmacy despite the express language in the Management
Agreement that the Wilsons "shall not hold themselves out as employees, partners
or agents of pharmacy for any purpose whatsoever." (Management Agreement,
-,r2(c).
49. The above violations of the Management Agreement were compounded by the
fact that Plaintiffs failed to seek proper Board of Directors' approval for their actions taken in
purchasing the Topton Pharmacy.
50. Both Robert Wilson and William Wilson, at different times, were members of the
Board of Directors ofCCRx. As members ofthe Board of Directors, and as stockholders in the
CCRx corporation, Plaintiffs have fiduciary duties to CCRx and its Board of Directors.
51. Plaintiffs repeatedly violated such fiduciary obligations by engaging in the
activities set forth above.
52. Plaintiffs also violated their fiduciary obligation by leasing two vehicles (includ-
ing a Mercedes ML320 Sport Utility Vehicle) and charging the leases for those vehicles to the
CCRx corporation, despite the fact that there was no authority under their Management Agree-
ment to do so.
53. Plaintiffs further violated their fiduciary duties to the corporation by causing
CCRx to pay approximately $4,500 for the 1998 corporate taxes of another corporation owned
by Plaintiffs and which is not related to CCRx. This action was undertaken without knowledge
of the Board of Directors and without the approval of the Board of Directors.
- 9-
54. Upon information and belief, Plaintiffs breached their obligations under the
Management Agreement, their duty to act in good faith, and their duties as fiduciaries, by failing
to comply with the rules and regulations of both state and federal agencies which govern the
CCRx pharmacies.
55. One or both of the Wilsons were repeatedly late for client meetings, or failed to
attend client meetings altogether, failed to return phone calls, and were unresponsive to customer
concerns and problems.
56. As a result of the activities set forth above, the Management Agreement between
CCRx and Plaintiffs was terminated on August 10, 1999.
57. As set forth above, CCRx's termination of the Agreement was done in good faith
and with just cause.
COUNTERCLAIM
CCRx v. Robert Wilson and William Wilson
COUNTERCLAIM COUNT I
Breach of Contract
58. As set forth in Paragraphs 35 through 57 above, Robert Wilson and William
Wilson breached their Management Agreement with CCRx.
59. Defendant CCRx has been damaged as a result of the conduct of the Wilsons in
that:
- 10-
(a) It has paid more than $50,000 in employee benefits to the Wilsons
which they were not entitled to receive;
(b) CCRx was forced to pay for the Topton Pharmacy license, and
inventory which had no value, in an amount yet to be determined;
(c) CCRx improperly paid approximately $4,500 in corporate taxes for
another entity owned by the Wilson; and
(d) CCRx may be required to pay fines and penalties for violations of
state and/or federal regulations as a result ofthe conduct ofthe Wilsons.
WHEREFORE, Counterclaim Plaintiff Continuing Care Rx, Inc. respectfully requests
that this Court enter judgment in its favor in an amount in excess of the threshold for compulsory
arbitration, and that it be awarded the costs of suit and such other compensation as this Court
deems just.
COUNTERCLAIM COUNT II
Breach of Fiduciary Duty
60. CCRx incorporates Paragraphs 35 through 57 above as ifset forth in full.
61. As a result of the violations of the fiduciary duties owed by the Wilsons to CCRx,
CCRx has suffered the following damages:
(a) It has paid more than $50,000 in employee benefits to the WiIsons
which they were not entitled to receive;
- 11 -
(b) CCRx was forced to pay for the Topton Pharmacy license, and
inventory which had no value, in an amount yet to be determined;
(c) CCRx improperly paid approximately $4,500 in corporate taxes for
another entity owned by the Wilson; and
(d) CCRx may be required to pay fines and penalties for violations of
state and/or federal regulations as a result ofthe conduct ofthe Wilsons.
WHEREFORE, Counterclaim Plaintiff Continuing Care Rx, Inc. respectfully requests
that this Court enter judgment in its favor in an amount in excess ofthe threshold for compulsory
arbitration, and that it be awarded the costs of suit and such other compensation as this Court
deems just.
