Document:

Exhibit 10.5

 

FOURTH AMENDMENT TO

THIRD
AMENDED AND RESTATED CREDIT AGREEMENT

AND
CONSENT OF GUARANTORS

 

This FOURTH AMENDMENT TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT AND
CONSENT OF GUARANTORS (this “Amendment”) is dated as of March 5,
2008, and entered into by and among FLEETWOOD
ENTERPRISES, INC.  (“Fleetwood”),
FLEETWOOD HOLDINGS INC. and its
Subsidiaries listed on the signature pages hereof (collectively, “Borrowers”),
the banks and other financial institutions signatory hereto that are parties as
Lenders to the Credit Agreement referred to below (the “Lenders”), and BANK OF AMERICA, N.A., as administrative agent and
collateral agent (in such capacity, the “Agent”) for the Lenders.

 

Recitals

 

Whereas,
Fleetwood, the Borrowers, the Lenders, and the Agent have entered into that
certain Third Amended and Restated Credit Agreement dated as of January 5,
2007, as amended by that certain First Amendment to Third Amended and Restated
Credit Agreement and Consent of Guarantors dated as of May 25, 2007, that
certain Second Amended and Restated Credit Agreement and Consent of Guarantors
dated as of September 18, 2007, and that certain Third Amended and
Restated Credit Agreement and Consent of Guarantors dated as of January 16,
2008 (as amended, amended and restated, extended, supplemented or otherwise
modified from time to time, the “Credit
Agreement”).  Any terms
defined in the Credit Agreement and not defined in this Amendment are used
herein as defined in the Credit Agreement;

 

Whereas,
the Borrowers have requested an amendment to the Credit Agreement to replace
the minimum EBITDA covenant set forth in Section 7.24 of the Credit
Agreement with a fixed charge coverage ratio; and

 

Whereas,
the Majority Lenders and the Agent are willing to agree to the amendment
requested by the Borrowers, on the terms and conditions set forth in this
Amendment;

 

Now Therefore, in consideration of the premises
and the mutual agreements set forth herein, Fleetwood, the Borrowers, the
Majority Lenders, and the Agent agree as follows:

 

1.     AMENDMENTS TO CREDIT
AGREEMENT.  Subject to the
conditions and upon the terms set forth in this Amendment and in reliance on
the representations and warranties of Fleetwood and the Borrowers set forth in
this Amendment, the Credit Agreement is hereby amended as follows:

 

 

1.1   Amendment to Section 7.24.  Section 7.24 shall be amended by
deleting such section and replacing it with the following:

 

7.24         Fixed Charge Coverage Ratio.  If a Minimum Liquidity Event shall occur and
be continuing, Fleetwood shall not have permitted the Fixed Charge Coverage
Ratio for the four quarter period ending as of the last day of any Fiscal
Quarter (for which an annual or quarterly compliance certificate has been
delivered pursuant to Section 5.2(e)), beginning with the Fiscal Quarter
ending in January, 2008, to be less than the correlative ratio indicated below
opposite each such period:

 

	
  Fiscal Quarter

  	
   

  	
  Fixed Charge Coverage Ratio

  	
   

  
	
  Four
  quarter period through Fiscal Quarter ending in January 2008

  	
   

  	
  0.15:1.0

  	
   

  
	
  Four
  quarter period through Fiscal Quarter ending in April 2008

  	
   

  	
  0.15:1.0

  	
   

  
	
  Four
  quarter period through Fiscal Quarter ending in July 2008

  	
   

  	
  0.15:1.0

  	
   

  
	
  Four
  quarter period through Fiscal Quarter ending in October 2008

  	
   

  	
  0.15:1.0

  	
   

  
	
  Four
  quarter period through Fiscal Quarter ending in January 2009

  	
   

  	
  0.45:1.0

  	
   

  
	
  Four
  quarter period through Fiscal Quarter ending in April 2009

  	
   

  	
  0.75:1.0

  	
   

  
	
  Four
  quarter period through Fiscal Quarter ending in July 2009 and each
  Fiscal Quarter ending in July, October, January and April thereafter

  	
   

  	
  1.1:1.0

  	
   

  

 

1.2           Amendment to Section 7.28.  Section 7.28 shall
be amended by adding a new subsection (d) and a new subsection (e) to
read as follows:

 

“(d)         On or before May 1, 2008,
Borrowers shall deliver to the Agent a revised Schedule 6.11 to the Credit
Agreement designating additional parcel(s) of Real Property owned by a
Borrower with a fair market value of at least $2,990,000 as Mortgaged Property
and “boot collateral” (as designated on such Schedule 6.11) and thereby
increase the aggregate value of all “boot collateral” to at least $27,990,000,
such parcel(s) and the value thereof to be satisfactory to the Agent (and
if required by the Agent, Borrowers shall have delivered a recent appraisal for
each such parcel in form and substance and by an appraiser satisfactory to the
Agent) and shall have delivered to the
Agent and the Collateral Agent (A) duly executed and acknowledged
amendments to the existing Mortgages or a new Mortgage, in each case to the
extent necessary under applicable law, in the reasonable judgment of the Agent,
to create a valid, enforceable and first priority Lien thereon in proper form
for recording in all appropriate places in all applicable jurisdictions, (B) title
policies (or endorsements to the existing title policies for the benefit of the
Agent) as reasonably requested by the Agent, assuring the Agent that such
Mortgages constitute first priority mortgage liens subject only to Permitted
Liens under clauses (a), (b), (d) and (e) of 

 

2

 

the definition of Permitted Liens, and (C) if
requested by the Agent, opinions of counsel as to such matters as reasonably
requested by the Agent.  Such additional
parcels shall not constitute Term Loan Collateral or Real Estate Subfacility
Assets, but shall be additional Collateral for the Obligations.

