Document:

Unassociated Document

    Exhibit
      10.1

     

    EXECUTION
      COPY

     

    

    ASSET
      PURCHASE AGREEMENT

     

    by
      and between

     

    VALLEY
      DRUG COMPANY

     

    and

     

    ROCHESTER
      DRUG COOPERATIVE, INC.

     

    dated
      as of 

     

    December
      22, 2005

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    TABLE
      OF CONTENTS

    
      
        

          
            	 	 	 	Page(s)	 
	 	 	 	 	 
	
                    2. Purchase
                      and Sale.

                  	 	 	
                    
                    

                    4

                  	 
	 	 	 	 	 
	
                    2.1.
                      Purchase and Sale of Assets.

                  	 	 	
                    4

                  	 
	
                    2.2.
                      Excluded Assets.

                  	 	 	
                    4

                  	 
	
                    2.3.
                      Method of Conveyance.

                  	 	 	
                    5

                  	 
	
                    2.4
                      Assumed Obligations.

                  	 	 	
                    5

                  	 
	
                    2.5.
                      Excluded Obligations.

                  	 	 	
                    5

                  	 
	
                    2.6.
                      Lease Amendment; Sublease.

                  	 	 	
                    6

                  	 
	 	 	 	 	 
	
                    3.
                      Purchase Price.

                  	 	 	
                    
                    

                    6

                  	 
	 	 	 	 	 
	
                    3.1
                      Purchase Price.

                  	 	 	
                    6

                  	 
	
                    3.2.
                      Payment of Purchase Price.

                  	 	 	
                    6

                  	 
	 	 	 	 	 
	
                    4.
                      Allocation of Purchase Price.

                  	 	 	
                    
                    

                    6

                  	 
	 	 	 	 	 
	
                    5.
                      Representations and Warranties of Seller.

                  	 	 	
                    
                    

                    6

                  	 
	 	 	 	 	 
	
                    5.1.
                      Corporate Organization.

                  	 	 	
                    7

                  	 
	
                    5.2.
                      Authorization.

                  	 	 	
                    7

                  	 
	
                    5.3.
                      No Violation.

                  	 	 	
                    7

                  	 
	
                    5.4.
                      Brokers and Finders.

                  	 	 	
                    7

                  	 
	
                    5.5.
                      Condition of Tangible Assets.

                  	 	 	
                    8

                  	 
	
                    5.6.
                      [Intentionally Omitted].

                  	 	 	
                    8

                  	 
	
                    5.7.
                      Absence of Specified Changes.

                  	 	 	
                    8

                  	 
	
                    5.8.
                      Title to Assets; Encumbrances.

                  	 	 	
                    8

                  	 
	
                    5.9.
                      Personal Property Leases.

                  	 	 	
                    8

                  	 
	
                    5.10.
                      Contracts and Commitments.

                  	 	 	
                    8

                  	 
	
                    5.11.
                      Litigation, Judgments and Decrees.

                  	 	 	
                    9

                  	 
	
                    5.12.
                      Consents and Approvals of Governmental Authorities and
                      Others.

                  	 	 	
                    9

                  	 
	
                    5.13
                      Compliance With Law; Necessary Authorizations.

                  	 	 	
                    9

                  	 
	 	 	 	 	 
	
                    6.
                      Representations and Warranties of Buyer.

                  	 	 	
                    
                    

                    10

                  	 
	 	 	 	 	 
	
                    6.1.
                      Organization.

                  	 	 	
                    10

                  	 
	
                    6.2.
                      Authorization.

                  	 	 	
                    10

                  	 
	
                    6.3.
                      No Violation.

                  	 	 	
                    10

                  	 
	
                    6.4.
                      Brokers and Finders.

                  	 	 	
                    11

                  	 
	
                    6.5.
                      Consents and Approvals of Governmental Authorities and
                      Others.

                  	 	 	
                    11

                  	 

          

           

           

          
            
              
              

            

            
              -i-

              
                

              

            

            
              
              

            

             

          

          
            	
                    7.
                      Covenants Prior to Closing.

                  	 	 	
                    
                    

                    11

                  	 
	 	 	 	 	 
	
                    7.1
                      Seller’s Covenants.

                  	 	 	
                    11

                  	 
	
                    7.2.
                      Buyer’s Covenants.

                  	 	 	
                    12

                  	 
	
                    7.3.
                      Risk of Loss.

                  	 	 	
                    13

                  	 
	 	 	 	 	 
	
                    8.
                      Conditions to Closing.

                  	 	 	
                    
                    

                    14

                  	 
	 	 	 	 	 
	
                    8.1.
                      Conditions to Seller’s Obligations to Close.

                  	 	 	
                    14

                  	 
	
                    8.2.
                      Conditions to Buyer’s Obligation to Close.

                  	 	 	
                    14

                  	 
	 	 	 	 	 