COUNTERCLAIM COUNT III
Breach of Duty to Act in Good Faith
62. CCRx incorporates its allegations in Paragraphs 35 through 57 above as if set
forth in full.
63. As a result of the WiIsons' breach of their duty of good faith to CCRx, CCRx has
been damaged as follows:
(a) It has paid more than $50,000 in employee benefits to the Wilsons
which they were not entitled to receive;
(b) CCRx was forced to pay for the Topton Pharmacy license, and
inventory which had no value, in an amount yet to be determined;
- 12-
(e) CCRx improperly paid approximately $4,500 in corporate taxes for
another entity owned by the Wilson; and
(d) CCRx may be required to pay fines and penalties for violations of
state and/or federal regulations as a result of the conduct of the Wilsons.
WHEREFORE, Counterclaim Plaintiff Continuing Care RX, Inc. respectfully requests
that this Court enter judgment in its favor in an amount in excess of the threshold for compulsory
arbitration, and that it be awarded the costs of suit and such other compensation as this Court
deems just.
COUNTERCLAIM COUNT IV,_~_
Punitive Damal:es
64. CCRx incorporates its allegations in Paragraphs 35 through 57 above as if set
forth in full.
65. The conduct of William Wilson and Robert Wilson, as set forth in Paragraphs 35
through 57 above, was willful, performed in reckless disregard to the rights of CCRx, wanton
and outrageous and should be punished not only through the recovery of compensatory damages,
but punitive damages as well.
- 13 -
WHEREFORE, Counterclaim Plaintiff Continuing Care Rx, Inc. requests that
punitive damages, in an amount to be decided by the Court, be assessed against Robert and
William Wilson, and that they be required to pay reasonable attorneys fees incurred by CCRx.
McNEES, WALLACE & NURICK
By
Miehael R. Kelley
LD. # 58854
David B. Disney
LD. #10200
I 00 Pine Street
P. O. Box 1166
Harrisburg, PAl 71 08-1166
(717) 232-8000
Arn\ '2~J 2.0..0
Attorneys for Defendant Continuing Care Rx,
Inc.
- 14-
VERIFICATION
I, Stephen E. Proctor, Chairman of the Board of Directors of CCRx, Inc., a corpo-
ration, Defendant in the within action, verify that the statements made in the foregoing
document are true and correct to the best of my knowledge, information and belief.
understand that false statements herein are made subject to the penalties of 18
Pa.C.S. 94904, relating to unsworn falsification to authorities.
~~
Stephe E. Proctor
Dated: Aprill~ 2000
CERTIFICATE OF SERVICE
I hereby certify that on this date a true and correct copy ofthe foregoing document was
served by first-class mail upon the following:
Dated: April ~5" ,2000
Allen C. Warshaw, Esquire
Duane, Morris & Heckscher L.L.P.
305 North Front Street, 5th Floor
P.O. Box 1003
Harrisburg, P A 17108-1003
Michael R. Kelley
<':::
w
;:~
;-~
Ll 1 ~ ~
-0t-,
f.;::;.... -~
'''I' ~ '
O~
~ 1 ..'--
u)
c-.
(?:
w:.:
u
-
~.
n...
>-
Z
?<e
Ll~';
0, ../~
<:
~::J>i
'::",...~
~_.:f)
-lZ
:-'C'Z
t-;.,.ilLD
)::J:::1-
-2
::J
(,)
lr-,
N
("
L-
~..
ro
~,
,
(
~
IN THE COURT OF COMMON PLEAS
CUMBERLAND COUNTY, PENNSYLVANIA
ROBERT WILSON
RDl
BOX 85
NEWPORT,PA 17074
and
WILLIAM WILSON
4997 WESTCHESTER DRIVE
HARRlSBURG,PA 17112
Civil Action No. 2000-119
PLAINTIFFS
V.