 

(e)           Subject to Section 2.8 and Section 7.28(d),
each parcel of Real Estate listed on Schedule 6.11 attached hereto and
identified thereon as “Mortgaged Property” shall remain subject to the Mortgage with respect to such property that is in
place as of May 1, 2008.

 

1.3           Amendment to Schedule
6.11.  Schedule 6.11 shall be
amended, with respect to Mortgaged Properties, as set forth on Schedule 6.11
attached hereto, with such changes as shall be approved by the Agent pursuant
to Section 7.28 hereof.  Except as
amended hereby, the existing Schedule 6.11 shall remain in full force and
effect.

 

2.     REPRESENTATIONS AND
WARRANTIES OF FLEETWOOD AND THE BORROWERS. 
In order to induce the Majority Lenders and the Agent to
enter into this Amendment, each of Fleetwood and each Borrower represents and
warrants to each Lender and the Agent that the following statements are true,
correct and complete:

 

2.1   Power and Authority.  Each of the Loan Parties has all corporate
power and authority to enter into this Amendment and, as applicable, the
Consent of Guarantors attached hereto (the “Consent”), and to carry out
the transactions contemplated by, and to perform its obligations under or in
respect of, the Credit Agreement.

 

2.2   Corporate Action.  The execution and delivery of this Amendment
and the Consent and the performance of the obligations of each Loan Party under
or in respect of the Credit Agreement as amended hereby have been duly
authorized by all necessary corporate action on the part of each of the Loan
Parties.

 

2.3   No Conflict or Violation
or Required Consent or Approval. 
The execution and delivery of this Amendment and the Consent and the
performance of the obligations of each Loan Party under or in respect of the
Credit Agreement as amended hereby do not and will not conflict with or violate
(a) any provision of the governing documents of any Loan Party or any of
its Subsidiaries, (b) any Requirement of Law, (c) any order, judgment
or decree of any court or other governmental agency binding on any Loan Party
or any of its Subsidiaries, or (d) any indenture, agreement or instrument
to which any Loan Party or any of its Subsidiaries is a party or by which any
Loan Party or any of its Subsidiaries, or any property of any of them, is
bound, and do not and will not require any consent or approval of any Person.

 

2.4   Execution, Delivery and
Enforceability.  This
Amendment and the Consent have been duly executed and delivered by each Loan
Party which is a party thereto and are the legal, valid and binding obligations
of such Loan Party, enforceable in accordance with their terms, except as
enforceability may be affected by applicable bankruptcy, insolvency, and
similar proceedings affecting the rights of creditors generally, and general
principles of equity.  The Agent’s Liens
in the Collateral continue to be valid, binding and enforceable first priority
Liens which secure the Obligations.

 

3

 

2.5   No Default or Event of
Default.  No event has
occurred and is continuing or will result from the execution and delivery of
this Amendment or the Consent that would constitute a Default or an Event of
Default.

 

2.6   No Material Adverse
Effect.  No event has
occurred that has resulted, or could reasonably be expected to result, in a
Material Adverse Effect.

 

2.7   Representations and
Warranties.  Each of the
representations and warranties contained in the Loan Documents is and will be
true and correct in all material respects on and as of the date hereof and as
of the effective date of this Amendment, except to the extent that such
representations and warranties specifically relate to an earlier date, in which
case they were true, correct and complete in all material respects as of such
earlier date.

 

3.     CONDITIONS TO
EFFECTIVENESS OF THIS AMENDMENT.  This
Amendment, and the consents and approvals contained herein, shall be effective
only if and when signed by, and when counterparts hereof shall have been
delivered to the Agent (by hand delivery, mail or telecopy) by, Fleetwood, the
Borrowers and each Lender and only if and when each of the following conditions
is satisfied:

 

3.1   Consent of
Guarantors.  Each of the
Guarantors shall have executed and delivered to the Agent the Consent.

 

3.2   No Default or Event of
Default; Accuracy of Representations and Warranties.  No Default or Event of Default shall exist
and each of the representations and warranties made by the Loan Parties herein
and in or pursuant to the Loan Documents shall be true and correct in all
material respects as if made on and as of the date on which this Amendment
becomes effective (except that any such representation or warranty that is
expressly stated as being made only as of a specified earlier date shall be
true and correct as of such earlier date), and the Borrowers shall have
delivered to the Agent a certificate confirming such matters.

 

3.3   Delivery
of Documents.  The Agent
shall have received such documents as the Agent may reasonably request in
connection with this Amendment.