	
                    9.
                      Closing.

                  	 	 	
                    
                    

                    15

                  	 
	 	 	 	 	 
	
                    9.1.
                      Closing and Closing Date.

                  	 	 	
                    15

                  	 
	
                    9.2.
                      Seller’s Closing Documents.

                  	 	 	
                    15

                  	 
	
                    9.3.
                      Buyer’s Closing Documents.

                  	 	 	
                    15

                  	 
	 	 	 	 	 
	
                    10.
                      Post-Closing Covenants.

                  	 	 	
                    
                    

                    16

                  	 
	 	 	 	 	 
	
                    10.1.
                      Consummation of Transactions: Further Assurances.

                  	 	 	
                    16

                  	 
	
                    10.2.
                      Payments Due to Other Party.

                  	 	 	
                    16

                  	 
	
                    10.3.
                      Post-Closing Access.

                  	 	 	
                    16

                  	 
	
                    10.4.
                      Post-Closing Employment.

                  	 	 	
                    17

                  	 
	
                    10.5
                      Buyer Post-Closing Covenants

                  	 	 	
                    17

                  	 
	
                    10.6.
                      Assignment and Assumption of Real Property Lease.

                  	 	 	
                    18

                  	 
	 	 	 	 	 
	
                    11.
                      Survival of Representations and Warranties;
                      Indemnification.

                  	 	 	
                    
                    

                    18

                  	 
	 	 	 	 	 
	
                    11.1.
                      Survival of Representations and Warranties.

                  	 	 	
                    18

                  	 
	
                    11.2.
                      Indemnification by Buyer.

                  	 	 	
                    18

                  	 
	
                    11.3.
                      Buyer’s Maximum Liability.

                  	 	 	
                    19

                  	 
	
                    11.4.
                      Indemnification by Seller.

                  	 	 	
                    19

                  	 
	
                    11.5.
                      Seller’s Maximum Liability.

                  	 	 	
                    19

                  	 
	
                    11.6.
                      Indemnification Procedure.

                  	 	 	
                    19

                  	 
	
                    11.7.
                      Remedies Exclusive.

                  	 	 	
                    20

                  	 
	
                    11.8.
                      Successors.

                  	 	 	
                    20

                  	 

          

           

           

          
            
              
              

            

            
              -ii-

              
                

              

            

            
              
              

            

          

           

          
            	
                    12.
                      Miscellaneous Provisions.

                  	 	 	
                    
                    

                    20

                  	 
	 	 	 	 	 
	
                    12.1.
                      Public Announcements.

                  	 	 	
                    20

                  	 
	
                    12.2.
                      Dispute Resolution.

                  	 	 	
                    21

                  	 
	
                    12.3.
                      Construction.

                  	 	 	
                    21

                  	 
	
                    12.4.
                      Amendment.

                  	 	 	
                    21

                  	 
	
                    12.5.
                      Waiver of Compliance.

                  	 	 	
                    22

                  	 
	
                    12.6.
                      Expenses.

                  	 	 	
                    22

                  	 
	
                    12.7.
                      Notices.

                  	 	 	
                    22

                  	 
	
                    12.8.
                      Binding Effect; Assignment.

                  	 	 	
                    23

                  	 
	
                    12.9.
                      Governing Law.

                  	 	 	
                    23

                  	 
	
                    12.10.
                      Counterparts.

                  	 	 	
                    23

                  	 
	
                    12.11.
                      Headings.

                  	 	 	
                    23

                  	 
	
                    12.12.
                      Entire Agreement.

                  	 	 	
                    23

                  	 
	
                    12.13.
                      Third Parties.

                  	 	 	
                    24

                  	 
	
                    12.14.
                      Severability.

                  	 	 	
                    24

                  	 
	
                    12.15.
                      Termination.

                  	 	 	
                    24

                  	 

          

        

      

    

     

     

    
      
        
        

      

      
        -iii-

        
          

        

      

      
        
        

      

    

    

    
      	Exhibit
              A:	
              Form
                of Lease Amendment

            

    

    
      	Exhibit
              B:	
              Form
                of Sublease

            

    

    
      	Exhibit
              C:	
              Allocation
                of Purchase Price

            

    

    
      	Exhibit
              D:	
              Form
                of General Assignment and Bill of
                Sale

            

    

    
      	Exhibit
              E:	
              Form
                of Assumption Agreement

            

    

    
      	Exhibit
              F:	
              Form
                of Assignment and Assumption of
                Lease

            

    

     

    
      
        
        

      

      
        -iv-

        
          

        

      

      
        
        

      

    

    
 

    ASSET
      PURCHASE AGREEMENT

     

    THIS
      ASSET PURCHASE AGREEMENT (as it may be amended from time to time, this
“Agreement”) is made as of December 22, 2005, by and between VALLEY DRUG COMPANY
      d/b/a Valley Drug North, a Ohio corporation having its principal place of
      business in New Castle, Pennsylvania (“Seller”), and ROCHESTER DRUG COOPERATIVE,
      INC., a New York corporation having its principal place of business in
      Rochester, New York (“Buyer”).