CONTINUING CARE RX, INC.
-1217 SLATE HILL ROAD
CAMP HILL, PENNSYLVANIA 17011
and
STEPHEN PROCTOR
7 AL YDAR BOULEVARD
DILLSBURG, PA
DEFENDANTS
ANSWER TO NEW MATTER AND COUNTERCLAIMS
AND NEW MATTER
35. Denied. The allegations contained in paragraph thirty-five (35) consist oflegal
conclusions which require no response. If, however, they are deemed factual they are denied.
36. Denied. The allegations contained in paragraph thirty-six (36) consist of legal
conclusions which require no response. If, however, they are deemed factual they are denied.
HBG\48569.1
,
,
.~
37. Denied. It is denied that at all relevant times CCRx acted in good faith in dealing
with Plaintiffs.
38. Denied. The allegations contained in paragraph thirty-eight (38) consist oflegaJ
conclusions which require no response. If, however, they are deemed factual they are denied. It
is specifically denied that the Wilsons acted in bad faith.
39. Denied. The allegations contained in paragraph thirty-nine (39) consist oflegaJ
conclusions which require no response. If, however, they are deemed factual they are denied. It
is specifically denied that the Wilsons have "unclean hands."
40. Denied. The allegations contained in paragraph forty (40) consist oflegal
conclusions which require no response. If; however, they are deemed factual they are denied.
41. Denied. The allegations contained in paragraph forty-one (41) consist oflegaJ
conclusions which require no response. If, however, they are deemed factual they are denied. In
further answer, the Board ofCCRx became aware of the treatment accorded Plaintiffs in early
1999 and, in effect, ratified that treatment and waived any breach based upon that treatment by
recognizing it and stating its intention, on at least two occasions, to amend the Management
Agreement to authorize that treatment in the future.
42. Admitted and denied. It is admitted that the Wilsons received employee benefits.
It is denied that they did so secretly and without seeking approval of the Board of Directors of
CCRx. The remaining allegations contained in paragraph forty-two (42) conSist of legal
conclusions which require no response. If, however, they are deemed factual they are denied. In
further answer, the Board ofCCRx became aware of the treatment accorded Plaintiffs in early
1999 and, in effect, ratified that treatment and waived any breach based upon that treatment by
HBG\48569.1
-2-
"
recognizing it and stating its intention, on at least two occasions, to amend the Management
Agreement to authorize that treatment in the future.
43. Denied. It is denied that the Wilsons committed a knowing violation of the
Management Agreement or received unjust compensation and that they took any action to cover
up such a violation or compensation. It is further denied that they delayed providing informatiQll
to the Board of Directors which would have disclosed their improper compensation.
44. Denied. It is denied that the Board of Directors did not become aware of the fact
that Plaintiffs were treating themselves as employees until such information was disclosed in an
audit report.
45. Denied. The allegations contained in paragraph forty-five (45) consist oflegal
conclusions which require no response. If, however, they are deemed factual they are denied.
46. Denied. The allegations eontained in paragraph forty-six (46) consist oflegal
conclusions which require no response. If: however, they are deemed factual they are denied.
47. Denied. The allegations contained in paragraph forty-seven (47) consist oflegal
conclusions which require no response. If, however, they are deemed factual they are denied.
48. Admitted and denied. It is denied that the Wilsons bungled the purchase of a
satellite pharmacy (known as the Topton Pharmacy). It is also denied that the Wilsons:
(a) entered into an agreement in haste and without proper review of the
agreement by legal counsel; or
(b) paid for the license of the pharmacy to be purchased, when a new license
could have been obtained at a much reduced cost;
It is admitted that the Wilsons:
HBG\48569.1
-3-
,
,
..
(c) failed to account fully for the inventory purehased at the Topton
Pharmacy;
(d) negotiated the purchase of the assets of Top ton and a license without
obtaining approval of the Board of Directors;
(e) negotiated and submitted a $2000 deposit, purportedly on behalf of CCRx,
for Topton Pharmacy.
