EXHIBIT 10.32
================================================================================
LIMITED LIABILITY COMPANY
AGREEMENT
OF
APS-SUMMIT CARE PHARMACY, L.L.C.,
a Delaware Limited Liability Company
Dated as of November 30, 1996
================================================================================
TABLE OF CONTENTS
Page
----
ARTICLE I - ORGANIZATIONAL MATTERS..................................... 1
1.1 Formation......................................................... 1
1.2 Name.............................................................. 1
1.3 Principal Place of Business; Other Places of Business............. 1
1.4 Purpose........................................................... 1
1.5 Certificate of Formation; Filings................................. 1
1.6 Fictitious Business Name Statements............................... 1
1.7 Designated Agent for Service of Process........................... 2
1.8 Term.............................................................. 2
ARTICLE 2 - DEFINITIONS................................................ 2
2.1 "Act"............................................................. 2
2.2 "Additional Members".............................................. 2
2.3 "Affected Member"................................................. 2
2.4 "Adjusted Capital Account Deficit"................................ 2
2.5 "Affiliate"....................................................... 2
2.6 "Agreement"....................................................... 2
2.7 "Assignee"........................................................ 3
2.8 "Bona Fide Offer"................................................. 3
2.9 "Business"........................................................ 3
2.10 "Capital Account"................................................ 3
2.11 "Capital Contributions".......................................... 4
2.12 "Cash Available for Distribution"................................ 4
2.13 "Certificate".................................................... 4
2.14 "Code"........................................................... 4
2.15 "Company"........................................................ 4
2.16 "Company Assets"................................................. 4
2.17 "Company Minimum Gain"........................................... 4
2.18 "Company Price".................................................. 4
2.19 [Intentionally deleted.)......................................... 4
2.20 "Depreciation"................................................... 4
2.21 "Economic Interest".............................................. 5
2.22 "Fundamental Change"............................................. 5
2.23 "Gross Asset Value".............................................. 6
2.24 "Immediate Family"............................................... 7
2.25 "Incapacity"..................................................... 7
2.26 "Indemnitee"..................................................... 7
2.27 "Majority in Interest"........................................... 7
2.28 "Majority of Remaining Members".................................. 7
2.29 "Member Minimum Gain"............................................ 7
2.30 "Member Nonrecourse Debt"........................................ 7
2.31 "Member Nonrecourse Deductions".................................. 7
i
Page
----
2.32 "Members"........................................................ 7
2.33 "Membership Interest" or "Interest".............................. 7
2.34 "Net Profits" or "Net Losses".................................... 7
2.35 "Nonrecourse Deductions"......................................... 8
2.36 "Nonrecourse Liability".......................................... 8
2.37 "Non-Transferring Members"....................................... 8
2.38 "Offerer"........................................................ 8
2.39 "Offer".......................................................... 8
2.40 "Offer by Transferor"............................................ 8
2.41 "Operating Cash Expenses"........................................ 9
2.42 "Ordinary Course"................................................ 9
2.43 "Percentage Interest"............................................ 9
2.44 "Person"......................................................... 9
2.45 "Recourse Liability"............................................. 9
2.46 "Regulations".................................................... 9
2.47 "Regulatory Allocations"......................................... 9
2.48 "Representative"................................................. 9
2.49 "Reserves"....................................................... 9
2.50 "Responsible Party".............................................. 9
2.51 "Substitute Member".............................................. 9
2.52 "Summit Care".................................................... 9
2.55 "Supermajority in Interest"...................................... 9
2.54 "Terminating Capital Transaction"................................ 10
2.55 "Termination Payment"............................................ 10
2.56 "Transfer"....................................................... 10
2.57 "Transferee"..................................................... 10
2.58 "Transferor"..................................................... 10
2.59 "Unaffected Members"............................................. 10
ARTICLE 3 - CAPITAL; CAPITAL ACCOUNTS AND MEMBERS...................... 10
3.1 Initial Capital Contributions of Members......................... 10
3.2 Additional Capital Contributions by Member....................... 10
3.3 Capital Accounts................................................. 11
3.4 Additional Members............................................... 11
3.5 Member Capital................................................... 11
3.6 Member Loans..................................................... 11
3.7 Liability of Members............................................. 11
ARTICLE 4 - DISTRIBUTIONS.............................................. 12
4.1 Distributions of Cash Available for Distribution................. 12
4.2 Distributions Upon Liquidation................................... 12
4.3 Withholding...................................................... 12
4.4 Distributions in Kind............................................ 13
4.5 Limitations on Distributions..................................... 13
ii
Page
----
ARTICLE 5 - ALLOCATIONS OF NET PROFITS AND NET LOSSES................... 13
5.1 General Allocation of Net Profits and Losses...................... 13
5.2 Regulatory Allocations............................................ 13
5.3 Tax Allocations................................................... 15
5.4 Other Provisions.................................................. 15
ARTICLE 6 - OPERATIONS.................................................. 16
6.1 Management........................................................ 16
6.2 Reliance By Third Parties......................................... 18
6.3 Compensation...................................................... 18
6.4 Records and Reports............................................... 18
6.5 Indemnification and Liability of the Member....................... 19
6.6 Covenant Not To Compete........................................... 20
6.7 Services.......................................................... 21
ARTICLE 7 - INTERESTS AND TRANSFERS OF INTERESTS........................ 21
7.1 Transfers......................................................... 21
7.2 Further Restrictions.............................................. 21
7.3 Rights of Assignees............................................... 22
7.4 Admissions and Withdrawals........................................ 22
7.5 Payment Upon Withdrawal of Member................................. 22
7.6 Admission of Assignees as Substitute Members...................... 22
7.7 Withdrawal of Members............................................. 23
7.8 Conversion of Membership Interest................................. 23
7.9 Right of First Refusal............................................ 23
7.10 Buy and Sell Rights............................................... 25
7.11 Option to Purchase Upon Fundamental Change........................ 26
ARTICLE 8 - DISSOLUTION, LIQUIDATION, AND TERMINATION OF THE
COMPANY................................................................. 27
8.1 Limitations....................................................... 27
8.2 Exclusive Causes.................................................. 27
8.3 Effect of Dissolution............................................. 27
8.4 No Capital Contribution Upon Dissolution.......................... 28
8.5 Liquidation....................................................... 28
ARTICLE 9 - MISCELLANEOUS............................................... 28
9.1 Amendments.......................................................... 28
9.2 Accounting and Fiscal Year.......................................... 29
9.3 Meetings............................................................ 29
9.4 Entire Agreement.................................................... 29
iii
Page
----
9.5 Further Assurances................................................ 29
9.6 Notices........................................................... 29
9.7 Tax Matters....................................................... 29
9.8 Governing Law..................................................... 30
9.9 Arbitration....................................................... 30
9.10 Construction...................................................... 30
9.11 Captions - Pronouns............................................... 30
9.12 Binding Effect.................................................... 30
9.13 Severability...................................................... 30
9.14 Confidentiality................................................... 30
9.15 Counterparts...................................................... 31
9.16 No Referrals...................................................... 31
iv
LIMITED LIABILITY COMPANY AGREEMENT
OF
APS-SUMMIT CARE PHARMACY, L.L.C.
THIS LIMITED LIABILITY COMPANY AGREEMENT (the "AGREEMENT") is made and
entered into as of the 30th day of November, 1996, by and between American
Pharmaceutical Services, Inc., a Delaware corporation ("APS"), and Summit Care
Pharmacy, Inc., a California corporation ("SCPI"; each of APS and SCPI are a
MEMBER, as defined below) for the purpose of forming APS-Summit Care Pharmacy,
L.L.C. (the "COMPANY"), a limited liability company organized under the Delaware
Limited Liability Company Act (the "ACT").
ARTICLE 1
ORGANIZATIONAL MATTERS
1.1 FORMATION. The Members hereby form the Company under the Act
for the purposes and upon the terms and conditions hereinafter set forth. The
rights and liabilities of the Members of the Company shall be as provided in the
Act, except as otherwise expressly provided herein. In the event of any
inconsistency between any terms and conditions contained in this Agreement and
any nonmandatory provisions of the Act, the terms and conditions contained in
this Agreement shall govern.
1.2 NAME. The name of the Company shall be "APS-Summit Care Pharmacy,
L.L.C." The Company may also conduct business at the same time under one or more
fictitious names if a Majority in Interest determines that such is in the best
interests of the Company. The Members may, upon the written consent of a
Majority in Interest, change the name of the Company, from time to time, in
accordance with applicable law.
1.3 PRINCIPAL PLACE OF BUSINESS; OTHER PLACES OF BUSINESS. The
principal place of business of the Company is located at 2324 Ridgepoint Drive,
Suite G-1, Austin, Texas 78754 or such other place within or outside the State
of Delaware as a Majority in Interest may from time to time designate. The
Company may maintain offices and places of business at such other place or
places within or outside the State of Delaware as a Majority in Interest deems
advisable.
1.4 PURPOSE. The Company shall provide institutional pharmacy
services to nursing homes, retirement centers and the patients and residents
residing in such facilities, and may engage in any and all other lawful
business, purpose or activity in which a limited liability company may be
engaged under applicable law (including, without limitation, the Act).
1.5 CERTIFICATE OF FORMATION; FILINGS. The Members shall cause to be
executed and filed a Certificate of Formation in the form attached as Schedule I
hereto (the "CERTIFICATE") in the Office of the Delaware Secretary of state as
required by the Act. Any Member may, upon the written consent of a Majority in
Interest, execute and file any duly authorized amendments to the Certificate
from time to time in a form prescribed by the Act.
1.6 FICTITIOUS BUSINESS NAME STATEMENTS. Following the execution of
this Agreement, fictitious business name statements shall be filed and published
when and if a Majority in Interest determines it necessary. Any such statement
shall be renewed as required by applicable law.
1.7 DESIGNATED AGENT FOR SERVICE OF PROCESS. The Company shall
continuously maintain a registered office and a designated and duly qualified
agent for service of process on the Company in the State of Delaware.
1.8 TERM. The Company shall commence on the date that the
Certificate is filed with the Office of the Delaware Secretary of State, and
shall continue until terminated pursuant to this Agreement.
ARTICLE 2
DEFINITIONS
Capitalized words and phrases used and not otherwise defined elsewhere
in this Agreement shall have the following meanings:
2.1 "ACT" is defined in the Preamble.
2.2 "ADDITIONAL MEMBERS" means those Persons admitted to the
Company pursuant to Paragraph 3.4 of this Agreement.
2.3 "AFFECTED MEMBER" is defined in Paragraph 7.11.1.
2.4 "ADJUSTED CAPITAL ACCOUNT DEFICIT" means, with respect to any
Member, the deficit balance, if any, in such Member's Capital Account as of the
end of the relevant fiscal year, after giving effect to the following
adjustments:
2.4.1 Add to such Capital Account the following items:
(a) The amount, if any, that such Member is
obligated to contribute to the Company pursuant to this Agreement upon
liquidation of such Member's Interest; and
(b) The amount that such Member is obligated to
restore or is deemed to be obligated to restore pursuant to Regulations Section
1.704-1(b)(2)(ii)(c) or the penultimate sentence of each of Regulations Sections
1.704-2(g)(1) and 1.704-2(i)(5); and
2.4.2 Subtract from such Capital Account such Member's
share of the items described in Regulations Sections 1.704-1(b)(2)(ii)(d)(4),
(5) and (6).
The foregoing definition of Adjusted Capital Account Deficit is intended to
comply with the provisions of Regulations Section 1.704-1(b)(2)(ii)(d) and shall
be interpreted consistently therewith.
2.5 "AFFILIATE" means, with reference to a specified Person: (a)
a Person that, directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with, the specified
Person, (b) any Person that is an officer, partner or trustee of, or serves in a
similar capacity with respect to, the specified Person, or for which the
specified Person is an officer, partner or trustee, or serves in a similar
capacity, or (c) any member of the Immediate Family of the specified Person.
2.6 "AGREEMENT" is defined in the Preamble.
2
2.7 "ASSIGNEE" means any Person (a) to whom a Member (or assignee
thereof) Transfers all or any part of its Interest, and (b) which has not been.
admitted to the Company as a Substitute Member pursuant to Paragraph 7.6 of this
Agreement.
2.8 "BONA FIDE OFFER" shall mean an offer in writing signed by a
third party offeror or offerors (who must be a Person financially capable of
carrying out the term of such Bona Fide Offer), in a form legally enforceable
against such third party offeror or offerors.
2.9 "BUSINESS" means the provision of institutional pharmacy
services to nursing homes, retirement centers and the patients and residents
residing in such facilities, or any and all other lawful business, purpose or
activity in which the Company may be engaged.
2.10 "CAPITAL ACCOUNT" means the Capital Account maintained for
each Member on the Company's books and records in accordance with the following
provisions:
2.10.1 To each Member's Capital Account there shall be
added (a) such Member's Capital Contributions, (b) such Member's allocable share
of Net Profits and any items in the nature of income or gain that are specially
allocated to such Member pursuant to Article 5 hereof or other provisions of
this Agreement, and (c) the amount of any Company liabilities assumed by such
Member or which are secured by any property distributed to such Member.
2.10.2 From each Member's Capital Account there shall be
subtracted (a) the amount of (i) cash and (ii) the Gross Asset Value of any
Company Assets (other than cash) distributed to such Member (other than any
payment of principal and/or interest to such Member pursuant to the terms of a
loan made by the Member to the Company) pursuant to any provision of this
Agreement, (b) such Member's allocable share of Net Losses and any other items
in the nature of expenses or losses that are specially allocated to such Member
pursuant to Article 5 or other provisions of this Agreement.
2.10.3 In the event any interest in the Company is
transferred in accordance with the terms of this Agreement, the transferee shall
succeed to the Capital Account of the transferor to the extent it relates to the
transferred interest.
2.10.4 In determining the amount of any liability for
purposes of Paragraphs 2.10.1 and 2.10.2 hereof, there shall be taken into
account Code Section 752(c) and any other applicable provisions of the Code and
Regulations.
2.10.5 The foregoing provisions and the other provisions
of this Agreement relating to the maintenance of Capital Accounts are intended
to comply with Regulations Sections 1.704-1(b) and 1.704-2 and shall be
interpreted and applied in a manner consistent with such Regulations. In the
event that a Majority in Interest shall determine that it is prudent to modify
the manner in which the Capital Accounts, or any additions or subtractions
thereto, are computed in order to comply with such Regulations, the Members may,
upon the written consent of a Majority in Interest, make such modification,
provided that it is not likely to have a material effect on the amounts
distributable to any Member pursuant to Article 8 hereof upon the dissolution of
the Company. Upon the written consent of a Majority in Interest, the Members
shall also make (a) any adjustments that are necessary or appropriate to
maintain equality between the Capital Accounts of the Members and the amount of
Company capital reflected on the Company's balance sheet, as computed for book
purposes, in accordance with Regulations
3
Section 1.704-1(b)(2)(iv)(q), and (b) any appropriate modifications in
the event that unanticipated events might otherwise cause this Agreement
not to comply with Regulations Sections 1.704-1(b) and 1.704-2.
2.11 "CAPITAL CONTRIBUTIONS" means, with respect to any Member,
the total amount of money and the initial Gross Asset Value of property (other
than money), less any liabilities of such Member assumed by the Company or any
liabilities which are secured by any property contributed to the capital of the
Company by such Member, whether as an initial Capital Contribution or as an
additional Capital Contribution.
2.12 "CASH AVAILABLE FOR DISTRIBUTION" means, with respect to any
fiscal year, all Company cash receipts (excluding the proceeds from any
Terminating Capital Transaction), after deducting payments for Operating Cash
Expenses, payments required to be made in connection with any loan to the
Company or any other loan secured by a lien on any Company Assets, capital
expenditures and any other amounts set aside for the restoration, increase or
creation of reasonable Reserves.
2.13 "CERTIFICATE" means the Certificate of Formation of the
Company filed under the Act in the Office of the Delaware Secretary of State for
the purpose of forming the Company as a Delaware limited liability company, and
any duly authorized, executed and filed amendments or restatements thereof.
2.14 "CODE" means the Internal Revenue Code of 1986, as amended
from time to time (or any corresponding provisions of succeeding law).
2.15 "COMPANY" is defined in the Preamble.
2.16 "COMPANY ASSETS" means all direct and indirect interests in
real and personal property owned by the Company from time to time, and shall
include both tangible and intangible property (including cash and cash
equivalents).
2.17 "COMPANY MINIMUM GAIN" has the meaning set forth in
Regulations Sections 1.7042(b)(2) and 1.704-2(d)(1) for the phrase "partnership
minimum gain."
2.18 "COMPANY PRICE" is defined in Paragraph 7.10.1
2.19 [Intentionally deleted.]
2.20 "DEPRECIATION" means, for each fiscal year or other period,
an amount equal to the federal income tax depreciation, amortization or other
cost recovery deduction allowable with respect to an asset for such year or
other period, except that if the Gross Asset Value of an asset differs from its
adjusted basis for federal income tax purposes at the beginning of such year or
other period, Depreciation shall be an amount that bears the same ratio to such
beginning Gross Asset Value as the federal income tax depreciation, amortization
or other cost recovery deduction for such year or other period bears to such
beginning adjusted tax basis; provided, however, that if the federal income tax
depreciation, amortization or other cost recovery deduction for such year or
other period is zero, Depreciation shall be determined with reference to such
beginning Gross Asset Value using any reasonable method agreed to by a Majority
in Interest.
4
2.21 "ECONOMIC INTEREST" means a Person's right to share in the
Net Profits, Net Losses, or similar items of, and to receive distributions from,
the Company, but does not include any other rights of a Member including,
without limitation, the right to vote or to participate in the management of the
Company, or, except as specifically provided in this Agreement or required under
the Act, any right to information concerning the business and affairs of the
Company.
2.22 "FUNDAMENTAL CHANGE" means the happening of any of the
following events with respect to a Member (or, in the case of SCPI, with respect
to either SCPI or Summit Care), without receiving the written consent of a
majority in interest of the Unaffected Members:
(a) the sale of substantially all of its assets to a Person or a
group of associated or affiliated Persons who are not affiliated
with such Member (or, in the case of SCPI, with either SCPI or
Summit Care, as the case may be);
(b) the sale, issuance, exchange or other disposition of more than
fifty percent (50%) of any class or series of the outstanding
capital stock of such Member (or, in the case of SCPI, either
SCPI or Summit Care) in one transaction or a series of related
transactions to a Person or a group of associated or affiliated
Persons who are not affiliated with such Member (or, in the case
of SCPI, with either SCPI or Summit Care, as the case may be);
(c) the dissolution or liquidation of such Member (or, in the case
of SCPI, of either SCPI or Summit Care);
(d) a merger or other reorganization with one or more entities in
which such Member (or, in the case of SCPI, either SCPI or
Summit Care) is not the surviving entity, or if such Member (or,
in the case of SCPI, either SCPI or Summit Care) is the
surviving entity, the ownership of fifty percent (50%) or more
of its voting common stock, is held by a Person or entity not
currently holding fifty percent (50%) of such voting common
stock;
(e) such Member (or, in the case of SCPI, either SCPI or Summit
Care) becomes insolvent or makes an assignment for the benefit
of creditors, or voluntary proceedings are instituted by such
Member (or, in the case of SCPI, either SCPI or Summit Care)
under the Bankruptcy Code as amended, or involuntary proceedings
are instituted against such Member (or, in the case of SCPI,
against either SCPI or Summit Care) under the Bankruptcy Code,
as amended and such involuntary proceedings are not dismissed
within sixty (60) days thereafter;
(f) a receiver is appointed for such Member (or, in the case of
SCPI, for either SCPI or Summit Care) or its assets; or
(g) any other event or transaction by which effective control of
such Member (or, in the case of SCPI, of either SCPI or Summit
Care) is transferred to, or vested in, a Person who is not
affiliated with such Member (or, in the case of SCPI, with
either SCPI or Summit Care).
Notwithstanding the foregoing, a public distribution of securities by a
Member (or, in the case of SCPI, by either SCPI or Summit Care) shall not be
deemed a Fundamental Change with respect to such Member (or, in the case of
SCPI, with respect to either SCPI or Summit Care) if a majority of such Member's
directors and principal officers (or, in the case of SCPI, the directors and
principal officers of SCPI and Summit Care) remain in the same positions they
held prior to the public distribution.
5
2.23 "GROSS ASSET VALUE" means, with respect to any asset, the
asset's adjusted basis for federal income tax purposes, except as follows:
2.23.1 The initial Gross Asset Value of any asset
contributed by a Member to the Company shall be the gross fair market value of
such asset, as determined by a Majority in Interest and the contributing Member.
2.23.2 The Gross Asset Values of all Company Assets
immediately prior to the occurrence of any event described in subsection
(a), subsection (b), subsection (c) or subsection (d) hereof shall be
adjusted to equal their respective gross fair market values, as determined
by a Majority in Interest using such reasonable method of valuation as such
Majority in Interest may adopt, as of the following times:
(a) the acquisition of an additional interest in
the Company (other than in connection with the execution of this
Agreement) by a new or existing Member in exchange for more than
a de minimis Capital Contribution if a Majority in Interest
reasonably determines that such adjustment is necessary or
appropriate to reflect the relative Economic Interests of the
Members in the Company;
(b) the distribution by the Company to a Member
of more than a de minimis amount of Company Assets as
consideration for an interest in the Company, if a Majority in
Interest reasonably determines that such adjustment is necessary
or appropriate to reflect the relative Economic Interests of the
Members in the Company;
(c) the liquidation of the Company within the
meaning of Regulations Section 1.704-1(b)(2)(ii)(g); and
(d) at such other times as a Majority in Interest
shall reasonably determine necessary or advisable in order to
comply with Regulations Sections 1.704-1(b) and 1.704-2.
2.23.3 The Gross Asset Values of Company Assets shall be
increased (or decreased) to reflect any adjustments to the adjusted basis of
such assets pursuant to Code Section 734(b) or Code Section 743(b), but only
to the extent that such adjustments are taken into account in determining
Capital Accounts pursuant to Regulations Section 1.704-1(b)(2)(iv)(m);
provided, however, that Gross Asset Values shall not be adjusted pursuant to
this Paragraph 2.23.3 to the extent that a Majority in Interest reasonably
determines that an adjustment pursuant to Paragraph 2.23.2 above is
necessary or appropriate in connection with a transaction that would
otherwise result in an adjustment pursuant to this Paragraph 2.23.3.
2.23.4 If the Gross Asset Value of a Company asset has
been determined or adjusted pursuant to Paragraph 2.23.1, Paragraph 2.23.2
or Paragraph 2.23.3 hereof, such Gross Asset Value shall thereafter be
adjusted by the Depreciation taken into account with respect to such Company
Asset for purposes of computing Net Profits and Net Losses.
6
2.24 "IMMEDIATE FAMILY" means, and is limited to, an individual
Member's current spouse, parents, parents-in-law, grandparents, children,
siblings, and grandchildren, or a trust or estate, all of the beneficiaries of
which consist of such Member or members of such Member's Immediate Family.
2.25 "INCAPACITY" means the bankruptcy, incompetence, insanity,
death, retirement, resignation, withdrawal, expulsion, or other acts resulting
in dissolution under the Act or termination (other than by merger or
consolidation) of any Person, any such Person being an "Incapacitated Member".
2.26 "INDEMNITEE" is defined in Paragraph 6.5.1.
2.27 "MAJORITY IN INTEREST" means Members holding, in the
aggregate, a majority of the Percentage Interests held by all Members of the
Company.
2.28 "MAJORITY OF REMAINING MEMBERS" means Members other than the
Incapacitated Member owning (a) a majority of the profits interests in the
Company held by all Members other than the Incapacitated Member, determined and
allocated based on any reasonable estimate of profits from the relevant date to
the projected termination of the Company and taking into account present and
future allocations of profits under this Agreement as it is in effect on the
relevant date, and (b) a majority of the capital interests in the Company,
determined as of the relevant date under this Agreement, owned by all the
Members other than the Incapacitated Member.
2.29 "MEMBER MINIMUM GAIN" means an amount, with respect to each
Member Nonrecourse Debt, equal to the Company Minimum Gain that would result if
such Member Nonrecourse Debt were treated as a Nonrecourse Liability, determined
in accordance with Regulations Section 1.704-2(i) with respect to "partner
minimum gain."
2.30 "MEMBER NONRECOURSE DEBT" has the meaning set forth in
Regulations Section 1.704-2(b)(4) for the phrase "partner nonrecourse debt."
2.31 "MEMBER NONRECOURSE DEDUCTIONS" has the meaning set forth in
Regulations Section 1.704-2(i) for the phrase "partner nonrecourse deductions."
2.32 "MEMBERS" means the Persons owning Membership Interests,
including any Substitute Members and Additional Members, with each Member being
referred to, individually, AS A "MEMBER."
2.33 "MEMBERSHIP INTEREST" or "INTEREST" means the entire
ownership interest of a Member in the Company at any particular time, including
without limitation, the Member's Economic Interest, any and all rights to vote
and otherwise participate in the Company's affairs, and the rights to any and
all benefits to which a Member may be entitled as provided in this Agreement,
together with the obligations of such Member to comply with all of the terms and
provisions of this Agreement.
2.34 "NET PROFITS" or "NET LOSSES" means, for each fiscal year or
other period, an amount equal to the Company's taxable income or loss for such
year or period determined in accordance with Code Section 703(a)(for this
purpose, all items of income, gain, loss or deduction required to be stated
separately pursuant to Code Section 703(a)(1) shall be included in taxable
income or loss), with the following adjustments:
7
2.34.1 Any income of the Company that is exempt from
federal income tax and not otherwise taken into account in computing Net
Profits or Net Losses pursuant to this Paragraph 2.34 shall be added to such
taxable income or loss;
2.34.2 Any expenditure of the Company described in Code
Section 705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures
pursuant to Regulations Section 1.704-1(b)(2)(iv)(i), and not otherwise
taken into account in computing Net Profits or Net Losses pursuant to this
Paragraph 2.34, shall be subtracted from such taxable income or loss;
2.34.3 Gain or loss resulting from any disposition of
Company Assets with respect to which gain or loss is recognized for federal
income tax purposes shall be computed by reference to the Gross Asset Value
of the Company Assets disposed of, notwithstanding that the adjusted tax
basis of such Company Assets differs from its Gross Asset Value;
2.34.4 In lieu of the depreciation, amortization and
other cost recovery deductions taken into account in computing such taxable
income or loss, there shall be taken into account Depreciation for such
fiscal year;
2.34.5 To the extent an adjustment to the adjusted tax
basis of any asset included in Company Assets pursuant to Code Section
734(b) or Code Section 743(b) is required pursuant to Regulations Section
1.704-1 (b)(2)(iv) (m) (4) to be taken into account in determining Capital
Accounts as a result of a distribution other than in liquidation of a
Member's Interest, the amount of such adjustment shall be treated as an item
of gain (if the adjustment increases the basis of the asset) or loss (if the
adjustment decreases the basis of the asset) from the disposition of the
asset and shall be taken into account for the purposes of computing Net
Profits and Net Losses;
2.34.6 If the Gross Asset Value of any Company Asset is
adjusted in accordance with Paragraph 2.23 of this Agreement, the amount of
such adjustment shall be taken into account in the taxable year of such
adjustment as gain or loss from the disposition of such asset for purposes
of computing Net Profits or Net Losses; and
2.34.7 Notwithstanding any other provision of this
Paragraph 2.33, any items that are specially allocated pursuant to Paragraph
5.2 hereof shall not be taken into account in computing Net Profits or Net
Losses.
2.35 "NONRECOURSE DEDUCTIONS" has the meaning set forth in
Regulations Sections 1.704-2(b)(1) and 1.704-2(c).
2.36 "NONRECOURSE LIABILITY" has the meaning set forth in
Regulations Sections 1.704-2(b)(3) and 1.752-1(a)(2).
2.37 "NON-TRANSFERRING MEMBERS" means, in the event an Offer by
Transferor is made, all Members other than the Member making such Offer by
Transferor.
2.38 "OFFERER" is defined in Paragraph 7.10.1
2.39 "OFFER" is defined in Paragraph 7.10.1.
2.40 "OFFER BY TRANSFEROR" is defined in Paragraph 7.9.
8
2.41 "OPERATING CASH EXPENSES" means, with respect to any fiscal
period, the amount of cash disbursed in the Ordinary Course during the period,
including without limitation, all cash expenses, such as advertising, promotion,
property management, insurance premiums, taxes, utilities, repair, maintenance,
legal, accounting, bookkeeping, computing, equipment use, travel on Company
business, telephone expenses and salaries, and direct expenses of Company
employees (if any) and agents while engaged in Company business. Operating Cash
Expenses shall include fees paid by the Company to any Member or any Affiliate
thereof permitted by this Agreement, and the actual cost of goods, materials and
administrative services used for or by the Company, whether incurred by any
Member, any Affiliate thereof or any non-Affiliate in performing functions set
forth in this Agreement reasonably requiring the use of such goods, materials or
administrative services. Operating Cash Expenses shall not include expenditures
paid from Reserves.
2.42 "ORDINARY COURSE" shall mean the ordinary course of business
of the Business.
2.43 "PERCENTAGE INTEREST" means, with respect to each Member,
the percentage set forth opposite such Member's name on Exhibit A. attached
hereto as it may be modified or supplemented from time to time pursuant to the
provisions of this Agreement.
2.44 "PERSON" means and includes an individual, a corporation, a
general or limited partnership, a limited liability company, a trust, an
unincorporated organization, a government or any department or agency thereof,
or any entity similar to any of the foregoing.
2.45 "RECOURSE LIABILITY" has the meaning set forth in
Regulations Section 1.752-1(a)(1).
2.46 "REGULATIONS" means temporary and final Treasury Regulations
promulgated under the Code, as such regulations may be amended from time to time
(including corresponding provisions of succeeding Treasury Regulations).
2.47 "REGULATORY ALLOCATIONS" is defined in Paragraph 5.2.8.
2.48 "REPRESENTATIVE" is defined in Paragraph 6.1.2.
2.49 "RESERVES" means funds set aside or amounts allocated to
reserves that shall be maintained in amounts deemed sufficient by a Majority in
Interest for working capital, to pay taxes, insurance, debt service, and other
costs or expenses incident to the conduct of business by the Company as
contemplated hereunder.
2.50 "RESPONSIBLE PARTY" is defined in Paragraph 6.5.5.
2.51 "SUBSTITUTE MEMBER" means any Person (a) to whom a Member
(or assignee thereof) Transfers all or any part of its Interest and (b) which
has been admitted to the Company as a Substitute Member pursuant to Paragraph
7.6.
2.52 "SUMMIT CARE" means Summit Care Corporation, a California
corporation.
2.53 "SUPERMAJORITY IN INTEREST" means Members holding, in the
aggregate, sixty-six percent (66%) or more of the Percentage Interests held by
all Members of the Company. Until such time as there are members in addition to
APS and SCPI, "Supermajority in Interest" shall mean 'Majority in Interest."
9
2.54 "TERMINATING CAPITAL TRANSACTION" means any sale or other
disposition of all or substantially all of the assets of the Company or a
related series of transactions that, taken together, result in the sale or other
disposition of all or substantially all of the Company Assets.
2.55 "TERMINATION PAYMENT" is defined in Paragraph 7.5.
2.56 "TRANSFER" means, with respect to any interest in the
Company, a sale, conveyance, exchange, assignment, pledge, encumbrance, gift,
bequest, hypothecation or other transfer or disposition by any other means,
whether for value or no value and whether voluntary or involuntary (including,
without limitation, by operation of law), or an agreement to do any of the
foregoing.
2.57 "TRANSFEREE" is defined in Paragraph 7.9.
2.58 "TRANSFEROR" is defined in Paragraph 7.9.
2.59 "UNAFFECTED MEMBERS" means, in the event of a Fundamental
change, all Members other than the Affected Member.
ARTICLE 3
CAPITAL: CAPITAL ACCOUNTS AND MEMBERS
3.1 INITIAL CAPITAL CONTRIBUTIONS OF MEMBERS. The names,
addresses, initial Capital Contributions and Percentage Interests of the Members
are set forth on Exhibit A attached hereto and incorporated herein. All Members
acknowledge and agree that the initial Capital Contributions set forth in
Exhibit A represent the amount of money and the Gross Asset Value of all
property (other than money) initially contributed by the Members.
3.2 ADDITIONAL CAPITAL CONTRIBUTIONS BY MEMBERS.
3.2.1 Except as provided in Paragraphs 3.2.2 and 3.2.3,
no Member shall be permitted or required to make any additional Capital
Contributions to the Company.
3.2.2 If from time to time the Company requires
additional capital or has capital inadequate to pay its liabilities, each as
determined by a Majority in Interest, then the Members constituting such
Majority in Interest shall deliver a notice to each other Member specifying
the aggregate amount of the additional Capital Contribution required, a date
not earlier than thirty (30) days from the date of such notice prior to
which such additional Capital Contribution shall be made, and any other
terms and conditions relating to such additional Capital Contribution. Upon
receipt of such notice, each Member, in its discretion, shall thereafter be
required to make additional Capital Contributions, on a date not later than
the date set forth in the notice, on a pro rata basis in accordance with its
respective Percentage Interests pursuant to such terms and conditions as are
set forth in the notice. The sole remedy against a Member for failure to
make the additional Capital Contribution approved by a Majority in Interest
under this Paragraph 3.2.2 shall be the reduction of such Member's
Percentage Interest as provided in Paragraph 3.2.3.