     

    WHEREAS,
      among other things, Seller is engaged in, from its facility at 209 Green Ridge
      Road, New Castle, Pennsylvania (the “Facility”), the wholesale pharmaceutical
      products distribution business (the “Business”);

     

    WHEREAS,
      Buyer desires to purchase from Seller certain of the assets of the Business,
      and
      assume certain of Seller’s obligations and liabilities associated with the
      Business, and Seller desires to sell such assets to Buyer and have Buyer assume
      such obligations and liabilities, all in accordance with the terms and
      conditions of this Agreement.

     

    NOW,
      THEREFORE, in consideration of the foregoing premises and the mutual covenants,
      representations, warranties and agreements contained herein, and other good
      and
      valuable consideration, the receipt and sufficiency of which are hereby
      acknowledged by the parties, the parties hereby agree as follows:

     

    1. Certain
      Definitions.

     

    For
      purposes of this Agreement, the following terms shall have the following
      meanings:

     

    1.1 “Accounts
      Receivable” all trade accounts receivable of Seller relating to the Business and
      existing on the Closing Date.

    

    1.2 “Action”
      shall mean any action, claim, dispute, proceeding, suit or investigation of
      any
      nature whatsoever, or any appeal therefrom.

    

    1.3 “Approval”
      shall mean any approval, authorization, consent, certificate, license,
      qualification, franchise, concession, order, grant or permit of or by, or
      declaration, filing or registration with, any Governmental Authority or other
      Person.

    

    1.4 “Assets”
      shall have the meaning given to that term in Section 2.1.

    

    1.5 “Assigned
      Contracts” shall have the meaning given to that term in Section
      2.1(e).

    

    1.6 “Assumed
      Obligations” shall have the meaning given to that term in Section
      2.4.

    

    1.7 “Authorized
      Distribution Agreement” means all agreements between Seller and pharmaceutical
      product suppliers.

    

    1.8 “Business”
      shall have the meaning given to that term in the first Whereas clause
      hereof.

     

    
      
        
        

      

      
        -1-

        
          

        

      

      
        
        

      

    

     

    1.9 "Closing”
      shall have the meaning given to that term in Section 9.1.

     

    1.10 “Closing
      Date” shall have the meaning given to that term in Section 9.1.

     

    1.11 “Collection
      Period” shall have the meaning given to that term in Section
      10.5(a).

     

    1.12 “Customer
      Data” shall have the meaning given to that term in Section 2.1(c).

     

    1.13 “Customers”
      means those customers of Seller identified in the Customer Data.

     

    1.14 “Damages”
      shall mean any claim, loss, deficiency, Liability, fine, charge, assessment,
      penalty, reasonable cost or expense (including reasonable attorneys’ fees, costs
      and expenses) or other damage.

     

    1.15 “Disclosure
      Schedule” shall mean the disclosure schedules delivered by Seller to Buyer
      concurrently with the execution and delivery of this Agreement. Each matter
      set
      forth in the Disclosure Schedule (or any agreement, instrument or other
      documents specifically referenced in the Disclosure Schedule) shall be arranged
      in numbered paragraphs corresponding to the numbered sections of this Agreement
      and shall be deemed to qualify the specific numbered sections of this Agreement
      to which such sections of the Disclosure Schedule correspond (or to which they
      are cross-referenced).

     

    1.16 “Equipment”
      shall have the meaning given to that term in Section 2.1(a).

     

    1.17 “Excluded
      Assets” shall have the meaning given to that term in Section 2.2.

     

    1.18 “Facility”
      shall have the meaning set forth in the First Whereas clause.

     

    1.19 "Governmental
      Authority” shall mean any foreign, federal, state, local or other governmental,
      administrative or regulatory entity, authority, body, agency, court,
      instrumentality, tribunal or similar Person.

     

    1.20 "Holdback"
      shall have the meaning set forth in Section 3.2.

     

    1.21 “Knowledge”
      with respect to Seller shall mean the actual knowledge of an officer of
      Seller.

     

    1.22 “Landlord”
      shall have the meaning set forth in Section 2.6.

     

    1.23 “Laws”
      shall mean all ordinances, statutes, rules, regulations, codes, judgments,
      orders, injunctions, writs or decrees of any governmental or political
      subdivision, Governmental Authority or agency thereof, or any court or similar
      body established by any such governmental or political subdivision, Governmental
      Authority or agency thereof.

     

    1.24 “Lease
      Amendment” shall have the meaning set forth in Section 2.6.

