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EXHIBIT 99.1
CLOSING AND HOLDBACK AGREEMENT
This Closing and Holdback Agreement ("Agreement") is made and entered
into this 31st day of March, 2000, by and among Park Pharmacy Corporation, a
Colorado corporation ("Parent"), Total Acquisition Corporation, a Texas
corporation ("Merger Sub"), Total Pharmacy Supply, Inc., a Texas corporation
(the "Company"), and Xxxx X. Xxxxx and Xxxxxxx X. Xxxxx (collectively, the
"Shareholders").
WHEREAS, Parent, Merger Sub, the Company and the Shareholders are
parties to that certain Agreement and Plan of Merger dated as of even date
herewith (the "Merger Agreement"), pursuant to which Merger Sub is being merged
with and into the Company, with the Company being the Surviving Corporation and
becoming a wholly owned subsidiary of Parent; and
WHEREAS, Parent, Merger Sub, the Company and the Shareholders have
agreed that Parent may hold back from the consideration payable to Shareholders
at the Closing ten percent (10%) of the Parent Preferred Shares as determined
pursuant to Section 2.1 of the Merger Agreement, as security for Parent's right
to be reimbursed for costs, expenses and losses arising out of breaches of
representations, warranties and/or covenants of the Shareholders and/or the
Company; and
WHEREAS, capitalized terms used herein, unless otherwise indicated,
shall have the respective meanings ascribed to them in the Merger Agreement.
In connection with the consummation of the transactions contemplated by
the Merger Agreement, the parties hereto agree as follows:
1. Holdback. At the Closing, Parent shall deduct from the consideration
to be paid to Shareholders for the Shares ten percent (10%) of the Parent
Preferred Shares as determined pursuant to Section 2.1 of the Merger Agreement
(the "Holdback"). The Holdback shall be held by Parent until the one year
anniversary of the Closing or later, as provided below.
2. Holdback Claim Procedure. Shareholders and the Company have made
various representations, warranties, and covenants in the Merger Agreement. This
Agreement has been executed and delivered, and the Holdback hereunder is being
made, for the purpose of providing reimbursement to Parent for costs, expenses
and losses arising out of breaches by Shareholders and/or the Company of any
such representations, warranties or covenants.
2.1 Initiation of Holdback Claim Procedure. If Parent has a
claim that any of the representations, warranties or covenants of Shareholders
and/or the Company has been breached, Parent shall give notice of such claim to
Shareholders stating the amount it believes it is entitled to charge against the
Holdback (reasonably estimated if necessary) as reimbursement for any damages,
losses, claims, liabilities, demands, charges, suits, penalties, costs and
expenses (each being a "Loss") arising out of such breach (a "Claim Notice")
within forty-five (45) days after first becoming aware
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of such Loss. Each Claim Notice shall specify in reasonable detail each
individual item giving rise to any such claim included in the amount so stated,
the date such item was paid or properly accrued, the basis for any anticipated
liability and the nature of the breach of the representation, warranty, or
covenant, to which each such item is related.
2.2 Shareholders' Objection. Unless the Shareholders by
written notice (a "Claim Objection Notice") to Parent objects to the charge
against the Holdback requested in a Claim Notice within forty-five (45) days
after the receipt by the Shareholders of such Claim Notice (the "Claim Objection
Period"), Parent shall be entitled to keep forever, and the Shareholders shall
not be entitled to, that number of Parent Preferred Shares having a value equal
to the Loss (as reasonably estimated by Parent if necessary), based on the value
of the Parent Preferred Shares on the Closing Date as provided under Section 2.1
of the Merger Agreement. A Claim Objection Notice shall state in reasonable
detail the basis for the objection and the portion, if any, of the claimed
charge to the Holdback as to which the Shareholders do not object.
2.3 Negotiated Settlement of Claims. In the event that the
Shareholders do deliver a Claim Objection Notice with respect to any claim or
claims made in any Claim Notice, the Shareholders and the Parent shall, within
the thirty (30) day period beginning as of the date of the receipt by the Parent
of the Claim Objection Notice, attempt in good faith to agree upon the proper
resolutions of each of such claims. If the parties should so agree, a memorandum
(a "Memorandum") setting forth such agreement shall be prepared and signed by
both parties, and in such event, the Parent shall be entitled to keep forever,
and the Shareholders shall not be entitled to, that number of Parent Preferred
Shares having a value equal to the Loss (as agreed to by the parties pursuant to
such Memorandum), based on the value of the Parent Preferred Shares on the
Closing Date as provided under Section 2.1 of the Merger Agreement.
2.4 Arbitration. If no agreement can be reached after good
faith negotiation within the thirty (30) day period specified in Section 2.3 or
such extended period as Parent and the Shareholders shall mutually agree upon in
writing, the matter shall be submitted to and reviewed by an arbitrator in
accordance with the rules and procedures of the American Arbitration
Association. The decision of the arbitrator as to the validity and amount of any
claim shall be conclusive and binding upon Parent and the Shareholders. The
Parent shall be entitled to make charges against the Holdback in accordance with
such decision. The arbitrator's decision may be used as a basis for entry of
judgment in any jurisdiction.
