(d)(1)
NCS HEALTHCARE, INC.
3201 Enterprise Parkway, Suite 2200
Beachwood, Ohio 44122
August 29, 2001
Mr. Joel F. Gemunder
President and Chief Executive Officer
Omnicare, Inc.
1600 RiverCenter II
100 East RiverCenter Boulevard
Covington, KY 41011
Re: NCS HealthCare, Inc.
Dear Mr. Gemunder:
Omnicare, Inc. ("Omnicare" and sometimes "you" or "your") has expressed
an interest in a possible transaction (the "Transaction") with NCS HealthCare,
Inc. (including its subsidiaries and affiliates, the "Company"). You have
requested that the Company furnish you with certain information which the
Company may consider to be material and non-public, confidential or proprietary
in nature. In consideration for and as a condition to the Company's furnishing
access to such information as the Company, in its sole discretion, agrees to
deliver, provide or otherwise make available to Omnicare, you agree to the terms
and conditions set forth in this letter agreement. The Company may, in its sole
discretion, withhold information where it concludes that the disclosure of such
information would violate applicable law, breach a duty, subject the Company to
risk of a material penalty, or be detrimental to its interests.
1. You and all of your partners, members, directors, officers, employees,
agents, affiliates, advisors, accountants, bankers, attorneys, potential
sources of financing and other similarly situated individuals or entities
(collectively "Informed Parties") acknowledge the confidential, non-public
and proprietary nature of the Confidential Information (as defined below)
and agree to hold and keep all Confidential Information which is disclosed
to you or any Informed Party pursuant to the terms of this letter agreement
as confidential, regardless of whether such information is marked or
otherwise identified as confidential.
Mr. Joel F. Gemunder
August 29, 2001
Page 2
2. As used in this letter agreement, the term "Confidential Information" means
and includes any and all information, in any form, hereafter disclosed, in
any manner, to you or your Informed Parties concerning the Company or the
Transaction regardless of whether such information is disclosed by the
Company or by its advisors, agents or other representatives (collectively
"Advisors"). The term "Confidential Information" also includes all notes,
analyses, compilations, studies, interpretations or other documents
prepared by you or Informed Parties which contain, reflect or are based
upon, in whole or in part, any information disclosed to you or Informed
Parties by or on behalf of the Company.
3. The term "Confidential Information" does not include information which (a)
is or becomes generally available to the public other than as a result of a
disclosure by you or the Informed Parties in violation of this letter
agreement, (b) is within your or the Informed Parties' possession from a
source other than the Company; provided that such source was not known by
you or the Informed Parties to be bound by any contractual, legal or
fiduciary obligations of confidentiality to the Company with respect to
such information, or (c) is or becomes available to you or the Informed
Parties on a non-confidential basis from a source other than the Company or
any of the Advisors; provided that such source is not known by you or your
Informed Parties to be bound by any contractual, legal or fiduciary
obligations of confidentiality to the Company with respect to such
information.
4. You and the Informed Parties acknowledge that any trade secrets of the
Company, however documented, that may be disclosed to you or the Informed
Parties are also entitled to any and all of the protections and benefits of
all applicable state trade secret laws. If any information that the Company
deems to be a trade secret is found by a court of competent jurisdiction
not to be a trade secret for purposes of this letter agreement, such
information will in any event still be considered Confidential Information
for purposes of this letter agreement.
5. To the extent that any Confidential Information may include materials
subject to the attorney-client privilege, the Company is not waiving and
will not be deemed to have waived or diminished its attorney work-product
protections, attorney-client privileges or similar protections and
privileges as a result of disclosing any Confidential Information
(including Confidential Information related to pending or threatened
litigation) to you or your Informed Parties, regardless of whether the
Company has asserted or is or may be entitled to assert such privileges and
protections. The parties (a) share a common legal and commercial interest
in all such Confidential Information that is subject to such privileges and
protections and (b) intend that such privileges and protections remain
intact should either party become subject to any actual or threatened
proceeding to which such Confidential Information covered by such
protections and privileges relates. In furtherance of the foregoing, you
shall not claim or contend, in proceedings involving either party, that the
Company waived its attorney work-product protections, attorney-client
privileges or similar protections and
Mr. Joel F. Gemunder
August 29, 2001
Page 3
privileges with respect to any information, documents or other material not
disclosed to you due to the Company disclosing Confidential Information
(including Confidential Information related to pending or threatened
litigation) to you.