     

    1.25 “Liability”
      shall mean any debt, liability, commitment or obligation of any kind, character
      or nature whatsoever, whether known or unknown, secured or unsecured, accrued,
      fixed, absolute or contingent, and whether due or to become due.

     

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

     

    1.26 “Lien”
      shall mean any lien, statutory lien, pledge, mortgage, security interest,
      charge, encumbrance, easement, right of way, restrictive covenant, claim,
      option, conditional sale contract or other title or interest retention agreement
      of any kind or nature whatsoever, including any lease, escrow, security or
      other
      deposit, right of redemption, chattel mortgage or collateral security
      arrangement.

     

    1.27 “Losses”
      shall have the meaning given to that term in Section 11.2.

     

    1.28 “Motor
      Vehicles” shall have the meaning given to that term in Section
      2.1(b).

     

    1.29 “Ordinary
      Course” shall mean any transaction that constitutes a normal day-to-day business
      activity of Seller in connection with the Business, conducted in a commercially
      reasonable and businesslike manner and consistent with Seller’s past
      practices.

     

    1.30 “Person”
      shall mean a corporation, association, general or limited partnership, limited
      liability company, limited liability partnership, organization, business, joint
      venture, individual, sole proprietorship, government or political subdivision
      thereof or a governmental agency.

     

    1.31 “Personal
      Property Leases” shall have the meaning given to that term in Section
      2.1(e).

     

    1.32 “Preliminary
      Customer Data” shall have the meaning given to that term in Section
      7.2(f).

     

    1.33 Real
      Property Lease” means that certain commercial lease of the Facility dated
      January 1, 2004, between Becan Development LLC, as landlord, and Seller, as
      tenant.

     

    1.34 Representative”
      with respect to any Person shall mean any employee, officer, director,
      stockholder, partner, accountant, attorney, investment banker, broker, finder,
      investor, contractor, subcontractor, consultant or other authorized agent or
      representative of such Person.

     

    1.35 “Sublease”
      shall have the meaning set forth in Section 2.6.

     

    1.36 "Tax”
      shall mean any foreign, federal, state or local income, gross receipts, license,
      severance, occupational, premium, environmental (including taxes under Code
      Section 59A), customs, duties, profits, disability, registration, alternative
      or
      add-on minimum, estimated, withholding, payroll, employment, unemployment
      insurance, social security (or similar), excise, sales, use, value-added,
      occupancy, franchise, real property, personal property, business, mercantile,
      windfall profits, capital stock, stamp, transfer, workmen’s compensation or
      other tax, fee or imposition of any kind whatsoever imposed by a Governmental
      Authority, including any interest, penalties, additions, assessments or deferred
      liability with respect thereto, whether disputed or not, and any Tax obligations
      arising as a result of a Person’s failure to qualify or become authorized to do
      business as a foreign corporation in any jurisdiction.

     

    1.37 "Transfer”
      shall mean transfer, sell, convey, assign or deliver.

     

    1.38 "Transfer
      Taxes” shall have the meaning given to that term in Section 2.3(c).

     

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

     

    2. Purchase
      and Sale.

     

    2.1. Purchase
      and Sale of Assets.

     

    On
      the
      terms of and subject to the conditions set forth in this Agreement and on the
      basis of the representations, warranties, covenants and agreements herein
      contained, at the Closing (as hereinafter defined), Seller agrees to Transfer
      to
      Buyer, and Buyer agrees to purchase from Seller and accept delivery of, all
      of
      Seller’s right, title and interest in and to the following assets, which are
      used in connection with the Business, other than the Excluded Assets (as
      hereinafter defined), all as the same shall exist as of the date hereof
      (collectively, the “Assets”):

     

    (a) all
      items
      of warehouse machinery, equipment and computer hardware owned by Seller in
      connection with the Business and located at the Facility (collectively, the
      “Equipment”), that are set forth on Schedule
      2.1(a);
      and

     

    (b) those
      motor vehicles owned by Seller and used in connection with the Business
      (collectively, the “Motor Vehicles”) that are set forth on Schedule
      2.1(b);
      and

     

    (c) those
      certain customer lists and related customer data now owned by Seller and used
      in
      connection with the Business, that (subject to Section 7.1(e) below) are
      specifically set forth on Schedule
      2.1(c)
      (collectively, the “Customer Data”); and

     

    (d) all
      rights of Seller under the leases of personal property that are set forth on
      Schedule
      2.1(d)
      (the
“Personal Property Leases”); and

     

    (e) all
      of
      Seller’s right, title and interest in and to the non-pharmaceutical supply
      contracts and customer purchase orders of the Business for which goods have
      yet
      to be shipped on the Closing Date relating to the Business, all of which is
      set
      forth on Schedule
      2.1(e) (the “Assigned Contracts”);
      and

     

    (f) all
      office equipment, office supplies and office furniture used in connection with
      the Business and located at the Facility; and

     

    (g) all
      rights of Seller relating to the Business with respect to leasehold improvements
      and fixtures located at the Facility.