3.2.3
(a) If any Member fails to make its proportionate
share of an additional Capital Contribution approved by a Majority in
Interest as required under Paragraph 3.2.2, such
10
Member's Percentage Interest shall be reduced to that percentage arrived at
by dividing the actual Capital Contributions made by such Member by the
total Capital Contributions made by all Members (including additional
Capital Contributions), and there shall be a corresponding increase to the
Percentage Interest of the Members making such additional Capital
Contributions.
(b) In the event that any Member fails to make
its proportionate share of an additional Capital Contribution approved by a
Majority in Interest as required under Paragraph 3.2.2, and such failure
shall continue for a period of thirty (30) days, the Members making such
additional Capital Contribution shall at any time thereafter that such
Capital Contribution has not been paid have the right to contribute (pro
rata in accordance with the Percentage Interests held by those electing to
so contribute) the delinquent Member's share of the additional Capital
Contribution. In the event of such contribution by one or more Members
making such additional Capital Contribution, the Percentage Interest of each
such Member making such Additional Capital Contribution shall be increased
to that percentage arrived at by dividing the sum of the actual Capital
Contributions (including additional Capital Contributions) made by such
Member on its own behalf and one hundred fifty percent (150%) of the total
Capital Contributions made by such Member on behalf of the Member not making
such Additional Capital Contribution, by the total Capital Contribution made
by all Members. The Percentage Interest of the Member not making such
additional Capital Contribution shall be correspondingly decreased.
(c) In the event that a Member's Percentage
Interest is diluted pursuant to this Paragraph 3.2.3, the Tax Matters
Partner shall prepare a revised Exhibit A reflecting the adjusted Percentage
Interests of the Members.
3.3 CAPITAL ACCOUNTS. A Capital Account shall be established and
maintained for each Member in accordance with the terms of this Agreement.
3.4 ADDITIONAL MEMBERS. Following formation of the Company, the
Members may, upon the written consent of a Majority in Interest, issue interests
in the Company directly from the Company, and admit one or more recipients of
such interests as additional Members ("ADDITIONAL MEMBERS") from time to time,
on such terms and conditions and for such Capital Contributions, if any, as a
Majority in Interest may determine. As a condition to being admitted to the
Company, each Additional Member shall execute an agreement to be bound by the
terms and conditions of this Agreement.
3.5 MEMBER CAPITAL. Except as otherwise provided in this
Agreement or with the prior written consent of all of the Members: (a) no Member
shall demand or be entitled to receive a return of or interest on its Capital
Contributions or Capital Account, (b) no Member shall withdraw any portion of
its Capital Contributions or receive any distributions from the Company as a
return of capital on account of such Capital Contributions, and (c) the Company
shall not redeem or repurchase the Interest of any Member.
3.6 MEMBER LOANS. No Member shall be required or permitted to
make any loans or otherwise lend any funds to the Company, except with the
consent of a Majority in Interest. No loans made by any Member to the Company
shall have any effect on such Member's Percentage Interest, such loans
representing a debt of the Company payable or collectible solely from the assets
of the Company in accordance with the terms and conditions upon which such loans
were made.
3.7 LIABILITY OF MEMBERS. Except as otherwise required by any
non-waivable provision of the Act or other applicable law: (a) no Member shall
be personally liable in any manner whatsoever
11
for any debt, liability or other obligation of the Company, whether such debt,
liability or other obligation arises in contract, tort, or otherwise; and (b) no
Member shall in any event have any liability whatsoever in excess of (i) the
amount of its Capital Contributions, (ii) its share of any assets and
undistributed profits of the Company, (iii) the amount of any unconditional
obligation of such Member to make additional Capital Contributions to the
Company pursuant to this Agreement, and (iv) the amount of any wrongful
distribution to such Member, if, and only to the extent, such Member has actual
knowledge (at the time of the distribution) that such distribution is made in
violation of Section 18-607 of the Act.
ARTICLE 4
DISTRIBUTIONS
4.1 Distributions of Cash Available for Distribution.
4.1.1 Except as otherwise provided in Article 8, Cash
Available for Distribution shall be distributed to the Members only at such
times as may be determined by a Majority in Interest.
4.1.2 Subject to Article 8 hereof, all distributions of
Cash Available for Distribution shall be distributed to the Members pro rata
in accordance with their respective Percentage Interests.
4.1.3 Notwithstanding anything to the contrary contained
herein, the Company shall distribute to APS the amount of One Million Five
Hundred Thousand Dollars ($1,500,000) in immediately available funds on the
date that the Certificate is filed with the Office of the Delaware Secretary
of State.
4.2 Distributions Upon Liquidation. Distributions made in
conjunction with the final liquidation of the Company, including, without
limitation, the net proceeds of a Terminating Capital Transaction, shall be
applied or distributed as provided in Article 8 hereof.
4.3 Withholding. The Company may withhold distributions or
portions thereof if it is required to do so by any applicable rule, regulation,
or law, and each Member hereby authorizes the Company to withhold from or pay on
behalf of or with respect to such Member any amount of federal, state, local or
foreign taxes that a Majority in Interest determines that the Company is
required to withhold or pay with respect to any amount distributable or
allocable to such Member pursuant to this Agreement. Any amount paid on behalf
of or with respect to a Member pursuant to this Paragraph 4.3 shall constitute a
loan by the Company to such Member, which loan shall be repaid by such Member
within fifteen (15) days after notice from the Company that such payment must be
made unless: (i) the Company withholds such payment from a distribution which
would otherwise be made to the Member or (ii) a Majority in Interest determines
that such payment may be satisfied out of Cash Available For Distribution which
would, but for such payment, be distributed to the Member. Any amounts withheld
pursuant to this Paragraph 4.3 shall be treated as having been distributed to
such Member. Each Member hereby unconditionally and irrevocably grants to the
Company a security interest in such Member's Interest to secure such Member's
obligation to pay to the Company any amounts required to be paid pursuant to
this Paragraph 4.3. In the event that a Member fails to pay any amounts owed to
the Company pursuant to this Paragraph 4.3 when due, the remaining Members may,
in their respective sole and absolute discretion, elect to make the payment to
the Company on behalf of such defaulting Member, and in such event shall be
deemed to have loaned such amount to such defaulting Member and shall succeed to
all rights and remedies of the Company as against such defaulting Member
(including, without limitation, the right to receive distributions). Any amounts
payable by a Member hereunder shall bear
12
interest at a rate equal to two percent (2%) above the "prime rate," as
announced in the Wall Street Journal from time to time, or the successor to such
rate if no longer published, compounded annually from the date such amount is
due (i.e., fifteen (15) days after demand) until such amount is paid in full.
Each Member shall take such actions as the Company shall request in order to
perfect or enforce the security interest created hereunder. A Member's
obligations hereunder shall survive the dissolution, liquidation, or winding up
of the Company.
4.4 Distributions in Kind. No right is given to any Member to
demand or receive property other than cash as provided in this Agreement. The
Members may, upon the written consent of a Majority in Interest, cause the
Company to make a distribution in kind of Company Assets to the Members, and
such Company Assets shall be distributed in such a fashion as to ensure that the
fair market value thereof is distributed and allocated in accordance with this
Article 4 and Articles 5 and 8 hereof; provided, however, that no Member may be
compelled to accept a distribution consisting, in whole or in part, of any
Company Assets in kind unless the ratio that the fair market value of such
distribution in kind bears to such Member's total distribution does not exceed
the ratio that the fair market value of similar distributions in kind bear to
the total distributions of other Members receiving distributions concurrently
therewith (if any), except upon a dissolution and winding up of the Company.
4.5 Limitations on Distributions. Notwithstanding any provision
to the contrary contained in this Agreement, neither the Company nor any Member,
on behalf of the Company, shall knowingly make a distribution to any Member or
the holder of any Economic Interest on account of its Membership Interest or
Economic Interest (as applicable) in violation of Section 18-607 of the Act.
ARTICLE 5
ALLOCATIONS OF NET PROFITS AND NET LOSSES
5.1 General Allocation of Net Profits and Losses.
5.1.1 Net Profits and Net Losses shall be determined and
allocated with respect to each fiscal year of the Company as of the end of
such fiscal year. Subject to the other provisions of this Agreement, an
allocation to a Member of a share of Net Profits or Net Losses shall be
treated as an allocation of the same share of each item of income, gain,
loss or deduction that is taken into account in computing Net Profits or Net
Losses.
5.1.2 Subject to the other provisions of this Article 5,
Net Profits, Net Losses and any other items of income, gain, loss and
deduction for any fiscal year shall be allocated in proportion to the
Members' respective Percentage Interests.
5.2 Regulatory Allocations. Notwithstanding the any other
provision of this Article 5, the following special allocations shall be made in
the following order of priority:
5.2.1 If there is a net decrease in Company Minimum Gain
during a Company taxable year, then each Member shall be allocated items of
Company income and gain for such taxable year (and, if necessary, for
subsequent years) in an amount equal to such Member's share of the net
decrease in Company Minimum Gain, determined in accordance with Regulations
Section 1.704-2(g)(2). Allocations made pursuant to the previous sentence
shall be made in proportion to the amounts required to be allocated to each
Member pursuant thereto. This Paragraph 5.2.1 is
13
intended to comply with the minimum gain chargeback requirement of
Regulations Section 1.704-2(f) and shall be interpreted consistently
therewith.
5.2.2 If there is a net decrease in Member Minimum Gain
attributable to a Member Nonrecourse Debt during any Company taxable year,
each Member who has a share of the Member Minimum Gain attributable to such
Member Nonrecourse Debt, determined in accordance with Regulations Section
1.704-2(i)(5), shall be specially allocated items of Company income and gain
for such taxable year (and, if necessary, subsequent years) in an amount
equal to such Member's share of the net decrease in Member Nonrecourse Debt,
determined in a manner consistent with the provisions of Regulations Section
1.704-(i)(4). Allocations made pursuant to the previous sentence shall be
made in proportion to the amounts required to be allocated to each Member
pursuant thereto. This Paragraph 5.2.2 is intended to comply with the
partner nonrecourse debt minimum gain chargeback requirement of Regulations
Section 1.704-2(i)(4) and shall be interpreted consistently therewith.
5.2.3 If any Members unexpectedly receive an adjustment,
allocation, or distribution of the type contemplated by Regulations Section
1.704-1(b)(2)(ii)(d)(4), (5) or (6), items of income and gain shall be
allocated to all such Members (in proportion to the amounts of their
respective Adjusted Capital Account Deficits) in an amount and manner
sufficient to eliminate, to the extent required by the Regulation, the
Adjusted Capital Account Deficit of such Members as quickly as possible. It
is intended that this Paragraph 5.2.3 qualify and be construed as a
"qualified income offset" within the meaning of Regulations Section 1.704-
1(b)(2)(ii)(d).
5.2.4 If the allocation of Net Loss to a Member as
provided in Paragraph 5.1 hereof would create or increase an Adjusted
Capital Account Deficit, there shall be allocated to such Member only that
amount of Net Loss as will not create or increase an Adjusted Capital
Account Deficit. The Net Loss that would, absent the application of the
preceding sentence, otherwise be allocated to such Member shall be allocated
to the other Members in accordance with their relative Percentage Interests,
subject to the limitations of this Paragraph 5.2.4.
5.2.5 To the extent that an adjustment to the adjusted
tax basis of any Company Asset pursuant to Code Section 734(b) or Code
Section 743(b) is required, pursuant to Regulations Section 1.704-
1(b)(2)(iv)(m)(2) or Regulations Section 1.704-1(b)(2)(iv)(m)(4), to be
taken into account in determining Capital Accounts as the result of a
distribution to a Member in complete liquidation of its Interest, the amount
of such adjustment to the Capital Accounts shall be treated as an item of
gain (if the adjustment increases the basis of the asset) or loss (if the
adjustment decreases such basis), and such gain or loss shall be specially
allocated to the Members in accordance with their interests in the Company
in the event that Regulations Section 1.704-1(b)(2)(iv)(m)(2) applies, or to
the Members to whom such distribution was made in the event that Regulations
Section 1.704-1(b)(2)(iv)(m)(4) applies.
5.2.6 The Nonrecourse Deductions for each taxable year of
the Company shall be allocated to the Members in proportion to their
Percentage Interests.
5.2.7 The Member Nonrecourse Deductions shall be
allocated each year to the Member that bears the economic risk of loss
(within the meaning of Regulations Section 1.752-2) for the Member
Nonrecourse Debt to which such Member Nonrecourse Deductions are
attributable in accordance with Regulations Section 1.704-2(i)(1).
14
5.2.8 The allocations set forth in Paragraphs 5.2.1,
5.2.2, 5.2.3, 5.2.4, 5.2.5, 5.2.6 and 5.2.7 hereof (the "REGULATORY
ALLOCATIONS") are intended to comply with certain requirements of
Regulations Sections 1.704-1(b) and 1.704-2(i). Notwithstanding the
provisions of Paragraph 5.1.2, the Regulatory Allocations shall be taken
into account in allocating other items of income, gain, loss and deduction
among the Members so that, to the extent possible, the net amount of such
allocations of other items and the Regulatory Allocations to each Member
shall be equal to the net amount that would have been allocated to each such
Member if the Regulatory Allocations had not occurred. In the event that the
Code or any Regulations require allocations of items of income, gain, loss,
deduction or credit different from those set forth in this Article 5, the
Company is hereby authorized to make new allocations in reliance on the Code
and such Regulations, provided that such new allocations shall be subject to
the prior written approval of a Majority in Interest. Furthermore, to the
extent permitted by the Code or Regulations, any such new allocations shall
be considered Regulatory Allocations subject to this Paragraph 5.2.8.
5.3 TAX ALLOCATIONS.
5.3.1 Except as provided in Paragraph 5.3.2 hereof, for
income tax purposes under the Code and the Regulations each Company item of
income, gain, loss and deduction shall be allocated between the Members as
its correlative item of "book" income, gain, loss or deduction is allocated
pursuant to this Article 5.
5.3.2 Tax items with respect to Company Assets that are
contributed to the Company with a Gross Asset Value that varies from its
basis in the hands of the contributing Member immediately preceding the date
of contribution shall be allocated between the Members for income tax
purposes pursuant to Regulations promulgated under Code Section 704(c) so as
to take into account such variation. The Company shall account for such
variation under any method approved under Code Section 704(c) and the
applicable Regulations as chosen by a Majority in Interest including,
without limitation, the 'traditional method" as described in Regulations
Section 1.704-3(b). If the Gross Asset Value of any Company Asset is
adjusted pursuant to Paragraph 2.23, subsequent allocations of income, gain,
loss and deduction with respect to such Company Asset shall take account of
any variation between the adjusted basis of such Company Asset for federal
income tax purposes and its Gross Asset Value in the same manner as under
Code Section 704(c) and the Regulations promulgated thereunder under any
method approved under Code Section 704(c) and the applicable Regulations as
chosen by a Majority in Interest. Allocations pursuant to this Paragraph
5.3.2 are solely for purposes of federal, state and local taxes and shall
not affect, or in any way be taken into account in computing, any Member's
Capital Account or share of Net Profits, Net Losses and any other items or
distributions pursuant to any provision of this Agreement.
5.4 OTHER PROVISIONS.
5.4.1 For any fiscal year during which any part of a
Membership Interest or Economic Interest is transferred between the Members
or to another Person, the portion of the Net Profits, Net Losses and other
items of income, gain, loss, deduction and credit that are allocable with
respect to such part of a Membership Interest or Economic Interest shall be
apportioned between the transferor and the transferee under any method
allowed pursuant to Section 706 of the Code and the applicable Regulations
as determined by a Majority in Interest.
15
5.4.2 For purposes of determining a Member's proportional
share of the Companys' "excess nonrecourse liabilities" within the meaning
of Regulations Section 1.752-3(a)(3), each Member's interest in Net Profits
shall be such Member's Percentage Interest.
5.4.3 The Members acknowledge and are aware of the income
tax consequences of the allocations made by this Article 5 and hereby agree
to be bound by the provisions of this Article 5 in reporting their shares of
Net Profits, Net Losses and other items of income, gain, loss, deduction and
credit for federal, state and local income tax purposes.
ARTICLE 6
OPERATIONS
6.1 MANAGEMENT.
6.1.1 The Company shall be a member-managed limited liability
company within the meaning of the Act. All Members shall be entitled to
participate in the management and control of the day-to-day operation and
business affairs of the Company. Each Member shall have the authority to
bind the Company, and, except as otherwise provided herein, shall have the
power, on behalf of the Company, to do all things necessary or convenient to
carry out the business and affairs of the Company. Notwithstanding anything
to the contrary contained herein, any action taken by any Member on behalf
of the Company without the requisite approval of the other Members as
required herein, shall constitute a breach of this Agreement by such Member.
6.1.2 Each of APS and SCPI is a duly organized and validly
existing corporation, acting by and through its respective Board of
Directors and elected and authorized officers. Each of APS and SCPI may
delegate a single officer to serve as its representative with respect to the
matters and affairs of the Company (each, a "Representative" and together,
"Representatives"). Each Representative shall be provided with copies of any
and all papers, documents and correspondences to or from the Company,
including, without limitation, financial statements, balance sheets,
contracts, reports, filings, tax returns, legal notices and notices from any
governmental authority or agency. As its initial Representative, SCPI
designates Jesse Martinez. APS designates Terry Davis as its initial
Representative.
6.1.3 Subject to Paragraph 6.1.l and the limitations set forth
in Paragraph 6.1.5,and except as otherwise expressly provided in this
Agreement, all actions by or on behalf of the Company may be taken upon the
prior written approval of a Majority in Interest. By way of illustration and
not by way of limitation, and subject to the limitations set forth in the
preceding sentence, the Company shall have the power and authority from time
to time, upon the prior written approval of a Majority in Interest, to do
the following:
(a) to oversee the operations of the Business and to manage
and maintain all personal and real property in which the
Company has an interest;
(b) to incur expenditures on behalf of the Company in
connection with the operation of the Business;
(c) to employ and dismiss from employment employees, agents
and consultants of the Business in the Ordinary Course;
16
(d) to enter into, execute, amend, supplement,
acknowledge and deliver contracts, agreements,
leases or other instruments in connection with
the operation of the Business;
(e) to establish and maintain one or more bank
accounts for the Company in such bank or banks
having assets of at least Twenty-five Million
Dollars ($25,000,000);
(f) to the extent that funds of the Company are
available, to pay expenses, debts and
obligations of the Company; and
(g) to perform all normal business functions, and
otherwise operate and manage the business and
affairs of the Company, in accordance with and
as limited by this Agreement.
6.1.4 The Company may, from time to time, hire such employees
as are deemed necessary by the Members for the efficient operation of
the Company's day-to-day business operations, which employees shall be
granted such powers and authority as determined by the Members.
6.1.5 Notwithstanding the provisions of Paragraphs 6.1.2,
6.1.3 and 6.1.4 or any other provision of this Agreement (but subject to
Paragraph 6.1.1) the Company may not take any of the following actions
without the written consent of a Supermajority in Interest:
(a) approve any Terminating Capital Transaction;
(b) sell, mortgage, encumber, pledge as security for
borrowing, lease or otherwise transfer or
dispose of (i) the Business or any portion
thereof or (ii) any of the assets of the Company
or the Business except in the Ordinary Course;
(c) incur any indebtedness other than trade
indebtedness to vendors and suppliers in the
Ordinary Course;
(d) employ or compensate any Person in connection
with the business of the Company, except in the
Ordinary Course;
(e) lend money or give credit on behalf of the
Company or release or discharge any debt or
liability owing to the Company, except in the
Ordinary Course;
(f) cause the Company to become a surety, guarantor
or endorser for any Person;
(g) enter into, amend or otherwise modify any
agreement, oral or written, including without
limitation any employment agreement, consulting
agreement or other similar agreement, on behalf
of the Company with any Member or any Affiliate
of any Member, and including, without
limitation, this Agreement or the Certificate;
or
17
(h) participate in a reorganization, merger or
consolidation with one or more entities in which
the Company is not the surviving entity, or if
Company is the surviving entity, if the
ownership of fifty percent (50%) or more of its
membership interest is held by entities other
than the Company, or the acquisition of
beneficial ownership of fifty percent (50%) or
more of the voting stock or other ownership
interest in any Member (or, in the case of SCPI,
of either SCPI or Summit Care) by any person or
entity not currently holding fifty percent (50%)
or more of such interest.
6.2 RELIANCE BY THIRD PARTIES. Any Person dealing with the Company
or any Member may rely upon a certificate signed by any Member as to:
(a) the identity of any Member of the Company;
(b) the existence or non-existence of any fact or
facts which constitute a condition precedent to
acts by a Member or in any other manner germane
to the affairs of the Company;
(c) the Persons who are authorized to execute and
deliver any instrument or document for or on
behalf of the Company; or
(d) any act or failure to act by the Company or as
to any other matter whatsoever involving the
Company or any Member.
6.3 COMPENSATION.
6.3.1 Except for the reimbursements provided for in Paragraph
6.3.2, no Member shall be entitled to compensation for actions taken on
behalf of the Company or in connection with this Agreement.
6.3.2 Subject to the approval of a Majority in Interest, to be
obtained on a monthly basis, to the extent not otherwise provided for in any
agreement contemplated in Paragraph 6.3.1, each Member shall be entitled to
reimbursement on a monthly basis from the Company for all out-of-pocket
costs and expenses incurred by it, in its reasonable discretion, for or on
behalf of the Company.
6.3.3 Compensation for the Representatives and any office
created under Paragraph 6.1.3 shall be determined by a Supermajority in
Interest.
6.4 RECORDS AND REPORTS.
6.4.1 The Members shall cause to be kept, at the principal
place of business of the Company, or at such other location as a Majority in
Interest shall reasonably deem appropriate, full and proper ledgers, other
books of account, and records of all receipts and disbursements, other
financial activities, and the internal affairs of the Company for at least
the current and past four fiscal years.
6.4.2 The Members shall also cause to be sent to each Member
of the Company, the following:
18
(a) within ninety (90) days following the end of
each fiscal year of the Company, a report that
shall include all necessary information required
by the Members for preparation of their federal,
state and local income or franchise tax or
information returns, including each Member's pro
rata share of Net Profits, Net Losses and any
other items of income, gain, loss and deduction
for such fiscal year; and
(b) a copy of the Company's federal, state and local
income tax or information returns for each
fiscal year, concurrent with the filing of such
returns.
6.4.3 Members (personally or through an authorized
representative) may, for purposes reasonably related to their Interests,
examine and copy (at their own cost and expense) the books and records of
the Company at all reasonable business hours.
6.5 INDEMNIFICATION AND LIABILITY OF THE MEMBERS.
6.5.1 The Company shall indemnify and hold harmless each
Member, its Affiliates, and subsidiaries, and all officers, directors,
employees, shareholders and agents of any of the foregoing (individually, an
"INDEMNITEE") to the full extent permitted by law from and against any and
all losses, claims, demands, costs, damages, liabilities, expenses of any
nature (including attorneys' fees and disbursements), judgments, fines,
settlements and other amounts arising from any and all claims, demands,
actions, suits or proceedings, civil, criminal, administrative or
investigative, in which the Indemnitee may be involved, or threatened to be
involved as a party or otherwise, relating to the performance or
nonperformance of any act concerning the activities of the Company, if (i)
the Indemnitee acted in good faith and in a manner he believed to be in, or
not contrary to, the best interests of the Company, and (ii) the
Indemnitee's conduct did not constitute gross negligence or willful
misconduct. The termination of an action, suit or proceeding by judgment,
order, settlement, or upon a plea of nolo contendere or its equivalent,
shall not, in and of itself, create a presumption or otherwise constitute
evidence that the Indemnitee acted in a manner contrary to that specified in
clauses (i) or (ii) above.
6.5.2 Any indemnification provided hereunder shall be
satisfied solely out of the assets of the Company, as an expense of the
Company. No Member shall be subject to personal liability by reason of these
indemnification provisions.
6.5.3 The provisions of this Paragraph 6.5 are for the benefit
of the Indemnitees and shall not be deemed to create any rights for the
benefit of any other Person.
6.5.4 Neither a Member, nor the subsidiaries nor Affiliates of
any Member nor the officers, directors, employees or agents of any of the
foregoing shall be liable to the Company or to any other Member for any
losses sustained or liabilities incurred as a result of any act or omission
of any Member or any such other Person if (i) the act or failure to act of
the Member or such other Person was in good faith and in a manner he
believed to be in, or not contrary to, the best interests of the Company,
and (ii) the conduct of the Member or such other Person did not constitute
gross negligence or willful misconduct.
6.5.5 To the extent that a Member, or any Affiliate or
subsidiary of any Member, or any officer, director, employee or agent of any
of the foregoing (each, a "RESPONSIBLE PARTY")
19
has, at law or in equity, duties (including, without limitation, fiduciary
duties) to the Company, or to any other Member or other Person bound by the
terms of this Agreement, such Responsible Parties acting in accordance with
this Agreement shall not be liable to the Company, any Member, or any such
other Person for its good faith reliance on the provisions of this
Agreement. The provisions of this Agreement, to the extent that they
restrict the duties of a Responsible Party otherwise existing at law or in
equity, are agreed by all parties hereto to replace such other duties to the
greatest extent permitted under applicable law.
6.5.6 Whenever a Responsible Party is required or permitted to
make a decision, take or approve an action, or omit to do any of the
foregoing: (a) in its discretion, under a similar grant of authority or
latitude, or without an express standard of behavior (including, without
limitation, standards such as "reasonable" or "good faith"), then such
Responsible Party shall be entitled to consider only such interests and
factors, including its own, as it desires, and shall have no duty or
obligation to consider any other interests or factors whatsoever, or (b)
with an express standard of behavior (including, without limitation,
standards such as "reasonable" or "good faith"), then such Responsible Party
shall comply with such express standard but shall not be subject to any
other, different or additional standard imposed by this Agreement or
otherwise applicable law.
6.6 COVENANT NOT TO COMPETE. No Member (for the purposes of this
Paragraph 6.6, the term "Member" shall include Summit Care) shall (and each
Member shall cause each of its officers, directors, partners, shareholders, and
owners not to), directly or indirectly, (i) engage in a business concerned in
whole or part with providing pharmacy services in competition with the Business
of the Company in the County of Travis, State of Texas, or (ii) be or become
interested in any Person engaged in a business concerned in whole or part with
providing pharmacy services in competition with the Business of the Company in
the County of Travis, State of Texas as a partner, shareholder, principal,
trustee, employee, consultant or in any other relationship or capacity. Members
agree to maintain in confidence, and not to disclose to any third party, any
ideas, methods, developments, inventions, improvements and business plans and
information which are the confidential information of the Company. In the event
the agreement in this Paragraph 6.6 shall be determined by any court of
competent jurisdiction to be unenforceable by reason of its extending for too
great a period of time or over too great a geographical area or by reason of its
being too extensive in any other respect, it shall be interpreted to extend only
over the maximum period of time for which it may be enforceable and/or over the
maximum geographical area as to which it may be enforceable and/or to the
maximum extent in all other respects as to which it may be enforceable, all as
determined by such court in such action.
Members acknowledge that a breach of the covenants contained in this
Paragraph 6.6 will cause irreparable damage to the Company, the exact amount of
which will be difficult to ascertain, and that the remedies at law for any such
breach will be inadequate. Accordingly, the Members agree that if any Member
breaches the covenant contained in this Paragraph 6.6, in addition to any other
remedy which may be available at law or in equity, the Company shall be entitled
to specific performance and injunctive relief, without posting bond or other
security.
Except as set forth below, the provisions of this Paragraph 6.6 shall
survive for so long as the Company is in existence and no longer.
Notwithstanding the preceding sentence, the provisions of this Paragraph 6.6
shall terminate and cease to apply (i) immediately upon the withdrawal of either
APS or SCPI as a Member with the consent of the other, as contemplated by the
second sentence of Paragraph 7.4 hereof and (ii) on November 30, 1998 in the
event that either APS or SCPI withdraws from the Company (A) prior to November
30, 1998 and (B) without the consent of the other party; provided, however, that
in the event either APS or SCPI exercises its buy/sell right under Paragraph
7.10 hereof,
20
the provisions of the first two paragraphs of this Paragraph 6.6 shall apply to
the selling party only (as though the buying party were the Company) and shall
terminate on the date that is the second (2nd) anniversary of the closing of the
sale contemplated by Paragraph 7.10 hereof
6.7 SERVICES. Subject to the other provisions of this Article VI,
APS shall provide to the Company without charge administrative support services
reasonably requested by the Company to maintain operations in the ordinary
course of business, including, without limitation, payroll, accounting and risk
management services.
ARTICLE 7
INTERESTS AND TRANSFERS OF INTERESTS
7.1 TRANSFERS. No Member or Assignee may Transfer all or any portion
of its Membership Interest or Economic Interest (or beneficial interest therein)
without the prior written consent of a Majority in Interest. Any purported
Transfer which is not in accordance with this Agreement shall be null and void.
7.2 FURTHER RESTRICTIONS. Notwithstanding any contrary provision in
this Agreement, any otherwise permitted Transfer shall be null and void if:
(a) such Transfer would cause a technical termination of the
Company for federal or state, if applicable, income tax purposes;
(b) such Transfer would, in the opinion of counsel to the
Company, cause the Company to cease to be classified as a partnership for
federal or state income tax purposes;
(c) such Transfer requires the registration of such Interest
to be transferred pursuant to any applicable federal or state securities
laws;
(d) such Transfer causes the Company to become a "Publicly
Traded Partnership," as such term is defined in Sections 469(k)(2) or
7704(b) of the Code;
(e) such Transfer subjects the Company to regulation under
the Investment Company Act of 1940, the Investment Advisers Act of 1940 or
the Employee Retirement Income Security Act of 1974, each as amended;
(f) such Transfer results in a violation of applicable laws
or any applicable regulation, rule or policy of any federal, state or local
entity;
(g) such Transfer causes the revaluation or reassessment of
the value of any Company Asset resulting in a material amount of federal,
state or local tax liability;
(h) all approvals and authorizations required in connection
with such Transfer have not been obtained;
(i) such Transfer is made to any Person who lacks the legal
right, power or capacity to own such Interest to be transferred; or
21
(j) the Company does not receive written instruments
(including, without limitation, copies of any instruments of Transfer and
such Assignee's consent to be bound by this Agreement as an Assignee) that
are in a form satisfactory to a Majority in Interest on or prior to the
closing of such Transfer.
7.3 RIGHTS OF ASSIGNEES. Until such time, if any, as a transferee of
any permitted Transfer pursuant to this Article 7 is admitted to the Company as
a Substitute Member pursuant to Paragraph 7.6: (i) such transferee shall be an
Assignee only, and only shall receive, to the extent transferred, the
distributions and allocations of income, gain, loss, deduction, credit, or
similar item to which the Member which transferred its Interest would be
entitled, and (ii) such Assignee shall not be entitled or enabled to exercise
any other rights or powers of a Member, such other rights, including, without
limitation, management and voting rights, remaining with the transferring
Member. In such a case, the transferring Member shall remain a Member even if it
has transferred its entire Economic Interest to one or more Assignees. In the
event any Assignee desires to make a further assignment of any Economic
interest, such Assignee shall be subject to all of the provisions of this
Agreement to the same extent and in the same manner as any Member desiring to
make such an assignment.
7.4 ADMISSIONS AND WITHDRAWALS. No Person shall be admitted to the
Company as a Member except in accordance with Paragraph 3.4 (in the case of
Persons obtaining an interest in the Company directly from the Company) or
Paragraph 7.6 (in the case of transferees in a permitted Transfer of an interest
in the Company from another Person). Except as otherwise specifically set forth
in Paragraph 7.7, no Member shall be entitled to retire or withdraw from being a
Member of the Company without the written consent of a Majority in Interest. Any
purported admission or withdrawal which is not in accordance with this Agreement
shall be null and void.
7.5 PAYMENT UPON WITHDRAWAL OF MEMBER. If any Member withdraws from
the Company with the consent of a Majority in Interest (other than pursuant to
Paragraph 7.7), then such Member automatically shall receive from the Company a
payment equal to the Member's Capital Account balance as adjusted as of the
effective date of the written election of withdrawal (the "TERMINATION
PAYMENT"). The Termination Payment shall be paid on the effective date of the
written election of withdrawal. If any Member attempts to withdraw from the
Company (other than pursuant to Paragraph 7.7) without the consent of a Majority
in Interest, such withdrawing Member shall not be entitled to any Termination
Payment or any other compensation whatsoever in consideration for its terminated
Membership Interest.