6. You agree that the Confidential Information (a) will be kept confidential
by you and the Informed Parties and (b) without limiting the foregoing,
will not be reproduced or disclosed, distributed or communicated, directly
or indirectly, in whole or in part, by you or the Informed Parties to any
person except with the specific prior written consent of the Company acting
through its Board of Directors or except as expressly otherwise permitted
by this letter agreement, provided, however, that you may make any such
disclosure (i) if the disclosure is required to comply with law, but only
to the extent necessary to comply (provided that, to the extent reasonably
practicable, you have given notice to the Company prior to any such
disclosure so that the Company may seek an appropriate protective order or
other appropriate relief or waive compliance with the provisions of this
letter agreement), and (ii) if the disclosure is required under the federal
securities laws in connection with any offer by you to purchase any debt or
equity securities of the Company (provided that you have given at least 24
hours written notice to the Company of your termination of discussions with
the Company relating to a possible Transaction prior to the disclosure
contemplated by this clause (ii)). It is understood that you may disclose
the Confidential Information to only those Informed Parties who (a) require
such information for the purpose of evaluating a possible Transaction with
the Company and (b) are informed by you of the confidential nature of the
Confidential Information and the obligations of this letter agreement. You
further agree that you and the Informed Parties will not use any of the
Confidential Information for any reason or purpose other than to evaluate
and to negotiate a possible Transaction with the Company. You also agree to
be responsible for any breach of this letter agreement by the Informed
Parties.
7. You acknowledge that you are aware, and that you will advise the Informed
Parties, that applicable securities laws impose restrictions on any person
who has material, non-public information concerning a company, such as the
Confidential Information, from purchasing or selling securities of such
company or from communicating such information to any other person under
circumstances in which it is reasonably foreseeable that such person is
likely to purchase or sell such securities in reliance upon such
information.
8. Except as expressly permitted by Section 6 and except as expressly
permitted by a definitive agreement with respect to the Transaction, if
any, entered into between the parties, each of the Company and its Advisors
and you and the Informed Parties agree not to disclose to any person the
fact that the Confidential Information has been disclosed to you or the
Informed Parties or that you or the Informed Parties have inspected any
portion of the Confidential Information or that any discussions or
negotiations are taking place concerning the Transaction; provided,
however, either party may make such a disclosure if, and solely to the
Mr. Joel F. Gemunder
August 29, 2001
Page 4
extent that, such party has determined, in connection with its outside
counsel, that such a disclosure must be made in order to not commit a
violation of law, and further provided, the party making such disclosure
shall consult with the other party before making any such disclosure, and
any such permitted disclosure shall not affect or impair such party's
obligations of confidentiality with respect to the Confidential
Information. Notwithstanding the foregoing, (i) the Company may disclose to
(a) its creditors and/or their representatives and advisors and (b) to any
party with which it is contractually obligated to do so pursuant to a
written agreement in existence on the date hereof or entered into
subsequent to the date hereof, and without limiting your rights under
paragraph 6 of this letter agreement (ii) you may disclose to (a) any owner
of the Company's bank debt or any debt security of the Company and/or their
representatives and advisors (collectively, the "Debt Holders") and (b)
AmerisourceBergen Corporation or any group or committee (whether ad hoc or
formal) representing no less than one-third of the trade debt of the
Company and/or their representatives and advisors (collectively, the "Trade
Creditors" and, together with the Debt Holders, the "Creditors"), the fact
that discussions are taking place concerning the Transaction and, in the
case of the preceding clauses (i)(a), (ii)(a) and (ii)(b), the terms of
such discussions or negotiations; provided that, in the case of the
preceding clauses (ii)(a) and (ii)(b), you advise the Creditors of the
confidential nature of the disclosed information and the obligations of
this letter agreement and further provided that you will not be responsible
for any breach of this letter agreement by such Creditors. You hereby
represent that as of the date you sign this letter agreement, you are not
aware of any facts or circumstances that exist that would require you to
make such a disclosure in order to not commit a violation of law. The
Company agrees to be responsible for any breach of this letter agreement by
its Advisors.
9. All requests by you or the Informed Parties for Confidential Information,
meetings with the Company's personnel or Advisors or inspection of the
Company's properties must be made to the Company's Board of Directors or
the Chief Executive Officer of the Company.