     

    2.2. Excluded
      Assets.

     

    Seller
      is
      not selling, and Buyer is not purchasing and shall not acquire any right, title
      or interest of Seller in or to, any assets of Seller other than the Assets.
      The
      assets of Seller relating to the Business which will not be transferred to
      Buyer
      shall include, without limitation, the following assets of Seller (the “Excluded
      Assets”):

     

    (a) all
      cash
      and cash equivalents in hand, in banks or in transit for the account of Seller
      and all marketable securities of Seller;

     

    (b) Accounts
      Receivable;

     

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

     

    (c) all
      inventory;

     

    (d) all
      insurance policies maintained by Seller in respect of the Business;

     

    (e) any
      prepaid items relating to insurance (casualty, employees and workers
      compensation), bid and performance bonds and letters of credit other than those
      related to Personal Property Leases, Assigned Contracts, and Transferred
      Approvals;

     

    (f) Authorized
      Distribution Agreements;

     

    (g) any
      stock
      or other equity interests in a subsidiary or other Person owned by
      Seller;

     

    (h) vendor
      credits and chargebacks in favor of Seller;

     

    (i) trademarks
      and tradenames and other intellectual property owned by Seller; and

     

    (j) certain
      leasehold improvements and other fixtures and improvements to the Facility
      which
      are owned by the landlord under the Real Property Lease.

     

    2.3. Method
      of Conveyance.

     

    (a) Against
      payment of the Purchase Price described in Section 3.2, the Transfer
      by
      Seller of the Assets to Buyer in accordance with Section 2.1 shall be effected
      on the Closing Date by Seller’s execution and delivery of one or more bills of
      sale, assignments, and other instruments of conveyance and transfer, all of
      which are identified in Section 8.

     

    (b) At
      the
      Closing, Seller shall Transfer to Buyer good and valid title to, and possession
      of, all Assets, free and clear of any and all Liens, and subject only to the
      Assumed Obligations.

     

    (c) Buyer
      shall be responsible for and shall pay all transfer taxes, sales and use taxes,
      and documentary stamps (collectively, “Transfer Taxes”), payable by reason of
      the purchase and sale of the Assets hereunder or Buyer’s assumption of the
      Assumed Obligations hereunder.

     

    2.4 Assumed
      Obligations.

     

    At
      the
      Closing, Buyer shall, and Seller shall cause Buyer to, assume only all of the
      Liabilities and obligations of Seller relating to periods from and after the
      Closing Date (the “Assumed Obligations”) under:

     

    (a) the
      Personal Property Leases and Assigned Contracts, which are specifically
      identified in Schedules
      2.1(d) and (e),
      and are
      assigned to Buyer at Closing.

     

    2.5. Excluded
      Obligations.

     

    Other
      than the Assumed Obligations, Buyer shall not assume or be responsible for
      any
      Liabilities, including any obligations, debts or commitments, of
      Seller.

     

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

     

    2.6. Lease
      Amendment; Sublease.

     

    Seller
      and Becan Development, LLC (the “Landlord”) have, in anticipation of the
      Closing, entered into a written amendment to the Real Property Lease in the
      form
      attached hereto as Exhibit
      A
      providing, among other matters, for an initial term of five (5) years with
      two
      (2) successive five-year renewal options at Buyer’s option and a purchase option
      in favor of Buyer, exercisable not before the expiration of the third year
      of
      the initial five year term, at the property’s fair market value at the time of
      exercise of the option (the “Lease Amendment”). As of the Closing Date, Seller
      and Buyer shall enter into a written sublease of the Facility pursuant to which
      Seller shall sublease the Facility to Buyer under the terms of the Real Property
      Lease, so amended by the Lease Amendment (the “Sublease”), which Sublease shall
      be substantially in the form set forth on Exhibit
      B.

     

    3. Purchase
      Price.

     

    3.1 Purchase
      Price.

     

    The
      aggregate consideration to be paid by Buyer to Seller for the Assets to be
      Transferred by Seller to Buyer pursuant to this Agreement, shall be the sum
      of
      (i) SIX HUNDRED FIFTY-FIVE THOUSAND AND NO/100 U.S. DOLLARS ($655,000),
plus
      (ii)
      assumption of the Assumed Obligations, subject to the Holdback (the “Purchase
      Price”). As of the date hereof, Buyer is depositing with Seller the sum of Two
      Hundred Fifty Thousand US Dollars to be held pending, and which shall be
      credited against payment of the Purchase Price at, the Closing (the "Deposit").
      To the extent that the Closing shall not occur within the period set forth
      in
      Section 9.1 or this Agreement is terminated pursuant to Section 12.15, Seller
      shall return the Deposit to Buyer within three (3) business days following
      Buyer's demand. 