 

3.4   Closing Fee.  Fleetwood shall have paid to the Agent,
for the pro rata account of all Lenders that have executed this Amendment on or
before 4:00 pm Pacific Time on March 5th, 2008, the closing fee
as described and in the amount set forth in the Fee Letter, dated as of the
date hereof, between Fleetwood and the Agent.

 

4.     EFFECTIVE DATE.  This
Amendment shall become effective (the “Effective Date”) on the date of
the satisfaction of the conditions set forth in Section 3.

 

5.     EFFECT OF AMENDMENT;
RATIFICATION.  This Amendment
is a Loan Document.  From and after the
date on which this Amendment becomes effective, all references in the Loan
Documents to the Credit Agreement shall mean the Credit Agreement as amended
hereby.  Except as expressly amended
hereby or waived herein, the Credit Agreement and the other Loan Documents,
including the Liens granted thereunder, shall remain in full force and effect,
and all terms and provisions thereof are hereby ratified and confirmed.

 

4

 

6.     Each of Fleetwood and the Borrowers
confirms that as amended hereby, each of the Loan Documents is in full force
and effect, and that none of the Credit Parties has any defenses, setoffs or
counterclaims to its Obligations.

 

7.     APPLICABLE LAW.  THE VALIDITY, INTERPRETATIONS AND
ENFORCEMENT OF THIS AMENDMENT AND ANY DISPUTE ARISING OUT OF OR IN CONNECTION
WITH THIS AMENDMENT, WHETHER SOUNDING IN CONTRACT, TORT, EQUITY OR OTHERWISE,
SHALL BE GOVERNED BY THE INTERNAL LAWS AND DECISIONS OF THE STATE OF
CALIFORNIA; PROVIDED THAT THE AGENT AND THE LENDERS SHALL RETAIN ALL RIGHTS
ARISING UNDER FEDERAL LAW.

 

8.     NO WAIVER.  The execution, delivery and
effectiveness of this Amendment does not constitute a waiver of any Default or
Event of Default, amend or modify any provision of any Loan Document except as
expressly set forth herein or constitute a course of dealing or any other basis
for altering the Obligations of any Loan Party.

 

9.     COMPLETE AGREEMENT.  This Amendment sets forth the
complete agreement of the parties in respect of any amendment to any of the
provisions of any Loan Document or any waiver thereof.  The execution, delivery and effectiveness of
this Amendment do not constitute a waiver of any Default or Event of Default,
amend or modify any provision of any Loan Document except as expressly set
forth herein or constitute a course of dealing or any other basis for altering
the Obligations of any Loan Party.

 

10.   CAPTIONS;
COUNTERPARTS.  The catchlines
and captions herein are intended solely for convenience of reference and shall
not be used to interpret or construe the provisions hereof.  This Amendment may be executed by one or more
of the parties to this Amendment on any number of separate counterparts
(including by telecopy), all of which taken together shall constitute but one
and the same instrument.

 

[signatures follow; remainder of page intentionally
left blank]

 

5

 

IN
WITNESS WHEREOF, each of the undersigned has duly executed
this Amendment as of the date set forth above.

 

	
  BORROWERS

  	
  FLEETWOOD
  HOLDINGS INC.

  
	
   

  	
   

  
	
   

  	
  FLEETWOOD
  HOMES OF ARIZONA, INC.

  
	
   

  	
   

  
	
   

  	
  FLEETWOOD
  HOMES OF CALIFORNIA,

  INC.

  
	
   

  	
   

  
	
   

  	
  FLEETWOOD
  HOMES OF FLORIDA, INC.

  
	
   

  	
   

  
	
   

  	
  FLEETWOOD
  HOMES OF GEORGIA, INC.

  
	
   

  	
   

  
	
   

  	
  FLEETWOOD
  HOMES OF IDAHO, INC.

  
	
   

  	
   

  
	
   

  	
  FLEETWOOD
  HOMES OF INDIANA, INC.

  
	
   

  	
   

  
	
   

  	
  FLEETWOOD
  HOMES OF KENTUCKY,

  INC.

  
	
   

  	
   

  
	
   

  	
  FLEETWOOD
  HOMES OF NORTH

  CAROLINA, INC.

  
	
   

  	
   

  
	
   

  	
  FLEETWOOD
  HOMES OF OREGON, INC.

  
	
   

  	
   

  
	
   

  	
  FLEETWOOD
  HOMES OF

  PENNSYLVANIA, INC.

  
	
   

  	
   

  
	
   

  	
  FLEETWOOD
  HOMES OF TENNESSEE,

  INC.

  
	
   

  	
   

  
	
   

  	
  FLEETWOOD
  HOMES OF TEXAS, L.P.

  
	
   

  	
  By:

  	
  FLEETWOOD
  GENERAL PARTNER

  
	
   

  	
  OF
  TEXAS, INC., its General Partner

  
	
   

  	
   

  
	
   

  	
  FLEETWOOD
  HOMES OF VIRGINIA, INC.

  
	
   

  	
   

  
	
   

  	
  FLEETWOOD
  HOMES OF WASHINGTON,

  INC.

  
	
   

  	
   

  
	
   

  	
  FLEETWOOD
  MOTOR HOMES OF

  CALIFORNIA, INC.

  
	
   

  	
   

  
	
   

  	
  FLEETWOOD
  MOTOR HOMES OF

  INDIANA, INC.