10. In the event that any party to this letter agreement becomes legally
compelled (by oral questions, interrogatories, requests for information or
documents, subpoena, civil or criminal investigative demand or similar
process) to make any disclosure that is prohibited or otherwise constrained
by this letter agreement (such party, a disclosing party), such disclosing
party will provide the other party (the non-disclosing party) with prompt
notice of such legal proceedings so that the non-disclosing party may seek
an appropriate protective order or other appropriate relief or waive
compliance with the provisions of this letter agreement. In the absence of
a protective order or a waiver from the non-disclosing party, the
disclosing party is permitted to disclose that portion (and only that
portion) of the Confidential Information that the disclosing party is
legally compelled to disclose; provided, however, that the disclosing party
must use reasonable efforts to obtain reliable assurance that confidential
treatment will be accorded by any person to whom any Confidential
Information is disclosed.
Mr. Joel F. Gemunder
August 29, 2001
Page 5
11. You understand, acknowledge and agree that the Company retains the right to
determine, in its sole discretion, what information, properties and
personnel it wishes to make available to you, and neither the Company nor
any of its Advisors make any representation or warranty, express or
implied, as to the accuracy or completeness of the Confidential
Information. You further agree that neither the Company, nor any of its
Advisors, shall have any liability to you or any Informed Party relating to
or resulting from the use of the Confidential Information.
12. You agree that, during the term of this letter agreement neither you nor
any Informed Party will directly or indirectly, (a) induce or attempt to
induce any employee of the Company or the Company's affiliates or
subsidiaries to leave the employ of the Company or such affiliate or
subsidiary, or (b) solicit for employment or as an independent contractor,
or otherwise, any person who is an employee of the Company, or of the
Company's affiliates or subsidiaries; provided, however, that the foregoing
subsections (a) and (b) of this paragraph 12 will not prevent you from
employing any such person who (i) contacts you on his or her own initiative
without any direct or indirect solicitation by, or encouragement from, you
(it being understood that general advertisements and other similar broad
forms of solicitations shall not constitute direct or indirect solicitation
hereunder) or (ii) has been terminated by the Company prior to commencement
of employment discussions between you and such person.
13. In the event that you determine that you no longer wish to proceed with the
Transaction or upon written notice from the Company that it does not wish
you to consider the Transaction any further, then (a) you (i) shall
promptly deliver to the Company's Board of Directors all documents or other
tangible materials disclosed by the Company or any of its Advisors to you
or the Informed Parties constituting Confidential Information, together
with all copies and summaries thereof in the possession or under the
control of you or the Informed Parties and (ii) will destroy all materials
generated by you or the Informed Parties that include or refer to any part
of the Confidential Information, without retaining a copy of any such
material or (b) alternatively, at your option, you will destroy all
documents or other matters constituting Confidential Information in the
possession or under the control of you or the Informed Parties. Any such
destruction pursuant to the foregoing must be certified by an authorized
officer of Omnicare in writing to the Company (and such certification shall
include a list of the destroyed materials). Notwithstanding the foregoing,
you may retain one copy of the Confidential Information in confidential
restricted access files for use only in the event a dispute arises
hereunder and only in connection with such dispute and you may retain such
of the Confidential Information as shall have been incorporated into the
records of your Board of Directors or the records of the Board of Directors
of any of your subsidiaries.
14. The Company reserves the right, in its sole discretion, to reject any and
all proposals made by you or the Informed Parties with regard to a
Transaction and to terminate discussions and
Mr. Joel F. Gemunder
August 29, 2001
Page 6
negotiations with you and the Informed Parties at any time. Neither you nor
the Company shall have rights or obligations of any kind whatsoever with
respect to the Transaction by virtue of this letter agreement other than
for the matters specifically agreed to herein. Without limiting the
preceding sentences, nothing in this letter agreement requires either you
or the Company to enter into a Transaction or to negotiate such Transaction
for any specified period of time.
15. You agree that no contract or agreement providing for a Transaction shall
be deemed to exist between the parties and/or any of the parties'
stockholders unless and until a detailed definitive written agreement
providing for a Transaction (a "Transaction Agreement") has been executed
and delivered by both parties, and each party hereby waives in advance, any
claims (including, without limitation, claims for breach of contract) in
connection with any possible Transaction unless and until the parties shall
have entered into such definitive Transaction Agreement. You also agree
that unless and until such definitive Transaction Agreement has been
executed and delivered by both parties neither party has any legal
obligation of any kind whatsoever with respect to any Transaction by virtue
of this letter agreement or any other written or oral expression with
respect to such Transaction except, in the case of this letter agreement,
for the matters specifically agreed to herein. For purposes of this
paragraph, the term "definitive Transaction Agreement" does not include an
executed letter of intent or any other preliminary written agreement, nor
does it include any written or oral acceptance of any offer or bid by any
party.