7.6 ADMISSION OF ASSIGNEES AS SUBSTITUTE MEMBERS.
7.6.1 An Assignee shall become a Substitute Member only if and
when each of the following conditions are satisfied:
(a) the assignor of the Interest transferred sends
written notice to each Member requesting the
admission of the Assignee as a Substitute Member
and setting forth the name and address of the
Assignee, the Percentage Interest transferred,
and the effective date of the Transfer;
(b) a Majority in Interest consents in writing to
such admission; and
(c) the Members receive from the Assignee (i) such
information concerning the Assignee's financial
capacities and investment experience as may
22
reasonably be requested by the Members, and (ii)
written instruments (including, without
limitation, copies of any instruments of
Transfer and such Assignee's consent to be bound
by this Agreement as a Substitute Member) that
are in a form satisfactory to the Members.
(d) at the request of a Majority in Interest, an
opinion of counsel to Assignee is delivered,
acceptable to a Majority in Interest, with
respect to the validity, binding effect and
enforceability of the assignment, of this
Agreement against such Assignee and such other
matters as a Majority in Interest shall
reasonably request.
7.6.2 Upon the admission of any Substitute Member, the Tax
Matters Partner shall amend Exhibit A to reflect the name, address and
Percentage Interest, corresponding to such Substitute Member and to
eliminate or adjust, if necessary, the name, address and Percentage Interest
corresponding to the predecessor of such Substitute Member.
7.7 WITHDRAWAL OF MEMBERS. If a Member has transferred all of its
Membership Interest to one or more Assignees, then such Member shall
automatically be deemed withdrawn from the Company, with no further action by
any party required, if and when all such Assignees have been admitted as
Substitute Members in accordance with this Agreement.
7.8 CONVERSION OF MEMBERSHIP INTEREST. Upon the Incapacity of a
Member (and the subsequent continuation of the business of the Company pursuant
to Paragraph 8.2(c), such Incapacitated Member's Membership Interest shall
automatically be converted to an Economic Interest only, and such Incapacitated
Member (or its executor, administrator, trustee or receiver, as applicable)
shall thereafter be deemed an Assignee for all purposes hereunder, with the same
Economic Interest as was held by such Incapacitated Member prior to its
Incapacity, but without any other rights of a Member unless the holder of such
Economic Interest is admitted as a Substitute Member pursuant to Paragraph 7.6.
7.9 RIGHT OF FIRST REFUSAL.
7.9.1 RECEIPT OF BONA FIDE OFFER. If any Member shall receive
a Bona Fide Offer to purchase any or all of its Membership Interest, and it
is willing to accept such Bona Fide Offer, then such Member shall make the
offer described in Paragraph 7.9.2 (the "Offer by Transferor").
7.9.2 OFFER BY TRANSFEROR. The Offer by Transferor shall
consist of a written offer to Transfer all of the Membership Interest
proposed to be Transferred by the transferor (the "Transferor") and shall be
given to the Company and to the remaining Members. The Offer by Transferor
shall include a statement of intention to Transfer and shall disclose all
the terms of the proposed Transfer, including the name and address of the
transferee under the Bona Fide Offer (the "Transferee"), and shall be
accompanied by a copy of the Bona Fide Offer.
7.9.3 ACCEPTANCE OF OFFER BY TRANSFEROR. Within thirty (30)
days after its receipt of the Offer by Transferor, the Company may, at its
option, elect to purchase all of the Membership Interest proposed to be
Transferred. The decision of the Company as to the acceptance or non-
acceptance of said offer shall be determined by a majority in interest of
the Non-Transferring Members. If the Company does not elect to purchase the
Membership Interest proposed to be Transferred pursuant to the Offer by
Transferor, the Company shall, within five (5) business days following
delivery of written notice of its election to the Transferor, or within five
(5) days following
23
the expiration of the above-described thirty (30)-day period, deliver
written notice of its election to the Non-Transferring Members. The Non-
Transferring Members may, within forty-five (45) days after the receipt of
said notice from the Company, at the Non-Transferring Members' option,
purchase all of the Membership Interests proposed to be Transferred pursuant
to the Offer by Transferor, pro rata in accordance with the Percentage
Interests held by the Members electing to purchase such Membership
Interests. The Non-Transferring Members shall exercise their election to
purchase by giving written notice of such election to the Transferor and to
the Company. In either event, such notice of election shall specify a date
for the closing of the purchase, which shall be not more than thirty (30)
days after the date of such notice. If any consideration to be received by
the Transferor under the Bona Fide Offer is property other than cash, the
time periods for acceptance of the Offer by Transferor by the Company, or
the Non-Transferring Members, and the closing date shall be extended and
shall begin running effective the day after the fair market value of such
consideration is determined in accordance with Paragraph 7.9.4.
7.9.4 PURCHASE PRICE. The purchase price for the Membership
Interest proposed to be Transferred pursuant to the Offer by Transferor
shall in no event exceed the purchase price stated in the Bona Fide Offer.
If any consideration to be received by the Transferor under the Bona Fide
Offer is property other than cash, the value shall be computed on the basis
of the fair market value of such non-cash consideration. Such fair market
value shall be determined by agreement among the Transferor and either the
Non-Transferring Members purchasing such Interest, or the Company, as
applicable, or if they are unable to agree, as determined by the average of
the appraisals of two (2) independent qualified appraisers, one being
selected by the Transferor and the other by the Non-Transferring Members
purchasing such Interest, the cost of such appraisal being shared equally by
Transferor and the Company.
7.9.5 CLOSING OF PURCHASE. The closing of the purchase
contemplated by Paragraph 7.9.3 shall take place at the principal office of
the Company. The Company or the Non-Transferring Members shall have the
option of paying the purchase price on the same terms as the Bona Fide Offer
or as follows: ten percent (10%) down payment in cash at closing and the
balance by a promissory note, payable in twelve (12) equal, quarterly annual
installments of principal, plus interest on the unpaid balance, with the
first installment due ninety (90) days after the closing, and each
successive installment paid on the first (lst) day of every third month
thereafter. The promissory note shall bear interest at a rate equal to two
percent (2%) above the "prime rate," as announced in the Wall Street Journal
from time to time, or the successor to such rate if such rate is no longer
published, and shall provide that: (i) the maker shall have the privilege of
prepaying all or any part thereof, at any time, without penalty; and (ii) a
default in any payment shall cause the remaining unpaid balance to become
due and payable immediately. The promissory note shall be secured by a
pledge of all of the Membership Interests being purchased. If the maker of
the promissory note is the Company, such promissory note shall be personally
endorsed by the remaining Members.
7.9.6 TRANSFER AFTER OFFER. If the Membership Interests are
not purchased by the Company or the Non-Transferring Members as provided in
this Article 7, the Transferor shall, for a period of three (3) months after
the earlier to occur of (i) the date of any written notice given by all Non-
Transferring Members of their election not to purchase such Membership
Interest and (ii) the date on which the period during which the Non-
Transferring Members may elect to purchase such Membership Interest expires,
be free to Transfer the Membership Interests to the Transferee, upon the
terms disclosed in the Offer by Transferor.
7.9.7 PROHIBITED TRANSFERS VOID.
24
(i) Any purported Transfer in violation of this Agreement
shall be null and void and shall not transfer any interest in, or title
to, the Membership Interests transferred to the purported Transferee.
The Company shall not be required to treat as owner of the Membership
Interests, or to pay distributions to, any Transferee to whom any of
such Membership Interests shall have been purportedly sold or
Transferred.
(ii) In addition, and without in any way intending to
validate, approve or otherwise render a Transfer in violation of this
Agreement other than null and void, the Company first, and the remaining
Members (pro rata in accordance with the Percentage Interests held by
those electing the option to purchase hereinafter described) second,
shall have the option to purchase all or any portion of the Membership
Interests attempted to be transferred to a Transferee in violation of a
restriction on Transfer contained in this Agreement for the price and on
the same terms and conditions described in Paragraphs 7.9.4 and 7.9.5;
provided, however, that the Company and the Non-Transferring Members may
pay the purchase price by delivery of a promissory note representing the
entire purchase price. To exercise this option, the Company must give
the Transferee written notice within thirty (30) days after the Company
is notified of the purported Transfer. In the event the Company does not
elect to exercise this option, the Company shall, within ten (10)
business days following the expiration of the foregoing thirty (30)-day
period, notify the Non-Transferring Members of its election. The Non-
Transferring Members must give the Transferee written notice, within
thirty (30) days following the receipt of notice from the Company, of
their election to purchase all or any portion of the Membership Interest
purportedly held by the Transferee. The Transferee's sale obligation
pursuant to this paragraph may be specifically enforced by the Company
or any Non-Transferring Member.
7.10 BUY AND SELL RIGHTS.
7.10.1 Any Member (the "Offeror") may, at any time, make a buy-
sell offer (the "Offer") to any other Member (the "Offeree") by notifying
the Offeree in writing of the exercise of this right, and stating in such
notice the gross sales price for the Company, as determined by the Offeror
(the "Company Price"), which Company Price shall be used in the calculation
procedures set forth in Paragraph 7.10.2 hereof, and the terms under which
the Offeror is willing either to buy all of the Membership Interest owned by
the Offeree or to sell to the Offeree all of the Membership Interest owned
by the Offeror, with the price and any terms being the same for both the
purchase and the sale. Except as set forth in Paragraph 7.10.2, the Offer
shall not be revocable once the aforesaid notice has been delivered to the
Offeree.
7.10.2 Within thirty (30) days after receipt by the Offeree of
the Offeror's written notice of the Offer, the Offeree shall send the
Offeror a written notice stating whether the Offeree elects (i) to purchase
from the Offeror all of the Offeror's Membership Interest, at the price (as
determined pursuant hereto) and under the terms stated in the Offer, or (ii)
to sell to the Offeror all of the Offeree's Membership Interest at the price
(as determined pursuant hereto) and under the terms stated in the Offer. If
the Offeree shall fail to notify the Offeror whether he elects to buy or
sell within the time period specified above, such failure shall be deemed to
be an election to sell all Membership Interest owned by the Offeree to the
Offeror at the price (as determined pursuant hereto) and under the terms
specified in the Offer. The Offeror shall be entitled to revoke the Offer by
giving the Offeree written notice of the withdrawal prior to the earlier of
(i) the date the Offeree gives the Offeror written notice of his election to
purchase or to sell pursuant to this Paragraph, or (ii) the date on which
the Offeree shall be deemed to have elected to sell his Membership Interest
to
25
the Offeror. The price payable to the Offeror or the Offeree, as the case
may be, shall be the product of the Company Price and the Percentage
Interest held by the selling Member.
7.10.3 The closing of the sale contemplated by this Paragraph
7.10 shall be held at the principal office of the Company (or at such other
place as the Offeror and the Offeree may in writing agree) no later than
thirty (30) days after the expiration of the notice period specified in
Paragraph 7.10.2. Unless otherwise stated in the Offer, the purchasing
Member shall deliver payment in full in cash for the purchase of the
Membership Interest. A Member selling its Interest pursuant to 7.10.2 hereof
shall deliver all appropriate documents of transfer at closing and shall
convey its Membership Interest to the buying Member, or its nominee, free
and clear of all liens, claims, encumbrances or other charges of any kind
whatsoever. In the event the Membership Interest is conveyed to a nominee of
the buying Member, the admission of such nominee to the Company as a
successor to the selling Member shall occur, and for all purposes shall be
deemed to have occurred immediately prior to the transfer by the selling
Member of its Membership Interest.
7.11 OPTION TO PURCHASE UPON FUNDAMENTAL CHANGE.
7.11.1 In the event of the occurrence of a Fundamental Change
with respect to a Member (the "Affected Member"), the Company shall have the
option to purchase from the Affected Member, and the Affected Member shall
sell to the Company upon the exercise of such option, all of the Membership
Interest owned by the Affected Member. The Company may exercise such option
upon the consent of a majority in interest of the Unaffected Members. If the
Company does not elect to exercise the option provided herein, the
Unaffected Members may, at the option of such Unaffected Members purchase
all Membership Interest of the Affected Member which the Company does not
elect to purchase. Such options shall be exercised by either the Company or
the Unaffected Members by giving written notice to the Affected Member
within ninety (90) days after the receipt of notice to the Company and the
Unaffected Members of the occurrence of such Fundamental Change.
7.11.2 PURCHASE PRICE. The purchase price of the Membership
Interest to be purchased pursuant to Paragraph 7.11.1 shall be the book
value of such Membership Interest, including previous adjustments
contemplated by the definition of Gross Asset Value, as of the last day of
the month preceding the date of the Fundamental Change, as determined by the
regularly employed outside accountant serving the Company at such time, or
if none, by a public accountant selected by the Company and the Affected
Member, or if they are unable to agree, by a public accountant chosen by two
public accountants, one being selected by the Affected Member and one by the
Company. At any time after the date of this Agreement, the Members shall
have the right to agree unanimously upon the value of the Membership
Interest of each Member and determine the purchase price of each Membership
Interest for purposes of Paragraph 7.11.1, in which event, the Tax Matters
Partner shall place the purchase price of each Membership Interest on
Exhibit A attached hereto, which shall be initialed by all of the Members.
The purchase price so determined shall be reviewed by the Members each year
or at any other time determined by all of the Members and shall either be
confirmed or adjusted by the unanimous agreement of all Members. If all
Members are unable to agree with respect to the purchase price of any
Membership Interest, the Tax Matters Partner shall delete such purchase
price from Exhibit A. In the event the Members allow a period of eighteen
(18) months to lapse without either revaluing or confirming such purchase
price or are unable to unanimously agree on the revaluing or confirmation of
such purchase price, the purchase price shall then become the book value of
the Membership Interest as appraised by the Company's
26
regularly employed outside accountant or such other accountant as may be
selected pursuant to the above-described procedure.
7.11.3 PAYMENT OF PURCHASE PRICE. The purchase price under this
Paragraph 7.11 shall be payable in cash at closing.
7.11.4 CLOSING. The closing of any purchase and sale under
Paragraph 7.11.1 shall take place at the office of the Company at a date
designated by the Company, or the Unaffected Members, as applicable, which
shall not be more than ninety (90) days after the date of determination of
the purchase price of the Membership Interest as set forth in Paragraph
7.11.2.
ARTICLE 8
DISSOLUTION, LIQUIDATION, AND TERMINATION OF THE COMPANY
8.1 LIMITATIONS. The Company may be dissolved, liquidated, and
terminated only pursuant to the provisions of this Article 8, and the parties
hereto do hereby irrevocably waive any and all other rights they may have to
cause a dissolution of the Company or a sale or partition of any or all of the
Company Assets.
8.2 EXCLUSIVE CAUSES. Notwithstanding the Act, the following and
only the following events shall cause the Company to be dissolved, liquidated,
and terminated:
(a) Any transaction the result of which is the ownership of
one hundred percent (100%) of all the Membership
Interests of the Company by a single Member, unless such
Member elects to continue the business of the Company by
admitting another Member within thirty (30) days
thereafter;
(b) The occurrence of a Terminating Capital Transaction;
(c) The Incapacity of any Member, unless a Majority of
Remaining Members votes to continue the Company within
ninety (90) days following the occurrence of any such
Incapacity;
(e) The written consent of a Majority in Interest;
(f) Judicial dissolution; or
(g) Upon the seventh (7th) anniversary of the date of this
Agreement.
Any dissolution of the Company other than as provided in this Paragraph 8.2
shall be a dissolution in contravention of this Agreement.
8.3 EFFECT OF DISSOLUTION. The dissolution of the Company shall be
effective on the day on which the event occurs giving rise to the dissolution,
but the Company shall not terminate until it has been wound up and its assets
have been distributed as provided in Paragraph 8.5 of this Agreement.
Notwithstanding the dissolution of the Company, prior to the termination of the
Company, the business of the Company and the affairs of the Members, as such,
shall continue to be governed by this Agreement.
27
8.4 NO CAPITAL CONTRIBUTION UPON DISSOLUTION. Each Member shall look
solely to the assets of the Company, its Capital Contribution thereto, its
Capital Account and its share of Net Profits or Net Losses for all distributions
with respect to the Company, and shall have no recourse therefor (upon
dissolution or otherwise) against any other Member. Accordingly, in the event
the Company is "liquidated" within the meaning of Regulations Section 1.704-
1(b)(2)(H)(g), if any Member has a deficit balance in its Capital Account (after
giving effect to all contributions, distributions and allocations for all
taxable years, including the year during which the liquidation occurs), then
such Member shall have no obligation to make any Capital Contribution with
respect to such deficit, and such deficit shall not be considered a debt owed to
the Company or to any other person for any purpose whatsoever.
8.5 LIQUIDATION.
8.5.1 Upon dissolution of the Company, the Members shall
liquidate the assets of the Company, and after allocating (pursuant to
Article 5 of this Agreement) all income, gain, loss and deductions resulting
therefrom, shall apply and distribute the proceeds thereof as follows:
(a) First, to the payment of the obligations of the Company,
to the expenses of liquidation, and to the setting up of
any Reserves for contingencies which a Majority in
Interest may consider necessary.
(b) Thereafter, to the Members in accordance with the
positive balances in the Members' respective Capital
Accounts, determined after taking into account all
Capital Account adjustments for the Company taxable year
during which such liquidation occurs (other than those
made as a result of the distributions set forth in this
Paragraph 8.5.1(b) of this Agreement), by the end of the
taxable year in which such liquidation occurs or, if
later, within 90 days after the date of the liquidation.
8.5.2 Notwithstanding Paragraph 8.5.1 of this Agreement, in
the event that a Majority in Interest determines that an immediate sale of
all or any portion of the Company Assets would cause undue loss to the
Members, in order to avoid such loss to the extent not then prohibited by
the Act, the Members may either defer liquidation of and withhold from
distribution for a reasonable time any Company Assets except those necessary
to satisfy the Company's debts and obligations, or distribute the Company
Assets to the Members in kind.
ARTICLE 9
MISCELLANEOUS
9.1 AMENDMENTS.
9.1.1 Each Additional Member and Substitute Member shall
become a signatory hereto by signing such number of counterpart signature
pages to this Agreement, and such other instruments, in such manner, as the
Members shall determine. By so signing, each Additional Member and
Substitute Member, as the case may be, shall be deemed to have adopted and
to have agreed to be bound by all of the provisions of this Agreement.
28
9.1.2 Amendments to this Agreement may be made only as set
forth in Paragraph 6.1.15.
9.1.3 In making any amendments, there shall be prepared and
filed by, or for, the Members such documents and certificates as may be
required under the Act and under the laws of any other jurisdiction
applicable to the Company.
9.2 ACCOUNTING AND FISCAL YEAR. Subject to Code Section 448, the
books of the Company shall be kept on such method of accounting for tax and
financial reporting purposes as may be determined by a Majority in Interest. The
fiscal year of the Company shall end on September 30 of each year, or on such
other date permitted under the Code as a Majority in Interest shall determine.
9.3 MEETINGS. At any time, and from time to time, a Majority in
Interest may, but shall not be required to, call meetings of the Members.
Written notice of any such meeting shall be given to all Members not less than
five (5) nor more than forty-five (45) days prior to the date of such meeting.
Each Member may authorize any other Person (whether or not such other Person is
a Member) to act as a proxy for it or on its behalf on all matters in which the
Member is entitled to participate. Each proxy must be signed by the Member or
such Member's attorney-in-fact. All other provisions governing, or otherwise
relating to, the holding of meetings of the Members, shall from time to time be
established by a Majority in Interest.
9.4 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties hereto pertaining to the subject matter hereof and fully
supersedes any and all prior or contemporaneous agreements or understandings
between the parties hereto pertaining to the subject matter hereof.
9.5 FURTHER ASSURANCES. Each of the parties hereto does hereby
covenant and agree on behalf of itself, its successors, and its assigns, without
further consideration, to prepare, execute, acknowledge, file, record, publish,
and deliver such other instruments, documents and statements, and to take such
other action as may be required by law or reasonably necessary to effectively
carry out the purposes of this Agreement.
9.6 NOTICES. Any notice, consent, payment, demand, or communication
required or permitted to be given by any provision of this Agreement shall be in
writing and shall be (a) delivered personally to the Person or to an officer of
the Person to whom the same is directed, or (b) sent by facsimile or registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows: if to the Company, to the Company at the address set forth in Paragraph
1.3 hereof, or to such other address as the Company may from time to time
specify by notice to the Members; if to a Member, to such Member at the address
set forth in Exhibit A, or to such other address as such Member may from time to
time specify by notice to the Company. Any such notice shall be deemed to be
delivered, given and received for all purposes as of: (i) the date so delivered,
if delivered personally, (ii) upon receipt, if sent by facsimile, or (iii) on
the date of receipt or refusal indicated on the return receipt, if sent by
registered or certified mail, return receipt requested, postage and charges
prepaid and properly addressed.
9.7 TAX MATTERS.
9.7.1 APS shall be designated and shall operate as the "Tax
Matters Partner" (as defined in Code Section 6231).
29
9.7.2 The Member designated as "Tax Matters Partner" may make
all elections for federal income and all other tax purposes (including,
without limitation, pursuant to Section 754 of the Code) except as expressly
provided otherwise in this Agreement; provided, however, that upon the
reasonable request of any Member transferring its Membership Interest as
permitted hereunder, the Tax Matters Partner, on behalf of the Company,
shall make the election pursuant to Section 754 of the Code requested by
such Member, as permitted by the Code.
9.7.3 Income tax returns of the Company shall be prepared by
the accountant selected by a Majority in Interest. Such income tax returns
shall be prepared at the Company's expense.
9.8 GOVERNING LAW. This Agreement, including its existence, validity,
construction, and operating effect, and the rights of each of the parties
hereto, shall be governed by and construed in accordance with the laws of the
State of Delaware without regard to otherwise governing principles of conflicts
of law.
9.9 ARBITRATION. The parties hereto agree to submit to arbitration
any and all matters in dispute and in controversy among them concerning the
terms and provisions of this Agreement. All such disputes and controversies
shall be resolved, determined and adjudged by the arbitrators, all pursuant to
the rules of the American Arbitration Association. The selection of arbitrators
and the arbitration procedure shall be according to the Rules of the American
Arbitration Association; however, the arbitrators shall have no authority to
grant any relief which is inconsistent with this Paragraph 9.9 or any other
provision of this Agreement.
9.10 CONSTRUCTION. This Agreement shall be construed as if all parties
prepared this Agreement.
9.11 CAPTIONS - PRONOUNS. Any titles or captions contained in this
Agreement are for convenience only and shall not be deemed part of the text of
this Agreement. All pronouns and any variations thereof shall be deemed to refer
to the masculine, feminine, neuter, singular or plural as appropriate.
9.12 BINDING EFFECT. Except as otherwise expressly provided herein,
this Agreement shall be binding on and inure to the benefit of the Members,
their heirs, executors, administrators, successors and all other Persons
hereafter holding, having or receiving an interest in the Company, whether as
Assignees, Substitute Members or otherwise.
9.13 SEVERABILITY. In the event that any provision of this Agreement
as applied to any party or to any circumstance, shall be adjudged by a court of
competent jurisdiction to be void, unenforceable or inoperative as a matter of
law, then the same shall in no way affect any other provision in this Agreement,
the application of such provision in any other circumstance or with respect to
any other party, or the validity or enforceability of this Agreement as a whole.
9.14 CONFIDENTIALITY. Each Party hereto agrees that the provisions of
this Agreement, all understandings, agreements and other arrangements between
and among the parties, and all other nonpublic information received from or
otherwise relating to, the Company shall be confidential, and shall not be
disclosed or otherwise released to any other Person (other than another party
hereto), without the written consent of a Majority in Interest. The obligations
of the parties hereunder shall not apply to the extent that the disclosure of
information otherwise determined to be confidential is required by applicable
law, provided that, prior to disclosing such confidential information, a party
shall notify the Company
30
thereof, which notice shall include the basis upon which such party believes the
information is required to be disclosed.
9.15 COUNTERPARTS. This Agreement may be executed in any number of
multiple counterparts, each of which shall be deemed to be an original copy and
all of which shall constitute one agreement, binding on all parties hereto.
9.16 NO REFERRALS. There exists no agreement or understanding between
the Company and any Member, or among any Members, or any affiliates of any
Member, that any Member shall order, refer or purchase goods or services from
the Company, or arrange for the ordering, referring or purchasing of such goods
or services from the Company. Likewise, there exists no agreement or
understanding between the Company and any Member, or among any Members, or any
affiliates of any Member, that the Company shall order, refer or purchase goods
or services from any Member, or arrange for the ordering referring or purchasing
of such goods or services from any Member.
[SIGNATURE PAGE FOLLOWS)
31
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the day and year first above written.
AMERICAN PHARMACEUTICAL SERVICES,
INC.
By: /s/ WILLIAM R. KORSLIN
-----------------------------------
William R. Korslin
SUMMIT CARE PHARMACY, INC.
By:____________________________________
--------------------
Its:
------------------------------------
ACKNOWLEDGED AND AGREED THIS ___
DAY OF __________, 1996 FOR THE
PURPOSES OF PARAGRAPH 6.6 HEREOF.
SUMMIT CARE CORPORATION
By:
---------------------------
---------------------------
Its:
---------------------------
S-1
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
AMERICAN PHARMACEUTICAL SERVICES,
INC.
By:
------------------------------------
William R. Korslin
SUMMIT CARE PHARMACY, INC.
By: /s/ DERWIN L. WILLIAMS
------------------------------------
Derwin L. Williams
Its: Sr. Vice President, Finance
------------------------------------
ACKNOWLEDGED AND AGREED THIS 30th
DAY OF NOVEMBER, 1996 FOR THE
PURPOSES OF PARAGRAPH 6.6 HEREOF.
SUMMIT CARE CORPORATION
By: /s/ DERWIN L. WILLIAMS
----------------------------
Derwin L. Williams
----------------------------
Its: Sr. Vice President, Finance
---------------------------
S-1
EXHIBIT A
MEMBERS, CAPITAL CONTRIBUTIONS,
AND PERCENTAGE INTERESTS
Purchase Price for
each Membership
Initial Capital Interest (Pursuant Percentage
Member Contribution to Paragraph 7.11) Interest
------ --------------- ------------------- ----------
American Pharmaceutical Services, Inc. Those assets that American 50%
1771 W. Diehl Road, Suite 210 Pharmaceutical Services, Inc.
Naperville, Illinois 60563 uses in the conduct of its
business of providing drugs,
pharmaceutical supplies and
pharmacy consulting to long term
care facilities in the Austin,
Texas area from the pharmacy
located at 2324 Ridgepoint
Drive, Suite G-1, Austin, Texas
78754 (Gross Asset Value =
$3,000,000 (1)
Summit Care Pharmacy, Inc. $1,500,000 50%
22607 Old Canal Road
Yorba Linda, California 92887
- ----------
(1) APS's Capital Account will be adjusted in accordance with Paragraph 2.10
hereof to reflect the distribution provided for in Paragraph 4.1.3 hereof.
SCHEDULE I
STATE OF DELAWARE
CERTIFICATE OF FORMATION
OF
APS-SUMMIT CARE PHARMACY, L.L.C.
FIRST: The name of the limited liability company is:
APS-SUMMIT CARE PHARMACY, L.L.C.
SECOND: Its registered office in the State of Delaware is to be located at:
1209 Orange Street
Wilmington, DE 19801
The county of New Castle and its registered agent at such address is:
The Corporation Trust Company
In Witness Whereof, the undersigned has executed this Certificate of Formation
of APS-SUMMIT CARE PHARMACY, L.L.C. this 27th day of November, 1996.
AMERICAN PHARMACEUTICAL SERVICES,
INC., a Delaware corporation
By:___________________________
Name:_________________________
Title:________________________
SUMMIT CARE PHARMACY, INC., a California
corporation
By:___________________________
Name:_________________________
Title:________________________
===============================================
ASSET CONTRIBUTION AGREEMENT
BY AND BETWEEN
AMERICAN PHARMACEUTICAL SERVICES, INC.,
a Delaware Corporation
AND
APS - SUMMIT CARE PHARMACY, L.L.C.,
a Delaware Limited Liability Company
===============================================
TABLE OF CONTENTS
Page
ASSET CONTRIBUTION AGREEMENT............................................. 1
RECITALS................................................................. 1
AGREEMENT................................................................ 1
ARTICLE I - CONTRIBUTION OF ASSETS....................................... 1
1.1 Contributed Assets...................................... 1
(a) Leasehold Interests............................... 2
(b) Purchased Contracts............................... 2
(c) Inventories....................................... 2
(d) Personal Property, Fixtures and Equipment......... 2
(e) Governmental Licenses and Permits................. 3
(f) Intangible Assets................................. 3
(g) Names............................................. 3
(h) Goodwill.......................................... 3
(i) Facility Records.................................. 3
(j) Customer Lists.................................... 3
(k) Noncompetition Covenant........................... 3
1.2 Excluded Assets......................................... 3
1.3 Nonassumption of Agreements............................. 4
ARTICLE II - ASSUMED LIABILITIES......................................... 4
2.1 Assumed Liabilities..................................... 4
2.2 Unassumed - Liabilities................................. 4
ARTICLE III - FINANCIAL ARRANGEMENTS AND CLOSING......................... 4
3.1 Asset Value............................................. 4
3.2 Capital Account Balance................................. 5
3.3 Payment to APS.......................................... 5
3.4 Allocation.............................................. 5
3.5 Closing................................................. 5
3.6 Closing Deliveries...................................... 5
i
ARTICLE IV - CLOSING CONDITIONS AND DOCUMENTS............................ 6
4.1 Conditions to Obligations of LLC............................ 6
4.2 Conditions to Obligations of APS............................ 8
ARTICLE V - NONCOMPETITION COVENANT...................................... 9
5.1 Covenant................................................ 9
5.2 Modification............................................ 9
5.3 Remedies................................................ 9
ARTICLE VI - REPRESENTATIONS AND WARRANTIES OF APS....................... 10
6.1 Title to Contributed Assets............................. 10
6.2 Compliance With Licensing Requirements................. 10
6.3 Compliance With Laws.................................... 10
6.4 Condition of Personal Property.......................... 11
6.5 Books and Records....................................... 11
6.6 Leases and Other Material Agreements.................... 11
6.7 Taxes................................................... 11
6.8 Governmental Investigations and Proceedings............. 11
6.9 No Conflict or Violation................................ 11
6.10 Material Misstatements.................................. 11
6.11 No Condemnation......................................... 12
6.12 No Assessments.......................................... 12
6.13 Financial Statements................................... 12
6.14 Hazardous Material...................................... 12
6.15 Insurance............................................... 13
6.16 Zoning.................................................. 13
6.17 Litigation.............................................. 13
6.18 Authorization........................................... 13
6.19 Corporate Existence and Qualification................... 13
6.20 Access to Records....................................... 13
ARTICLE VII - REPRESENTATIONS AND WARRANTIES OF LLC...................... 14
7.1 No Conflict or Violation................................ 14
7.2 Litigation.............................................. 14
7.3 Authorization........................................... 14
7.4 Corporate Existence and Qualification................... 14
ii
ARTICLE VIII - POSTCLOSING AGREEMENTS.................................... 14
8.1 Books and Records and Financial Information............. 14
8.2 Sales and Use Taxes..................................... 15
ARTICLE IX - INDEMNIFICATION............................................. 15
9.1 Indemnification by APS.................................. 15
9.2 Indemnification by LLC.................................. 16
ARTICLE X - MISCELLANEOUS................................................ 17
10.1 Notices................................................. 17
10.2 Referrals............................................... 18
10.3 Counterparts............................................ 18
10.4 Construction............................................ 18
10.5 Gender and Number....................................... 18
10.6 Waiver.................................................. 18
10.7 Further Assurances...................................... 18
10.8 Confidentiality......................................... 18
10.9 Time of Essence......................................... 19
10.10 Survival................................................ 19
10.11 Supersedes Agreement.................................... 19
10.12 Commissions............................................. 19
10.13 Attorneys' Fees and Costs............................... 19
10.14 Arbitration............................................. 19
10.15 Interpretation.......................................... 20
10.16 Severability............................................ 20
10.17 Binding................................................. 20
10.18 Facsimile Copies........................................ 20
10.19 Force Majeure........................................... 20
10.20 No Obligations To Third Parties......................... 21
iii
ASSET CONTRIBUTION AGREEMENT
This Asset Contribution Agreement (the "Agreement") is entered into as
of November 27, 1996 (the "Execution Date"), by and between American
Pharmaceutical Services, Inc., a Delaware corporation ("APS"), and APS - Summit
Care Pharmacy, L.L.C., a Delaware limited liability company ("LLC"). APS and
LLC are sometimes hereinafter referred to collectively as "Parties" and
individually as "Party".
RECITALS
A. APS is the owner and operator of a pharmacy (the "Facility")
located at 2324 Ridgepoint Drive, Suite G-1, Austin, Texas 78754 (the
"Premises").
B. APS owns certain "Contributed Assets" (as defined in Section 1. 1
of this Agreement) which are used or usable in connection with the operation of
the Facility.
C. APS and Summit Care Pharmacy, Inc., a California corporation
("Summit Care") (a) have formed LLC for the purpose of engaging in the business
of operating a pharmacy to provide pharmacy and IV therapy services and (b) have
entered into that certain Limited Liability Company Agreement, of even date
herewith (the "LLC Agreement"), to govern the ownership and operations of LLC.
D. Pursuant to the LLC Agreement, APS will contribute to LLC, as its
initial capital contribution, the Contributed Assets, on the terms and
conditions set forth in this Agreement.