  
	
   

  	
   

  
	
   

  	
  FLEETWOOD
  MOTOR HOMES OF 

  

 

S-1

 

	
   

  	
  PENNSYLVANIA,
  INC.

  
	
   

  	
   

  
	
   

  	
  FLEETWOOD
  TRAVEL TRAILERS OF

  CALIFORNIA, INC.

  
	
   

  	
   

  
	
   

  	
  FLEETWOOD
  TRAVEL TRAILERS OF

  INDIANA, INC.

  
	
   

  	
   

  
	
   

  	
  FLEETWOOD
  TRAVEL TRAILERS OF

  KENTUCKY, INC.

  
	
   

  	
   

  
	
   

  	
  FLEETWOOD
  TRAVEL TRAILERS OF

  MARYLAND, INC.

  
	
   

  	
   

  
	
   

  	
  FLEETWOOD
  TRAVEL TRAILERS OF

  OHIO, INC.

  
	
   

  	
   

  
	
   

  	
  FLEETWOOD
  TRAVEL TRAILERS OF

  OREGON, INC.

  
	
   

  	
   

  
	
   

  	
  FLEETWOOD
  TRAVEL TRAILERS OF

  TEXAS, INC.

  
	
   

  	
   

  
	
   

  	
  FLEETWOOD
  FOLDING TRAILERS, INC.

  
	
   

  	
   

  
	
   

  	
  GOLD
  SHIELD, INC.

  
	
   

  	
   

  
	
   

  	
  GOLD
  SHIELD OF INDIANA, INC.

  
	
   

  	
   

  
	
   

  	
  HAUSER
  LAKE LUMBER OPERATION,

  INC.

  
	
   

  	
   

  
	
   

  	
  CONTINENTAL
  LUMBER PRODUCTS,

  INC.

  
	
   

  	
   

  
	
   

  	
  FLEETWOOD
  GENERAL PARTNER OF

  TEXAS, INC.

  
	
   

  	
   

  
	
   

  	
  FLEETWOOD
  HOMES INVESTMENT, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Boyd R.
  Bowman

  
	
   

  	
  Name: 

  	
  Boyd R. Plowman

  
	
   

  	
  Title: 

  	
  Executive Vice
  President and Chief

  Financial Officer

  

 

S-2

 

	
  GUARANTOR

  	
  FLEETWOOD
  ENTERPRISES, INC., as the Guarantor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Boyd R.
  Bowman

  
	
   

  	
  Name:

  	
  Boyd R. Plowman

  
	
   

  	
  Title: 

  	
  Executive Vice
  President and Chief

  Financial Officer

  

 

S-3

 

IN
WITNESS WHEREOF, each of the undersigned has duly executed
this Amendment as of the date set forth above.

 

 

	
   

  	
  BANK OF AMERICA, N.A.,
  as the Agent and

  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Todd
  Eggertsen

  
	
   

  	
  Name:

  	
  Todd Eggertsen

  
	
   

  	
  Title:

  	
  Vice President

  

 

S-4

 

	
   

  	
  WELLS FARGO FOOTHILL, INC., fka

  FOOTHILL CAPITAL CORPORATION, as

  a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Juan
  Barrera

  
	
   

  	
  Name:

  	
  Juan Barrera

  
	
   

  	
  Title:

  	
  Vice President

  

 

S-5

 

	
   

  	
  THE
  CIT GROUP/BUSINESS CREDIT,

  INC., as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Jang
  Kim

  
	
   

  	
  Name:

  	
  Jang Kim

  
	
   

  	
  Title:

  	
  Vice President

  

 

S-6

 

	
   

  	
  TEXTRON
  FINANCIAL CORPORATION,

  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Nobert
  Schmidt

  
	
   

  	
  Name:

  	
  Nobert Schmidt

  
	
   

  	
  Title:

  	
  Senior Account
  Executive

  

 

S-7

 

	
   

  	
  PNC
  BANK, NATIONAL ASSOCIATION, as

  a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Robin
  L. Arriola

  
	
   

  	
  Name:

  	
  Robin L. Arriola

  
	
   

  	
  Title:

  	
  Vice President

  

 

S-8

 

	
   

  	
  WACHOVIA
  CAPITAL FINANCE

  CORPORATION (WESTERN),
  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

S-9

 

CONSENT
OF GUARANTORS

 

Each
of the undersigned is a Guarantor of the Obligations of the Borrowers under the
Credit Agreement and hereby (a) consents to the foregoing Amendment, (b) acknowledges
that notwithstanding the execution and delivery of the foregoing Amendment, the
obligations of each of the undersigned Guarantors are not impaired or affected
and the Guaranties continue in full force and effect, and (c) ratifies its
Guaranty and each of the Loan Documents to which it is a party.

 

IN
WITNESS WHEREOF, each of the undersigned has executed and delivered this
CONSENT OF GUARANTORS as of the 5th day of March, 2008.

 

 

	
  GUARANTORS

  	
  FLEETWOOD
  ENTERPRISES, INC.

  FLEETWOOD
  CANADA LTD.