After reasonable investigation, they are unable to form a belief as to the truth or falsity of the
allegation that CCRx purchased a number of outdated pharmaceutical products from the Toptoh
Pharmacy. The remaining allegations contained in paragraph forty-eight (48) consist oflega!
conclusions which require no response. If, however, they are deemed factual, they are denied.
In further answer, the purchase of the Topton Pharmacy was within the scope of the
authority granted to the WiIsons under the Management Agreement and was, as negotiated by
the WiIsons, a prudent business transaction. Moreover, the Wilsons did not enter into any final
purchase agreement, nor were they able to complete their review of the inventory prior to the
purported termination of the Management Agreement.
49. Denied. The allegations contained in paragraph forty-nine (49) consist ofIegal
conclusions which require no response. If, however, they are deemed factual they are denied. It
is specifically denied that Board of Directors' approval was necessary for the Wilsons' actions in
purchasing the Topton Pharmacy.
50. Admitted and denied. It is admitted that both Robert Wilson and William Wilson,
at different times, were members of the Board of Directors ofCCRx. _The remaining allegations
HBG\48569.1
-4-
,
~
o
contained in paragraph fifty (50) consist oflegal conclusions which require no response. If,
however, they are deemed factual they are denied.
51. Denied. The allegations contained in paragraph fifty-one (51) consist oflegal
conclusions which require no response. If, however, they are deemed factual they are denied. In
further answer, Plaintiffs incorporate herein their answers to paragraphs thirty-seven (37)
through Fifty (50) as if set forth fully herein.
52. Admitted and denied. It is admitted that the Wilsons leased two vehicles
(including a Mercedes ML320 Sport Utility Vehicle) and charged the leases for those vehicles to
the CCRx corporation. The remaining allegations contained in paragraph fifty-two (52) consist
oflegal conclusions which require no response. If, however, they are deemed factual they are
denied. In further answer, The Wilson's were entitled to reimbursement for travel expenses
under the terms of the Management Agreement and determined it was significantly cheaper for
CCRx to lease them cars than to reimburse them on the basis of mileage.
53. Admitted and denied. It is admitted that Plaintiffs caused CCRx to pay
approximately $4,500 for the 1998 corporate taxes of another corporation owned by Plaintiffs
and that that action was undertaken without knowledge of the Board of Directors and without
approval of the Board of Directors. The remaining allegations contained in paragraph fifty-three
(53) consist oflegaJ conclusions which require no response. If, however, they are deemed
factual they are denied. In further answer, the payment of $4500 for the corporate taxes of
Capital Pharmacy Resources was authorized by the various agreements under which CCRx was
formed and was known to and authorized by the Company's accountants. In any case, if the
HBG\48569.1
-5-
," J
payment was improper, it was made in good faith and does not constitute a material breach of
any duties to CCRx.
54. Denied. The allegations contained in paragraph fifty-four (54) consist oflegaJ
conclusions which require no response. If, however, they are deemed factual they are denied. In
further answer, it is specifically denied that Plaintiffs failed to comply with the rules and
regulations of either the state and federal agencies which govern the CCRx pharmacies.
55. Denied. It is denied that one or both of the Wilsons were repeatedly late for client
meetings, or failed to attend client meetings altogether, failed to return phone calls and were
unresponsive to customer concerns and problems.
56. Denied. It is admitted that defendant purported to terminate the Management
Agreement on August 10, 1999. It is denied that it was properly terminated and that the
purported termination was as !lreSult of the activities described elsewhere in the New Matter.
57. Denied. It is denied that CCRx's termination of the Agreement was done in good
faith and with just cause.
COUNTERCLAIM COUNT I
58. Denied. It is denied that the Wilsons breached their Management Agreement with
CCRx. In further answer, Plaintiffs incorporate their answers to paragraphs thirty-five (35)
through fifty-seven (57) as if set forth fully herein.