E. APS desires to contribute the Contributed Assets to LLC, and LLC
desires to receive the Contributed Assets from APS, upon the terms and
conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the terms and conditions set forth
herein, the Parties agree as follows:
AGREEMENT
ARTICLE I
CONTRIBUTION OF ASSETS
1.1 Contributed Assets. At the Closing (as defined in Section 3.5
hereof) of the transactions contemplated by this Agreement, in
reliance upon the representations and warranties and agreements
of APS herein, APS shall contribute to LLC, and LLC shall accept
from APS, all right, title and interest
1
of APS in the following assets, rights and interests of APS
relating to the Facility, all of which are to be contributed by
APS at Closing in accordance with the provisions of Section 3.5
hereof, excluding only the "Excluded Assets" defined in Section
1.2 hereof. (All of the assets, rights and interests to be
contributed and delivered by APS to LLC pursuant to Section 3.6
are hereinafter collectively referred to as the "Contributed
Assets"):
(a) Leasehold Interests. All of APS's leasehold interest
(including all security deposits, and any options to extend
such leasehold, to expand the leased premises, to purchase
such premises or otherwise) as lessee of the Facility
pursuant to the lease (the "Lease") under which APS, as
lessee, has been granted the leasehold interest by the owner
of the Premises as lessor, and all improvements owned by APS
on the Closing Date, if any, to real property and the
buildings leased by APS with respect to the Facility
(collectively, the "Leasehold Interests"). To effectuate the
transfer of the Leasehold Interests hereunder, APS agrees to
execute and deliver at Closing (i) an Assignment of Lease
executed by APS in substantially the form attached as
Exhibit A hereto; and (ii) a "Consent to Assignment of
Lease" executed by the lessor of the Premises in
substantially the form attached as Exhibit B hereto.
(b) Purchased Contracts. All right, title and interest of APS
in, to and under the contracts relating exclusively to the
operations of the Facility (collectively, the "Purchased
Contracts"), including but not limited to (i) all assignable
agreements between APS and third-party payors (collectively,
the "Payor Contracts"), (ii) all assignable agreements with
suppliers to which APS is a party (collectively, the
"Supplier Contracts"), (iii) all assignable agreements with
nursing homes (collectively, the "Facility Contracts") and
(iv) the contracts (including the Payor Contracts, the
Supplier Contracts, and the Facility Contracts) listed on
Schedule 1.1(b) hereto.
(c) Inventories. All of APS's inventories held for use in
connection with the Facility on the Closing Date and
maintained in the ordinary course of the business of the
Facility, including, without limitation, all medical
supplies, equipment and drugs (all such items, collectively,
the "Inventory").
(d) Personal Property, Fixtures and Equipment. All right, title
and interest of APS in and to all furniture, fixtures,
furnishings, tools, machinery, equipment including, without
limitation, all computer hardware, computer software,
supplies, billing and office support equipment,
telecommunications equipment and records necessary to
operate, prepare and collect bills and maintain the
Facility, appliances and all other tangible personal
property of every kind and description
2
and any interest therein necessary to the operations of the
Facility and owned or leased by APS and exclusively used in
or related to the operation of the Facility on the Closing
Date, whether or not located at the Facility, and whether or
not reflected as capital assets on the accounting records of
APS (all such items, collectively, the "Personal Property"),
including, but not limited to, those items listed on
Schedule 1.1(d) hereto.
(e) Governmental Licenses and Permits. All right, title and
interest of APS in, to and under all agreements, licenses,
permits, consents, authorizations, certificates and other
rights of every kind and character relating exclusively to
the Facility of any regulatory, administrative or other
governmental agency or body issued to or held by APS
necessary or incidental to the operations of the Facility as
of the Closing Date, to the extent the same are transferable
(all such items, collectively the "Governmental Licenses and
Permits"). A listing of the Facility's license and permit
numbers is set forth on Schedule 1.1(e) hereto.
(f) Intangible Assets. All right, title and interest of APS in,
to and under the technology, data, symbols, copyrights and
registrations thereof, trade names, trademarks, trademark
registrations, trademark applications, service marks,
service mark registrations, service mark applications,
telephone numbers, licenses, and other intangible rights and
privileges used by APS exclusively in connection with the
operation of the Facility on the Closing Date.
(g) Names. A license to use the name set forth on Schedule
1.1(g).
(h) Goodwill. The goodwill and going concern value of APS's
interest in the Facility.
(i) Facility Records. Copies of all books and records, computer
tapes, disks and data relating exclusively to the Facility
and the Contributed Assets, (collectively, the "Facility
Records"), as listed on Schedule 1.1(i) hereto.
(j) Customer Lists. All right, title and interest of APS in all
customer lists relating to the operation of the Facility.
(k) Noncompetition Covenant. The Noncompetition Covenant
described in Article V of this Agreement.
1.2 Excluded Assets. Notwithstanding any other provision of this
Agreement, the Contributed Assets shall include only the assets,
rights and interests of APS specifically described in this
Agreement and expressly shall not include (and APS does not
hereby contribute to LLC) any other assets, rights or interests
3
of APS, including, without limitation: (i) any cash, securities,
bank accounts or safe deposit boxes; or (ii) any accounts
receivable arising with respect to goods sold or services
rendered by APS prior to the Closing Date.
1.3 Nonassumption of Agreements. Except for the obligations under the
Purchased Contracts accruing on and after the Closing Date, LLC
shall not assume any agreements or obligations, whether express
or implied, that exist between APS and any of APS's current or
former employees, or any third party, and nothing in this
Agreement is intended to be or shall be construed as an
assumption by LLC of any rights, obligations or liabilities of
any kind under any such agreements.
ARTICLE II
ASSUMED LIABILITIES
2.1 Assumed Liabilities. Except as specified in Section 2.2 hereof,
as of the Closing Date, LLC hereby agrees to assume, satisfy or
perform when due all sums owed to trade vendors and service
providers for goods and services purchased in the ordinary course
of operations of the Facility (the "Accounts Payable") for goods
delivered to LLC or services performed for LLC after the Closing
Date (the "Assumed Liabilities").
2.2 Unassumed Liabilities. Other than the Assumed Liabilities, LLC
shall not assume, nor shall LLC or any of its affiliates be
deemed to have assumed or guaranteed, any other liability or
obligation of any nature of APS, or claims of such liability or
obligation, whether accrued, matured or unmatured, liquidated or
unliquidated, fixed or contingent, known or unknown arising out
of (i) acts or occurrences prior to the Closing, (ii) liabilities
or obligations relating to the Contributed Assets prior to the
Closing, or (iii) any other liability or obligation of APS (all
such items (i) through (iii) of this Section 2.2, collectively,
the "Unassumed Liabilities"). The Unassumed Liabilities
specifically include, without limitation, all Accounts Payable
for goods delivered to APS or services performed for APS prior to
the Closing Date and also include any liabilities or obligations
of APS with respect to APS's employees earned prior to the
Closing Date, whether or not any of APS's employees become
employees of LLC.
ARTICLE III
FINANCIAL ARRANGEMENTS AND CLOSING
3.1 Asset Value. The Parties agree that the fair market value of the
Contributed Assets is Three Million Dollars ($3,000,000.00). In
exchange for APS's contribution of the Contributed Assets to LLC
pursuant to the terms and
conditions of this Agreement, APS will receive from LLC the
consideration described in Sections 3.2 and 3.3 of this
Article.
3.2 Capital Account Balance. In exchange for the Contributed
Assets contributed by APS to LLC in accordance with this
Agreement, in addition to the consideration described in
initial capital account credit in LLC equal to One Million
Five Hundred Thousand Dollars ($1,500,000.00) and (b) a
membership interest in LLC that represents a fifty percent
(50%) ownership interest in LLC.
3.3 Payment to APS. In exchange for the Contributed Assets
contributed by APS to LLC in accordance with this Agreement,
in addition to the consideration described in Section 3.2
above, APS will receive payment from LLC in the amount of One
Million Five Hundred Thousand Dollars ($1,500,000.00), to be
paid in immediately available funds on the Closing Date
described below.
3.4 Allocation. The Three Million Dollar ($3,000,000.00) value of
the Contributed Assets agreed upon by the Parties shall be
applied and allocated as set forth on Schedule 3.4 hereto. As
an inducement for APS and LLC to enter into this Agreement,
the Parties agree that the values assigned to the items
included in this Agreement and set forth on Schedule 3.4 are
fair and equitable and have been bargained for separately. In
addition, the Parties agree to cooperate in filing reports
relating to such allocation, as and when required by law,
including IRS Form 8594. Furthermore, the Parties acknowledge
and agree that APS and LLC shall report to federal and state
tax authorities any additionally required information relating
to the noncompetition covenant described herein or other
agreements between APS and LLC. APS and LLC agree to cooperate
with each other in the preparation of any such additional
reports.
3.5 Closing. The closing of the transactions contemplated under
this Agreement (the "Closing") shall take place by mail on or
prior to November 30, 1996 (the "Closing Date"). The Closing
Date may be extended upon the mutual agreement of the Parties
hereto. The transfer of the Contributed Assets by APS to LLC
shall be deemed to be effective as of 11:59 p.m., Texas time,
on the Closing Date.
3.6 Closing Deliveries. At the Closing, APS shall execute and
deliver to LLC all instruments, documents and records set
forth in Section 4.1 hereof required by that Section to be
delivered by APS as a condition to LLC's obligation to accept
the Contributed Assets; and LLC shall execute and deliver to
APS all instruments, documents and records set forth in
Section 4.2 hereof required by that Section to be delivered by
LLC as a condition to APS's obligation to accept the
Contributed Assets. For purposes of this Agreement, the term
"Transaction Documents" shall refer to this Agreement and to
the Assignment
5
of Lease and Consent to Assignment of Lease, the General
Conveyance and Assignment of Interests described below and
such other instruments of transfer necessary to vest title and
possession in and to the Contributed Assets in LLC as of the
Closing Date.
ARTICLE IV
CLOSING CONDITIONS AND DOCUMENTS
4.1 Conditions to Obligations of LLC. LLC's obligation to accept
the Contributed Assets shall be expressly conditioned upon
satisfaction, or, in the alternative, waiver by LLC of the
following conditions:
(a) All of the terms, covenants and conditions of this
Agreement to be complied with and performed by APS on
or before the Closing Date shall have been duly
complied with and performed by APS in all material
respects.
(b) The representations and warranties made by APS herein
shall be correct in all material respects as of the
Closing Date, with the same force and effect as
though such representations and warranties had been
made as of the Closing Date.
(c) On or before the Closing Date, the Board of Directors
of APS shall have voted to authorize the Transaction
Documents, and the transactions described therein,
and the Secretary or Assistant Secretary of APS shall
have delivered to LLC a certified copy of the
resolutions of its Board of Directors to such effect;
APS shall have executed the Assignment of Lease and
obtained the executed Consent to Assignment of Lease,
in substantially the forms attached hereto as
Exhibits A and B, respectively, on or before the
Closing Date.
(d) On or before the Closing Date, APS shall have
executed an Employee Services Agreement in
substantially the form attached as Exhibit D hereto.
(e) The Facility shall not have been adversely affected
in any material way as the result of any fire,
accident or other casualty (whether or not insured)
or by any act of God.
(f) There shall not have been material adverse change in
the operations, financial condition, or regulatory or
licensing status of APS since the Execution Date of
this Agreement nor shall APS have received any
reports, surveys, citations or correspondence from
licensing authorities (collectively, "Reports")
affecting the Facility for the period prior to the
6
Closing Date, except such Reports as to which LLC has had a
reasonable opportunity to review and not disapprove.
(g) APS shall have delivered to LLC a certificate to the
effect that, as of the Closing Date, the conditions
set forth in subsections (a) and (b) of this Section
4.1 have been satisfied.
(h) On or before the Closing Date, APS shall have and
Acceptance and Assignment of Interests and Assumption
of Liabilities in substantially the form attached
hereto as Exhibit C and incorporated herein by this
reference (the "General Conveyance"), which General
Conveyance shall be effective to transfer to LLC the
Contributed Assets free and clear of all liens and
encumbrances, other than the Permitted Encumbrances
set forth on Schedule 6.1.
(i) On or before the Closing Date, APS and Summit Care
shall have executed and delivered to LLC that certain
LLC Agreement by and between APS and Summit Care.
Additionally, on or before the Closing Date, Summit
Care shall have contributed cash in the amount of One
Million Five Hundred Thousand Dollars ($1,500,000.00)
to LLC in accordance with the LLC Agreement.
(j) APS shall have made available for delivery at the
Facility the Purchased Contracts.
(k) APS shall have made available for delivery at the
Facility the Facility Records.
(l) No action, suit, or proceeding before any court or
transactions described in this Agreement or to the
consummation thereof as provided herein, shall have
been instituted or threatened on or before the
Closing Date.
(m) APS shall have delivered to LLC any additional
instruments, signed and properly acknowledged by APS,
if appropriate, as may be necessary for APS to comply
with this Agreement.
(n) To the extent required herein, APS shall have
obtained all necessary consents or approvals of all
third parties (except parties to nursing home
contracts) whose consent or approval is required in
order for APS to consummate the transactions
contemplated by the Transaction Documents.
(o) On or before the Closing Date, APS shall assign or
cause to be assigned to LLC all of APS's existing
warranties of any contractors and
7
suppliers who have provided either labor, services,
equipment and/or materials to the Facility to the
extent assignable.
4.2 Conditions to Obligations of APS. APS's obligation to
contribute the Contributed Assets shall be expressly
conditioned upon satisfaction, or in the alternative, waiver
by APS, of the following conditions:
(a) All of the terms, covenants and conditions of this
Agreement to be complied with and performed by LLC on
or before the Closing Date shall have been duly
complied with and performed in all material respects.
(b) The representations and warranties made by LLC herein
shall be correct in all material respects as of the
Closing Date, with the same force and effect as
though such representations and warranties had been
made as of the Closing Date.
(c) LLC shall have executed and delivered all documents
and agreements which it is obligated hereby to
execute.
(d) On or before the Closing Date, LLC shall have
executed an Employee Services Agreement in
substantially the form attached as Exhibit D hereto.
(e) The Facility shall not have been adversely affected
in any material way as the result of any fire,
accident or other casualty (whether or not insured)
or by any act of God.
(f) LLC shall have delivered to APS a certificate to the
effect that, as of the Closing Date, the conditions
set forth in subsections (a) and (b) of this Section
4.2 have been satisfied.
(g) On or before the Closing Date, LLC shall have
executed and delivered to APS the General Conveyance.
(h) On or before the Closing Date, APS and Summit Care
shall have executed and delivered to LLC that certain
LLC Agreement by and between APS and Summit Care.
Additionally, on or before the Closing Date, Summit
Care shall have contributed cash in the amount of One
Million Five Hundred Thousand Dollars ($1,500,000.00)
to LLC in accordance with the LLC Agreement.
(i) No action, suit, or proceeding before any court or
any governmental body or authority pertaining to the
transactions described in this Agreement or to the
consummation thereof as provided herein, shall have
been instituted or threatened on or before the
Closing Date.
8
LLC shall have delivered to APS any additional
instruments, signed and properly acknowledged by LLC,
if appropriate, as may be necessary for LLC to comply
with this Agreement.
ARTICLE V
NONCOMPETITION COVENANT
5.1 Covenant. APS shall not directly or indirectly carry on or
engage in the business of providing pharmacy services or
otherwise compete with LLC at or in connection with any
location in the County of Travis, State of Texas, whether on
its own account, or solely or jointly with others as an agent,
consultant, stockholder, member, investor, or general or
limited partner of any corporation, general partnership,
limited partnership, limited liability company or any other
entity, or in any other relationship or capacity. Except as
set forth below, the provisions of this Article V shall
survive for so long as LLC is in existence and no longer.
Notwithstanding the preceding sentence, the provisions of this
Article V shall terminate and cease to apply (i) immediately
upon the withdrawal of either APS or Summit Care as a "Member"
of LLC (as "Member" is defined in the LLC Agreement) with the
consent of the other, as contemplated by the second sentence
of Paragraph 7.4 of the LLC Agreement and (ii) on November 30,
1998 in the event that either APS or Summit Care withdraws
from LLC (A) prior to November 30, 1998 and (B) without the
consent of the other party; provided, however, that in the
event either APS or Summit Care exercises its buy/sell right
under Paragraph 7. 10 of the LLC Agreement, the provisions of
this Article V shall apply to the selling party only (as
though the buying party were LLC) and shall terminate on the
date that is the second (2nd) anniversary of the closing of
the sale contemplated by Paragraph 7.10 of the LLC Agreement.
5.2 Modification. Although APS and LLC consider the restrictions
contained herein to be reasonable, if a final judicial
determination is made by a court of competent jurisdiction
that the time or geographical territory or any other
restriction contained in this Article is an unreasonable or
otherwise unenforceable restriction, the above provisions
shall not be rendered void but shall be deemed amended to
apply as to such maximum time and territory and to such other
extent as such court may determine or indicate to be
reasonable.
5.3 Remedies. The Parties to this Agreement further acknowledge
and agree that LLC's remedy at law for a breach or threatened
breach of any of the provisions of the above covenant not to
compete would be inadequate and, in recognition of that fact,
in the event of a breach or threatened breach by APS of the
provisions of this Article, LLC shall be entitled to, without
posting any bond, and APS agrees not to oppose any request
for, equitable relief in the form of specific performance, a
temporary restraining order, a temporary or permanent
injunction or any other equitable remedy which may be
9
available. Nothing contained herein shall be construed as
prohibiting LLC from pursuing any other remedies available to
LLC for such breach or threatened breach until any such
injunction is granted.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF APS
APS hereby makes the following representations and warranties
to LLC as of the Execution Date and the Closing Date:
6.1 Title to Contributed Assets. Except as disclosed on Schedule
6.1 (collectively, the "Permitted Encumbrances"), no claims,
liens, imperfections of title, security interests or other
encumbrances have attached to any of the Contributed Assets,
nor has any action or event occurred which will impair APS's
ability to deliver valid and marketable title to the
Contributed Assets. APS has taken all reasonably necessary
action to maintain and protect any trademarks or trade names
used in connection with the Facility. Set forth on Schedule 6.
1A hereto are lien search results showing certain UCC
Financing Statements listing APS as debtor which APS believes
were filed against it in error, but for which APS specifically
indemnifies and holds harmless LLC pursuant to the provisions
of Section 9.1 hereof.
6.2 Compliance With Licensing Requirements. Except as specified in
Schedule 6.2 hereof, the Facility has been operated in
substantial compliance with the applicable laws, rules,
requirements, and regulations of the State of Texas and of the
federal government for licensing and certification of the
Facility. Except as set forth on Schedule 6.2 hereof, all
requirements or recommendations of all applicable licensing or
certification authorities regarding the Facility have been or
at the Closing shall have been fully complied with. As of the
Closing, all material State licenses, permits and Medicare and
Medicaid billing agreements and certification necessary to
operate the Facility and to obtain payment shall have been
obtained by APS, shall be in full force and effect, and shall
not be the subject of any revocation or termination action by
the issuing agencies.
6.3 Compliance With Laws. To the knowledge of APS, no action or
event has occurred which would cause the Facility to be out of
substantial compliance with any applicable federal, state or
local laws, rules and regulations, including without
limitation, all federal, state or local health, fire and
safety, seismic safety, zoning, or labor laws, ordinances,
rules or regulations applicable to the Facility, all
requirements of the Occupational Safety and Health Act and its
Texas equivalent and regulations promulgated under such
legislation and all orders, judgments and decrees of any
tribunal under such legislation that apply to the Facility,
the consequences of violation of which could have a material
adverse effect on the operations of the Facility.
10
6.4 Condition of Personal Property. AU Personal Property has been
maintained and repaired by APS in the ordinary course of APS's
business operations.
6.5 Books and Records. APS's Financial Statements and other
financial books and records for the Facility have been
maintained in accordance with APS's usual and customary
accounting practices applied on a consistent basis and are
true and correct in all material aspects.
6.6 Leases and Other Material Agreements. Except as disclosed on
Schedule 6.6 hereto, APS has not entered into any leases,
subleases, management agreements or management contracts
affecting the Facility, other than the Lease. To the knowledge
of APS, nothing has occurred which would cause any of the
Purchased Contracts listed on Schedule 1.1(b) not to be legal,
valid, binding, enforceable and in full force and effect. APS
has not assigned, transferred, conveyed, mortgaged, deeded in
trust or encumbered any interest in the Lease other than to
LLC.
6.7 Taxes. All federal, state and local taxes (other than real and
personal property taxes and any transfer taxes arising out of
the transfer contemplated herein), fees and assessments of
whatever nature upon the Contributed Assets being sold to LLC
hereunder which are due and payable by reason of the
transactions contemplated by this Agreement have been or shall
be paid by APS.
6.8 Governmental Investigations and Proceedings. Except as
disclosed on Schedule 6.8 hereto, there is no current or
pending litigation, proceeding, vendor hold or similar lien on
state or federal payments to APS, or arbitration or
governmental investigation with respect to APS and relating to
the Facility, which, if decided adversely to APS, could have a
material and adverse impact on the operations of the Facility.
6.9 No Conflict or Violation. The execution, delivery and
performance of the Transaction Documents by APS will not
result in any breach or violation or constitute a default
under any material agreement or other instrument to which APS
is a party or result in the termination of, or accelerate the
performance required by, or cause the acceleration of the
maturity of any such material agreement or other instrument.
6.10 Material Misstatements. No representation or warranty by APS
contained in this Agreement and no records, writing,
certificate, list or other instrument furnished or to be
furnished to LLC pursuant hereto or in connection with the
transactions contemplated hereby contains or will contain any
untrue statement of a material fact.
11
6.11 No Condemnation. No condemnation action has been taken or to
APS's knowledge has been threatened with respect to the
Facility or any part thereof.
6.12 No Assessments. The Facility has not been the subject of any
assessments for work or improvements either completed or to be
completed, and APS has no knowledge or belief that there is
any pending or contemplated assessment or other specified tax
or assessment relating to the Facility.
6.13 Financial Statements. Schedule 6.13 attached hereto sets forth
the profit and loss statements of APS for APS's two (2) most
recent fiscal years for the Facility (the "Financial
Statements"). The Financial Statements have been prepared in
accordance with APS's usual and customary accounting practices
consistently followed by APS throughout the periods indicated,
and fairly present the financial position and results of
operations of APS for the respective periods indicated. In
addition, on or before the Closing, APS shall promptly provide
LLC with all such additional monthly profit and loss
statements for the Facility through September 1996 as are
prepared by APS in APS's normal course of business in
accordance with APS' usual and customary accounting practices
consistently followed by APS throughout the periods indicated.
6.14 Hazardous Material. APS has not placed any underground storage
tanks on the real property upon which the Facility is located
in which any Hazardous Material (as defined below) has been or
is being stored, nor has APS spilled, disposed of, discharged,
or released any Hazardous Material into, upon, from, or over
such real property or into or upon ground or surface water on
such real property. APS has not incorporated any asbestos-
containing materials into the buildings or interior
improvements that are part of such real property, nor has it
located any electrical transformer, fluorescent light fixture
with ballasts, or other equipment containing PCBs on such real
property. As used in this paragraph, "Hazardous Material"
means any hazardous or toxic substance, material, or waste
that is regulated by any federal authority or by any state or
local governmental authority where the substance, materials,
or waste is located. Except as set forth on Schedule 6.14
hereto, APS has operated the Facility in material compliance
with all federal, state and local environmental protection
laws and regulations and has not received any notice of nor
has been cited for any violation of any such law or regulation
and is aware of no such pending or threatened citation. There
is no pending audit with respect to the Facility known to APS
by any federal, state, or local governmental authority with
respect to groundwater, soil, or air monitoring; the storage,
burial, release, transportation, or disposal of Hazardous
Materials; or the use of underground storage tanks by APS,
related to the Facility. APS has no agreement with any third
party or federal, state, or local governmental authority
relating to any such environmental matter or any environmental
cleanup.
12
6.15 Insurance. APS has maintained and now maintains (1) insurance
on all of the assets of the Facility of a type customarily
insured, covering property damage and loss of income by fire
and other casualty, and (2) adequate insurance protection
against all liabilities, claims, and risks against which it is
customary to insure. APS is not in default with respect to
payment of premiums on any such policy. No claim is pending
under any such policy which if decided adversely to APS would
materially and adversely effect the business, condition,
operations (financially or otherwise), or results of
operations of the Facility.
6.16 Zoning. APS has not commenced, nor received notice of the
commencement of, any proceeding that would affect the present
zoning or other land use classification of the property where
the Facility is located.
6.17 Litigation. Except as set forth on Schedule 6.17 attached
hereto, APS (a) is not subject to any outstanding injunction,
judgment, order, decree, ruling or charge or (b) is not a
party nor to APS's knowledge is threatened to be made a party
to any action, suit, proceeding, hearing, audit or
investigation relating to the Facility or the Purchased Assets
of, in or before any court or quasijudicial or administrative
agency of any federal, state, local or foreign jurisdiction or
before any arbitrator that is reasonably likely to result in a
material adverse change with respect to the business,
condition, operations (financial or otherwise) or results of
operation of the Facility or the Contributed Assets.
6.18 Authorization. APS has full power and authority to execute and
deliver the Transaction Documents and to perform its
obligations thereunder. The Transaction Documents constitute
the valid and legally binding obligation of APS, enforceable
against APS in accordance with their respective terms, except
as may be limited by bankruptcy, insolvency, or similar laws
relating to creditors' rights and to principles of equity
generally.
6.19 Corporate Existence and Qualification. APS is a corporation
duly organized, validly existing, and in good standing under
the laws of the State of Delaware, and has all necessary
corporate powers to own its properties and to carry on its
business as now owned and operated by it.
6.20 Access to Records. APS shall have provided LLC, its agents,
counsel, and accountants, through APS's counsel, reasonable
access to all records maintained by APS at the Facility
applicable to the Contributed Assets and the Facility and
necessary to enable LLC to consummate the transactions
described herein.
13
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF LLC
LLC hereby represents and warrants to APS as follows:
7.1 No Conflict or Violation. To the actual knowledge of LLC,
there is no impediment or reason, including threatened or
pending litigation, which would preclude LLC from executing
and delivering the Transaction Documents, from performing its
obligations thereunder or from consummating the transactions
contemplated hereunder.
7.2 Litigation. LLC (a) is not subject to any outstanding
injunction, judgment, order, decree, ruling or charge or (b)
is not a party nor to LLC's knowledge is threatened to be made
a party to any action, suit, proceeding, hearing, audit or
investigation in or before any court or quasi-judicial or
administrative agency of any federal, state, local or foreign
jurisdiction or before any arbitrator that is reasonably
likely to result in a material adverse change with respect to
the business, condition, operations (financial or otherwise)
or results of operation of the Facility or the Contributed
Assets.
7.3 Authorization. LLC has all necessary power and authority and
has taken all action necessary to enter into this Agreement
and to consummate the transactions contemplated hereby and to
perform its obligations hereunder. The Transaction Documents
have been duly executed and delivered by LLC and are the
legal, valid and binding obligations of LLC enforceable
against LLC in accordance with their terms, except as may be
limited by bankruptcy, insolvency, or similar laws relating to
creditors' rights and to principles of equity generally.
7.4 Corporate Existence and Qualification. LLC is a limited
liability company duly organized, validly existing, and in
good standing under the laws of the State of Delaware, and has
all necessary corporate power to own its properties and to
carry on its business as now owned and operated by it.
ARTICLE VIII
POSTCLOSING AGREEMENTS
8.1 Books and Records and Financial Information. Following the
Closing Date, APS agrees to provide, promptly upon reasonable
request by LLC, access to any books, records, computer tapes,
disks and data related to the Contributed Assets and the
Facility, which were not purchased by LLC as Facility Records,
and such financial information of APS related to the
Contributed Assets and the Facility with respect to any period
prior to the Closing Date as LLC or its auditors shall request
in connection with any filings or reports LLC and its
14
affiliates are required to file, or any tax inquiry or audit,
as a result of the transactions contemplated hereby.
8.2 Sales and Use Taxes. All sales and use taxes arising out of the
transfer of the Contributed Assets imposed by any local, state
or federal agency shall be paid by the party required to
collect them under the statute imposing such taxes.
ARTICLE IX
INDEMNIFICATION
9.1 Indemnification by APS.
(a) APS shall indemnify and hold LLC (including, for
purposes of this Article IX, any members, officers,
affiliates, agents and employees of LLC, and its or
their successors and assigns) harmless against any
claims, demands, damages, losses, expenses and
liabilities, including without limitation, reasonable
attorneys' fees (collectively, the "Liabilities")
suffered by LLC, arising out of or resulting from (i)
any breach by APS (including, for purposes of this
Article IX, any officers, directors, affiliates,
agents and employees of APS, and its or their
successors and assigns) of this Agreement, (ii) any
inaccuracy or misrepresentation in or breach of any of
the representations, warranties, covenants or
agreements made by APS herein, (iii) any inaccuracy or
misrepresentation in any certificate or document
delivered by APS in accordance with the provisions of
this Agreement, (iv) any Unassumed Liabilities, or (v)
any citation violations issued by the State of Texas
which relate to surveys of the Facility, if any,
conducted prior to the Closing. APS shall indemnify
and hold LLC harmless from and against any and all
liabilities arising out of the acts or omissions of
APS in connection with the operation of the Facility
prior to the Closing. For purposes of this Section
9.1(a), the indemnification by APS provided herein
shall be in force and effect for a period of two (2)
years from the Closing Date, or until the expiration
of the statute of limitations applicable to the
specific matter indemnified against, whichever is
greater. The obligation of APS to indemnify LLC shall
be limited to the amount of One Million Five Hundred
Thousand Dollars ($1,500,000.00).
(b) Upon obtaining knowledge thereof, LLC shall promptly
notify APS of any claim or demand which such party has
determined has given or could give rise to a right of
indemnification under this Agreement. If such claim or
demand relates to a claim or demand asserted by a
third party against such party and if APS acknowledges
APS's obligations to indemnify and hold harmless
hereunder, APS shall have the right to employ such
counsel as is reasonably acceptable to LLC to defend
any
such claim or demand asserted against such party. LLC
shall have the right at its own expense to
participate in the defense of any such claim or
demand. So long as APS is defending in good faith any
such claim or demand, LLC shall not settle such claim
or demand, without the consent of APS, which shall
not be unreasonably withheld. LLC shall make
available to APS all records and other materials
required by APS for its use in contesting any claim
or demand asserted by a third party against LLC.
Whether or not APS so elects to defend any such claim
or demand, LLC shall not have any obligation to do so
and LLC shall not waive any right that LLC may have
against APS hereunder with respect to any such claim
or demand by electing or failing to elect to defend
any such claim or demand.
9.2 Indemnification by LLC.
(a) LLC shall indemnify and hold APS harmless from and
against any and all Liabilities arising out of or
resulting from (i) any breach by LLC of this
Agreement; (ii) the acts or omissions of LLC after
the Closing; (iii) the failure by LLC to pay or
otherwise discharge any Assumed Liabilities or any
obligation incurred or accrued subsequent to the
Closing relating to the Facility or the Purchased
Assets; (iv) any inaccuracy or misrepresentation in
or breach of any of the representations, warranties,
covenants or agreements made by LLC herein; or (v)
any inaccuracy or misrepresentation in any
certificate or document delivered by LLC in
accordance with the provisions of this Agreement. For
purposes of this Section 9.2(a), the indemnification
by LLC provided herein shall be in force and effect
for a period of two (2) years from the Closing Date,
or until expiration of the statute of limitations
applicable to the specific matter indemnified
against, whichever is greater. The obligation of LLC
to indemnify APS shall be limited to the amount of
One Million Five Hundred Thousand Dollars
($1,500,000.00).
(b) Upon obtaining knowledge thereof, APS shall promptly
notify LLC of any claim or demand which such party
has determined has given or could give rise to a
right of indemnification under this Agreement. If
such claim or demand relates to a claim or demand
asserted by a third party against such party and if
LLC acknowledges LLC's obligations to indemnify and
hold harmless hereunder, LLC shall have the right to
employ such counsel as is reasonably acceptable to
APS to defend any such claim or demand asserted
against such party. APS shall have the right at its
own expense to participate in the defense of any such
claim or demand. So long as LLC is defending in good
faith any such claim or demand, APS shall not settle
such claim or demand, without the consent of LLC,
which shall not be unreasonably withheld. APS shall
make available to LLC all records and other materials
required by
16
LLC for its use in contesting any claim or demand
asserted by a third party against APS. Whether or not
LLC so elects to defend any such claim or demand, APS
shall not have any obligation to do so and APS shall
not waive any right that APS may have against LLC
hereunder with respect to any such claim or demand by
electing or failing to elect to defend any such claim
or demand.
ARTICLE X
MISCELLANEOUS
10.1 Notices. All notices required or permitted to be given
hereunder shall be personally delivered or sent by registered
or certified mail, return receipt requested, or sent by
overnight courier, or sent by both facsimile and mail,
addressed to the Parties as follows:
If to LLC: APS - Summit Care Pharmacy, L.L.C.