  FLEETWOOD INTERNATIONAL INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Boyd R.
  Bowman

  
	
   

  	
  Name:

  	
  Boyd R. Plowman

  
	
   

  	
  Title:

  	
  Executive Vice
  President and Chief

  Financial Officer

  

 

S-10

 

Schedule
6.11

 

(See
attachment)

 

S-11EXHIBIT 10.1

 

ASSET
PURCHASE AGREEMENT

 

This Agreement made this
29th day of February, 2008, by and among Thrifty Drug Stores, Inc., a
Minnesota corporation (“Seller”), and ApothecaryRx, LLC, an Oklahoma limited
liability company (“Buyer”).

 

RECITALS

 

A.                                   Seller owns and operates a retail
pharmacy and drug store business under the name Thrifty White Drug #726 at 417
Potter Street, Red Wing, Minnesota 55066 (such business is sometimes referred
to herein as the “Business”).

 

B.                                     Seller desires to sell and Buyer desires
to purchase certain assets of Seller used in the Business in accordance with
the terms and conditions contained herein.

 

AGREEMENTS

 

1.             ASSETS TO BE PURCHASED.  Buyer shall purchase and Seller shall sell
the following assets of Seller used in the operation of the Business (the “Assets”):

 

(a)           All of the in-date, salable pharmacy
inventory, including all rights to pharmaceutical inventory ordered but not yet
received on the Valuation Date (as hereinafter defined in paragraph 2(a)) (the “Inventory”).The
Inventory expressly  excludes the
following:

 

(i)            Outdated inventory (inventory within
90 days of expiration date or older) on the Valuation Date;

 

(ii)           Non-wholesaler repacked or misbranded
pharmaceutical inventory;

 

(iii)          Compounding chemicals; and

 

(iv)          Any and all other inventory not
transferable due to State Board of Pharmacy laws or other applicable state or
federal laws;

 

(b)           All of the following additional
personal property (the “Intangible Property”):

 

(i)            All customer lists, customer account
receivable files, doctor files, prescription files, customer prescription
history, and customer prescription records used by the Business (together, the “Files”);

 

(ii)           All goodwill, the covenant not to
compete and going concern value associated with the Business as set forth in
the Goodwill Protection Agreement attached hereto as Exhibit B (the
“Goodwill Protection Agreement”); and

 

1

 

(iii)          All phone numbers used by the Business
will be transferred to Buyer, including, without limitation, the telephone
numbers listed at Exhibit C attached as a part hereof (the “Phone Numbers”),
with Buyer assuming and paying all roll over costs;

 

all as such assets exist
on the Closing Date.  Only such assets
set forth above shall be sold by Seller to Buyer.  Seller shall be responsible for the proper
disposal of any inventory or other assets of Seller not purchased by Buyer
hereunder.  Buyer and Seller specifically
agree that the cash, cash equivalents, investment assets and accounts
receivable of Seller relating to the Business are excluded from the assets
being purchased and shall be retained by the Seller.

 

2.             PURCHASE PRICE.  The
purchase price for the Assets to be purchased shall be equal to the sum of:

 

(a)           For the Inventory described in Section 1(a) hereof,
the actual cost thereof paid by Seller. 
The actual cost paid by Seller will be determined by physical inventory
on the date agreed to by the parties (the “Valuation Date”) by Retail Inventory
Services (the fees of Retail Inventory Services to be split equally between
Buyer and Seller), on the basis of the cost shown on Seller’s books and
records, and after making allowances for damaged and out-dated inventory.  Inventory in open bottles or other
manufacturer containers shall be counted in one-tenth increments.  Buyer and Seller have the right to examine
the inventory tapes and reports and, if either of them reasonably believes that
there have been errors or inaccuracies in such inventory, either party shall
have the right to have the inventory reviewed by the inventory service or
another national third-party inventory service mutually agreed upon by them
and, if there were errors or inaccuracies, to have such errors or inaccuracies
corrected; and

 

(b)           For the Intangible Property, an
amount equal to $11 times the number of Annual Prescriptions (as hereinafter
defined).  Annual Prescriptions means the
lesser of:

 

(i)            The number of prescriptions sold by
the Business and paid for by customers of the Business during the 12-full-month
period from January 1, 2007 through December 31, 2007; or

 

(ii)           The number of prescriptions sold by
the Business and paid for by customers of the Business during the period from October 1,
2007 through December 31, 2007, multiplied by four.

 

To the best of Seller’s
ability, it has provided reports to Buyer generated from Seller’s TWRx Pharmacy
operating system demonstrating net prescriptions.  The reports are 35B Reports which demonstrate
gross prescriptions and 35A Reports which demonstrate net prescriptions,
showing deletes.  Seller will provide
these reports for the following time periods: 
10/01/07 to 12/31/07 and 01/01/07 to 12/31/07.  The purchase price for the Intangible
Property will be $11 times the lesser of: the number of prescriptions shown on
the quarterly 35A Report times 4; or the total annual prescription count on the
35A Net Report; times $11.  The lesser of
these two amounts is 

 

2

 

the 60,460 prescriptions
shown on the annual 35A Report times $11 or $665,060.  The parties agree that the purchase price for
the Intangible Property is this $665,060, less $2,100 for rebates ($662,960).