59. Denied. It is denied that CCRx has been damaged as a result of the conduct of the
Wilsons. It is further denied that:
(a) CCRx has paid more than $50,000 in employee benefits to the Wilsons
which they were not entitled to receive;
HBG\48569.1
-6-
.
.~
"
(b) CCRx was forced to pay for the Topton Pharmacy license and inventory
which had no value in l\IlaIUount yet to be determined;
(c) CCRx improperly paid approximately $4,500 in corporate taxes for
another entity owned by the Wilsons; and
(d) CCRx may be required to pay fincs and penalties for violations of state
and/or federal regulations as a result of the conduct of the Wilsons.
WHEREFORE, Plaintif(s Robert and William Wilsonrespectfully request that judgment
be entered in their favor and against Counterclaim Defendant Continuing Care Rx, Inc.
COUNTERCLAIM COUNT II
Breach ofPiduciarv Dutv
60. Plaintiffs incorporate their answers to paragraphs thirty-five (35) through fifty-
seven (57) as if set forth fully herein.
61. Denied. It is denied that CCRx has been damaged as a result of the conduct of the
Wilsons. It is further denied that the Wilsons have violated any fiduciary duties owed by the
Wilso~ns to CCRx and that:
(a) CCRx has paid more than $50,000 in employee benefits to the Wilsons
which they were not entitled to receive;
(b) CCRx was forced to pay for the Topton Pharmacy license and inventory
which had no value in an amount yet to be determined;
(c) CCRx improperly paid approximately $4,500 in corporate taxes for
another entity owned by the Wilsons; and
HBG\48569.1
-7-
'x
(d) CCRx may be required to pay fmes and penalties for violations of state
and/or federal regulations as a result of the conduct of the Wilsons.
WHEREFORE, Plaintiffs Robert and William Wilson respectfully request that judgment
be entered in their favor and against Counterclaim Defendant Continuing Care Rx, Inc.
COUNTERCLAIM COUNT III
Breach Duty to Act in Good Faith
62. Plaintiffs incorporate their answers to paragraphs thirty-five (35) through fifty-
seven (57) as if set forth fully herein.
63. Denied. It is denied that CCRx has been damaged as a result of the conduct of the
Wilsons. It is further denied that the Wilsons have any duty of good faith owed to CCRx and
that:
(a) CCRx has paid more than $50,000 in employee benefits to the Wilsons
which they were not entitled to receive;
(b) CCRx was forced to pay for the Topton Pharmacy license and inventory
which had no value in an amount yet to be determined;
(c) CCRx improperly paid approximately $4,500 in corporate taxes for
another entity owned by the Wilsons; and
(d) CCRx may be required to pay fines and penalties for violations of state
and/or federal regulations as a result ofthe conduet of the Wilsons.
WHEREFORE, Plaintiffs Robert and William Wilson respectfully request that judgment
be entered in their favor and against Counterclaim Defendant Continuing Care Rx, Inc.
HBG\48569, I
-8-
.~ .' ..
i:X .L __ ~
COUNTERCLAIM COUNT IV
Punitive Damal!es
64. Plaintiffs incorporate their answers to paragraphs thirty-five (35) through fifty-
seven (57) as if set forth fully herein.
65. Denied. It is denied the conduct of William Wilson or Robert Wilson was willful,
performed in reckless disregard to the rights of CCRxand wanton or outrageous. The remaining
allegations in paragraph sixty-five (65) consist oflegal conclusions which require no response.
If, however, they are deemed factual they are denied.
WHEREFORE, Plaintiffs Robert and William Wilson respectfully request that judgment
be entered in their favor and against Counterclaim Defendant Continuing Care Rx, Inc.
NEW MATTER
66. The Board of CCRx became fully aware of the treatment accorded William and
Robert Wilson with regard to benefits in early 1999.
67. The Board ratified that treatment and waived any breach based upon that
treatment by recognizing it, allowing that treatment to continue for eight months and stating its
intention, on at least two occasions, to amend the Management Agreement to authorize that
treatment in the future.