2324 Ridgepoint Drive, Suite G-1
Austin, Texas 78754
Attention: President
With a copy to: Hooper, Lundy & Bookman, Inc.
1875 Century Park East, Suite 1600
Los Angeles, CA 90067-2799
Telephone: (310) 551-8111
Telecopier: (310) 551-8181
If to APS: American Pharmaceutical Services, Inc.
1771 W. Diehl Road, Suite 210
Naperville, Illinois 60563
Attn: William Korslin, President
Telephone: (630) 305-8000
Telecopier: (630) 305-8190
With a copy to: American Pharmaceutical Services, Inc.
1771 W. Diehl Road, Suite 210
Naperville, Illinois 60563
Attn: Chris Mollet, Vice President
and General Counsel
Telephone: (630) 305-8000
Telecopier: (630) 305-8190
17
With a copy to: Latham & Watkins
233 So. Wacker Drive, Suite 5800
Chicago, Illinois 60606
Telephone: (312) 876-7700
Telecopier:(312) 993-9767
If mailed, notices shall be deemed received as of the date of
receipt indicated by the postal service, or, if the addressee
refuses to accept delivery, as of the date of such refusal of
attempted delivery. If personally delivered, notices shall be
deemed received as of the date of delivery. Either Party may
change its address for purposes of this Agreement by giving
notice thereof in accordance with this Section 10.1.
10.2 Referrals. Neither Party shall have any obligation to make
referrals to the other Party. The potential for referrals
between the Parties has played no role in determining the
consideration described in Sections 3.2 and 3.3 of this
Agreement or in the decision to enter into this Agreement.
10.3 Counterparts. This Agreement may be executed simultaneously or
in any number of counterparts, each of which shall be deemed
to be an original, but all of which together shall constitute
one and the same agreement.
10.4 Construction. APS and LLC acknowledge that each Party and its
counsel have reviewed and revised this Agreement and that the
normal rule of construction to the effect that any ambiguities
are to be resolved against the drafting party shall not be
employed in the interpretation of this Agreement.
10.5 Gender and Number. The masculine, feminine and neuter gender
and the singular or plural number shall each be deemed to
include the other whether the context so indicates.
10.6 Waiver. Waiver by a Party of the performance of any covenant,
condition or promise of any Party shall not invalidate this
Agreement, nor shall it be considered to be a waiver by such
Party of any other covenant, condition or promise contained
herein. The waiver of either or both Parties of the time for
performing any act shall not be construed as a waiver of any
other act required to be performed at a later date.
10.7 Further Assurances. APS and LLC agree to execute such further
documents and instruments as shall be necessary to fully carry
out the terms of this Agreement or to vest, perfect or confirm
in LLC the title to the Contributed Assets as of the Closing
Date.
10.8 Confidentiality. The Parties agree to keep all information
contained in this Agreement confidential. Additionally, the
Parties agree to keep confidential all nonpublic information
provided by one Party to the other Party including,
18
but not limited to, information of both a technical and
financial nature relating to the business operations of the
Parties and subsidiary or other affiliated entities. Provided,
however, that the information to be kept confidential shall
not include (i) information which has come within the public
domain through no fault or action of either Party; (ii)
information which rightfully becomes available to a Party on a
nonconfidential basis prior to its disclosure in relation to
this Agreement and the transactions contemplated hereunder; or
(iii) information which rightfully becomes available to a
Party on a nonconfidential basis from any third party, the
disclosure of which to that Party did not violate any
contractual or legal obligation the third party has to the
other Party, its members, subsidiaries or other affiliated
entities with respect to such information. For purposes of
this Section only, the term "Party" shall include Summit Care.
Notwithstanding the above, nothing in this Section shall
prohibit a Party from providing information when legally
required to do so by a law enforcement, licensing, or other
governmental agency or entity.
10.9 Time of Essence. Time is of the essence of each and every
provision of this Agreement.
10.10 Survival. The representations and warranties in this Agreement
shall survive the Closing for a period of two (2) years.
10.11 Supersedes Agreement. This Agreement and the Schedules and
Exhibits attached hereto express the complete agreement of the
Parties and supersede all prior written or oral agreements
between APS and LLC regarding the Facility and the Contributed
Assets, except that the Agreement shall be entered into and
construed in compliance with the LLC Agreement.
10.12 Commissions. No fees or commissions are due or payable to any
brokers, finders or other agents of the Parties hereto.
10.13 Attorneys' Fees and Costs. In the event either Party commences
legal action or arbitration to interpret or enforce this
Agreement, or for damages for any alleged breach hereof, the
prevailing party in such action shall be entitled to recover
from the nonprevailing party reasonable attorney's fees and
costs as awarded by the court.
10.14 Arbitration. Any controversy or claim arising out of or
relating to this Agreement, or the breach hereof, shall be
settled by arbitration in accordance with the Rules of the
American Arbitration Association, at its Austin, Texas office,
or at its office nearest to Austin. Notwithstanding the
foregoing, LLC and APS shall endeavor to agree on an
arbitrator within ten (10) business days (the "Arbitrator
Selection Period") after the initiation of the arbitration
proceeding (the "Proceeding"), the cost and expenses of which
shall be shared fifty percent (50%) by APS and fifty percent
(50%) by the other members of LLC, collectively. If APS and
LLC are unable to agree on an arbitrator, then
19
within ten (10) business days after the expiration of the
Arbitrator Selection Period, each of APS and LLC shall select
an arbitrator (together, the "Chosen Arbitrators"), the costs
and expenses of each of which shall be paid solely by the
Party that selected such Chosen Arbitrator. Within 5 business
days after the Chosen Arbitrators have been selected, they
shall together choose a third arbitrator (together with the
Chosen Arbitrators, the "Panel"), the costs and expenses of
which shall be shared fifty percent (50%) by APS and fifty
percent (50%) by the other members of LLC, collectively. Each
Party shall submit its case in writing, setting forth the
facts and its arguments with respect to the matter or matters
that are the subject of the Proceeding, to the Arbitrator or
the Panel, as the case may be, within thirty (30) days after
the initiation of the Proceeding. Hearings in the Proceeding
shall commence within thirty (30) days after the last such
submission. The Arbitrator or the Panel, as the case may be,
shall deliver its opinion within thirty (30) days after the
completion of the arbitration hearings. Judgment upon the
award rendered by the Arbitrator or the Panel, as the case may
be, may be entered in any court having jurisdiction thereof.
10.15 Interpretation. This agreement shall be governed by and
construed in accordance with the laws of the State of Texas.
10.16 Severability. If any provision of this Agreement or any
application thereof to any person or circumstances shall to
any extent be invalid, the remainder of this Agreement
(including the application of such provision to persons or
circumstances other than those to which it is held invalid)
shall not be affected thereby, and each provision of this
Agreement shall be valid and enforced to the fullest extent
permitted by law.
10.17 Binding. This Agreement shall be binding upon, and inure to
the benefit of the Parties hereto and their respective heirs,
executors, administrators, successors in interest and
permitted assigns.
10.18 Facsimile Copies. Signed, faxed documents shall constitute
originals.
10.19 Force Majeure. In the event that either Party is unable to
consummate the transactions contemplated herein by the Closing
Date or within any extension of the Closing Date granted
hereunder due to (i) losses to the Facility by reason of
strike, fire, flood, earthquake, accident or other calamity of
such character as to interfere materially with the conduct of
the business and operations of the Facility regardless of
whether or not such loss shall have been insured, (ii) the
outbreak or escalation of hostilities between the United
States and any foreign power or of any other insurrection or
armed conflict involving the United States or the declaration
by the United States of a national emergency which makes it
impracticable or inadvisable to consummate the transactions
contemplated hereby, then either Party may extend the Closing
Date until such condition no longer makes it impracticable
20
or inadvisable to consummate the transactions contemplated
hereby but in any event, the Closing Date shall not be
extended pursuant to this section for a period longer than 30
days.
10.20 No Obligations To Third Parties. The execution and delivery of
this Agreement shall not be deemed to confer any rights or
benefits upon any person or entity other than as specified
herein.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on
the Execution Date first written above.
APS: AMERICAN PHARMACEUTICAL
SERVICES, INC., a Delaware corporation
By: [SIG]
-------------------------------------
Its: President
------------------------------------
LLC: APS-SUMMIT CARE PHARMACY, L.L.C.,
a Delaware limited liability company
By: American Pharmaceutical Services, Inc.,
a Delaware corporation, its member
By: [SIG]
---------------------------------
Its: President
--------------------------------
By: Summit Care Pharmacy, Inc., a
California corporation, its member
By:
---------------------------------
Its:
--------------------------------
Acknowledged and Agreed
this ___ day of _____________,
1996, for the purposes of Sections 5.1
and 10.8 hereof only.
SUMMIT CARE PHARMACY, INC., a
California corporation
By:
--------------------------
Its:
-------------------------
21
or inadvisable to consummate the transactions contemplated
hereby but in any event, the Closing Date shall not be
extended pursuant to this section for a period longer than 30
days.
10.20 No Obligations To Third Parties. The execution and delivery of
this Agreement shall not be deemed to confer any rights or
benefits upon any person or entity other than as specified
herein.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on
the Execution Date first written above.
APS: AMERICAN PHARMACEUTICAL
SERVICES, INC., a Delaware corporation
By:
-------------------------------------
Its:
------------------------------------
LLC: APS-SUMMIT CARE PHARMACY, L.L.C.,
a Delaware limited liability company
By: American Pharmaceutical Services, Inc.,
a Delaware corporation, its member
By:
---------------------------------
Its:
--------------------------------
By: Summit Care Pharmacy, Inc., a
California corporation, its member
By: DERWIN L. WILLIAMS
---------------------------------
Its: Sr. Vice President, Finance
--------------------------------
Acknowledged and Agreed
this 30th day of November
1996, for the purposes of Sections 5.1
and 10.8 hereof only.
SUMMIT CARE PHARMACY, INC., a
California corporation
By: DERWIN L. WILLIAMS
----------------------------
Its: Sr. Vice President, Finance
---------------------------
21
EXHIBIT A
ASSIGNMENT OF LEASE
[SEE ATTACHED]
ASSIGNMENT AND ASSUMPTION OF LEASE
This ASSIGNMENT AND ASSUMPTION OF LEASE (the "Assignment") is made as
of November 30,1996 by AMERICAN PHARMACEUTICAL SERVICES, INC., a Delaware
corporation ("Assignor"), APS-SKILLED CARE PHARMACY, L.L.C., a Delaware limited
liability company ("Assignee"), and PROMONTORY INVESTORS, LTD., a Texas limited
partnership ("Landlord"), as successor in interest to Pension Realty Income
Trust A.
RECITALS
A. Lease. Pursuant to that certain Lease, dated as of April 11,
1994 (the "Lease"), by and between Landlord, as lessor, and Assignor, as
successor in interest to Abbey Pharmaceutical Services, Inc., as lessee,
Landlord leased to Assignor certain real property located at 2324 Ridgepoint
Drive, Suite G-1, Austin, Texas, 78754 (the "Property"). The entire right, title
and interest of Assignor under the Lease is referred to herein as the "Leasehold
Estate."
B. Purpose. Pursuant to (i) that certain Limited Liability
Company Agreement of APS-Summit Care Pharmacy, L.L.C., dated as of the date
hereof, by and between Assignor and Summit Care Pharmacy, Inc. a California
corporation ("SCPI"), and (ii) that certain Asset Contribution Agreement, dated
as of the date hereof, by and between Assignor and Assignee, Assignor and SCPI
have formed Assignee and provided for the contribution of all of the assets of
Assignor's pharmacy business that is conducted at the Property to Assignee, and
Assignee wishes to assume the obligations of the Lease and have all of
Assignor's rights under the Lease assigned to Assignee.
AGREEMENT
NOW THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, Assignor, Assignee and Landlord
mutually agree as follows:
1. Assignment. Assignor hereby sets over, transfers and assigns
unto Assignee, effective as of the date hereof, all of Assignor's right, title
and interest in and to the Leasehold Estate, for the balance of the term
thereof, with the full benefit of all the powers and of all the covenants and
provisions contained therein. This assignment includes an assignment of all
right, title and interest of Assignor in and to the improvements at the
Property. The execution of this Assignment shall not release Assignor from
Assignor's obligations as lessee under the Lease.
2. Assumption. In consideration of the foregoing assignment,
Assignee hereby accepts the foregoing assignment and agrees to make all of the
payments and to otherwise observe, keep and perform all the terms, covenants and
conditions to be made, observed, kept and performed by Assignor, as lessee under
the Lease, as fully as though Assignee were originally named in the Lease as the
lessee.
3. Consent. Landlord hereby consents to the terms of this
Assignment and acknowledges that Assignee shall forthwith be the lessee under
the Lease.
4. Assignor's Warranties. Assignor hereby represents and warrants
to Assignee that:
(a) At the time of this Assignment, Assignor is the lawful owner
of that interest in and to the Leasehold Estate assigned
hereby and Assignor has the right, power and authority to
assign the same to Assignee.
(b) Assignor has not previously assigned, transferred or conveyed
any of its right, title or interest in or to the Leasehold
Estate.
(c) The Lease is free and clear of any and all liens, charges,
encumbrances and claims whatsoever.
5. Landlord's Warranties. Landlord hereby represents and warrants
to Assignee that:
(a) The term of the Lease began June 1, 1994 and will expire May
31, 1999.
(b) The current minimum rent in the amount of $5,156.02 per month
and all other sums due thereunder, have been paid in
accordance with the terms of the Lease through the date
hereof, and Landlord holds no security deposit with respect to
the Lease.
(c) To the best of Landlord's knowledge, as of the date hereof,
Landlord is entitled to no penalties, interest or offset under
the Lease.
(d) As of the date hereof, the Lease is in full force and effect
and, to the best of Landlord's knowledge, no default exists
thereunder.
(e) Landlord has not assigned, hypothecated, pledged or otherwise
transferred all or any portion of its interest under the Lease
except to Equitable of Iowa or its affiliate under a first
mortgage loan.
(f) The copy of the Lease attached hereto as Exhibit A is a true
and correct copy of the Lease. The Lease has not been modified
or amended except as indicated on Exhibit A. The Lease
constitutes the only agreement relating to the lease of the
Leasehold Estate from Landlord to Assignor.
6. Tenant's Sign. Assignee agrees that it will remove its sign
from the exterior facade of the Property within thirty (30) days after the date
hereof. If Assignee replaces such sign, the new sign will comply with Landlord's
sign specifications, a copy of which has been delivered to Assignee prior to the
execution of this document.
2
7. Miscellaneous. Each party agrees that it will execute and
deliver such additional documents as are necessary or reasonable to give effect
to this Assignment or any provisions hereof If any party refers this Assignment
to an attorney to assist in its enforcement, the prevailing party in any action
on the dispute shall be entitled to an award of its costs and attorneys' fees
incurred in connection therewith. This Assignment shall be governed by the law
of the State of Texas. This Assignment shall be binding upon, and shall inure to
the benefit of, the heirs, successors, assigns and personal representatives of
the parties. This Assignment may be executed in one or more counterparts, each
of which is an original and all of which constitute one agreement.
[SIGNATURE PAGE FOLLOWS]
3
IN WITNESS WHEREOF, the parties hereto have executed this Assignment as
of the date first above written.
"Assignor"
AMERICAN PHARMACEUTICAL SERVICES,
INC., a Delaware corporation
By:__________________________________
Name:________________________________
Title:_______________________________
"Assignee"
APS-SKILLED CARE PHARMACY, L.L.C., a
Delaware limited liability company
By: American Pharmaceutical Services,
Inc., a Delaware corporation, Member
By:_____________________________
Name:___________________________
Title:__________________________
By: Summit Care Pharmacy, Inc., a
California corporation, Member
By:_____________________________
Name:___________________________
Title:__________________________
"Landlord"
PROMONTORY INVESTORS, LTD., a Texas
limited partnership
By: Cameron Road Investors, Ltd., a Texas
limited liability company
By:_____________________________
Name: Mark S. Scher
Title: Director
S-1
EXHIBIT A
THE LEASE
Attached.
A-1
EXHIBIT B
CONSENT TO ASSIGNMENT OF LEASE
[SEE EXHIBIT A]
EXHIBIT C
GENERAL CONVEYANCE AND ACCEPTANCE
AND ASSIGNMENT OF INTERESTS AND ASSUMPTION OF LIABILITIES
[SEE ATTACHED]
GENERAL CONVEYANCE AND ACCEPTANCE
AND ASSIGNMENT OF INTERESTS AND ASSUMPTION OF LIABILITIES
This General Conveyance and Acceptance and Assignment of Interests and
Assumption of Liabilities (the "General Conveyance") is hereby entered into and
delivered by and between American Pharmaceutical Services, Inc., a Delaware
corporation ("APS"), and APS-Summit Care Pharmacy, L.L.C., a Delaware limited
liability company ("LLC"), effective as of November 30, 1996, in connection with
that certain Asset Contribution Agreement of even date herewith (the "Asset
Contribution Agreement"). The terms of the Asset Contribution Agreement are
hereby incorporated herein by this reference.
For valuable consideration, the receipt and adequacy of which are
hereby acknowledged, APS hereby contributes, transfers and assigns to LLC, in
accordance with the terms of the Asset Contribution Agreement, all of APS's
rights, title and interest in and to the Contributed Assets (as defined in
Article I of the Asset Contribution Agreement). In accordance with the terms of
the Asset Contribution Agreement, LLC hereby accepts the Contributed Assets and
assumes the Assumed Liabilities (as defined in Article II of the Asset
Contribution Agreement).
APS hereby covenants and agrees to take all steps reasonably necessary
to establish the record of LLC's title to the Contributed Assets contributed,
transferred and assigned in accordance with this General Conveyance.
This General Conveyance is executed in, and shall be governed by, the
laws of the State of Texas.
IN WITNESS WHEREOF, the parties have executed this General Conveyance
effective as of the date first written above.
AMERICAN PHARMACEUTICAL APS-SUMMIT CARE PHARMACY, L.L.C.,
SERVICES, INC., a a Delaware limited liability company
Delaware corporation
By: American Pharmaceutical Services, Inc.
a Delaware corporation, its member
By:_____________________________
By:_________________________________
Its:____________________________
Its:________________________________
By: Summit Care Pharmacy, Inc., a
California corporation, its member
By:_________________________________
Its:________________________________
EXHIBIT D
EMPLOYEE SERVICES AGREEMENT
[SEE ATTACHED]
EMPLOYEE SERVICES AGREEMENT
This Employee Services Agreement (the "Agreement") is made as of this
30th day of November, 1996 by and between APS-Summit Care Pharmacy, L.L.C., a
Delaware limited liability company ("Joint Venture"), and American
Pharmaceutical Services, Inc., a Delaware corporation ("APS").
RECITALS
A. Joint Venture was formed pursuant to that certain Limited
Liability Agreement, dated as of the date hereof (the "LLC Agreement"), by and
between APS and Summit Care Pharmacy, Inc., a California corporation.
B. Joint Venture owns and operates a pharmacy located at 2324
Ridgepoint Drive, Suite G-1, Austin, Texas (the "Pharmacy") providing
pharmaceutical supplies and services to long-term care facilities that are
located in the Austin, Texas area (the "Business").
C. Joint Venture desires that APS provide, and APS desires to
provide, employee services to operate the Business in the ordinary course of
business according to the terms and provisions of this Agreement.
AGREEMENT
1. Provision of Employee Services. APS shall make commercially
reasonable efforts to provide to Joint Venture, at the request of Joint Venture,
the services of APS employees that are reasonably necessary to operate the
Business in a manner consistent with its past operation and with its reasonable
business needs (the "Employee Services"). The employees providing the Employee
Services (the "Leased Employees") shall work on-site at the Pharmacy during its
regular business hours and shall also be available during non-business hours,
consistent with APS personnel policies, with the past operation of the Business
and with its reasonable business needs. The Leased Employees shall hold all such
licenses or other professional qualifications as are reasonably necessary for
the operation of the Business in the ordinary course of business.
2. Compensation for Employee Services. APS shall be solely
responsible for paying the costs of providing the Employee Services (the
"Employee Costs"), including, without limitation, (i) the salaries or wages, as
applicable, of the Leased Employees, including, without limitation, vacation
pay, sick pay, payroll taxes and severance costs, (ii) the cost of employee
benefits programs for the Leased Employees, to the extent such benefits are
customarily provided to APS employees, including, without limitation, health
insurance, life insurance, disability insurance, worker's compensation
insurance, malpractice insurance, other customary insurance, retirement programs
and profit sharing plans, and (iii) a reasonable allocation for the overhead
costs of APS in employing the Leased Employees. Joint Venture shall reimburse to
APS the amount of all Employee Costs during the term of this Agreement. As soon
as practicable after the end of each calendar month, APS shall deliver to Joint
Venture a statement setting forth the Employee Costs that are attributable to
such month. Joint Venture shall pay the Employee Costs reflected on such
statement on or before the fifth (5th) day after receipt of such statement.
1
3. Employee Management. Subject to the provisions of Section I
hereof and except as otherwise required by applicable law, Joint Venture shall
supervise and manage the day-to-day duties of the Leased Employees and be liable
for their actions in such capacity. Joint Venture hereby agrees to comply with
all applicable laws and regulations and to follow APS personnel policies with
respect to the Leased Employees. APS, in its sole discretion, shall make all
hiring and termination decisions, establish and pay all wages, salaries and
compensation, determine staffing levels, individual work hours, personnel
policies and employee benefit programs for all of the Leased Employees, all
consistent with APS's personnel policies. APS shall consult with Joint Venture
on such matters, but all final decisions shall be those of APS, in its sole
discretion.
4. Ownership of Employee Records. All records and information
relating to the Leased Employees shall remain the property of APS.
5. Term. This Agreement shall commence on the date hereof and
shall terminate on the date that APS ceases to hold at least fifty percent (50%)
of the membership interests in Joint Venture.
6. Indemnity by Joint Venture. Joint Venture hereby indemnifies,
saves and holds harmless APS, its affiliates and subsidiaries, and its and its
affiliates' and subsidiaries' respective officers, directors, principals,
attorneys, agents or other representatives (collectively, "APS Indemnified
Parties") from and against all costs, losses, liabilities, damages, lawsuits,
deficiencies, claims and expenses (whether or not arising out of third party
claims), including, without limitation, interest, penalties, reasonable
attorneys' fees and all amounts paid in investigation, defense or settlement of
any of the foregoing incurred in connection with or arising out of the actions
of the Leased Employees while leased to Joint Venture pursuant hereto or the
Leased Employees' employment on-site at the Clinic, including, without
limitation, claims for discrimination, harassment and workplace injury. Nothing
contained herein is intended to relieve any APS Indemnified Party of its
respective obligations arising as a result of APS's status as a member in Joint
Venture.
7. Indemnity by APS. APS hereby indemnifies, saves and holds
harmless Joint Venture, its affiliates and subsidiaries, and its and its
affiliates' and subsidiaries' respective officers, directors, principals,
attorneys, agents or other representatives (collectively, "Joint Venture
Indemnified Parties") from and against all costs, losses, liabilities, damages,
lawsuits, deficiencies, claims and expenses (whether or not arising out of third
party claims), including, without limitation, interest, penalties, reasonable
attorneys' fees and all amounts paid in investigation, defense or settlement of
any of the foregoing incurred in connection with or arising out of the failure
by APS to timely pay any Employee Costs as contemplated by the first sentence of
Section 2 hereof or any decisions by APS to fire or otherwise discipline Leased
Employees to the extent that a Majority in Interest (as defined in the "LLC
Agreement") did not agree with such decision to fire or discipline.
8. No Liability. In no event shall APS, or its successors and
assigns, representatives, agents, advisors, partners, consultants, affiliates,
contractors, counsel, shareholders, directors, officers and employees, be liable
to Joint Venture under or in connection
2
with this Agreement under any theory of tort, contract, strict liability or
other legal or equitable theory for any damages, direct or indirect,
consequential or otherwise except for such damages that result from the
recklessness or willful misconduct of APS and except for the intentional
repudiation by APS of its obligations hereunder when such intentional
repudiation is not reasonable under the existing circumstances. Nothing
contained herein is intended to relieve any APS Indemnified Party of its
respective obligations arising as a result of APS's status as a member in Joint
Venture.
9. Assignment and No Third Party Beneficiaries. Neither this
Agreement nor any of the rights or obligations hereunder may be assigned by any
party without the prior written consent of the other party. Subject to the
foregoing, this Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns, and no
other person shall have any right, benefit or obligation under this Agreement as
a third party beneficiary or otherwise.
10. Choice of Law. This Agreement shall be construed, interpreted
and the rights of the parties determined in accordance with the laws of the
State of Texas (without reference to the choice of law provisions of Texas law).
11. Entire Agreement; Amendments and Waivers. This Agreement
together with all exhibits to be attached hereto constitutes the entire
agreement among the parties pertaining to the subject matter hereof and
supersedes or will supersede all prior agreements, understandings, negotiations
and discussions, whether oral or written, of the parties. To the extent that the
provisions of the exhibits to be attached hereto conflict with the provisions of
this Agreement, the provisions of this Agreement shall control. This Agreement
may not be amended except by an instrument in writing signed on behalf of each
of the parties hereto. No amendment, supplement, modification or waiver of this
Agreement shall be binding unless executed in writing by the party to be bound
thereby. No waiver of any of the provisions of this Agreement shall be deemed or
shall constitute a waiver of any other provision hereof (whether or not
similar), nor shall such waiver constitute a continuing waiver unless otherwise
expressly provided.
12. Notices. All notices, requests, and other communications which
may be given under this Agreement (other than orders hereunder, which shall be
placed as provided herein) shall be in writing and shall be deemed to have been
duly given when received if personally delivered; when transmitted if
transmitted by telecopy; the day after being sent, if sent for next day delivery
by recognized overnight delivery service (e.g., FedEx); and upon receipt, if
sent by certified or registered mail, return receipt requested. In each case
notice shall be given as follows:
If to Joint Venture, addressed to:
APS-Summit Care Pharmacy, L.L.C.
2324 Ridgepoint Drive, Suite G-1
Austin, TX 78754
Telecopy Number:__________________
3
Attention: Terry Davis
with a copy to the same address:
Attention: Jesse Martinez
If to APS, addressed to:
American Pharmaceutical Services, Inc.
Diehl Road, Suite 210
Naperville, IL 60563
Telecopy Number: (708) 305-0824
Attention: President
with a copy to the same address:
Attention: General Counsel
13. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
14. Relationship. Nothing herein shall be deemed to create a
partnership, joint venture or other similar relationship. Joint Venture and APS
shall not be construed as partners of each other by reason of this Agreement,
and neither shall have the power to bind or obligate the other except as
specifically set forth herein.
[SIGNATURE PAGE FOLLOWS]
4
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
AMERICAN PHARMACEUTICAL SERVICES,
INC., a Delaware corporation
By:_____________________________
Name:___________________________
Title:__________________________
APS-SKILLED CARE PHARMACY, L.L.C., a
Delaware limited liability company
By: American Pharmaceutical Services,
Inc., a Delaware corporation, Member
By:_____________________________
Name:___________________________
Title:__________________________
By: Summit Care Pharmacy, Inc., a
California corporation, Member
By:_____________________________
Name:___________________________
Title:__________________________
S-1
SCHEDULE 1.1(b)
PURCHASED CONTRACTS
[SEE ATTACHED]
CUSTOMER/SERVICE SEGMENTS
9/30/96
----------
Area/Reg. Territ. Facility Name City SL AFFIL. C RX
- --------- ------- ------------------- ---------------- -- ------ --- ----
C/MS P-CONS Aldwyche Group Austin TX LCA X X
C/MS CTX Alexander CC Austin TX LCA X X
C/MS P-PHRM Arbor Austin TX PCA X
C/MS CTX Arboretum S. Marcos TX X X
C/MS P-PHRM Austin Manor Austin TX 3927 X X
C/MS CTX Austin NC Austin TX X X
C/MS CTX B. Gardens Austin TX Mart X X
C/STX P-PHRM Barton House Austin TX X
C/MS CTX Bastrop Nursing Bastrop TX LCA X X
C/MS CTX Brazos Valley Geri College Station TX LCA X X
C/MS P-PHRM Canon Oaks Austin TX PCA X
C/MS P-PHRM Capital City Austin TX PCA X
C/MS P-PHRM Cent Tx Treatment Austin TX X
C/MS CTX CI-Lagrange Lagrange TX LCA X X
C/MS CTX CI-Liano Liano TX LCA X X
C/MS P-PHRM Clairmont Austin TX X
C/MS P-PHRM Concept Six Austin TX X X
C/MS Crestview Methodist Brian TX
C/MS CTX Crestview Manor Belton TX LCA X X
C/STX SAN Deer Creek Nursing Wimberly TX LCA X X
C/STX P-PHRM Four Seasons Austin TX X
C/MS CTX Gracy Woods Austin TX X
C/MS Gracy Woods II Austin TX LCA X
C/STX P-PHRM Heartland Austin YX HCR X X
C/MS CTX Heritage Park Austin TX HCCI X X
C/MS Home Patients Austin TX X
C/MS P-PHRM Indian Wells Austin TX X X
C/MS P-PHRM Lalla Austin TX X
C/MS P-PHRM M. Johnson N C Austin TX X X
C/MS P-CONS M.L. Southpointe Austin TX X X
C/MS CTX Marbridge Manchaca TX X X
C/MS P-PHRM Mary Lee Res Ctr Austin TX X
C/MS P-CONS Marywood Group Austin TX LCA X
C/MS P-PHRM Mason CC Mason TX 3927 X
C/MS P-PHRM Monte Siesta Austin TX X
C/MS CTX Oak Manor NC Flatonia TX Summit
C/MS CTX Oakland Manor Giddings TX Summit
C/MS P-CONS Parkfield Group Austin TX LCA X X
C/MS CTX Pecan Grove Austin TX X X
C/MS P-CONS Pendleton Group Austin TX LCA X X
C/MS CTX Pflugerville HC Pflugerville TX X
C/MS P-PHRM Regency Village Austin TX X X
C/MS P-PHRM Renaissance Georgetown TX X
C/MS CTX Retirement & NC Austin TX X X
C/MS P-PHRM River Gardens New Brauniels TX X X
C/MS CTX River Haven Georgetown TX X X
C/MS P-PHRM Scissortail Austin TX X X
C/MS P-PHRM Settlement Home Austin TX X
C/MS CTX Sierra Health Austin TX Sierra X
C/MS P-CONS Silverway Group Austin TX LCA X X
C/MS P-PHRM Skyview Austin TX X X
C/MS CTX Southwood Austin TX Summit X
C/MS P-PHRM Stratford House Austin TX X
C/MS P-PHRM Summit HCC Austin TX X X
C/MS CTX Sweetbriar Taylor Taylor TX LCA X X
C/MS CTX The Hearthstone Roundrock TX LCA X X
??? CT ???????? TX X X
C/MS P-CONS Wagon Crossing Austin TX LCA X X
C/STX P-PHRM Walnut Hills Austin TX X X
C/MS CTX Westminster HC Austin TX X X
SCHEDULE 1.1(d)
PERSONAL PROPERTY, FIXTURES AND EQUIPMENT
[SEE ATTACHED]
November 19, 1996 Page 1
9:23 AM
American Pharmamceutical Services
DEPRECIATION EXPENSE REPORT
as of 09/30/1996
- --------------------------------------------------------------------------------------
In Svc Acquired Dep P Est Salvage/ Depreciable Thru Prior Acc
SYS No Ext Date Value Meth T Life Sect 179 Basis Date Depreciati
- --------------------------------------------------------------------------------------
Book: Book 6 FY: September
000085 000 10/01/94 4206.02 SLMM P 04 07 0.00 4206.02 08/96 917.
000086 000 10/01/94 3923.73 SLMM P 04 08 0.00 3923.73 08/96 840.
000087 000 10/01/94 2376.87 SLMM P 04 10 0.00 2376.87 08/96 491.
000088 000 10/01/94 4632.48 SLMM P 04 11 0.00 4632.48 08/96 942.
000089 000 07/01/94 69600.00 SLMM P 04 10 0.00 69600.00 08/96 14400.
000090 000 10/01/94 18191.29 SLMM P 04 09 0.00 18191.29 08/96 3829.
000091 000 10/01/94 3062.40 SLMM P 04 10 0.00 3062.40 08/96 633.
000092 000 10/01/94 905.91 SLMM P 04 11 0.00 905.91 08/96 184.
000093 000 10/01/94 7440.00 SLMM P 02 03 0.00 7440.00 08/96 3288.
000094 000 10/01/94 16137.00 SLMM P 02 09 0.00 16137.00 08/96 5868.
000095 000 10/01/94 1095.56 SLMM P 02 10 0.00 1095.56 08/96 386.
000370 000 10/01/94 276.98 SLMM P 04 06 0.00 276.98 08/96 61.
000371 000 10/01/94 34.88 SLMM P 04 06 0.00 34.88 08/96 7.
000372 000 10/01/94 2.78 SLMM P 04 08 0.00 2.78 08/96 0.
000373 000 10/01/94 133.90 SLMM P 04 06 0.00 133.90 08/96 29.
000374 000 10/01/94 56.84 SLMM P 04 07 0.00 56.84 08/96 12.