     

    3.2. Payment
      of Purchase Price.

     

    The
      Purchase Price shall be calculated and paid in the following
      manner:

     

    At
      the
      Closing, Buyer shall pay to Seller, by wire transfer of immediately available
      funds to an account identified in writing by Seller to Buyer, a sum equal to
      $405,000, against which the Deposit shall be credited as having been paid to
      Seller. At the Closing, Buyer shall be entitled to withhold from the Purchase
      Price a sum equal to $250,000 (the "Holdback") until the satisfaction of the
      requirements and consummation of the transactions contemplated by Section
      10.6.

     

    4. Allocation
      of Purchase Price.

     

    The
      Purchase Price shall be allocated among the Assets being purchased hereunder
      in
      accordance with Section 1060 of the Internal Revenue Code of 1986, as amended
      (the “Code”), and the regulations promulgated thereunder. Such allocation shall
      be set forth on Exhibit C
      hereto.

     

    5. Representations
      and Warranties of Seller.

     

    Seller
      hereby represents and warrants to Buyer as follows:

     

    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

    

     

    5.1. Corporate
      Organization.

     

    Seller
      is
      a corporation duly organized, validly existing and in good standing under the
      Laws of the State of Ohio. Seller has requisite corporate power and authority
      to
      own the Assets and carry on the Business as the same is now being
      conducted.

     

    5.2. Authorization.

     

    Seller
      has all requisite corporate power and authority to execute, deliver and perform
      its obligations under this Agreement and to carry out the transactions
      contemplated hereby. Seller has taken all necessary corporate action required
      by
      Law, Seller’s Certificate of Incorporation, as amended, By-Laws, as amended, or
      otherwise to be taken by Seller to authorize Seller’s execution and delivery of
      this Agreement and the consummation of the transactions contemplated hereby.
      This Agreement has been, and the instruments of transfer, assignment and
      conveyance, and other agreements, referred to in Section 8 will be, duly and
      validly executed and delivered by Seller, and this Agreement constitutes, and
      such instruments and other agreements will constitute, legal, valid and binding
      obligations of Seller enforceable against Seller in accordance with their terms,
      except that such enforcement may be subject to: (a)
      bankruptcy, insolvency, reorganization, moratorium or other similar Laws now
      or
      hereafter in effect relating to creditor’s rights, and (b)
      general
      principles of equity.

     

    5.3. No
      Violation.

     

    Except
      as
      set forth in Section 5.3
      of the Disclosure Schedule,
      neither
      the execution and delivery of this Agreement by Seller nor the consummation
      by
      Seller of the transactions contemplated hereby will violate any provision of
      the
      Certificate of Incorporation, as amended, or the By-Laws, as amended, of Seller,
      or be in conflict with, or constitute a material default under, or result in
      the
      termination or invalidity of, or accelerate the performance required by, or
      cause the acceleration of the maturity of any of the Assumed Obligations, or
      result in the creation or imposition of any Lien upon any of the Assets, whether
      under any agreement or commitment to be assumed by Buyer pursuant to this
      Agreement to which Seller is a party or by which Seller is bound or to which
      any
      of the Assets is subject or otherwise, or violate any Law of any Governmental
      Authority applicable to any of the Assets, or to the best of Seller’s knowledge,
      Seller.

     

    5.4. Brokers
      and Finders.

     

    Except
      as
      set forth in Section
      5.4 of the Disclosure Schedule,
      no
      Person has been authorized by Seller, or by anyone acting on behalf of Seller,
      or any of its officers, directors, employees or trustees, to act as a broker,
      finder or in any other similar capacity in connection with the transactions
      contemplated by this Agreement in such a manner as to give rise to any valid
      claim against Buyer or Seller for any broker’s or finder’s fee or commission or
      similar type of compensation and Seller shall be solely responsible for paying
      any broker’s, or finder’s fee or commission or similar type of compensation
      arising out of the matters described in Section
      5.4 of the Disclosure Schedule.

     

    
      
        
        

      

      
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    5.5. Condition
      of Tangible Assets.

     

    Except
      as
      set forth in Section
      5.5 of the Disclosure Schedule,
      the
      Assets consisting of tangible personal property are in good working condition
      and good repair, ordinary wear and tear excepted, are suitable for immediate
      use
      in the Ordinary Course of Business and are free from latent and patent defects.
      No such item of tangible personal property is in need of repair or replacement
      other than as part of a routine maintenance in the Ordinary Course of Business.
      All Assets consisting of tangible personal property used in Seller’s Business
      are in the possession of Seller.

     

    5.6. [Intentionally
      Omitted].