16. Each party agrees that because an award of money damages (whether pursuant
to the foregoing sentence or otherwise) would be inadequate for any breach
of this letter agreement, and any such breach would cause irreparable harm,
in the event of any breach or threatened breach of this letter agreement,
each party will also be entitled, without the requirement of posting a bond
or other security, to equitable relief, including injunctive relief and
specific performance. Such remedies will not be the exclusive remedies for
any breach of this letter agreement but will be in addition to all other
remedies available at law or equity.
17. The agreements contained in this letter agreement shall be binding upon the
successors of the parties hereto.
18. This letter agreement contains the entire agreement between you and the
Company concerning the Confidential Information, and this letter agreement
and the obligations set forth in this letter agreement may be modified or
waived only by a separate writing signed by the Company and you expressly
modifying or waiving this letter agreement or such obligations.
Mr. Joel F. Gemunder
August 29, 2001
Page 7
19. Neither the failure nor the delay by any party in exercising any right,
power or privilege under this letter agreement will operate as a waiver of
such right, power or privilege, and no single or partial exercise of any
such right power or privilege will preclude any other or further exercise
of such right, power or privilege or the exercise of any other right, power
or privilege.
20. As used in this letter agreement, the term "person" means any individual,
corporation (including any nonprofit corporation), general or limited
partnership, limited liability company, joint venture, estate, trust,
association, organization, labor union or other entity or governmental
body.
21. The invalidity or unenforceability of any provision of this letter
agreement shall not affect the validity or enforceability of any other
provisions of this letter agreement, which shall remain in full force and
effect. If any of the covenants or provisions of this letter agreement are
determined to be unenforceable by reason of its extent, duration, scope or
otherwise, then the parties contemplate that the court making such
determination shall reduce such extent, duration, scope or other provision
and enforce them in their reduced form for all purposes contemplated by
this letter agreement.
22. All words used in this letter agreement will be construed to be of such
gender or number as the circumstances require. Unless otherwise expressly
provided, the word "including" does not limit the preceding words or terms.
23. Any action or proceeding seeking to enforce any provision of, or based upon
any right arising out of, this letter agreement may be brought against
either of the parties in the courts of the Delaware and each of the parties
consents to the jurisdiction of such courts (and of the appropriate
appellate courts) in any such action or proceeding and waives any objection
to venue laid therein. Process in any action or proceeding referred to in
the preceding sentence may be served on any party anywhere in the world.
24. This letter agreement will be governed by and construed in accordance with
the laws of the state of Delaware applicable to contracts between residents
of that state and executed in and to be performed in that state, without
regard to conflicts of laws principles.
25. This letter agreement may be executed in one or more counterparts, each of
which will be deemed to be an original copy of this letter agreement, and
all of which, when taken together, shall be deemed to constitute one and
the same agreement. The exchange of copies of this letter agreement and of
signature pages by facsimile transmission shall constitute effective
execution and delivery of this letter agreement as to the parties and may
be used in lieu of the
Mr. Joel F. Gemunder
August 29, 2001
Page 8
original letter agreement for all purposes. Signature of the parties
transmitted by facsimile shall be deemed to be their original signatures
for any purpose whatsoever.
26. The parties have participated jointly in the negotiation and drafting of
this letter agreement. If an ambiguity or question of intent or
interpretation arises, this letter agreement shall be construed as if
drafted jointly by the parties and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any
of the provisions of this letter agreement.
27. Notwithstanding anything to the contrary that may be contained herein, this
letter agreement shall terminate two years from the date of your acceptance
hereof. If you are in agreement with the foregoing, please sign and return
one copy of this letter agreement, which thereupon will constitute our
agreement with respect to its subject matter.
[Confidentiality Agreement Signature Page]
Very truly yours,
NCS HealthCare, Inc.
By: /s/ Jon H. Outcalt
----------------------------------
Name: Jon H. Outcalt
Title: Chairman
ACCEPTED AND AGREED to
this 29th day of August, 2001
OMNICARE, INC.
By: /s/ Joel F. Gemunder
-------------------------------
Name: Joel F. Gemunder
Title: President and Chief Executive Officer