000375 000 10/01/94 226.24 SLMM P 04 06 0.00 226.24 08/96 50.
000376 000 10/01/94 138.22 SLMM P 04 06 0.00 138.22 08/96 30.
000377 000 10/01/94 988.20 SLMM P 04 06 0.00 988.20 08/96 219.
000378 000 10/01/94 1312.20 SLMM P 04 06 0.00 1312.20 08/96 291.
000379 000 10/01/94 2102.26 SLMM P 04 06 0.00 2102.26 08/96 467.
000380 000 10/01/94 1341.19 SLMM P 04 06 0.00 1341.19 08/96 298.
000381 000 10/01/94 6268.75 SLMM P 04 03 0.00 6268.75 08/96 1475.
000663 000 10/01/94 97.90 SLMM P 04 06 0.00 97.90 08/96 21.
000664 000 10/01/94 144.96 SLMM P 04 06 0.00 144.96 08/96 32.
000666 000 10/01/94 4291.50 SLMM P 02 03 0.00 4291.50 08/96 1907.
000667 000 10/01/94 5922.50 SLMM A 01 02 0.00 5922.50 11/95 2369.
000668 000 10/01/94 3742.99 SLMM A 02 06 0.00 3742.99 08/96 1497.
000669 000 10/01/94 6742.35 SLMM A 02 06 0.00 6742.35 08/96 2696.
000670 000 10/01/94 3240.00 SLMM A 02 03 0.00 3240.00 07/96 1440.
000671 000 10/01/94 5359.50 SLMM A 02 03 0.00 5359.50 07/96 2382.
001103 000 03/01/95 1495.30 SLMM P 05 00 0.00 1495.30 08/96 174.
001104 000 05/01/95 1674.00 SLMM P 05 00 0.00 1674.00 08/96 139.
001105 000 12/01/94 3122.00 SLMM P 05 00 0.00 3122.00 08/96 520.
001106 000 10/01/94 17426.80 SLMM P 04 00 0.00 17426.80 08/96 0.
001107 000 10/01/94 1561.00 SLMM P 04 00 0.00 1561.00 08/96 0.
001108 000 10/01/94 5855.00 SLMM P 04 00 0.00 5855.00 08/96 0.
001109 000 10/01/94 3155.34 SLMM P 05 00 0.00 3155.34 08/96 105.
001110 000 10/01/94 43.38 SLMM P 05 00 0.00 43.38 08/96 1.
001111 000 08/01/95 2550.00 SLMM P 05 00 0.00 2550.00 08/96 85.
001112 000 10/01/94 4152.80 SLMM P 05 00 0.00 4152.80 08/96 622.
001113 000 01/01/95 3141.61 SLMM P 05 00 0.00 3141.60 08/96 471.
001114 000 05/01/95 1475.74 SLMM P 05 00 0.00 1475.74 08/96 122.
001115 000 07/01/95 3190.32 SLMM P 05 00 0.00 3190.32 08/96 159.
001116 000 10/01/94 1595.16 SLMM P 05 00 0.00 1595.16 08/96 26.
001117 000 10/01/94 187.89 SLMM P 02 00 0.00 187.89 08/96 0.
002811 000 10/01/94 0.00 SLMM P 10 00 0.00 0.00 08/96 0.
002812 000 10/01/94 0.00 SLMM P 10 00 0.00 0.00 08/96 0.
November 19, 1996
9:23 A.M. Page 2
American Pharmaceutical Services
DEPRECIATION EXPENSE REPORT
as of 09/30/1996
- -----------------------------------------------------------------------------------
In Svc Acquired Dep P Est Salvage/ Depreciable
SYS No. Ext Date Value Meth T Life Sect 179 Basis
- --------------------------------------------------- ------------------------------
002814 000 10/01/94 0.00 SLMM P 10 00 0.00 0.00
002815 000 10/01/94 0.00 SLMM P 10 00 0.00 0.00
002816 000 10/01/94 0.00 SLMM P 10 00 0.00 0.00
002817 000 10/01/94 0.00 SLMM P 10 00 0.00 0.00
002818 000 10/01/94 0.00 SLMM P 10 00 0.00 0.00
002819 000 10/01/94 0.00 SLMM P 10 00 0.00 0.00
002820 000 10/01/94 0.00 SLMM P 10 00 0.00 0.00
002821 000 10/01/94 0.00 SLMM P 10 00 0.00 0.00
002822 000 10/01/94 0.00 SLMM P 10 00 0.00 0.00
002823 000 10/01/94 0.00 SLMM P 10 00 0.00 0.00
002824 000 10/01/94 0.00 SLMM P 10 00 0.00 0.00
002825 000 10/01/94 0.00 SLMM P 10 00 0.00 0.00
002826 000 10/01/94 0.00 SLMM P 10 00 0.00 0.00
002837 000 10/01/94 0.00 SLMM P 10 00 0.00 0.00
002842 000 10/01/94 0.00 SLMM P 01 00 0.00 0.00
002843 000 10/01/94 0.00 SLMM P 10 00 0.00 0.00
002844 000 10/01/94 0.00 SLMM P 10 00 0.00 0.00
002845 000 10/01/94 0.00 SLMM P 10 00 0.00 0.00
002846 000 10/01/94 0.00 SLMM P 10 00 0.00 0.00
002847 000 10/01/94 0.00 SLMM P 10 00 0.00 0.00
002848 000 10/01/94 0.00 SLMM P 10 00 0.00 0.00
002849 000 10/01/94 0.00 SLMM P 10 00 0.00 0.00
002850 000 10/01/94 0.00 SLMM P 10 00 0.00 0.00
002854 000 10/01/94 0.00 SLMM P 10 00 0.00 0.00
002855 000 10/01/94 0.00 SLMM P 10 00 0.00 0.00
002856 000 10/01/94 0.00 SLMM P 10 00 0.00 0.00
003042 000 10/01/94 16308.48 SLMM A 03 02 0.00 16308.48
003091 000 10/01/94 17190.22 SLMM A 03 04 0.00 17190.22
003338 000 10/01/94 15859.49 SLMM R 04 10 0.00 15859.49
003339 000 10/01/94 1497.37 SLMM P 04 10 0.00 1497.37
003340 000 10/01/94 7947.31 SLMM P 04 10 0.00 7947.31
003341 000 10/01/94 8475.38 SLMM P 04 10 0.00 8475.38
003342 000 10/01/94 1489.63 SLMM P 05 00 0.00 1489.63
003343 000 10/01/94 4632.48 SLMM P 04 11 0.00 4632.48
003344 000 02/01/95 444.18 SLMM A 02 00 0.00 444.18
003345 000 04/01/95 17466.81 SLMM A 04 00 0.00 17466.81
003346 000 09/09/95 17722.38 SLMM A 03 04 0.00 17722.38
003347 000 12/01/95 15885.61 SLMM A 03 04 0.00 15885.61
003348 000 10/01/94 6850.25 SLMM P 02 09 0.00 6850.25
003349 000 10/01/94 4067.91 SLMM P 02 09 0.00 4067.91
003350 000 10/01/94 252.96 SLMM P 02 10 0.00 252.96
003351 000 10/01/94 760.77 SLMM P 02 10 0.00 760.77
003358 000 02/01/96 584.00 SLMM P 05 00 0.00 584.00
003359 000 10/01/95 2954.00 SLMM P 05 00 0.00 2954.00
003360 000 12/01/95 5866.00 SLMM P 05 00 0.00 5866.00
003361 000 01/01/96 722.86 SLMM P 05 00 0.00 722.86
003662 000 10/01/94 2395.88 SLMM P 01 02 0.00 2395.88
003664 000 10/01/94 19.51 SLMM P 01 01 0.00 19.51
003665 000 10/01/94 68.23 SLMM P 01 01 0.00 68.23
- -------------------------------------------------
Current Year Curr Accum
to Date Depreciation Key
- -------------------------------------------------
002814 0.00 0.00
002815 0.00 0.00
002816 0.00 0.00
002817 0.00 0.00
002818 0.00 0.00
002819 0.00 0.00
002820 0.00 0.00
002821 0.00 0.00
002822 0.00 0.00
002823 0.00 0.00
002824 0.00 0.00
002825 0.00 0.00
002826 0.00 0.00
002837 0.00 0.00
002842 0.00 0.00
002843 0.00 0.00
002844 0.00 0.00
002845 0.00 0.00
002846 0.00 0.00
002847 0.00 0.00
002848 0.00 0.00
002849 0.00 0.00
002850 0.00 0.00
002854 0.00 0.00
002855 0.00 0.00
002856 0.00 0.00
003042 5150.04 10300.09
003091 5157.11 10314.18
003338 3281.28 6562.55
003339 309.84 619.64
003340 1644.26 3288.53
003341 1753.56 3507.09
003342 306.46 614.66
003343 942.24 1884.44
003344 222.12 370.18
003345 4411.06 6550.04
003346 5759.77 5759.77
003347 3971.40 3971.40
003348 2491.00 4982.00
003349 1479.24 2958.48
003350 89.28 178.56
003351 268.55 537.06
003358 77.87 77.87
003359 590.80 590.80
003360 977.70 977.70
003361 108.45 108.45
003662 319.44 1277.79 d
003664 1.44 5.78 d
003665 5.04 20.20 d
November 19, 1996 Page 3
9:23 AM
American Pharmaceutical Services
DEPRECIATION EXPENSE REPORT
as of 09/30/1996
- ----------------------------------------------------------------------------------------------
Depre- D
In Svc Acquired Dep P Est Salvage/ ciable Thru Prior Accum c
SYS No Ext Date Value Meth T Life Sec 179 Basis Date Depreciation T
- ----------------------------------------------------------------------------------------------
003666 000 10/01/94 61.71 SLMM P 01 01 0.00 61.71 10/95 13.71
003667 000 10/01/94 784.80 SLMM P 01 01 0.00 784.80 10/95 174.40
003668 000 10/01/94 162.34 SLMM P 01 01 0.00 162.34 10/95 36.08
003671 000 06/01/96 1821.08 SLMM P 10 00 0.00 1821.08 08/96 0.00
003687 000 09/30/96 16900.65 SLMM A 03 04 0.00 16900.65 00/00 0.00
003807 000 09/30/96 1431.41 SLMM P 05 00 0.00 1431.41 00/00 0.00
003808 000 09/30/96 1554.00 SLMM P 05 00 0.00 1554.00 00/00 0.00
Count= 104 --------- ---- --------- -------- --
Grand Total 396799.44 0.00 396799.44 75867.46 76
Less disposals
and transfers 18014.47 0.00 18014.47 7393.04
--------- ---- --------- -------- --
Net 378784.97 0.00 378784.97 68474.42 76
========= ==== ========= ======== ==
- ----------------------------Calculation Assumptions---------------------------------
Book Short Years Midquarter Convention Adjustment Convention
------ ----------- --------------------- ---------------------
Book 6 [N] [N] Immediate
- -----------------------------Asset Grouping/Sorting----------------------------
Group: Location 125
Include Assets that meet the following conditions:
Location is 125
Sort Assets by:
- --------------------------------------Key--------------------------------------
d: Asset has been disposed of.
SCHEDULE 1.1 (e)
LICENSES AND PERMITS
1. Texas Pharmacy License No.: 15974, expires 05/31/97
2. Medicaid No.: 350045
3. DEA No.: BA-4304109, expires 06/30/97
4. NABP No.: 4591637
5. NHIC No.: VP3500457
6. Texas Controlled Substances
Registration Certificate No.: X0088579, expires 08/31/97
SCHEDULE 1.1(g)
LICENSED NAME
AMERICAN PHARMACEUTICAL SERVICES
SCHEDULE 1.1 (i)
FACILITY RECORDS
Copies of all books and records, computer tapes, disks and data located at the
Facility that relate exclusively to the Facility and the Contributed Assets.
SCHEDULE 3.4
ALLOCATION
DESCRIPTION AMOUNT
- ----------- ------
Inventories $ 388,403
Fixed Assets 198,214
Capital Leases (46,036)
----------
Total Net Assets $ 540,581
==========
Goodwill $2,459,419
----------
Total Value of Contributed Assets $3,000,000
==========
SCHEDULE 6.1
PERMITTED ENCUMBRANCES
NONE.
EXHIBIT 6.1A
FINANCING STATEMENT FILINGS
Debtor Name Records Searched Type of Secured Party
Search
============================================================================
American Secretary of State UCC Cash Flow
Pharmaceutical State of Texas Management,
Services, Inc. Inc.
American Secretary of State Federal Internal
Pharmaceutical State of Texas Tax Revenue
Services, Inc., a Lien Service,
Corporation Dallas, Texas
American Secretary of State Federal
Pharmaceutical State of Texas Tax Internal
Services, Inc., a Lien Revenue
Corporation Service,
Dallas, Texas
Debtor Name Scope of Lien Date Conti
Filed Assi
=================================================================================================================
American All accounts, instruments, 4/3/92 N/A
Pharmaceutical documents, inventory, equipment,
Services, Inc. intangibles, all goods and inventory,
books, records, etc.
N/A
American Taxes due for periods ending 1/29/93
Pharmaceutical 6/30/92 and 9/30/92 in the total
Services, Inc., a amount of $109,239.48 plus interest
Corporation and penalties
American
Pharmaceutical Taxes due for periods ending 5/26/93 N/A
Services, Inc., a 6/30/92, 9/30/92 and 12/31/92 in the
Corporation total amount of $161,528.71 plus
interest and penalties
SCHEDULE 6.2
NONCOMPLIANCE WITH LICENSING REQUIREMENTS
NONE.
SCHEDULE 6.6
LEASES AND OTHER MATERIAL AGREEMENTS
[SEE ATTACHED]
American Pharmaceutical Services
Vehicle Lease Schedule
As of September 30, 1996
PURCH TRM ORIGINAL
UNIT# BR YR MAKE MODEL SERIAL NUMBER DATE MOS COST
- ------ -- -- ---- ----- ------------- ---- --- ----
9409 #025 1994 FORD VAN IFTDA14U9RZB34046 08/10/94 40 17,166.84
9411 #025 1995 FORD VAN IFTDA14U8SZA00733 09/13/94 40 17,190.22
9516 #025 1995 FORD VAN IFTDA14UXSZA91066 07/24/95 40 17,722.39
9506 #025 1995 FORD VAN IFTDA14U4SZA35043 03/20/95 40 17,466.81
9528 #025 1995 FORD VAN IFTDA14U7SZC21093 12/25/95 36 15,885.61
96018 #025 1996 FORD ESCORT IFASP1536TW148995 06/30/96 13,318.91
-----------
AUSTIN TOTAL 98,750.78
------------
NET ORGNL MNTHLY REMN PRIN LEASE
BOOK INT PRN PYMT MOS ON OBLGTN CUR LT
UNIT# VALUE RATE (DEPR) LEASE 12/31/94 PRTN PRTN
------ ----- ---- ------ ----- -------- ---- ----
9409 6,624.09 414.01 16 6,624.16 4,968.12 1,656.04
9411 7,616.91 400.85 19 7,616.15 4,810.20 2,805.95
9516 12,521.48 417.38 30 12,521.40 5,008.56 7,512.84
9506 10,457.86 418.31 25 10,457.75 5,019.72 5,438.03
9528 12,955.67 417.92 31 12,955.52 5,015.04 7,940.48
96018 13,318.91 0.00 1 0.00 0.00 0.00
--------- -------- --------- --------- ---------
AUSTIN TOTAL 63,494.20 2,068.47 50,174.98 24,821.64 25,353.34
- ------------
DUPLICATE
[ARI LOGO] MOTOR VEHICLE LEASE AGREEMENT
AUTOMOTIVE RENTALS, INC. (ARI) hereby leases to AMERICAN PHARMACEUTICAL
SERVICES, INC. (Lessee), the vehicle referred to herein for the rental set forth
herein. This Lease Agreement and any assignment hereof is subject to all the
terms and conditions of the Agreement dated 10/13/94 between ARI and Lessee
covering the leasing of vehicles to Lessee all of which are incorporated herein
by reference.
ARI hereby assigns to CORESTATES BANK NA AGENT (Assignee) all right, title and
interest of ARI in and to all moneys due and to become due under this Lease
Agreement and ARI hereby authorizes Assignee to collect all such moneys when
due, either in the name of Assignee or ARI. Lessee hereby agrees to this
assignment.
To induce Assignee to accept on assignment of ARI's rights hereunder, Lessee
agrees that upon such assignment all rights and remedies of ARI hereunder shall
vest in and be exercisable by Assignee that Lessee will render performance of
Lessee's obligation hereunder to Assignee rather than ARI and that the rights of
Assignee to rentals and other sums due hereunder shall not be subject to any
defense (except payment), off-set, counter-claim or recoupment of Lessee
whatsoever arising from the breach of warranty or representation relating to the
motor vehicle whether made by the manufacturer thereof, ARI or any other person,
or arising from the breach or failure of ARI to observe or perform the
provisions of this Lease Agreement or any other agreement between ARI and Lessee
or arising from any course whatsoever. Lessee also agrees that nothing
(including termination of this Lease Agreement) except full payment to Assignee
of the Capitalized Value set forth below, with interest to date of such payment
as specified below, shall be sufficient to terminate liability of Lessee to make
payment to Assignee under this Lease Agreement. Lessee also agrees to continue
to make prompt payment to Assignee of the rentals due hereunder even if
bankruptcy, reorganization, arrangement, insolvency, liquidation or dissolution
proceedings are instituted by or against ARI and regardless whether a trustee or
receiver in any such proceedings shall assume or reject this Lease Agreement or
other agreement between ARI and Lessee. Lessee also agrees that Assignee does
not assume any obligations arising hereunder and Lessee will look solely to ARI
for the performance of any such obligations.
- ----------------------------------------------------------------------------------------------------------
VEHICLE INFORMATION
- ----------------------------------------------------------------------------------------------------------
YR & MAKE - 1995 FORD MODEL - A14 C VAN VEHICLE # - 0025-09528
ENGINE - 6 CYL. 3.0 LITER EXT COLOR - OXFORD WHITE LESSEE # - 0647-00
SERIAL # - 1FTDA14U7SZC21093 DELIVERY DATE - 12/25/95 REVISION DATE:02/13/96 REVISION NO: 02
- ----------------------------------------------------------------------------------------------------------
S = SIDEBILLED D = DEALER INSTALLED EQUIPMENT
- ----------------------------------------------------------------------------------------------------------
VINYL INT
DUAL BUCKETS
P215/75R14 BSW
FXD SD DOOR GLS
SWING LOCK MIRR
MANUAL AIR COND
RADIO AM/FM CAS D
000000
- ----------------------------------------------------------------------------------------------------------
COST
- ----------------------------------------------------------------------------------------------------------
CAPPED CAPPED CAPPED
DESCRIPTION AMOUNT DESCRIPTION AMOUNT DESCRIPTION AMOUNT
- ----------------------------------------------------------------------------------------------------------
BASE COST 14,783.35
P&H 150.00
SIDEBILL 225.00-
MODAGRAFICS BODY CST1 14.24
DLR INSTL ITEMS 225.00
SALES TAX 938.02
TOTAL COST 15,885.61
- ----------------------------------------------------------------------------------------------------------
LEASE INFORMATION
- ----------------------------------------------------------------------------------------------------------
OPEN END LEASE - PERIOD BEGINS: 01/96 TOTAL CAPITALIZATION: 15,885.61
* * * * * * RATES BELOW REFLECT DEPRECIATION AND ADMINISTRATIVE FEE ONLY * * * * * *
RATE AMT
1ST-12TH MONTH .02868 $455.60 PER MONTH DEPRECIATION PERIOD 36 MONTHS @ $441.30
13TH-24TH MONTH .02868 $455.60 PER MONTH
25TH-36TH MONTH .02868 $455.60 PER MONTH
FINANCIAL INFO
INT-TYPE: FLOAT INDEX: COMM PAPER FACTOR-SCHEDULE: 107
- ----------------------------------------------------------------------------------------------------------
CENTMARTINE
MAILING AMERICAN PHARMACEUTICAL DRIVER NAME: TERRY DAVIS
ADDRESS: ATTN: LISA DILLON ADDRESS: AMERICAN PHARMACEUTICALS
1771 W DIEHL ROAD 2524 RIDGEPOINT DR.
SUITE 210 SUITE R1
NAPERVILLE IL 60563 AUSTIN TX 78754
Date 02/05/96 By [SIG]
------------ --------------------------
Authorized Signature
DUPLICATE
MOTOR VEHICLE LEASE AGREEMENT
[ARI LOGO]
AUTOMOTIVE RENTALS, INC. (ARI) hereby leases to AMERICAN PHARMACEUTICAL
SERVICES, INC. (Lessee), the vehicle referred to herein for the rental set forth
herein. This Lease Agreement and any assignment hereof is subject to all the
terms and conditions of the Agreement dated 10/13/94 between ARI and Lessee
covering the leasing of vehicles to Lessee all of which are incorporated herein
by reference.
ARI hereby assigns to CORESTATES BANK NA AGENT (Assignee) all right, title and
interest of ARI in and to all moneys due and to become due under this Lease
Agreement and ARI hereby authorizes Assignee to collect all such moneys when
due, either in the name of Assignee or ARI. Lessee hereby agrees to this
assignment.
To induce Assignee to accept on assignment of ARI's rights hereunder, Lessee
agrees that upon such assignment all rights and remedies of ARI hereunder shall
vest in and be exercisable by Assignee that Lessee will render performance of
Lessee's obligation hereunder to Assignee rather than ARI and that the rights of
Assignee to rentals and other sums due hereunder shall not be subject to any
defense (except payment), off-set, counter-claim or recoupment of Lessee
whatsoever arising from the breach of warranty or representation relating to the
motor vehicle whether made by the manufacturer thereof, ARI or any other person,
or arising from the breach or failure of ARI to observe or perform the
provisions of this Lease Agreement or any other agreement between ARI and Lessee
or arising from any course whatsoever. Lessee also agrees that nothing
(including termination of this Lease Agreement) except full payment to Assignee
of the Capitalized Value set forth below, with interest to date of such payment
as specified below, shall be sufficient to terminate liability of Lessee to make
payment to Assignee under this Lease Agreement. Lessee also agrees to continue
to make prompt payment to Assignee of the rentals due hereunder even if
bankruptcy, reorganization, arrangement, insolvency, liquidation or dissolution
proceedings are instituted by or against ARI and regardless whether a trustee or
receiver in any such proceedings shall assume or reject this Lease Agreement or
other agreement between ARI and Lessee. Lessee also agrees that Assignee does
not assume any obligations arising hereunder and Lessee will look solely to ARI
for the performance of any such obligations.
- ----------------------------------------------------------------------------------------------------------
VEHICLE INFORMATION
- ----------------------------------------------------------------------------------------------------------
YR & MAKE - 1995 FORD MODEL - AEROSTAR VEHICLE # - 0043-09601
ENGINE - 6 CYL. 3.3 LITER EXT COLOR - WHITE LESSEE # - 0647-00
SERIAL # - 1FTDA14U2SZC22734 DELIVERY DATE - 01/27/96 REVISION DATE:04/17/96 REVISION NO: 02
- ----------------------------------------------------------------------------------------------------------
S = SIDEBILLED D = DEALER INSTALLED EQUIPMENT
- ----------------------------------------------------------------------------------------------------------
CLOTH INT 004200
STD AIR COND
TINT GLASS ALL
AM-FM STEREO
PWR STEERING
PWR DISC BRAKES
CRUISE/TILT
DUAL BUCKETS
FRT LIC PLATE
FXD SD DOOR GLS
- ----------------------------------------------------------------------------------------------------------
COST
- ----------------------------------------------------------------------------------------------------------
CAPPED CAPPED CAPPED
DESCRIPTION AMOUNT DESCRIPTION AMOUNT DESCRIPTION AMOUNT
- ----------------------------------------------------------------------------------------------------------
BASE COST 16,940.35
P&H 150.00
MODAGRAFICS BODY CST1 14.15
FLEET INCENTIVE 1,000.00-
TOTAL COST 16,104.50
- ----------------------------------------------------------------------------------------------------------
LEASE INFORMATION
- ----------------------------------------------------------------------------------------------------------
OPEN END LEASE - PERIOD BEGINS: 02/96 TOTAL CAPITALIZATION: 16,104.50
* * * * * * RATES BELOW REFLECT DEPRECIATION AND ADMINISTRATIVE FEE ONLY * * * * * *
RATE AMT
1ST-12TH MONTH .02868 $461.88 PER MONTH DEPRECIATION PERIOD 36 MONTHS @ $447.38
13TH-24TH MONTH .02868 $461.88 PER MONTH
25TH-36TH MONTH .02868 $461.88 PER MONTH
FINANCIAL INFO
INT-TYPE: FLOAT INDEX: COMM PAPER FACTOR-SCHEDULE: 107
- ----------------------------------------------------------------------------------------------------------
CENTMARTINE
MAILING AMERICAN PHARMACEUTICAL DRIVER NAME: JOHN KEELING
ADDRESS: ATTN: LISA DILLON ADDRESS: 34921 US HWY 19 NORTH
1771 W DIEHL ROAD PALM HARBOR FL 34684
SUITE 210
NAPERVILLE IL 60563
Date 02/02/96 By [SIG]
------------ --------------------------
Authorized Signature
DUPLICATE
[ARI LOGO] MOTOR VEHICLE LEASE AGREEMENT
AUTOMOTIVE RENTALS, INC. (ARI) hereby leases to AMERICAN PHARMACEUTICAL
SERVICES, INC. (Lessee), the vehicle referred to herein for the rental set forth
herein. This Lease Agreement and any assignment hereof is subject to all the
terms and conditions of the Agreement dated 10/13/94 between ARI and Lessee
covering the leasing of vehicles to Lessee all of which are incorporated herein
by reference.
ARI hereby assigns to CORESTATES BANK NA AGENT (Assignee) all right, title and
interest of ARI in and to all moneys due and to become due under this Lease
Agreement and ARI hereby authorizes Assignee to collect all such moneys when
due, either in the name of Assignee or ARI. Lessee hereby agrees to this
assignment.
To induce Assignee to accept on assignment of ARI's rights hereunder, Lessee
agrees that upon such assignment all rights and remedies of ARI hereunder shall
vest in and be exercisable by Assignee that Lessee will render performance of
Lessee's obligation hereunder to Assignee rather than ARI and that the rights of
Assignee to rentals and other sums due hereunder shall not be subject to any
defense (except payment), off-set, counter-claim or recoupment of Lessee
whatsoever arising from the breach of warranty or representation relating to the
motor vehicle whether made by the manufacturer thereof, ARI or any other person,
or arising from the breach or failure of ARI to observe or perform the
provisions of this Lease Agreement or any other agreement between ARI and Lessee
or arising from any course whatsoever. Lessee also agrees that nothing
(including termination of this Lease Agreement) except full payment to Assignee
of the Capitalized Value set forth below, with interest to date of such payment
as specified below, shall be sufficient to terminate liability of Lessee to make
payment to Assignee under this Lease Agreement. Lessee also agrees to continue
to make prompt payment to Assignee of the rentals due hereunder even if
bankruptcy, reorganization, arrangement, insolvency, liquidation or dissolution
proceedings are instituted by or against ARI and regardless whether a trustee or
receiver in any such proceedings shall assume or reject this Lease Agreement or
other agreement between ARI and Lessee. Lessee also agrees that Assignee does
not assume any obligations arising hereunder and Lessee will look solely to ARI
for the performance of any such obligations.
- ----------------------------------------------------------------------------------------------------------
VEHICLE INFORMATION
- ----------------------------------------------------------------------------------------------------------
YR & MAKE - 1995 FORD MODEL - A14 C VAN VEHICLE # - 0025-09516
ENGINE - 6 CYL. 3.0 LITER EXT COLOR - OXFORD WHITE LESSEE # - 0647-00
SERIAL # - 1FTDA14UXSZA91066 DELIVERY DATE - 07/24/95 REVISION DATE:00/00/00 REVISION NO: 00
- ----------------------------------------------------------------------------------------------------------
S = SIDEBILLED D = DEALER INSTALLED EQUIPMENT
- ----------------------------------------------------------------------------------------------------------
VINYL INT
DUAL BUCKETS
P215/75R14 BSW
FXD SD DOOR GLS
MANUAL AIR COND
AM/FM STEREO
0053000
- ----------------------------------------------------------------------------------------------------------
COST
- ----------------------------------------------------------------------------------------------------------
CAPPED CAPPED CAPPED
DESCRIPTION AMOUNT DESCRIPTION AMOUNT DESCRIPTION AMOUNT
- ----------------------------------------------------------------------------------------------------------
BASE COST 16,191.35
P&H 150.00
MODAGRAFICS BODY CST1 14.08
DLR INSTL ITEMS 355.00
SALES TAX 1,011.95
TOTAL COST 17,722.38
- ----------------------------------------------------------------------------------------------------------
LEASE INFORMATION
- ----------------------------------------------------------------------------------------------------------
OPEN END LEASE - PERIOD BEGINS: 08/95 TOTAL CAPITALIZATION: 17,722.38
* * * * * * RATES BELOW REFLECT DEPRECIATION AND ADMINISTRATIVE FEE ONLY * * * * * *
RATE AMT
1ST-12TH MONTH .02590 $459.01 PER MONTH DEPRECIATION PERIOD 40 MONTHS @ $443.06
13TH-24TH MONTH .02590 $459.01 PER MONTH
25TH-36TH MONTH .02590 $459.01 PER MONTH
FINANCIAL INFO
INT-TYPE: FLOAT INDEX: COMM PAPER FACTOR-SCHEDULE: 107
- ----------------------------------------------------------------------------------------------------------
CENTMARTINE
MAILING AMERICAN PHARMACEUTICAL DRIVER NAME: TERRY DAVIS
ADDRESS: ATTN: LISA DILLON ADDRESS: 2324 RIDGEPOINT DR.
1771 W DIEHL ROAD SUITE 41
SUITE 210 AUSTIN TX 78754
NAPERVILLE IL 60563
Date 09/21/95 By [SIG]
------------ --------------------------
Authorized Signature
DUPLICATE
MOTOR VEHICLE LEASE AGREEMENT
[ARI LOGO]
AUTOMOTIVE RENTALS, INC. (ARI) hereby leases to AMERICAN PHARMACEUTICAL
SERVICES, INC. (Lessee), the vehicle referred to herein for the rental set forth
herein. This Lease Agreement and any assignment hereof is subject to all the
terms and conditions of the Agreement dated 10/13/94 between ARI and Lessee
covering the leasing of vehicles to Lessee all of which are incorporated herein
by reference.
ARI hereby assigns to CORESTATES BANK NA AGENT (Assignee) all right, title and
interest of ARI in and to all moneys due and to become due under this Lease
Agreement and ARI hereby authorizes Assignee to collect all such moneys when
due, either in the name of Assignee or ARI. Lessee hereby agrees to this
assignment.
To induce Assignee to accept on assignment of ARI's rights hereunder, Lessee
agrees that upon such assignment all rights and remedies of ARI hereunder shall
vest in and be exercisable by Assignee that Lessee will render performance of
Lessee's obligation hereunder to Assignee rather than ARI and that the rights of
Assignee to rentals and other sums due hereunder shall not be subject to any
defense (except payment), off-set, counter-claim or recoupment of Lessee
whatsoever arising from the breach of warranty or representation relating to the
motor vehicle whether made by the manufacturer thereof, ARI or any other person,
or arising from the breach or failure of ARI to observe or perform the
provisions of this Lease Agreement or any other agreement between ARI and Lessee
or arising from any course whatsoever. Lessee also agrees that nothing
(including termination of this Lease Agreement) except full payment to Assignee
of the Capitalized Value set forth below, with interest to date of such payment
as specified below, shall be sufficient to terminate liability of Lessee to make
payment to Assignee under this Lease Agreement. Lessee also agrees to continue
to make prompt payment to Assignee of the rentals due hereunder even if
bankruptcy, reorganization, arrangement, insolvency, liquidation or dissolution
proceedings are instituted by or against ARI and regardless whether a trustee or
receiver in any such proceedings shall assume or reject this Lease Agreement or
other agreement between ARI and Lessee. Lessee also agrees that Assignee does
not assume any obligations arising hereunder and Lessee will look solely to ARI
for the performance of any such obligations.