     

    5.7. Absence
      of Specified Changes.

     

    Except
      as
      set forth in Section 5.7
      of the Disclosure Schedule,
      since
      December 2, 2005, there has not been (i) any material adverse change in the
      Business; (ii) any damage or destruction or property loss whether or not covered
      by insurance, materially and adversely affecting the Business or any of the
      Assets; (iii) any sale or other disposition of any of the Assets other than
      sales or dispositions made in the Ordinary Course; (iv) any entry by Seller
      into
      any material commitment or transaction with respect to the Business other than
      those commitments and transactions entered into in the Ordinary Course, or
      those
      contemplated by this Agreement; (v) any release or waiver of any material right
      or claim of Seller with respect to any of the Assets or the Business, (vi)
      any
      mortgage, pledge or imposition of a Lien or other encumbrance on any of the
      Assets. 

     

    5.8. Title
      to Assets; Encumbrances. 

     

    Except
      for the Personal Property Leases and as set forth on Section
      5.8 of the Disclosure Schedule,
      Seller
      has good and marketable title to all of the Assets, free and clear of any
      mortgage, pledge, Lien, security interest, or other encumbrance. Seller has
      a
      valid leasehold interest in the Real Property Lease, except for defects in
      title, easements, restrictive covenants and similar encumbrances that
      individually or in the aggregate have not and would not reasonably be expected
      to interfere in any material respect with the use or occupancy thereof or any
      portion thereof in the operation of the Seller’s Business as currently conducted
      thereon.

     

    5.9. Personal
      Property Leases.

     

    (a) Except
      as
      set forth in Section
      5.9 of the Disclosure Schedule,
      (i)
      each of the Personal Property Leases is valid, binding and enforceable in
      accordance with its terms, and is in full force and effect; and (ii) there
      are
      no existing material defaults on the part of Seller or, to the best of Seller’s
      knowledge, any other party under any Personal Property Lease.

     

    (b) Seller’s
      interest in each of the Personal Property Leases is free and clear of all Liens
      or other encumbrances.

     

    5.10. Contracts
      and Commitments.

     

    Except
      as
      described on or referred to in Section 5.10
      of the Disclosure Schedule,

     

    
      
        
        

      

      
        -8-

        
          

        

      

      
        
        

      

    

     

    (a) Seller
      is
      and has been in compliance with all applicable terms and requirements of each
      Assigned Contract, 

     

    (b) to
      the
      knowledge of Seller, each other Person that has or had any obligation or
      liability under any Assigned Contract is, and at all times during the term(s)
      of
      such Assigned Contracts, has been, in full compliance with all applicable terms
      and requirements of such contract,

     

    (c)
       no
      event
      has occurred or circumstance exists that (with or without notice or lapse of
      time) may contravene, conflict with or result in a breach of, or give Seller
      or
      another Person the right to declare a default or exercise any remedy under,
      or
      to accelerate the maturity or performance of, or payment under, or to cancel,
      terminate or modify, any Assigned Contract,

     

    (d) no
      event
      has occurred or circumstance exists under or by virtue of any Assigned Contract
      that (with or without notice or lapse of time) would cause the creation of
      any
      Lien affecting any of the Assets.

     

    5.11. Litigation,
      Judgments and Decrees.

     

    (a) Except
      as
      set forth in Section 5.11
      of the Disclosure Schedule
      and
      except for workers compensation claims in the Ordinary Course, there are no
      Actions (including Actions with respect to products liability), at law or in
      equity or both, by or before any Governmental Authority or government or
      arbitration tribunal, board, bureau, authority or commission pending or, to
      the
      best of Seller’s knowledge, threatened against Seller involving the Customers,
      any of the Assets or any of the Assumed Obligations, or that question or
      challenge the validity of this Agreement or any action taken or to be taken
      by
      Seller pursuant to this Agreement or in connection with the transactions
      contemplated hereby.

     

    5.12. Consents
      and Approvals of Governmental Authorities and Others.

     

    Except
      as
      set forth in Section 5.12
      of the Disclosure Schedule,
      no
      Approval of, or notice to, any Governmental Authority or any other Person is
      required of Seller in connection with the execution, delivery and performance
      by
      Seller of this Agreement or the consummation by Seller of the transactions
      contemplated hereby.

     

    5.13 Compliance
      With Law; Necessary Authorizations.

     

    (a) In
      connection with the Business, Seller has, except as set forth in Section 5.13(a)
      of the Disclosure Schedule,
      in all
      material respects duly complied and is presently in all material respects duly
      complying with all applicable Laws, Approvals, judgments and decrees of all
      federal, state, local Governmental
      Authorities.

     

    (b) Seller
      has duly obtained all material Approvals necessary for the conduct of the
      Business as conducted on or before the date hereof; each of the foregoing is
      in
      full force and effect.

     

    
      
        
        

      

      
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    5.14 Relationships
      with Customers.