 

3.             PAYMENT OF PURCHASE
PRICE.  On the Closing Date,
Buyer shall pay Seller, by wire transfer, an amount equal to the sum of:  (i) 100% of the amount determined under Section 2(a) above
as the purchase price for the Inventory; and (ii) 85% of the amount
determined under Section 2(b) above for the Intangible Property.  The balance of the amount due hereunder (15%
of the amount for the Intangible Property) shall be paid by Buyer to Seller in
60 equal monthly installments, due on the first day of each month commencing April 1,
2008, subject to the provisions of Sections 4 and 5 of the Goodwill Protection
Agreement between the parties.

 

4.             REPRESENTATIONS
AND WARRANTIES OF SELLER. 
Seller hereby represents and warrants to Buyer as follows:

 

(a)(a)       Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of Minnesota and
has full corporate power and authority to enter into and perform its
obligations under this Agreement.  All
documents executed and to be executed by Seller and delivered in accordance
with the terms of this Agreement have been duly authorized and will be valid
obligations of Seller, enforceable in accordance with their respective terms;

 

(b)           Seller possesses and has the right to
transfer hereunder all of the Assets, free and clear of all liens, encumbrances
and charges whatsoever, except for the security interests set forth on Exhibit A
attached hereto, which will be released on or before the Closing Date;

 

(c)           The Files are all of the Seller’s
records relating to customers of the Business and the Phone Numbers listed at Exhibit C
are all of the telephone numbers used by the Business;

 

(d)           The number of Annual Prescriptions
determined by the Seller and used to calculate a portion of the Purchase Price
is true and correct and based on the actual number of net prescriptions filled
on the TWRx Pharmacy operating system during the applicable time period;

 

(e)           This Agreement, the transactions
contemplated hereby and the performance hereof by Seller do not and will not
result in the violation of any contract, undertaking or agreement to which
Seller is a party or by which Seller is bound;

 

(f)            There is no litigation or proceeding
pending or, to the knowledge of Seller, threatened against or relating to
Seller or its properties or the Business, nor does Seller know of, or have any
reasonable grounds to know of, any basis for any such action or of any
governmental investigation relating to Seller or to any of its properties or
the Business; and

 

3

 

(g)           Seller has properly prepared and
filed or caused to be prepared and filed all federal, state and local tax
returns, including payroll tax returns, relating to the Business, that were due
on or before the Closing Date, and Seller has paid all federal, state and local
taxes which were shown on such returns or which were otherwise due on or before
the Closing Date.

 

The foregoing
representations and warranties shall be true at the time of execution of this
Agreement and shall survive the execution and delivery of this Agreement and
the Closing for a period of 48 months following the Closing Date.  Seller hereby agrees to indemnify and hold
harmless Buyer from any losses, costs or expenses (including reasonable
attorneys’ fees, whether or not suit is brought) of any nature that Buyer
incurs as a result of a breach of any of the foregoing representations and
warranties.

 

5.             REPRESENTATIONS AND
WARRANTIES OF BUYER.  Buyer
hereby represents and warrants to Seller as follows:

 

(a)           Buyer is a limited liability company
duly organized, validly existing and in good standing under the laws of the
State of Oklahoma, duly qualified to do business in Minnesota, and has full
power and authority to enter into and perform its obligations under this
Agreement.  All documents executed and to
be executed by Buyer and delivered in accordance with the terms of this
Agreement have been duly authorized and are and will be the valid obligations
of Buyer enforceable in accordance with their respective terms;

 

(b)           This Agreement, the transactions
contemplated hereby and the performance hereof by Buyer do not and will not
result in the violation of any contract, undertaking or agreement to which
Buyer is a party or by which Buyer is bound;

 

(c)           There is no litigation or proceeding
pending or, to the best knowledge of Buyer, threatened against Buyer which questions
the authority of Buyer to enter into or perform its obligations under this
Agreement or which, if determined adversely to Buyer, would affect its ability
to enter into or perform its obligations under this Agreement; and

 

(d)           Buyer is authorized by law to enter
into this transaction and has all necessary and appropriate federal and state
licenses and permits necessary for it to take possession and control of the
assets to be purchased under Section 1 hereof.

 

The foregoing
representations and warranties shall be true at the time of execution of this
Agreement and on the Closing Date and shall survive the execution and delivery
of this Agreement and the Closing for a period of 48 months following the
Closing Date.  Buyer hereby agrees to
indemnify and hold harmless Seller from any losses, costs or expenses
(including reasonable attorneys’ fees, whether or not suit is brought) that
Seller incurs as a result of a breach of any of the foregoing representations
and warranties.