- ----------------------------------------------------------------------------------------------------------
VEHICLE INFORMATION
- ----------------------------------------------------------------------------------------------------------
YR & MAKE - 1995 FORD MODEL - A14 C VAN VEHICLE # - 0025-09506
ENGINE - 6 CYL. 3.0 LITER EXT COLOR - OXFORD WHITE LESSEE # - 0647-00
SERIAL # - 1FTDA14U4SZA35043 DELIVERY DATE - 03/20/95 REVISION DATE:08/16/95 REVISION NO: 02
- ----------------------------------------------------------------------------------------------------------
S = SIDEBILLED D = DEALER INSTALLED EQUIPMENT
- ----------------------------------------------------------------------------------------------------------
VINYL INT 000000
SWING LOCK MIRR
MANUAL AIR COND
CRUISE/TILT
AM/FM STEREO
DUAL BUCKETS
P215/75R14 BSW
FRONT LICENSE
3.73 AXLE RATIO
FXD SD DOOR GLS
- ----------------------------------------------------------------------------------------------------------
COST
- ----------------------------------------------------------------------------------------------------------
CAPPED CAPPED CAPPED
DESCRIPTION AMOUNT DESCRIPTION AMOUNT DESCRIPTION AMOUNT
- ----------------------------------------------------------------------------------------------------------
BASE COST 15,955.35
P&H 150.00
MODAGRAFICS BODY CST1 9.25
DLR INSTL ITEMS 355.00
SALES TAX 977.21
TOTAL COST 17,466.81
- ----------------------------------------------------------------------------------------------------------
LEASE INFORMATION
- ----------------------------------------------------------------------------------------------------------
OPEN END LEASE - PERIOD BEGINS: 04/95 TOTAL CAPITALIZATION: 17,466.81
* * * * * * RATES BELOW REFLECT DEPRECIATION AND ADMINISTRATIVE FEE ONLY * * * * * *
RATE AMT
1ST-12TH MONTH .02590 $452.39 PER MONTH DEPRECIATION PERIOD 40 MONTHS @ $436.67
13TH-24TH MONTH .02590 $452.39 PER MONTH
25TH-36TH MONTH .02590 $452.39 PER MONTH
37TH-40TH MONTH .02590 $452.39 PER MONTH
FINANCIAL INFO
INT-TYPE: FLOAT INDEX: COMM PAPER FACTOR-SCHEDULE: 107
- ----------------------------------------------------------------------------------------------------------
CENTMARTINE
MAILING AMERICAN PHARMACEUTICAL DRIVER NAME: TERRY DAVIS
ADDRESS: ATTN: LISA GREENE ADDRESS: 2324 RIDGEPOINT DR.
1771 W DIEHL ROAD SUITE E1
SUITE 210 AUSTIN TX 78754
NAPERVILLE IL 60563
Date 04/24/95 By [SIG]
------------ --------------------------
Authorized Signature
DUPLICATE
[ARI LOGO] MOTOR VEHICLE LEASE AGREEMENT
AUTOMOTIVE RENTALS, INC. (ARI) hereby leases to AMERICAN PHARMACEUTICAL
SERVICES, INC. (Lessee), the vehicle referred to herein for the rental set forth
herein. This Lease Agreement and any assignment hereof is subject to all the
terms and conditions of the Agreement dated 10/13/94 between ARI and Lessee
covering the leasing of vehicles to Lessee all of which are incorporated herein
by reference.
ARI hereby assigns to CORESTATES BANK NA AGENT (Assignee) all right, title and
interest of ARI in and to all moneys due and to become due under this Lease
Agreement and ARI hereby authorizes Assignee to collect all such moneys when
due, either in the name of Assignee or ARI. Lessee hereby agrees to this
assignment.
To induce Assignee to accept on assignment of ARI's rights hereunder, Lessee
agrees that upon such assignment all rights and remedies of ARI hereunder shall
vest in and be exercisable by Assignee that Lessee will render performance of
Lessee's obligation hereunder to Assignee rather than ARI and that the rights of
Assignee to rentals and other sums due hereunder shall not be subject to any
defense (except payment), off-set, counter-claim or recoupment of Lessee
whatsoever arising from the breach of warranty or representation relating to the
motor vehicle whether made by the manufacturer thereof, ARI or any other person,
or arising from the breach or failure of ARI to observe or perform the
provisions of this Lease Agreement or any other agreement between ARI and Lessee
or arising from any course whatsoever. Lessee also agrees that nothing
(including termination of this Lease Agreement) except full payment to Assignee
of the Capitalized Value set forth below, with interest to date of such payment
as specified below, shall be sufficient to terminate liability of Lessee to make
payment to Assignee under this Lease Agreement. Lessee also agrees to continue
to make prompt payment to Assignee of the rentals due hereunder even if
bankruptcy, reorganization, arrangement, insolvency, liquidation or dissolution
proceedings are instituted by or against ARI and regardless whether a trustee or
receiver in any such proceedings shall assume or reject this Lease Agreement or
other agreement between ARI and Lessee. Lessee also agrees that Assignee does
not assume any obligations arising hereunder and Lessee will look solely to ARI
for the performance of any such obligations.
- ----------------------------------------------------------------------------------------------------------
VEHICLE INFORMATION
- ----------------------------------------------------------------------------------------------------------
YR & MAKE - 1995 FORD MODEL - A14 C VAN VEHICLE # - 0025-09411
ENGINE - 6 CYL. 3.0 LITER EXT COLOR - OXFORD WHITE LESSEE # - 0647-01
SERIAL # - 1FTDA14U8SZA00733 DELIVERY DATE - 10/13/94 REVISION DATE:00/00/00 REVISION NO: 00
- ----------------------------------------------------------------------------------------------------------
S = SIDEBILLED D = DEALER INSTALLED EQUIPMENT
- ----------------------------------------------------------------------------------------------------------
VINYL INT S/DR FIXED GLS
STD AIR COND 1860#PAYLOAD
TINT GLASS ALL S/LK PLR MIRROR
RADIO AM/FM STE D 004200
PWR STEERING
PWR DISC BRAKES
STD TRIM
DUAL BUCKETS
P215/TIRES
3.73 AXLE RATIO
- ----------------------------------------------------------------------------------------------------------
COST
- ----------------------------------------------------------------------------------------------------------
CAPPED CAPPED CAPPED
DESCRIPTION AMOUNT DESCRIPTION AMOUNT DESCRIPTION AMOUNT
- ----------------------------------------------------------------------------------------------------------
BASE COST 16,347.85
P&H 150.00
DLR INSTL ITEMS 290.00
FLEET INCENTIVE 400.00-
INCENTIVE 2 200.00-
SALES TAX 1,002.37
TOTAL COST 17,190.22
- ----------------------------------------------------------------------------------------------------------
LEASE INFORMATION
- ----------------------------------------------------------------------------------------------------------
OPEN END LEASE - PERIOD BEGINS: 10/94 TOTAL CAPITALIZATION: 17,190.22
* * * * * * RATES BELOW REFLECT DEPRECIATION AND ADMINISTRATIVE FEE ONLY * * * * * *
RATE AMT
1ST-12TH MONTH .02570 $441.79 PER MONTH DEPRECIATION PERIOD 40 MONTHS @ $429.76
13TH-24TH MONTH .02570 $441.79 PER MONTH
25TH-36TH MONTH .02570 $441.79 PER MONTH
37TH-40TH MONTH .02570 $441.79 PER MONTH
FINANCIAL INFO
INT-TYPE: FLOAT INDEX: COMM PAPER FACTOR-SCHEDULE: 108A
- ----------------------------------------------------------------------------------------------------------
CENTMARTINEZ 320
MAILING AMERICAN PHARMACEUTICAL DRIVER NAME: TERRY DAVIS
ADDRESS: ATTN: LISA GREENE ADDRESS: 2324 RIDGEPOINT DR.
1771 W DIEHL ROAD SUITE E1
SUITE 210 AUSTIN TX 78754
NAPERVILLE IL 60563
Date 10/14/94 By [SIG]
------------ --------------------------
Authorized Signature
DUPLICATE
[ARI LOGO] MOTOR VEHICLE LEASE AGREEMENT
AUTOMOTIVE RENTALS, INC. (ARI) hereby leases to ABBEY PHARMACEUTICAL
SERVICES (Lessee), the vehicle referred to herein for the rental set forth
herein. This Lease Agreement and any assignment hereof is subject to all the
terms and conditions of the Agreement dated 05/28/92 between ARI and Lessee
covering the leasing of vehicles to Lessee all of which are incorporated herein
by reference.
ARI hereby assigns to CORESTATES BANK NA AGENT (Assignee) all right, title and
interest of ARI in and to all moneys due and to become due under this Lease
Agreement and ARI hereby authorizes Assignee to collect all such moneys when
due, either in the name of Assignee or ARI. Lessee hereby agrees to this
assignment.
To induce Assignee to accept on assignment of ARI's rights hereunder, Lessee
agrees that upon such assignment all rights and remedies of ARI hereunder shall
vest in and be exercisable by Assignee that Lessee will render performance of
Lessee's obligation hereunder to Assignee rather than ARI and that the rights of
Assignee to rentals and other sums due hereunder shall not be subject to any
defense (except payment), off-set, counter-claim or recoupment of Lessee
whatsoever arising from the breach of warranty or representation relating to the
motor vehicle whether made by the manufacturer thereof, ARI or any other person,
or arising from the breach or failure of ARI to observe or perform the
provisions of this Lease Agreement or any other agreement between ARI and Lessee
or arising from any course whatsoever. Lessee also agrees that nothing
(including termination of this Lease Agreement) except full payment to Assignee
of the Capitalized Value set forth below, with interest to date of such payment
as specified below, shall be sufficient to terminate liability of Lessee to make
payment to Assignee under this Lease Agreement. Lessee also agrees to continue
to make prompt payment to Assignee of the rentals due hereunder even if
bankruptcy, reorganization, arrangement, insolvency, liquidation or dissolution
proceedings are instituted by or against ARI and regardless whether a trustee or
receiver in any such proceedings shall assume or reject this Lease Agreement or
other agreement between ARI and Lessee. Lessee also agrees that Assignee does
not assume any obligations arising hereunder and Lessee will look solely to ARI
for the performance of any such obligations.
- ----------------------------------------------------------------------------------------------------------
VEHICLE INFORMATION
- ----------------------------------------------------------------------------------------------------------
YR & MAKE - 1994 FORD MODEL - A14 C VAN VEHICLE # - -09409
ENGINE - 6 CYL. 3.0 LITER EXT COLOR - WHITE LESSEE # - 0847-01
SERIAL # - 1FTDA14U9RZB34046 DELIVERY DATE - 08/10/94 REVISION DATE:00/00/00 REVISION NO: 00
- ----------------------------------------------------------------------------------------------------------
S = SIDEBILLED D = DEALER INSTALLED EQUIPMENT
- ----------------------------------------------------------------------------------------------------------
VINYL INT 004200
TD AIR COND
INT GLASS ALL
AM-FM STEREO
PWR STEERING
PWR DISC BRAKES
STD TRIM
DUAL BUCKETS
FIXED GLS S/D
STLD WHEEL CVRS
- ----------------------------------------------------------------------------------------------------------
COST
- ----------------------------------------------------------------------------------------------------------
CAPPED CAPPED CAPPED
DESCRIPTION AMOUNT DESCRIPTION AMOUNT DESCRIPTION AMOUNT
- ----------------------------------------------------------------------------------------------------------
BASE COST 16,415.85
P&H 150.00
FLEET INCENTIVE 400.00-
SALES TAX 1,000.99
TOTAL COST 17,166.84
- ----------------------------------------------------------------------------------------------------------
LEASE INFORMATION
- ----------------------------------------------------------------------------------------------------------
OPEN END LEASE - PERIOD BEGINS: 08/94 TOTAL CAPITALIZATION: 17,166.84
* * * * * * RATES BELOW REFLECT DEPRECIATION AND ADMINISTRATIVE FEE ONLY * * * * * *
RATE AMT
1ST-12TH MONTH .02570 $441.19 PER MONTH DEPRECIATION PERIOD 40 MONTHS @ $429.17
13TH-24TH MONTH .02570 $441.19 PER MONTH
25TH-36TH MONTH .02570 $441.19 PER MONTH
37TH-40TH MONTH .02570 $441.19 PER MONTH
FINANCIAL INFO
INT-TYPE: FLOAT INDEX: COMM PAPER FACTOR-SCHEDULE: 108A
- ----------------------------------------------------------------------------------------------------------
CENTMARTINEZ 320
MAILING AMERICAN PHARMACEUTICAL DRIVER NAME: TERRY DAVIS
ADDRESS: ATTN: LISA GREENE ADDRESS: 2324 RIDGEPOINT DR.
1771 W DIEHL ROAD SUITE G1
SUITE 210 AUSTIN TX 78754
NAPERVILLE IL 60563
Date 08/11/94 By [SIG]
------------ --------------------------
Authorized Signature
SCHEDULE 6.8
PENDING GOVERNMENT INVESTIGATIONS
NONE.
SCHEDULE 6.13
FINANCIAL STATEMENTS
[SEE ATTACHED]
AMERICAN PHARMACEUTICAL SERVICES, INC.
Austin
September 30, 1995
Desc October November December January February March April May June July
- ------------------------------------------------------------------------------------------------------------------------------------
Revenue
Enteral 56,691 56,261 50,513 40,722 40,381 43,913 54,765 49,889 53,384 56,409
Wholesale 6,574 11,202 9,729 11,585 11,890 10,456 10,616 13,512 10,265 14,748
Billing Service Fee 1,000 1,100 1,000 520 890 450 770 810 1,790 660
Option 10,231 7,074 8,968 8,125 10,282 11,779 9,240 13,187 14,619 13,153
------- ------- ------- ------- ------- ------ ------ ------ ------ ------
Enteral Total 74,496 75,637 70,210 60,952 63,443 66,598 75,391 77,398 80,058 84,970
Urological 17,150 18,886 20,417 18,130 17,805 8,879 16,996 15,583 20,641 23,689
Wholesale 0 0 0 0 0 0 0 0 0 0
------- ------- ------- ------- ------ ------ ------ ------ ------ ------
Urological Total 17,150 18,886 20,417 18,130 17,805 8,879 16,996 15,583 20,641 23,689
Orthotics 9,514 8,244 5,616 4,017 5,003 0 0 0 3,006 3,409
Wholesale 0 0 0 0 0 0 0 0 0 0
------- ------- ------- ------- ------ ------ ------- ------ ------ ------
Orthotics Total 9,514 8,244 5,616 4,017 5,003 0 0 0 3,006 3,409
Wound Care Part B 3,930 253 3,184 (493) 3,682 5,484 2,757 9,893 2,003 41,375
Wound Care Non B/Whse 0 0 0 0 0 56 258 450 (256) 371
-------- ------- ------- ------- ------ ------ ------ ------ ------ -----
Wound Care Total 3,930 253 3,184 (493) 3,682 5,540 3,015 10,343 1,747 41,746
I.V. 3,420 5,376 10,281 7,610 11,726 26,079 5,791 7,964 14,379 17,159
Pharmacy 146,380 150,807 149,769 151,196 123,581 155,678 159,676 179,227 185,874 58,415
Medicaid 99,573 107,073 129,104 126,595 119,478 150,463 117,363 135,263 128,952 81,335
Contractual Allowance (6,876) (11,571) (16,346) (16,347) (16,347) (30,093) (23,473) (27,053) (25,791) 36,267)
Consulting 6,907 5,640 5,061 5,157 5,474 15,340 9,660 16,177 13,673 16,012
Correctional 0 0 0 0 0 0 0 0 0 0
Corr. Billing Serv. Fee 0 0 0 0 0 0 0 0 0 0
Oxygen 0 0 0 0 0 0 0 0 0 0
Oxygen Medicaid 0 0 0 0 0 0 0 0 0 0
Retail 21,906 13,231 11,506 12,288 21,541 20,450 9,358 32,078 5,074 (4,940)
Other (92) 0 0 0 0 0 0 0 0 0
------- ------- ------- ------- ------- ------- ------- ------- ------- ------
Pharmacy Total 267,798 265,180 279,094 278,889 253,727 311,838 272,594 335,692 307,982 14,555
------- ------- ------- ------- ------- ------- ------- ------- ------- ------
Total Revenue 376,308 373,576 388,802 369,105 355,386 418,934 373,787 446,980 427,813 85,528
Contractual Allowance % (6.9%) (10.6%) (12.7%) (12.9%) (13.7%) (20.0%) (20.0%) (20.0%) (20.0%) (20.0%)
Desc August September YTD Actuals
- ---------------------------------------------------------------------
Revenue
Enteral 61,139 74,608 638,675
Wholesale 13,434 10,961 134,972
Billing Service Fee 770 470 10,230
Option 4,975 7,284 118,917
------- ------ -------
Enteral Total 80,318 93,323 902,794
Urological 15,944 16,973 211,093
Wholesale 0 0 0
------ ------ -------
Urological Total 15,944 16,973 211,093
Orthotics 0 0 38,809
Wholesale 0 0 0
------ ------ -------
Orthotics Total 0 0 38,809
Wound Care Part B 21,099 33,076 126,243
Wound Care Non B/Whse 690 1,092 2,661
------ ------- -------
Wound Care Total 21,789 34,168 128,904
I.V. 9,022 13,841 132,648
Pharmacy 206,236 188,738 1,957,667
Medicaid 149,080 149,448 1,593,727
Contractual Allowance (29,816) (29,890) (269,870)
Consulting 16,639 15,671 131,611
Correctional 0 0 0
Corr. Billing Serv. Fee 0 0 0
Oxygen 0 0 0
Oxygen Medicaid 0 0 0
Retail 8,063 (258) 150,307
Other 0 0 (92)
Pharmacy Total 352,292 323,909 3,563,550
------- ------- ---------
Total Revenue 479,365 482,214 4,977,796
Contractual Allowance % (20.0%) (20.0%) (16.9%)
Page 1
AMERICAN PHARMACEUTICAL SERVICES, INC.
Austin
September 30, 1995
Desc October November December January February March April May June July
- ----------------------------------------------------------------------------------------------------------------------------------
COGS
Enteral 29,242 34,793 23,236 18,732 18,575 20,200 25,192 22,949 24,556 25,948
Wholesale 3,391 0 4,475 5,329 5,469 4,810 4,883 6,216 4,722 6,784
Option 5,278 0 4,585 3,977 5,139 7,783 4,604 6,438 7,548 6,354
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Enteral Total 37,911 34,793 32,296 28,038 29,183 32,793 34,679 35,603 36,826 39,086
Urological 12,540 8,688 9,392 8,340 8,190 4,084 7,818 7,168 9,495 10,897
Wholesale 0 0 0 0 0 0 0 0 0 0
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Urological Total 12,540 8,688 9,392 8,340 8,190 4,084 7,818 7,168 9,495 10,897
Orthotics 0 3,792 2,584 1,848 2,301 0 0 0 1,383 1,568
Wound Care 0 116 1,465 (227) 1,694 2,546 1,658 5,689 961 22,960
I.V. 0 1,882 3,598 2,663 4,104 9,127 2,027 2,787 5,033 6,005
Pharmacy 170,221 169,221 178,669 178,473 161,861 193,317 226,693 146,588 188,680 194,650
Contractual Allowance 0 0 0 0 0 0 0 0 0 0
Correctional 0 0 0 0 0 0 0 0 0 0
Oxygen 0 0 0 127 0 0 0 174 0 0
Retail 0 0 0 0 0 0 0 0 0 0
Other 17,293 3,303 4,861 2,270 2,046 (6,592) 877 (206) 1,617 921
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Pharmacy Total 187,514 172,524 183,530 180,870 163,907 186,725 227,570 146,556 190,297 195,571
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Total COGS 237,965 221,795 232,865 221,532 209,379 235,277 273,752 197,803 243,995 276,067
Desc August September YTD Actuals
- ----------------------------------------------------------------
COGS
Enteral 26,124 4,152 275,699
Wholesale 6,180 5,042 57,301
Option 2,643 3,567 57,916
------- ------- ---------
Enteral Total 36,947 12,761 390,916
Urological 7,334 7,808 101,754
Wholesale 0 0 0
------- ------- ---------
Urological Total 7,334 7,808 101,754
Orthotics 0 0 13,476
Wound Care 11,984 21,408 70,256
I.V. 3,158 4,845 45,229
Pharmacy 218,845 200,841 2,228,059
Contractual Allowance 0 0 0
Correctional 0 0 0
Oxygen 0 0 301
Retail 0 0 0
Other 1,805 2,504 30,699
------- ------- ---------
Pharmacy Total 220,650 203,345 2,259,059
------- ------- ---------
Total COGS 280,073 150,167 2,680,690
Page 2
AMERICAN PHARMACEUTICAL SERVICES, INC.
Austin
September 30, 1995
Desc October November December January February March April
- ------------------------------------------------------------------------------------------------------------
Gross Profit
Enteral 27,449 21,468 27,277 21,990 21,806 23,713 29,573
Wholesale 3,183 11,202 5,254 6,256 6,421 5,646 5,733
Billing Service Fee 1,000 1,100 1,000 520 890 450 770
Option 4,953 7,074 4,383 4,148 5,143 3,996 4,636
------- ------- ------- ------- ------- ------- -------
Total Enteral 36,585 40,844 37,914 32,914 34,260 33,805 40,712
Urological 4,610 10,198 11,025 9,790 9,615 4,795 9,178
Wholesale 0 0 0 0 0 0 0
------- ------- ------- ------- ------- ------- -------
Total Urological 4,610 10,198 11,025 9,790 9,615 4,795 9,178
Total Orthotics 9,514 4,452 3,032 2,169 2,702 0 0
Total Wound Care 3,930 137 1,719 (266) 1,988 2,992 1,357
Total I.V. 3,420 3,494 6,683 4,947 7,622 16,952 3,764
Pharmacy 75,732 88,659 100,204 99,318 81,198 112,824 50,346
Contractual Allowance (6,876) (11,571) (16,346) (16,347) (16,347) (30,093) (23,473)
Consulting 6,907 5,640 5,061 5,157 5,474 15,340 9,660
Correctional 0 0 0 0 0 0 0
Oxygen 0 0 0 (127) 0 0 0
Retail 21,906 13,231 11,506 12,288 21,541 20,450 9,368
Other (17,385) (3,303) (4,861) (2,270) (2,046) 6,592 (877)
------- ------- ------- ------- ------- ------- -------
Total Pharmacy 80,284 92,656 95,564 98,019 89,820 125,113 45,024
------- ------- ------- ------- ------- ------- -------
Total Gross Profit 138,343 151,781 155,937 147,573 146,007 183,657 100,035
Enteral % 49.1% 54.0% 54.0% 54.0% 54.0% 50.8% 54.0%
Urological % 26.9% 54.0% 54.0% 54.0% 54.0% 54.0% 54.0%
Orthotics % 100.0% 54.0% 54.0% 54.0% 54.0% 0.0% 0.0%
Wound Care % 100.0% 54.2% 54.0% 54.0% 54.0% 54.0% 45.0%
I.V. % 100.0% 65.0% 65.0% 65.0% 65.0% 65.0% 65.0%
Pharmacy % 30.0% 34.9% 34.2% 35.1% 35.4% 40.1% 16.5%
Total Gross Profit % 36.8% 40.6% 40.1% 40.0% 41.1% 43.8% 26.8%
Desc May June July August September YTD Actuals
- -----------------------------------------------------------------------------------------------------
Gross Profit
Enteral 26,940 28,828 30,461 33,015 70,456 362,976
Wholesale 7,296 5,543 7,964 7,254 5,919 77,671
Billing Service Fee 810 1,790 660 770 470 10,230
Option 6,749 7,071 6,799 2,332 3,717 61,001
------- ------- ------- ------- ------- ---------
Total Enteral 41,795 43,232 45,884 43,371 80,562 511,878
Urological 8,415 11,146 12,792 8,610 9,165 109,339
Wholesale 0 0 0 0 0 0
------- ------- ------- ------- ------- ---------
Total Urological 8,415 11,146 12,792 8,610 9,165 109,339
Total Orthotics 0 1,623 1,841 0 0 25,333
Total Wound Care 4,654 786 18,786 9,805 12,760 58,648
Total I.V. 5,177 9,346 11,154 5,864 8,996 87,419
Pharmacy 167,902 126,146 145,100 138,561 137,345 1,323,335
Contractual Allowance (27,053) (25,791) (36,267) (29,816) (29,890) (269,870)
Consulting 16,177 13,873 16,012 16,639 15,871 131,811
Correctional 0 0 0 0 0 0
Oxygen (174) 0 0 0 0 (301)
Retail 32,078 5,074 (4,940) 8,063 (258) 150,307
Other 206 (1,617) (921) (1,805) (2,504) (30,791)
------- ------- ------- ------- ------- ---------
Total Pharmacy 189,136 117,685 118,984 131,642 120,564 1,304,491
------- ------- ------- ------- ------- ---------
Total Gross Profit 249,177 183,818 209,441 199,292 232,047 2,097,108
Enteral % 54.0% 54.0% 54.0% 54.0% 56.3% 56.7%
Urological % 54.0% 54.0% 54.0% 54.0% 54.0% 51.8%
Orthotics % 0.0% 54.0% 54.0% 0.0% 0.0% 65.3%
Wound Care % 45.0% 45.0% 45.0% 45.0% 37.3% 45.5%
I.V. % 65.0% 65.0% 65.0% 65.0% 65.0% 65.9%
Pharmacy % 56.3% 38.2% 37.8% 37.4% 37.2% 36.6%
Total Gross Profit % 55.7% 43.0% 43.1% 41.6% 48.1% 42.1%
Page 3
AMERICAN PHARMACEUTICAL SERVICES, INC.
Austin
September 30, 1995
Desc October November December January
- -------------------------------------------------------------------------------
Salaries 72,497 91,062 79,699 81,379
Mtb Bonus 1,668 1,668 1,688 1,668
A/R Bonus (706) 0 0 0
Commissions 4,591 2,078 4,120 694
FICA Taxes 5,724 5,630 6,163 6,297
Unemployment Taxes 156 153 577 1,110
Workmen's Comp Insurance 4,328 4,204 6,403 4,995
General Insurance 1,510 1,510 5,896 390
Denver City Tax 0 0 0 0
Group Health Insurance 1,577 8,805 5,582 6,245
401K 0 98 163 110
------- ------- ------- -------
Salaries 91,343 115,206 110,269 102,886
Vehicle GE Capital 83 0 63 68
Vehicle Repairs 0 0 0 0
Vehicle Gasoline 697 0 0 1,462
Vehicle Misc. 0 1,428 155 629
------- -------- ------- -------
Vehicle 780 1,428 218 2,159
Travel & Lodging 883 3,465 1,781 2,683
Meats 535 219 161 334
Entertainment 255 333 497 62
Mileage 541 0 0 0
Car Allowance 1,200 1,500 1,500 1,500
Shows & Conventions 4,907 381 0 0
------- ------- -------- -------
Travel Expense 8,321 5,898 3,939 4,579
Consulting Services 5000 1,600 610 575
Audit Fees 0 0 0 0
Legal Fees 0 0 0 0
Misc Professional Services 1,436 1,476 3,799 1,184
------- ------- ------- -------
Professional Services 1,936 3,078 4,409 1,759
Office Space 7,584 0 6,695 6,695
Other Space Rental 91 0 91 202
------- ------- ------- -------
Space Rental 7,675 0 6,766 6,897
Desc. June July August September
- -------------------------------------------------------------------------------
C>
Salaries 79,797 78,929 84,148 79,287
Mtb Bonus 4,833 3,633 4,933 5,833
A/R Bonus 184 0 0 (334)
Commissions 292 1,798 2,165 1,794
FICA Taxes 5,885 7,664 6,118 6,703
Unemployment Taxes 194 186 181 119
Workmen's Comp Insurance 6,499 3,448 (1,207) 1,028
General Insurance (1,845) 2,539 3,375 2,183
Denver City Tax 0 0 0 0
Group Health Insurance 5,486 5,904 5,528 4,832
401K 245 174 174 14
------- ------- ------- -------
Salaries 101,570 104,275 105,415 100,457
Vehicle GE Capital 1,126 1,117 1,117 1,110
Vehicle Repairs 213 1,056 1,528 1,969
Vehicle Gasoline 0 1,702 0 3,671
Vehicle Misc. 0 0 0 0
------- ------- ------- -------
Vehicle 1,339 3,875 2,645 6,750
Travel & Lodging 4,245 2,175 1,528 1,624
Meats 320 388 278 372
Entertainment 0 144 0 338
Mileage 0 0 0 0
Car Allowance 1,500 1,500 1,500 1,500
Shows & Conventions 403 0 0 0
------- ------- ------- -------
Travel Expense 6,468 4,207 3,306 3,834
Consulting Services 0 0 0 0
Audit Fees 0 0 0 0
Legal Fees 1,069 (138) (1,089) 75
Misc Professional Services 530 0 865 210
------- ------- ------- -----
Professional Services 1,619 (138) (224) 285
Office Space 7,203 7,627 6,127 6,127
Other Space Rental 168 256 394 230
------- ------- ------- -------
Space Rental 7,371 7,883 6,521 6,357
Page 4
AMERICAN PHARMACEUTICAL SERVICES, INC.
Austin
September 30, 1995
Desc October November December January February March
------- -------- -------- ------- -------- -----
Machine & Equipment 1,022 1,337 1,412 (73) 925 925
Furn & Fixtures 412 412 392 (926) 687 550
Vehicles 818 2,154 1,724 6,228 2,201 2,201
Leasehold Improvements 1,473 1,473 1,473 1,473 1,473 1,468
Building Improvements 0 0 0 0 0 0
Durable Medical Equip 0 0 0 0 0 0
Computer Hardware 1,358 1,358 1,321 2,900 1,395 1,395
Computer Software 0 0 0 0 0 0
------ ------ ------ ------ ------ ------
Depreciation Expenses 5,083 6,734 6,322 9,602 6,681 6,539
Employee Relations 375 107 202 827 342 273
Temporary Services 124 0 0 0 0 0
Employee Education 1,592 63 63 63 75 119
Recruiting 1,200 1,200 1,054 1,000 0 0
Office Supplies 1,728 2,063 3,691 2,708 1,428 2,000
Independent Business 0 0 776 200 875 75
Small Equipment 0 0 0 0 0 0
Furniture & Equip
Rentals 513 395 1,517 539 342 1,001
Repairs & Maintenance 52 3,159 2,162 1,135 373 495
Telephone 4,114 3,286 1,384 6,422 2,901 2,182
Cellular Phone 178 239 262 258 370 534
Advertising 583 421 307 618 935 (112)
Postage 483 581 527 103 811 343
Freight 94 54 0 1,149 488 89
Janitorial 351 351 351 351 351 351
Dues/Subscription 12 0 44 0 0 40
Professional Licenses 0 0 420 0 85 0
Uniforms 0 0 0 0 0 0
Computer 0 11 0 864 2,065 907
Utilities 1,189 0 827 2,622 2,404 602
General Taxes 0 0 0 (1,580) 0 294
Tax Penalty 0 147 0 0 0 0
Donations &
Contributions 0 0 0 0 0 0
Property Taxes 1,325 1,325 1,325 9,453 1,325 1,325
LTC Link 0 0 0 0 0 0
Other Misc Income 0 0 (1,706) 0 0 (500)
Other Misc Expenses 0 (61) 0 17,050 0 0
------ ------ ------ ------ ------ ------
Other Misc. Expenses 13,911 13,361 13,204 43,862 15,170 10,018
------ ------ ------ ------ ------ ------
Total Other Expenses 37,706 30,497 34,878 68,858 40,024 37,312
YTD
Desc May June July August September Actuals
--- ---- ---- ------ --------- -------
Machine & Equipment 925 1,398 1,017 1,089 5,982 16,884
Furn & Fixtures 580 580 454 758 734 5,183
Vehicles 2,028 2,099 1,711 2,099 2,099 22,978
Leasehold Improvements 1,473 1,473 1,473 1,473 1,473 17,671
Building Improvements 0 0 0 0 0 0
Durable Medical Equip 0 0 0 0 0 0
Computer Hardware 1,395 1,395 1,395 1,395 1,395 18,097
Computer Software 0 0 0 0 0 0
------ ------ ------ ------ ------ -------
Depreciation Expenses 6,401 6,945 6,050 6,814 11,683 80,813
Employee Relations 182 197 125 75 45 2,869
Temporary Services 0 0 65 100 0 289
Employee Education 66 74 72 101 66 2,420
Recruiting 0 0 0 0 0 4,454
Office Supplies 2,924 (340) 1,780 2,878 2,893 24,616
Independent Business 622 898 2,381 563 1,478 8,729
Small Equipment 9 0 0 0 0 9
Furniture & Equip
Rentals 469 972 678 2,142 1,315 9,905
Repairs & Maintenance 1,870 (2,159) 587 678 619 9,297
Telephone 2,461 2,575 3,018 2,725 1,673 33,873
Cellular Phone 319 864 47 1,285 687 5,347
Advertising 1,705 677 736 689 850 7,809
Postage 734 199 428 625 287 6,902
Freight 210 972 103 16 249 3,568
Janitorial 392 351 351 0 351 3,902
Dues/Subscription 0 6 0 80 0 577
Professional Licenses 0 0 0 0 0 505
Uniforms 0 0 0 843 136 979
Computer 1,560 2,039 2,387 1,329 1,347 13,013
Utilities 2,282 1,144 1,261 1,329 1,247 15,568
General Taxes 22 0 61 13 127 (911)
Tax Penalty 94 0 0 0 0 241
Donations &
Contributions 0 0 0 0 0 0
Property Taxes 1,325 1,325 1,325 1,325 1,325 24,028
LTC Link 0 0 0 (594) (108) (702)
Other Misc Income 0 0 0 (247) (13) (2,468)
Other Misc Expenses 0 128 (582) 0 0 16,535
------ ------ ------ ------ ------ -------
Other Misc. Expenses 17,246 9,922 14,823 15,955 14,574 191,354
------ ------ ------ ------ ------ -------
Total Other Expenses 35,213 33,684 36,700 35,017 43,483 457,323
Page 5
AMERICAN PHARMACEUTICAL SERVICES, INC.