68. Thomas Trite was retained by CCRx even though he too was treated as an
employee by CCRx during the relevant period.
69. The Wilsons negotiated, but did not enter into, a purchase agreement with regard
to the purchase of the Toptofi Pharmacy.
HBG\48569.1
-9-
jI ,~ ;I;
,___ -.1-. ~
70. Negotiation of the purchase of the T6pton Pharmacy was well within the grant of
authority given the Wilson's under the Management Agreement.
71. The purchase of the Topton Pharmacy was necessary in order to serve in a timely
fashion a new CCRx client which had previously been served by the Topton Pharmacy.
72. Negotiation ofthc purchase of the Topton Pharmacy was a sound business action
and constituted a proper exercise of discretion by the Wilsons.
73. The purchase of the existing license of the Topton Pharmacy was both cheaper
and faster than the purchase of a new license would have been.
74. The Board ratified the Wilsons' negotiations with regard to the Topton Pharmacy
by entering into a purchase agreement and completing the purchase after terminating the
Management Agreement.
75. The payment of$4500 for the corporate taxes of Capital Pharmacy Resources was
authorized by the various agreements under which CCRx was formed and was known to and
authorized by the Company's accountants.
76. In any case, if the payment was improper, it was made in good faith and does not
constitute a material breach of any duties to CCRx.
77. Throughout the term of the Management Agreement, the Wilson's provided their
best efforts and abilities in performing their duties.
78. The Wilson's were entitled to reimbursement for travel expenses under the terms
of the Management Agreement and determined it was significantly cheaper for CCRx to lease
them cars than to reimburse them on the basis of mileage.
HBG\48569.1
- 10-
... . I J.-
:-'t ,~ ..
79. At all relevant times, the Wilsons acted in good faith.
WHEREFORE,Plaintiffs Robert and William Wilson respectfully request that judgment
be entered in their favor and against Counterclaim Defendant Continuing Care Rx, Inc.
Respectfully submitted,
Dated:
51)h/OO u_ -
()~/ /L-
Allen C. Warshaw, Esquire
Attorney Id No. 17145
Duane, Morris & Heckscher LLP
305 North Front Street, 5th Floor
P.O. Box 1003
fIarrisburg,P1\ 17108-1003
(717) 237-5500
Attorneys for Robert & William Wilson
HBG\48569.1
-11 -
....- . It ..
~ .., #
CERTIFICATE OF SERVICE
On this 16th day of May, 2000, I, Sherry L. Weigel, a secretary in the law offices of
Duane, Morris & Heckscher LLP, hereby certify that I have served this day true and correct
copies of the foregoing ANSWER TO NEW MATTER AND COUNTERCLAIMS
AND NEW MATTER in the above-captioned matter, via hand delivery to those persons and
addresses indicated below:
Mr. Michael R. Kelley, ESquire
McNees, Wallace & Nurick
100 Pine Street
P.O. Box 1166
Harrisburg, PA 17108-1166
s~
~-
t I!JVf-P
HBG\48S69.1
-12 -
~~
,."
_'~~~0
.~ ~u: (:)
~ ~:\,,: ".'
J '-.(L)F"
,~-~." >.::'
~. ".
--...-- _~ 1:,1..
~..._~,.
f.1~ .'"Ur
.~~ ~ ,- ','
.!"'tr: - ~
. ~ ";L
;".;
"t~'l'~
~~
If')
c--:
M
>-
.l-~~
::::>:'.!:
Q:z
'--~-i:
. ~
Qs:!
~t~
_~j .L-
a:z
l....UUJ
[;)0_
2
i5-
:::L
c..
r-
:>-
"""
x:
o
CJ
~ . iO *.
'r.---
LAW O~1='JCE:S OF"
c
DUANE, MORRIS 8 HECKSCHER LLP
305 NORTH FRONT STREET, P.O, BOX 1003
HARRISBURG. PA 17108-1003
*"' .... ~
.