 

4

 

6.             CONDITIONS TO
OBLIGATIONS OF BUYER.  The obligations of Buyer hereunder
shall be subject to the performance or observance of the following conditions
on or before the Closing Date:

 

(a)           The representations and warranties of
Seller as set forth in Section 4 hereof shall be true and correct in all
respects on the Closing Date;

 

(b)           Seller shall, pending the Closing
Date, use its reasonable best efforts to preserve the goodwill of the Business
and its customers;

 

(c)           The security interests described on Exhibit A
attached hereto shall have been released with respect to the assets described
in Section 1 hereof and the documentation of such release shall be
reasonably satisfactory to Buyer;

 

(d)           Seller shall have executed and
delivered to Buyer the Goodwill Protection Agreement attached hereto as Exhibit B
and a Bill of Sale conveying the Assets to Buyer with warranty of title and no
other warranties in a form acceptable to Buyer and Seller;

 

(e)           No preliminary or permanent
injunction or other order will have been issued by any court of competent
jurisdiction or any regulatory body preventing consummation of the transactions
contemplated by this Agreement;

 

(f)            No action will have been commenced
or threatened against Seller, Buyer or any of their respective affiliates,
associates, officers or directors seeking damages arising from, to prevent or
challenge the transactions contemplated by this Agreement;

 

(g)           Seller will have performed or
satisfied on and as of the Closing Date, all obligations, covenants, agreements
and conditions contained in this Agreement to be performed or complied with by
the Seller; and

 

(h)           There will have been no material
adverse change, nor any event which would result in any material adverse
change, so far as can reasonably be foreseen by the Buyer, in the Business or
the Assets.

 

If any of the foregoing
conditions are not performed or observed on or before the Closing Date, Buyer
may, at its option and in its discretion, either waive the performance or
observance of any or all of such conditions or terminate this Agreement by
notice to Seller, in which event Buyer shall have no further obligations or
liabilities under this Agreement.

 

7.             CONDITION TO
OBLIGATIONS OF SELLER.  The
obligations of Seller hereunder shall be subject to the representations and
warranties of Buyer set forth in Section 5 hereof being true and correct
on the Closing Date and the performance or observance of the conditions set
forth in paragraphs 6(e) and 6(f) above.  If the foregoing conditions are not performed
or observed on or before the Closing Date, Seller may, at its option and in its
discretion, either waive the performance or observance of such condition or
terminate this Agreement by notice to Buyer, in which event Seller shall have
no further obligations or liabilities under this Agreement.

 

5

 

8.             SELLER’S LIABILITIES
NOT ASSUMED.  Buyer is
acquiring the assets described in Section 1 hereof, but is not assuming
any of Seller’s liabilities.  Seller
shall be and remain responsible for all liabilities and obligations of Seller
or the Business, including without limitation, all federal, state and local
taxes, including payroll taxes, vacation pay and other employee costs and
obligations of any nature whatsoever and any and all secured and unsecured
liabilities of Seller, and Buyer shall have no responsibility therefore.  Seller agrees that the liabilities and
obligations of Seller will be paid as they become due, and Seller hereby agrees
to, and does indemnify, Buyer and hold Buyer harmless from and against any and
all liabilities and obligations of Seller, along with any losses, costs or
expenses (including reasonable attorneys’ fees, whether or not suit is brought)
suffered or incurred by Buyer in connection therewith.  The provisions of this Section shall
survive the Closing.

 

9.             COVENANTS.  Not fewer than ten (10) days prior to
the Closing Date, Seller will furnish to Buyer a form letter on Seller’s
letterhead in a form reasonably acceptable to Buyer advising the customers of
the Business that the Business is closing and that arrangements have been made
for Buyer’s pharmacy to fill the customers’ prescriptions.  Seller hereby authorizes Buyer to send Seller’s
letter to the customers of the Business, and physicians and facilities served
by the Business.  Beginning on the
Closing Date and continuing to the later of the date of termination of Seller’s
lease or March 31, 2008, Seller will display signs acceptable to or
provided by Buyer in the windows or other areas of the building where the
Business was operated advising customers of the matters contemplated by this
Agreement.  The foregoing covenant will
survive closing.

 

10.           CLOSING.  The Closing Date of the purchase and sale
contemplated hereby shall, subject to the conditions hereof, occur on or before
February 29, 2008, or such other date agreed by the parties, at such time
and such place in Minnesota, as Seller and Buyer shall mutually agree.  On the Closing Date, Seller shall deliver to
Buyer all of the Files in forms reasonably satisfactory to Buyer, including,
without limitation, hard copies of all paper prescriptions, telephone
prescription orders and other original documentation required by law to be held
by a pharmacy.  Buyer acknowledges and
agrees that the foregoing and all such information therein is confidential,
non-public information and is governed by HIPAA regulations and other
regulations with which Buyer will comply. 
In the event that the Closing does not occur, Buyer will return all of
such information, in all formats, to Seller without keeping a copy or copies
for Buyer, and will not use or permit others to use such information obtained
pursuant to this Agreement.  If this sale
does not close, Buyer agrees that Buyer will remain obligated to honor the
confidentiality and HIPAA requirements as they apply to such information.  Seller agrees that following the execution of
this Agreement, Seller will deliver the Files to Buyer’s data conversion
company in electronic format in order to permit Buyer to load such information
in its computers prior to the Closing Date. 
In the event that the Closing does not occur for any reason whatsoever,
Buyer will return all of such information to Seller, and will not use or permit
others to use such information obtained pursuant to this Agreement, and will
not keep copies of such information in any form.  For six (6) months after the Closing
Date, upon Buyer’s request, Seller will furnish to Buyer a read-only computer
system including monitor, cpu and keyboard containing patient prescription
files of Seller’s customer records.