3. Payments from the Holdback.
3.1 Distribution of Holdback. Subject to the provisions of
Section 3.2, on the one year anniversary of the Closing Date (the "Distribution
Date"), Parent shall distribute to the Shareholders any Parent Preferred Shares
remaining in the Holdback, less that number of Parent Preferred Shares having a
value equal to any Pending Claims (based on the value of the Parent Preferred
Shares on the Closing Date as provided in Section 2.1 of the Merger Agreement)
outstanding on such Distribution Date. Parent shall be entitled to retain that
portion of the Parent Preferred Shares in the Holdback equal to one hundred
percent (100%) of such unsatisfied Pending
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Claims, plus accrued interest thereon from the date of the Claim Notice(s), and
only the remaining balance of Parent Preferred Shares shall be delivered to the
Shareholders. With respect to such Pending Claims, this Agreement shall remain
in effect until such claims have been resolved in accordance with the procedures
set forth in Section 2 of this Agreement.
3.2 Subsequent Distributions. Promptly following the expiration of the
Claim Objection Period described in Section 2.2, in cases covered by Section 2.1
of this Agreement, or the execution of a Memorandum under Section 2.3, or the
decision of an arbitrator under Section 2.4 relating to any Pending Claim
outstanding on the Distribution Date (each such date a "Subsequent Distribution
Date"), Parent shall:
(i) retain such portion of the Holdback that it is entitled to
under an unchallenged Claim Notice or pursuant to a Memorandum or
decision of an arbitrator; and
(ii) deliver to Shareholders that portion of the Holdback, if
any, equal to the excess of (x) the Holdback (after payment of the
amount set forth in clause (i) above) over (y) the amount of all
remaining Pending Claims outstanding on such Subsequent Distribution
Date.
4. Termination of the Agreement.
This Agreement shall terminate upon the disposition of the full amount
of the Holdback pursuant to the provisions of Section 3 of this Agreement.
5. Miscellaneous Provisions.
5.1 Notices. All notices, requests, demands and other
communications under this Agreement shall be in writing and shall be deemed
given when delivered personally, when received if sent by facsimile
transmission, on the date after deposit with an overnight courier if deposited,
postage prepaid, addressed as follows or on the third day after mailing if
mailed by certified or registered mail, postage prepaid, addressed as follows
(or addressed to such other address as may be requested in writing from time to
time by a party desiring to change the address to which such communications are
to be delivered or mailed):
Parent: Park Pharmacy Corporation
Attn: Xxxxxx X. Xxxxx
00000 Xxxxxxx Xxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Fax: (000) 000-0000
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With a copy to: Carrington, Coleman, Xxxxxx & Xxxxxxxxxx, L.L.P.
Attn: Xxxx X. Xxxxxx, Esq.
000 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Fax: (000) 000-0000
The Company: Total Pharmacy Supply, Inc.
0000 Xxxx Xxxxxx Xxxx Xxxx
Xxxxx 000
Xxxxxxxxx, Xxxxx 00000
Shareholders: Xxxx X. Xxxxx
Xxxxxxx X. Xxxxx
0000 Xxxx Xxxxxx Xxxx Xxxx
Xxxxx 000
Xxxxxxxxx, Xxxxx 00000
Any notices required to be given to any party to this Agreement shall
be given contemporaneously to all of the parties to this Agreement.
5.2 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas applicable to
agreements made and to be performed entirely within such State and shall be
binding on the successors and assigns of the parties herein.
5.3 Entire Agreement. This Agreement is entered into and
delivered pursuant to the Merger Agreement and sets forth the entire agreement
among the parties with respect to the subject matter hereof and supersedes all
prior agreements, written or oral, with respect thereto.
5.4 Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and assigns.
5.5 Waivers and Amendments. This Agreement may be amended,
modified, superseded, canceled, renewed or extended, and the terms or conditions
hereof may be waived, only by a written instrument signed by all of the parties,
or, in the case of a waiver, by the party waiving compliance. No delay on the
part of any party in exercising any right, power or privilege hereunder shall
operate as a waiver thereof, nor shall any waiver on the part of any party of
any right, power or privilege hereunder, nor any single or partial exercise of
any right, power or privilege hereunder, preclude any other or further exercise
thereof or the exercise of any other right, power or privilege hereunder.
5.6 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
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5.7 Further Assurances. Each of the parties shall execute such
documents and other papers and take such further actions as may be reasonable,
required or desirable to carry out the provisions hereof and the transactions
contemplated hereby.
5.8 Variations in Pronouns. All pronouns and any variations
thereof refer to the masculine, feminine or neuter, singular or plural, as the
identity of the person or persons may require.
5.9 Headings. The headings in this Agreement are for reference
purposes only and shall not in any way affect the meaning or interpretation of
this Agreement.
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
by the duly authorized officers of the parties hereto as of the date first
written above.
"PARENT" "THE COMPANY"
PARK PHARMACY CORPORATION, TOTAL PHARMACY SUPPLY, INC.,
a Colorado corporation a Texas corporation
By: /s/ Xxxxxx X. Xxxxx By: /s/ Xxxx X. Xxxxx
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Name: Xxxxxx X. Xxxxx Name: Xxxx X. Xxxxx
Title: President Title: President
"MERGER SUB" "SHAREHOLDERS"
TOTAL ACQUISITION CORPORATION,
a Texas corporation /s/ Xxxx X. Xxxxx
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Xxxx X. Xxxxx
By: /s/ Xxxxxx X. Xxxxx
----------------------------
Name: Xxxxxx X. Xxxxx /s/ Xxxxxxx X. Xxxxx
Title: President ------------------------------------
Xxxxxxx X. Xxxxx
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