-~
-:-,
~~
, ....of..
. ..
IN THE COURT OF COMMON PLEAS
OF CUMBERLAND COUNTY, PENNSYLVANIA
ROBERT & WILLIAM WILSON,
Plaintiffs
v.
CONTINUING CARE RX, INC.
And STEPHEN PROCTOR,
Defendants
CIVIL ACTION LA W ~
NO. 2000-I19-CIVIL TERM v
ROBERT & WILLIAM WILSON,
Plaintiffs
v.
CONTINUING CARE RX, INC.
PHI, INC.,
CIVIL ACTION LAW
NO. 00-3738-CIVIL TERM
Defendants
AND NOW, this
ORDER
\ '3 t~ day of ~e..~ r vZ; 1
,2001, upon consideration of the
within Stipulation of the parties, the Preliminary Injunction Order of June 20, 2000 in the action
docketed to No. 00-3738-Civil Term is lifted. Itis~further ORDERED that the cases docketed to
2000-ll9-Civil Term, ahd 00-3738-Civil Term, are dismissed with prejudice.
Q
, .
.;V
~~~u...D\
\v6<: ~~~
'.
. .
,
FILED-0mCE ~
OF T;..::: "Pi"'!~U~NOTA.RY
., '...... " '... I" ,I"'
01 FEB 14 PM 2:42
CUMBERLAND COUN1Y
PENNSYLVANIA
..
- ,
. .
IN THE COURT OF COMMON PLEAS
OF CUMBERLAND COUNTY, PENNSYLVANIA
ROBERT & WILLIAM WILSON,
Plaintiffs
v.
CONTINUING CARE RX, INC.
And STEPHEN PROCTOR,
Defendants
CIVIL ACTION LAW
NO. 2000-119-CIVIL TERM
ROBERT & WILLIAM WILSON,
Plaintiffs
v.
CONTINUING CARE RX, INC.
PHI, INC.,
CIVIL ACTION LAW
NO. 00-3738-CIVIL TERM
Defendants
:
JOINT STIPULATIQN OF PARTIES TO DISMISS ACTIONS
WITH PRE.JUDICE AND TO 1JU IN.JUNCTION ORDER OF .JUNE 20. 2000
Robert Wilson and William Wilson, through their attorneys, Duane, Morris and
Hecksher, and Continuing Care, Rx, Inc., Pill, Inc., and Stephen Proctor, through their attorneys,
McNees, Wallace & Nurick, hereby enter into the following Stipulation:
I. Robert Wilson and William Wilson initiated an action against Continuing Care,
Rx, Inc. and Stephen Proctor, docketed to No. 2000-1l9-Civil Termin the Court of Common
Pleas of Cumberland COWlty.
2. Robert Wilson and William Wilson also filed a Complaint, Motion for Special
Injunction and Motion for Preliminary Injunction against Continuing Care, Rx, Inc. and PHI,
Inc., docketed to No. 00-3738 Civil Term in the Court of Common Pleas of Cumberland County.
3. The parties to these actions have agreed to a settlement of the claims,
counterclairns, disputes and other controversies set forth in those actions, and have agreed to a
Settlement and Mutual General Release of all Claims. The Settlement Agreement was executed
on December I, 2000.
4. On or about June 20, 2000, tIns Court entered an Order granting tlle Wilsons'
Motion for Preliminary Injunction, pending a subsequent hearing.
5. The subsequent hearing was continued based upon the representations of the
parties that an oral settlement of the claims had been reached.
6. The oral agrecment of the partics has now been reduccd to writing and has been
fully executed by the parties as of December 1,2000, as set forth in paragraph 3, above.
-2-
WHEREFORE, the parties to this action request that the Court enter an order dismissing
with prejudice the actions docketed to Nos. 2000-ll9-Civil Term and 00-3738-Civil Term, and
that the order regarding the preliminary injunction, dated June 20, 2000, be lifted.