 

6

 

11.           DEFAULT.  If a party fails to perform any obligation contained
in this Agreement, the party claiming default will serve written notice to the
other party specifying the nature of such default and demanding
performance.  If such default has not
been cured within ten (10) days after receipt of such default notice, the
non-defaulting party will be entitled to exercise all remedies arising at law
or in equity by reason of such default, including, without limitation, specific
performance of this Agreement or any one or more of the provisions herein
contained.

 

12.           NOTICES.  All notices required hereunder shall be in writing and
shall be delivered to the parties as follows:

 

	
  To Seller:

  	
   

  	
  Thrifty Drug
  Stores, Inc.

  
	
   

  	
   

  	
  Attention: Robert J.
  Narveson, President and CEO

  
	
   

  	
   

  	
  6901 East Fish Lake
  Road, Suite 118

  
	
   

  	
   

  	
  Maple Grove, MN 55369

  
	
   

  	
   

  	
  Fax: (763) 513-4347

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  	
  Fredrikson & Byron,
  P.A.

  
	
   

  	
   

  	
  Attention: Neil A.
  Weikart, Esq.

  
	
   

  	
   

  	
  200 South Sixth Street,
  Suite 4000

  
	
   

  	
   

  	
  Minneapolis, MN 55402

  
	
   

  	
   

  	
  Fax: (612) 492-7077

  
	
   

  	
   

  	
   

  
	
  To Buyer:

  	
   

  	
  ApothecaryRx, LLC

  
	
   

  	
   

  	
  Attention: Lewis P.
  Zeidner, President

  
	
   

  	
   

  	
  5500 Wayzata Boulevard,
  Suite 210

  
	
   

  	
   

  	
  Golden Valley, MN 55416

  
	
   

  	
   

  	
  Fax: (763) 647-1137

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  	
  Commercial Law Group,
  P.C.

  
	
   

  	
   

  	
  Attention: Michael
  Meleen, Esq.

  
	
   

  	
   

  	
  700 Oklahoma Tower

  
	
   

  	
   

  	
  210 Park Avenue

  
	
   

  	
   

  	
  Oklahoma City, OK 73102

  
	
   

  	
   

  	
  Fax: (405) 232-5553

  

 

Such addresses may be
changed by written notice to the other party. 
Such notices shall be effective upon receipt (if delivered personally or
by facsimile transmission, with confirmation of transmission); three business
days after mailing (if delivered by registered or certified mail); or one business
day after mailing (if delivered by overnight courier service).

 

13.           AGREEMENT. 
This Agreement contains the entire agreement of the parties concerning
the subject matter hereof, and supersedes all prior communications,
understandings and agreements.  No
representations, promises or agreements, oral or otherwise, not contained
herein shall be of any force or effect.

 

7

 

14.           GOVERNING
LAW.  This Agreement shall be governed by and
construed and enforced under the laws of the State of Minnesota and shall be
binding upon and inure to the benefit of Seller and Buyer and their respective
successors and assigns.

 

15.           PRESS RELEASE.  Buyer will prepare and issue all press
releases relating to this Agreement and the sale of the Business.  Seller will not issue any press releases and
will refer all inquiries concerning any transaction contemplated by this
Agreement to Buyer.  Seller must consent
to the form of such press releases, which consent will not be unreasonably
withheld.

 

16.           MISCELLANEOUS.  Time is of the essence of this
Agreement.  Prior to and at all times
following the termination or closing of this Agreement the parties agree to
execute and deliver, or cause to be executed and delivered, such documents and
do, or cause to be done, such other acts and things as might reasonably be
requested by any party to this Agreement to assure that the benefits of this
Agreement are realized by the parties. 
It is agreed that the parties may not assign such party’s rights nor
delegate such party’s duties under this Agreement without the express written
consent of the other parties to this Agreement which consent will not be
unreasonably denied.  Neither this
Agreement, nor any of the provisions hereof can be changed, waived, discharged
or terminated, except by an instrument in writing signed by the party against
whom enforcement of the change, waiver, discharge or termination is
sought.  If any party institutes an
action or proceeding against any other party relating to the provisions of this
Agreement, the party to such action or proceeding which does not prevail will
reimburse the prevailing party therein for the reasonable expenses of attorneys’
fees and disbursements incurred by the prevailing party.  Seller represents to Buyer that Seller has
dealt with no broker in connection herewith and agrees to hold Buyer harmless
from any claim for brokerage commissions asserted by any other party as a
result of dealings with Seller.  Buyer
represents to Seller that Buyer has dealt with no broker in connection herewith
agrees to indemnify and hold Seller harmless from any claim for brokerage
commissions asserted by any party as a result of dealings with Buyer.  This Agreement may be executed in
counterparts, including by telefacsimile, each of which will be deemed an
original document but all of which will constitute a single document.

 

IN WITNESS WHEREOF, this
Agreement has been executed by the parties effective the date first above
written.

 

	
   

  	
  THRIFTY DRUG STORES, INC.

  
	
   

  	
   

  
	
   

  	
  By:/S/ROBERT J.
  NARVESON

  
	
   

  	
  Its:

  	
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  APOTHECARYRX, LLC

  
	
   

  	
   

  
	
   

  	
  By:/S/LEWIS P. ZEIDNER

  
	
   

  	
  Its:

  	
  President

  
				

 

8

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