Austin
September 30, 1995
Desc October November December January February
- ---------------------------------------------------------------------------------
Partner Service Charges 0 0 0 0 0
Bad Debt Facility 1,663 671 1,920 2,068 2,068
Bad Debt Medicare 5,404 1,171 4,097 3,472 4,261
Bad Debt Medicaid 2,781 2,865 3,383 3,308 3,094
Bad Debt Private 5,259 3,286 4,990 5,060 4,518
Bad Debt Other 0 215 411 305 569
------- ------- ------- ------- -------
Bad Debt 15,127 8,208 14,801 14,211 14,408
Total Operating Expense 144,178 153,911 159,948 185,955 152,451
Amortization Nondeductible 0 0 0 0 0
Amortization Deductible 0 0 0 0 0
Earnings From Operations (5,833) 2,130 (4,011) (38,382) (6,444)
Interest/Income/Dividend 0 0 0 0 0
Interest Expense 338 22 182 187 164
Minority Interest 0 0 0 0 0
------- ------- ------- ------- -------
Earnings Before Allocations (6,171) (2,152) (4,193) (38,569) (6,608)
Corporate Allocations 0 0 0 0 0
------- ------- ------- ------- -------
Earnings Before Taxes (6,171) (2,152) (4,193) (38,569) (6,608)
State Income Tax 0 0 0 0 0
Federal Income Tax 0 0 0 0 0
------- ------- ------- ------- -------
Income Tax 0 0 0 0 0
Net Income (6,171) (2,152) (4,193) (38,569) (6,608)
======= ======= ====== ======= ======
Percent to Sales
----------------
Salaries % 24.3% 30.8% 28.4% 27.9% 27.6%
Vehicle % 0.2% 0.4% 0.1% 0.6% 0.3%
Professional Services % 0.5% 0.6% 1.1% 0.5% 0.9%
Space Rental % 2.0% 0.0% 1.7% 1.9% 2.5%
Depreciation % 1.4% 1.8% 1.6% 2.6% 1.9%
Other Misc. Expense % 3.7% 3.6% 3.4% 11.9% 4.3%
Total Other Expenses % 10.0% 8.2% 9.0% 18.7% 11.3%
Bad Debt % 4.0% 2.2% 3.8% 3.9% 4.1%
Total Op. Expense % 38.3% 41.2% 41.1% 50.4% 42.9%
Earnings From Operations % (1.6%) (0.6%) (1.0%) (10.4%) (1.8%)
Net Income % (1.6%) (0.6%) (1.1%) (10.4%) (1.9%)
Desc August September YTD Actuals
- ----------------------------------------------------------------
Partner Service Charges 0 0 0
Bad Debt Facility 2,071 1,823 22,904
Bad Debt Medicare 4,663 8,701 59,749
Bad Debt Medicaid 3,578 3,587 39,717
Bad Debt Private 4,991 6,131 63,458
Bad Debt Other 361 554 5,169
------- ------- -------
Bad Debt 15,864 20,796 190,997
Total Operating Expense 156,296 164,736 1,927,844
Amortization Nondeductible 0 0 0
Amortization Deductible 0 0 0
Earnings From Operations 42,996 67,311 169,264
Interest/Income/Dividend 0 0 0
Interest Expense (12,568) 1,617 7,063
Minority Interest 0 0 0
------- ------- -------
Earnings Before Allocations 55,564 65,694 162,201
Corporate Allocations 0 0 0
------- ------- -------
Earnings Before Taxes 55,564 65,694 162,201
State Income Tax 0 0 0
Federal Income Tax 0 0 0
------- ------- -------
Income Tax 0 0 0
Net Income 55,564 65,694 162,201
======= ====== =======
Percent to Sales
----------------
Salaries % 22.0% 20.8% 25.7%
Vehicle % 0.6% 1.4% 0.6%
Professional Services % (0.0%) 0.1% 0.4%
Space Rental % 1.4% 1.3% 1.6%
Depreciation % 1.4% 2.4% 1.6%
Other Misc. Expense % 3.3% 3.0% 3.8%
Total Other Expenses % 7.3% 9.0% 9.2%
Bad Debt % 3.3% 4.3% 3.8%
Total Op. Expense % 32.6% 34.2% 38.7%
Earnings From Operations % 9.0% 14.0% 3.4%
Net Income % 11.6% 13.6% 3.3%
AMERICAN PHARMACEUTICAL SERVICES, INC.
Austin
September 30, 1996
Desc October November December January February
- ------------------------------------------------------------------------------------
Revenue
Enteral 54,452 46,134 51,198 43,299 84,699
Wholesale 12,580 12,357 11,514 11,008 9,883
Billing Service Fee 600 720 540 300 330
Option 5,214 6,453 2,508 1,590 2,596
------- -------- ------- ------- -------
Enteral Total 72,846 85,664 65,760 56,197 97,508
Urological 12,527 13,658 13,522 16,062 14,967
Wholesale 0 0 0 0 0
------- ------- ------- ------- -------
Urological Total 12,527 13,658 13,522 16,062 14,967
Orthotics 867 0 0 0 0
Wholesale 0 0 0 0 0
------- ------- ------- ------- -------
Orthotics Total 867 0 0 0 0
Wound Care Part B 32,328 40,130 (6,999) 21,377 19,380
Wound Care Non B/Whlse 879 510 1,130 2,052 (121)
------- ------- ------- ------- -------
Wound Car Total 33,207 40,640 (5,869) 23,429 19,259
Vencor/Vencare 0 0 0 0 1,581
Resp Supplies 0 0 0 0 0
Concent Rentals 0 0 0 0 0
------- ------- ------- ------- -------
Respiratory Total 0 0 0 0 1,581
I.V. 9,183 16,909 5,900 16,261 18,879
Pharmacy 209,510 164,770 192,077 214,848 200,433
Medicaid 158,068 146,975 150,098 158,402 122,383
Contractual Allowance (31,614) (29,395) (30,020) (31,680) (24,477)
Consulting 18,697 16,049 10,286 8,947 13,579
Correctional 0 0 0 0 0
Corr. Billing Serv. Fee 0 0 0 0 0
Oxygen 0 0 0 0 0
Oxygen Medicaid 0 0 0 0 0
Retail 4,176 1,744 3,041 3,742 1,993
Other 0 0 0 0 0
-------- ------- ------- ------- -------
Pharmacy Total 358,837 300,143 325,482 354,259 313,911
------- ------- ------- ------- -------
Total Revenue 487,467 437,014 404,795 466,206 466,105
Contractual Allowance % (20.0%) (20.0%) (20.0%) (20.0%) (20.0%)
Desc August September YTD Actuals
- ---------------------------------------------------------------------
Revenue
Enteral 15,208 49,457 654,504
Wholesale 3,020 8,259 112,094
Billing Service Fee (450) 0 2,760
Option 0 0 21,168
------- ------ -------
Enteral Total 17,778 57,716 690,546
Urological 7,014 7,335 131,849
Wholesale 0 0 0
------ ------ -------
Urological Total 7,014 7,335 131,849
Orthotics (2,052) 0 5,553
Wholesale 0 0 0
------ ------ -------
Orthotics Total (2,052) 0 5,533
Wound Care Part B 2,823 21,756 210,318
Wound Care Non B/Whlse (10) 338 6,280
------ ------- -------
Wound Car Total 2,813 22,094 216,598
Vencor/Vencare 1,631 1,539 11,187
Resp Supplies 0 0 0
Concent Rentals 0 0 0
------ ------ -------
Respiratory Total 1,631 1,539 11,187
I.V. 20,569 11,759 177,205
Pharmacy 196,643 195,336 2,360,009
Medicaid 261,053 239,651 2,346,996
Contractual Allowance (52,211) (47,930) (469,401)
Consulting 13,739 13,795 163,960
Correctional 0 0 0
Corr. Billing Serv. Fee 0 0 0
Oxygen 0 0 0
Oxygen Medicaid 0 0 0
Retail 2,442 1,983 37,858
Other 408 2,361 2,835
------- ------- ---------
Pharmacy Total 424,074 405,196 4,442,279
------- ------- ---------
Total Revenue 471,827 505,639 5,675,197
Contractual Allowance % (20.0%) (20.0%) (20.0%)
AMERICAN PHARMACEUTICAL SERVICES, INC.
Austin
September 30, 1996
Desc October November December January February Ma
- ------------------------------------------------------------------------------------
COGS
Enteral 24,367 20,645 22,911 19,376 37,903 3
Wholesale 5,629 5,530 5,152 4,926 4,423 4
Option 2,602 3,210 1,365 1,113 1,617 1
------- ------- ------- ------- ------- ---
Enteral Total 32,598 29,385 29,428 25,415 44,143 9
Urological 7,720 8,417 8,333 9,899 9,224 7
Wholesale 534 (534) 0 0 0
------- ------- ------- ------- ------- ---
Urological Total 8,254 7,883 8,333 9,899 9,224 7
Orthotics 399 0 0 0 0
Wound Care 15,986 19,565 (2,825) 11,278 9,271 7
Vencor/Vencare 0 0 0 0 1,423 1
Resp Supplies 0 0 0 0 0
Concent Rentals 0 0 0 0 0
------- ------- ------- ------- ------- ---
Respiratory total 0 0 0 0 1,423 1
I.V. 3,306 6,087 2,124 5,854 6,796 6
Pharmacy 207,928 173,667 189,557 211,089 183,593 205
Contractual Allowance 0 0 0 0 0
Correctional 0 0 0 0 0
Oxygen 0 0 0 0 0
Retail 0 2,570 (2,570) 0 0
Other 676 3,335 3,128 1,289 3,243 1
------- ------- ------- ------- ------- ---
Pharmacy Total 208,604 179,572 190,115 212,378 186,836 207
------- ------- ------- ------- ------- ---
Total COGS 269,147 242,492 227,175 264,824 257,693 240
Desc May June July August September
- ----------------------------------------------------------------------------------
COGS
Enteral 24,448 43,962 (6,431) 5,931 19,288
Wholesale 5,888 4,059 5,937 7,780 7,601
Option 0 0 0 0 0
------- ------- ------- ------- -------
Enteral Total 30,336 48,021 (494) 8,711 26,889
Urological 6,686 2,642 5,960 4,910 5,134
Wholesale 0 0 0 0 0
------- ------- ------- ------- -------
Urological Total 6,686 2,642 5,960 4,910 5,134
Orthotics (143) (128) 2,809 (944) 0
Wound Care 8,924 6,919 10,424 1,407 11,047
Vencor/Vencare 785 1,959 (363) 1,468 1,320
Resp Supplies 0 0 0 0 0
Concent Rentals 0 0 0 0 0
------- ------- ------- ------- -------
Respiratory total 785 1,959 (363) 1,468 1,320
I.V. 4,525 4,608 9,705 12,788 7,311
Pharmacy 248,789 220,210 266,053 263,312 243,381
Contractual Allowance 0 0 0 0 0
Correctional 0 0 0 0 0
Oxygen 0 0 0 0 0
Retail 0 0 0 0 0
Other 740 4,565 4 2,076 1,861
------- ------- ------- ------- -------
Pharmacy Total 249,529 224,775 266,057 265,388 245,242
------- ------- ------- ------- -------
Total COGS 300,642 288,796 294,098 293,728 296,943
AMERICAN PHARMACEUTICAL SERVICES, INC.
Austin
September 30, 1996
Desc October November December January February March April
- ------------------------------------------------------------------------------------------------------------
Gross profit
Enteral 30,085 25,489 28,287 23,923 46,796 3,886 27,177
Wholesale 6,951 6,827 6,362 6,082 5,460 5,714 5,010
Billing Service Fee 600 720 540 300 330 480 70
Option 2,612 3,243 1,143 477 779 848 0
------- ------- ------- ------- ------- ------- -------
Total Enteral 40,248 36,279 36,332 30,782 53,365 10,928 32,257
Urological 4,807 5,241 5,189 6,163 5,743 4,926 4,119
Wholesale (534) 534 0 0 0 0 0
------- ------- ------- ------- ------- ------- -------
Total Urological 4,273 5,775 5,189 6,163 5,743 4,926 4,119
Total Orthotics 468 0 0 0 0 0 653
Total Wound Care 17,221 21,075 (3,044) 12,151 9,988 8,112 6,160
Vencor/Vencare 0 0 0 0 158 252 196
Resp Supplies 0 0 0 0 0 0 0
Concent Rentals 0 0 0 0 0 0 0
------- ------- ------- ------- ------- ------- -------
Respiratory Total 0 0 0 0 158 252 196
Total I.V. 5,877 10,822 3,776 10,407 12,083 11,999 17,088
Pharmacy 159,650 138,078 152,618 162,161 139,223 163,424 190,088
Contractual Allowance (31,614) (29,395) (30,020) (31,680) (24,477) (34,774) (47,130)
Consulting 18,697 16,049 10,286 8,947 13,579 13,586 13,855
Correctional 0 0 0 0 0 0 0
Oxygen 0 0 0 0 0 0 0
Retail 4,176 (826) 5,611 3,742 1,993 2,133 3,022
Other (676) (3,335) (3,128) (1,289) (3,243) (1,619) (3,909)
------- ------- ------- ------- ------- ------- -------
Total Pharmacy 150,233 120,571 135,367 141,881 127,075 142,750 155,926
------- ------- ------- ------- ------- ------- -------
Total Gross Profit 218,320 194,522 177,620 201,384 208,412 178,967 216,399
Enteral % 55.3% 55.2% 55.2% 54.8% 54.7% 52.8% 55.3%
Urological % 34.1% 42.3% 38.4% 38.4% 38.4% 38.4% 38.4%
Orthotics % 54.0% 0.0% 0.0% 0.0% 0.0% 0.0% 54.0%
Wound Care % 51.9% 51.9% 51.9% 51.9% 51.9% 51.9% 51.9%
Respiratory % 0.0% 0.0% 0.0% 0.0% 10.0% 14.0% 0
I.V. % 64.0% 64.0% 64.0% 64.0% 64.0% 64.0% 64.0%
Pharmacy % 41.9% 40.2% 41.6% 40.1% 40.5% 40.8% 40.0%
Total Gross Profit % 44.8% 44.5% 43.9% 43.2% 44.7% 42.6% 43.3%
Desc May June July August September YTD Actuals
- -----------------------------------------------------------------------------------------------------
Gross profit
Enteral 30,186 71,728 (10,058) 9,277 30,169 316,945
Wholesale 7,269 399 513 240 658 51,485
Billing Service Fee 170 (300) 300 (450) 0 2,760
Option 0 0 0 0 0 9,102
------- ------- ------- ------- ------- ---------
Total Enteral 37,625 71,827 (9,245) 9,067 30,827 380,292
Urological 4,162 1,187 2,554 2,104 2,201 48,396
Wholesale 0 0 0 0 0 0
------- ------- ------- ------- ------- ---------
Total Urological 4,162 1,187 2,554 2,104 2,201 48,396
Total Orthotics (169) (157) 3,297 (1,108) 0 2,964
Total Wound Care 9,613 7,201 10,424 1,406 11,047 111,354
Vencor/Vencare 117 299 (122) 163 219 1,282
Resp Supplies 0 0 0 0 0 0
Concent Rentals 0 0 0 0 0 0
------- ------- ------- ------- ------- ---------
Respiratory Total 117 299 (122) 163 219 1,282
Total I.V. 8,045 2,925 2,489 7,781 4,448 97,740
Pharmacy 195,399 169,781 205,758 196,384 191,606 2,064,170
Contractual Allowance (46,052) (43,856) (50,262) (52,211) (47,930) (469,401)
Consulting 13,925 13,819 13,703 13,739 13,795 163,960
Correctional 0 0 0 0 0 0
Oxygen 0 0 0 0 0 0
Retail 8,783 2,466 2,333 2,442 1,983 37,858
Other (674) (4,565) (4) (1,665) 500 (23,610)
------- ------- ------- ------- ------- ---------
Total Pharmacy 171,381 137,645 171,528 158,686 159,954 1,772,997
------- ------- ------- ------- ------- ---------
Total Gross Profit 230,774 220,927 180,925 178,099 206,696 2,415,045
Enteral % 55.4% 59.9% 94.9% 51.0% 53.4% 55.1%
Urological % 38.4% 31.0% 30.0% 30.0% 30.0% 36.7%
Orthotics % 54.2% 55.1% 54.0% 54.0% 0.0% 53.9%
Wound Care % 51.9% 51.0% 50.0% 50.0% 50.0% 51.4%
Respiratory % 13.0% 13.2% 25.2% 10.0% 14.2% 11.5%
I.V. % 64.0% 38.8% 20.4% 37.8% 37.8% 55.2%
Pharmacy % 40.7% 38.0% 39.2% 37.4% 39.5% 39.9%
Total Gross Profit % 43.4% 43.3% 38.1% 37.7% 41.3% 42.6%
Page 15
AMERICAN PHARMACEUTICAL SERVICES, INC.
Austin
September 30, 1996
Desc October November December January February March April May
- --------------------------------------------------------------------------------------------------------------------------------
Salaries 79,945 76,423 79,141 78,665 72,718 72,842 81,405 79,025
MtB Bonus 1,668 1,666 1,666 (211) 1,197 1,197 (7,181) 0
A/R Bonus 4,509 4,489 (7,873) 573 248 (231) 186 73
Commissions 1,101 3,395 3,422 1,674 2,377 2,389 1,014 1,906
FICA Taxes 5,723 5,234 5,002 6,426 5,705 5,706 5,490 5,830
Unemployment Taxes 37 87 53 1,893 855 494 243 182
Workmen's Comp Insurance 3,407 3,212 3,662 3,129 3,023 3,087 3,489 3,349
General Insurance 2,069 1,975 2,228 1,925 1,857 1,862 2,080 2,041
Denver City Tax 0 0 0 0 0 0 0 0
Group Health Insurance 5,885 4,752 5,083 5,235 5,361 (2,098) 2,992 4,669
401K 0 0 0 287 153 241 183 308
------- ------- ------- ------- ------- ------- ------- -------
Salaries 104,342 101,233 92,384 99,596 93,494 85,489 89,901 97,383
Vehicle GE Capital 132 89 98 89 83 160 0 124
Vehicle Repairs 146 214 1,830 921 1,158 1,536 709 722
Vehicle Gasoline 0 3,785 53 4,056 1,863 10 2,372 3,377
Vehicle Misc. 0 0 0 0 0 0 0 0
------- ------- ------- ------- ------- ------- ------- -------
Vehicle 278 4,088 1,981 5,068 3,104 1,706 3,081 4,223
Travel & Lodging 1,529 1,162 249 406 (158) 172 0 173
Meals 95 288 222 292 146 141 22 103
Entertainment 0 0 742 75 45 98 84 61
Mileage 0 679 1,216 1,543 1,487 1,270 1,612 1,523
Car Allowance 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500
Shows & Conventions 0 8 0 0 0 0 0 0
------- ------- -------- ------- ------- ------- ------- -------
Travel Expense 3,124 3,637 3,929 3,816 3,020 3,181 3,218 3,360
Consulting Services 0 0 2,198 1,060 0 0 0 0
Audit Fees 0 0 0 0 0 0 0 0
Legal Fees 0 0 0 216 221 325 125 549
Misc Professional Services 0 0 0 0 1,757 1,504 0 0
------- ------- ------- ------- ------- ------- ------- -------
Professional Services 0 0 2,198 1,276 1,978 1,829 125 549
Office Space 6,127 6,127 6,127 6,127 9,321 8,430 4,530 6,480
Other Space Rental 230 301 230 230 230 230 230 230
------- ------- ------- ------- ------ ------- ------- -------
Space Rental 6,357 6,428 6,357 6,357 9,551 8,660 4,760 6,710
Desc. June July August September YTD Actuals
- ----------------------------------------------------------------------------------------------------
Salaries 77,443 87,884 70,295 76,721 932,507
Mtb Bonus 0 0 2,394 1,197 3,591
A/R Bonus 0 0 54 269 2,297
Commissions 3,028 3,482 (771) 2,618 25,635
FICA Taxes 6,377 6,478 4,384 4,889 67,244
Unemployment Taxes 92 1,388 (1,088) 174 4,410
Workmen's Comp Insurance 3,113 713 (2,769) 2,808 30,221
General Insurance 1,818 2,240 (839) 1,640 20,896
Denver City Tax 0 0 0 0 0
Group Health Insurance 4,453 4,627 4,468 5,035 50,460
401K 262 1,666 (1,721) 0 1,379
------- ------- ------- ------- ---------
Salaries 96,586 108,478 74,405 95,349 1,138,640
Vehicle GE Capital 95 87 99 161 1,217
Vehicle Repairs 2,190 338 426 1,539 11,729
Vehicle Gasoline 1,460 2,878 2,888 2,133 24,875
Vehicle Misc. 0 0 0 0 0
------- ------- ------- ------- ---------
Vehicle 3,745 3,303 3,413 3,833 37,821
Travel & Lodging 140 0 101 (605) 3,169
Meals 146 83 54 114 1,706
Entertainment 86 0 0 0 1,191
Mileage 1,077 1,396 1,072 1,476 14,351
Car Allowance 1,500 1,875 1,685 1,419 18,479
Shows & Conventions 0 0 0 0 8
------- ------- ------- ------- ---------
Travel Expense 2,949 3,354 2,912 2,404 38,904
Consulting Services 505 1,050 1,110 0 5,923
Audit Fees 0 0 0 0 0
Legal Fees 329 (1,220) 0 1,382 1,927
Misc Professional Services 1,391 0 750 0 5,402
------- ------- ------- ----- ---------
Professional Services 2,225 (170) 1,860 1,382 13,252
Office Space 6,863 7,246 6,863 6,863 81,104
Other Space Rental 135 368 0 674 3,066
------- ------- ------- ------- ---------
Space Rental 6,998 7,612 6,863 7,537 84,190
Page 16
AMERICAN PHARMACEUTICAL SERVICES, INC.
Austin
September 30, 1996
Desc October November December January February March April
- ----------------------------------------------------------------------------------------------------
Machine & Equipment 534 1,854 2,582 1,547 1,547 1,547 1,547
Furn & Fixtures 734 490 734 893 714 1,498 882
Vehicles 2,099 3,003 3,463 2,588 2,582 2,365 2,365
Leasehold Improvements 1,473 1,473 1,473 1,473 1,473 1,473 1,473
Building Improvements 0 0 0 0 0 0 0
Durable Medical Equip 0 0 0 0 0 0 0
Computer Hardware 1,395 528 1,418 1,413 1,325 1,325 1,325
Computer Software 0 0 0 0 0 0 0
------ ------ ------ ------ ------ ------ ------
Depreciation Expense 6,235 7,348 9,670 7,914 7,621 8,168 7,592
Employee Relations 23 16 658 163 15 194 202
Temporary Services 0 160 0 225 0 0 220
Employee Education 70 80 1,064 996 298 (904) 21
Recruiting 0 202 0 0 0 0 0
Office Supplies 184 4,072 3,192 3,390 3,358 2,002 2,050
Independent Business 95 745 900 733 1,084 54 1,100
Small Equipment 0 0 0 0 0 0 0
Furniture & Equip Rentals 1,459 443 1,266 634 1,218 517 1,007
Repairs & Maintenance 768 2,186 447 936 752 198 348
Telephone 2,738 2,307 1,680 3,167 3,312 (189) 2,619
Cellular Phone 953 342 568 1,069 305 539 1,025
Advertising 746 550 726 640 552 482 524
Postage 755 211 697 647 734 310 882
Freight 101 23 52 96 (171) 241 39
Janitorial 703 352 352 352 274 484 349
Dues/Subscription 0 15 0 100 0 342 0
Professional Licenses 0 0 0 0 0 0 0
Uniforms 0 44 0 0 0 0 0
Computer 619 744 791 677 558 1,307 1,091
Utilities 1,024 883 822 715 780 1,039 790
General Taxes 0 0 0 0 0 0 242
Tax Penalty 0 0 0 0 0 0 0
Donations & Contributions 0 0 0 0 0 0 0
Property Taxes 600 725 725 2,145 2,145 2,145 2,145
LTC Link 0 0 0 0 0 0 0
Other Misc Income (672) (63) (117) 2,860 0 0 0
Other Misc Expense 0 468 0 (24) 250 (477) 0
------ ------ ------ ------ ------ ------ ------
Other Misc. Expenses 10,164 14,535 13,858 19,527 15,464 8,284 14,654
------ ------ ------ ------ ------ ------ ------
Total Other Expenses 26,158 36,036 37,993 43,958 40,738 31,826 33,430
Desc May June July August September YTD Actuals
- --------------------------------------------------------------------------------------------------
Machine & Equipment 1,547 1,548 1,547 1,547 1,548 18,893
Furn & Fixtures 882 913 913 913 913 10,437
Vehicles 4,748 2,762 3,095 3,095 2,750 34,895
Leasehold Improvements 1,473 1,473 1,473 1,473 1,473 17,678
Building Improvements 0 0 0 0 0 0
Durable Medical Equip 0 0 0 0 0 0
Computer Hardware 1,325 1,325 1,325 1,325 1,543 15,572
Computer Software 0 0 0 0 0 0
------ ------ ------ ------ ------ -------
Depreciation Expense 9,975 8,021 8,353 8,353 8,225 97,473
Employee Relations 273 78 113 106 245 2,066
Temporary Services 3,095 930 560 80 1,696 6,966
Employee Education 0 83 0 14 48 1,770
Recruiting 0 167 0 0 42 411
Office Supplies 1,679 2,118 588 2,183 1,826 26,612
Independent Business 945 548 1,850 148 1,404 9,602
Small Equipment 0 0 0 0 0 0
Furniture & Equip Rentals 1,293 634 1,269 363 1,238 11,361
Repairs & Maintenance 447 707 311 896 825 8,819
Telephone 2,311 1,011 1,416 1,243 2,891 24,506
Cellular Phone 534 968 494 516 869 8,182
Advertising 335 568 455 716 559 6,853
Postage 635 42 1,055 698 759 7,425
Freight 15 34 60 13 73 576
Janitorial 0 349 698 487 352 4,752
Dues/Subscriptions 75 240 0 0 0 772
Professional Licenses 0 0 0 0 0 0
Uniforms 0 0 0 0 0 44
Computer 941 1,357 497 1,008 1,505 11,123
Utilities 1,028 1,226 13 2,720 1,150 12,190
General Taxes 54 0 0 2,597 16,338 19,252
Tax Penalty 0 0 0 0 0 0
Donations & Contributions 30 0 0 0 0 30
Property Taxes 2,135 2,135 2,135 2,135 1,118 20,288
LTC Link 0 0 0 0 0 0
Other Misc Income 445 (145) 66 (46) (3) 2,292
Other Misc Expense 128 0 21 192 (210) 348
------ ------ ------ ------ ------ -------
Other Misc Expenses 16,398 13,045 11,571 16,065 32,695 186,260
------ ------ ------ ------ ------ -------
Total Other Expenses 41,215 36,983 34,023 39,468 56,076 457,900
Page 17
AMERICAN PHARMACEUTICAL SERVICES, INC.
Austin
September 30, 1996
Desc October November December January February March April
- -----------------------------------------------------------------------------------------------------------
Partner Service Charges
Bad Debt Facility 2,104 2,033 1,785 1,754 1,642 1,503 1,070
Bad Debt Medicare 7,236 8,809 4,388 5,170 8,738 1,954 5,154
Bad Debt Medicaid 3,794 3,527 3,602 3,802 2,937 4,172 5,656
Bad Debt Private 6,972 5,477 6,162 6,828 8,840 6,329 6,027
Bad Debt Other 837 676 237 650 755 750 1,068
------- ------- ------- ------- ------- ------- -------
Bad Debt 20,473 20,522 16,174 18,202 20,552 14,708 18,975
Total Operating Expense 150,973 157,791 146,551 161,754 154,784 132,023 142,306
Amortization Nondeductible 0 0 0 0 0 0 0
Amortization Deductible 0 0 0 0 0 0 0
Earnings From Operations 67,347 36,731 31,069 39,630 53,628 46,944 74,093
Interest Income/Dividend 0 0 0 0 0 0 0
Interest Expense 1,692 1,465 1,381 1,371 1,334 1,510 1,000
Minority Interest 0 0 0 0 0 0 0
------- ------- ------- ------- ------- ------- -------
Earnings Before Allocation 65,655 35,266 29,688 38,259 52,294 45,434 73,093
Corporate Allocations 0 0 0 0 0 0 0
------- ------- ------- ------- ------- ------- -------
Earnings Before Taxes 65,655 35,266 29,688 38,259 52,294 45,434 73,093
State Income Tax 0 0 0 0 0 0 0
Federal Income Tax 0 0 0 0 0 0 0
------- ------- ------- ------- ------- ------- -------
Income Tax 0 0 0 0 0 0 0
Net Income 65,655 35,266 29,688 38,259 52,294 45,434 73,093
======= ======= ======= ======= ======= ======= =======
Percent to Sales
- -----------------
Salaries % 21.4% 23.2% 22.8% 21.4% 20.1% 20.4% 18.0%
Vehicle % 0.1% 0.9% 0.5% 1.1% 0.7% 0.4% 0.6%
Professional Services % 0.0% 0.0% 0.5% 0.3% 0.4% 0.0% 0.0%
Space Rental % 1.3% 1.5% 1.6% 1.4% 2.0% 2.1% 1.0%
Depreciation % 1.3% 1.7% 2.4% 1.7% 1.6% 1.9% 1.5%
Other Misc. Expense % 2.1% 3.3% 3.4% 4.2% 3.3% 2.0% 2.9%
Total Other Expenses % 5.4% 8.2% 9.4% 9.4% 8.7% 7.6% 6.7%
Bad Debt % 4.2% 4.7% 4.0% 3.9% 4.4% 3.5% 3.8%
Total Op. Expense % 31.0% 36.1% 36.2% 34.7% 33.2% 31.5% 28.4%
Earnings From Operations % 13.5% 8.1% 7.3% 8.2% 11.2% 10.8% 14.6%
Net Income % 13.5% 8.1% 7.3% 8.2% 11.2% 10.8% 14.6
AMERICAN PHARMACEUTICAL SERVICES, INC.
Austin
September 30, 1996
Desc May June July August September YTD Actuals
- ---------------------------------------------------------------------------------------------------
Partner Service Charges
Bad Debt Facility 1,970 503 996 690 971
Bad Debt Medicare 5,391 10,331 98 1,832 5,014 64,115
Bad Debt Medicaid 5,526 5,263 6,031 6,268 5,752 56,328
Bad Debt Private 7,101 5,610 6,606 8,457 (78,596) (8,549)
Bad Debt Other 503 301 488 823 471 7,089
------- ------- ------- ------- ------- -------
Bad Debt 20,491 22,008 14,219 16,068 (66,388) 138,004
Total Operating Expense 159,089 155,577 156,720 129,039 85,037 1,732,544
Amortization Nondeductible 0 0 0 0 0 0
Amortization Deductible 0 0 0 0 0 0
Earnings From Operations 71,685 65,350 24,205 48,160 123,659 682,501
Interest Income/Dividend 0 0 0 0 0 0
Interest Expense 1,627 1,214 1,206 1,193 1,100 16,093
Minority Interest 0 0 0 0 0 0
------- ------- ------- ------- ------- -------
Earnings Before Allocation 70,058 64,136 22,999 46,967 122,559 666,408
Corporate Allocations 0 0 0 0 0 0
------- ------- ------- ------- ------- -------
Earnings Before Taxes 70,058 64,136 22,999 46,967 122,559 666,408
State Income Tax 0 0 0 0 0 0
Federal Income Tax 0 0 0 0 0 0
------- ------- ------- ------- ------- -------
Income Tax 0 0 0 0 0 0
Net Income 70,058 64,136 22,999 46,967 122,559 666,408
======= ======= ======= ======= ======= =======
Percent to Series
- -----------------
Salaries % 18.3% 18.9% 22.8% 15.8% 18.9% 20.1%
Vehicle % 0.8% 0.7% 0.7% 0.7% 0.8% 0.7%
Professional Services % 0.1% 0.4% (0.0%) 0.4% 0.3% 0.2%
Space Rental % 1.3% 1.4% 1.6% 1.5% 1.5% 1.5%
Depreciation % 1.9% 1.6% 1.8% 1.6% 1.6% 1.7%
Other Misc. Expense % 3.1% 2.6% 2.4% 3.4% 6.5% 3.3%
Total Other Expenses % 7.8% 7.3% 7.2% 8.4% 11.1% 8.1%
Bad Debt % 3.9% 4.3% 3.0% 3.4% (13.1%) 2.4%
Total Op. Expense % 29.9% 30.5% 33.0% 27.6% 18.8% 30.5%
Earnings From Operations % 13.2% 12.6% 4.6% 10.0% 24.2% 11.7%
Net Income % 13.2% 12.6% 4.6% 10.0% 24.2% 11.7%
Page 18
SCHEDULE 6.14
NONCOMPLIANCE WITH ENVIROMENTAL LAWS
NONE.
SCHEDULE 6.17
OUTSTANDING LITIGATION
NONE.