LACE & NURICK
By
Michael R. Kelley
I.D. # 58854
100 Pine Street
P. O. Box 1166
Harrisburg, P A 171 08-1166
(717) 232-8000
Attorneys for Defendant Continuing Care Rx,
Inc.
DUANE, MORRIS & HECKSCHER L.L.P.
By fP6 ( v4--
Al en C. Warshaw
305 North Front Street, 5th Floor
P.O. Box 1003
Harrisburg, P A 171 08-1 003
(717) 237-5508
DATED: J,) S-J C I
Attorneys for Robert and William Wilson
-3-
. .--'.
CERTIFICATE OF SERVICE
I hereby certifY that on this date a true and correct copy of the foregoing document was
served by first-class mail upon the following:
Allen C. Warshaw, Esquire
Duane, Morris & Heckscher L.L.P.
305 North Front Street, 5th Floor
P.O. Box 1003
Harrisburg, PA 17108-1003
Dated: ;t \r} 0 \
Michael R. Kelley
--- - - --- --- -- -
.... . ... .. . ...... . ........ . .< . .......
.............)........ ....... ....) ......................... ..... ................................
<<...........< ................. ..... ...........
.............. .<i>> .......... ...... .... ..... .... .'< .>i .... ..
........... ...... ....... ........... .....
< < >'. ............ .. ... ... ..... .. ........... .... < .'. ........ ..........> < ........
>..........>>.i> ................. .............. ........
... ...> < <<<<.< ...... ...... < .......
.//i> < .... ......... ................)). ...............<
...........< ........ .....i< . i... ../
............ ............. > ". .<<. .<<<. .................. . .......)....
.. <<< < .. ..' ..... .> .... ......... ...... .....
.<<. ............>.< ..........i> .... ........ . ..... .... ..... . ...
.. ..< ..... .< .............. .>> ..... ........<.<. ......
< .............. >>............ . . ........ ....>.<<
......< ....< .....
<.................. ............. .....>>............ .............................>.........
................<................ ......
......... ..<)
.>).. .......< ........ ................. ....>...
.)< ........ ...... ........ .................<< ...
. .... .>< ...........<< ......... .......<i ......... .......... . .....
>......... ..>) .........<.i............. ...
<> ..... ....... ............ ............< ..... .........
) .... ................ i> ....... ........< ... ... 'i) .....> .
....> < ........<
<<<. ........... ....... .......< ....... .................. .......... ..i..................
..............> '. .. ....... .>>)...
. ......... >> ........... ........ ........ ...... )>< ........ ...
< .)/ ........ ........
.........> ......... . .....>> .. .... .. < . ........ '" ............ . ... ..... . ....>>i ..... .........
>< ...... .i ... .<<< .... ..... ......>
................ . ........ ...<<)<
......<i<.... ..... .......... ... ...<...... .........
".<> .............<) ....... .............. ............. ...........................
.......... ... ........ ....... ........<<
...............................
< . '<. . <......
.... ...... ......< ............ ........
................. ..... .....>) ......<.................................................
................... .......... .....
<<. ....... ..................> ........... ..............<.>
<><< ........... . ...... ....... .............
. .............. . ...... ..> ..... ......<> .......... .. . .... ......... <>
.> <. ......<........ ............ .................. ......
.......... .<<.i.....<. .'.
< ............ .............. ..... ........... .. .... ............ ....i<.
<< ......>><< ... ..... ".
. ......< ......... . .> ..../ ....... .....>/ ..............
. ..i. .........<> > >< ....
< ................ . ............. .............. .i< .....<< ...... >. " ..... .... .... .......... ...
... ........... .< .><i ..........> ... ....... .<. ......... .. .
>> . ...... · ........ ..... .'. ................... i> .....>i.
..... ...................................... . .......... . ...< ....... . ................>. ......... )<< . .
.>< " ........... . < .......><< ..... ...... ...... ., .
> >ii ........... ............ ...........
............. .......>..................) <............ ........... .................. ............
..<< ....... .........< .