     

    The
      relationships of the Seller with each of its Customers are good commercial
      working relationships, and except as set forth on Section
      5.14 of the Disclosure Schedule,
      none of
      the Customers has notified Seller that it has cancelled or otherwise terminated,
      or threatened in writing to cancel or otherwise terminate, its relationship
      with
      the Seller within the last six (6) months. Section
      5.14 of the Disclosure Schedule
      sets
      forth the names of the twenty (20) largest Customers of Seller based on the
      net
      dollar value of purchases by such customers during the preceding twelve (12)
      months. Seller has not received any written notice that any such customer may
      cancel or otherwise materially and adversely modify its relationship with Seller
      or limit its purchases from Seller, either as a result of the transactions
      contemplated hereby or otherwise.

     

    6. Representations
      and Warranties of Buyer.

     

    Buyer
      represents and warrants to Seller as follows:

     

    6.1. Organization.

     

    Buyer
      is
      a corporation duly organized, validly existing and in good standing under the
      Laws of the State of New York. Buyer has full power and authority to carry
      on
      its business as it is now being conducted and to own, lease and operate its
      properties and assets as and in the places where such business is now conducted
      and where such properties and assets are now owned, leased or
      operated.

     

    6.2. Authorization.

     

    Buyer
      has
      all requisite power and authority to execute, deliver and perform its
      obligations under this Agreement and to carry out the transactions contemplated
      hereby. Buyer has taken all necessary action required by Law, Buyer’s
      Certificate of Incorporation or Bylaws or otherwise to be taken by Buyer to
      authorize Buyer’s execution and delivery of this Agreement and the consummation
      of the transactions contemplated hereby. This Agreement has been duly and
      validly executed and delivered by Buyer and constitutes a valid and binding
      agreement of and upon Buyer enforceable against Buyer in accordance with its
      terms, except that such enforcement may be subject to: (a)
      bankruptcy, insolvency, reorganization, moratorium or other similar Laws now
      or
      hereafter in effect relating to creditor’s rights, and (b)
      general
      principles of equity.

     

    6.3. No
      Violation.

     

    Neither
      the execution and delivery of this Agreement by Buyer nor the consummation
      by
      Buyer of the transactions contemplated hereby will violate any provision of
      the
      Certificate of Incorporation or Bylaws of Buyer, or be in conflict with, or
      give
      rise to a right to accelerate any obligation under, any agreement or instrument
      to which Buyer is a party or by which its assets are bound or affected, or
      violate any Law of any Governmental Authority applicable to Buyer.

     

    
      
        
        

      

      
        -10-

        
          

        

      

      
        
        

      

    

     

    6.4. Brokers
      and Finders.

     

    No
      Person
      has been authorized by Buyer, or by anyone acting on behalf of Buyer, or any
      of
      its officers, partners, employees or trustees, to act as a broker, finder or
      in
      any other similar capacity in connection with the transactions contemplated
      by
      this Agreement in such a manner as to give rise to any valid claim against
      Seller or Buyer for any broker’s or finder’s fee or commission or similar type
      of compensation and Buyer shall be solely responsible for paying any broker’s,
      or finder’s fee or commission or similar type of compensation arising out of the
      matters described in.

     

    6.5. Consents
      and Approvals of Governmental Authorities and Others.

     

    No
      Approval of, or notice to, any Governmental Authority or any other Person is
      required of Buyer in connection with the execution, delivery and performance
      by
      Buyer of this Agreement or the consummation by Buyer of the transactions
      contemplated hereby.

     

    7. Covenants
      Prior to Closing.

     

    7.1 Seller’s
      Covenants.

     

    Seller
      hereby covenants that, except as otherwise consented to in writing by Buyer,
      from and after the date hereof until the Closing or the earlier termination
      of
      this Agreement:

     

    (a) Conduct
      of Business.
      Seller
      shall carry on the Business in the Ordinary Course and in the same manner as
      heretofore conducted; provided,
      however, that commencing as of the start of business on Tuesday, December 27,
      2005, Seller shall permit Buyer to visit the Facility and conduct interviews
      of
      Seller’s employees in contemplation of Buyer’s potential hiring of such
      employees following the Closing and in accordance with Section 7.2(e). Seller
      will use commercially reasonable efforts consistent with past practice to
      preserve the Business and continue business relationships with suppliers,
      customers and others having business relations with Seller in connection with
      the operation of the Business.

     

    (b) Cooperation.
      Seller
      shall use its best efforts to cause the transactions contemplated by this
      Agreement to be consummated as promptly as practicable in accordance with the
      terms and conditions hereof. Seller shall use its best efforts to prepare for
      and cause the transition, following the Closing, of existing distribution
      relationships with Customers (including the physical transition of Customer
      Data). Between the date of this Agreement and the Closing Date, Seller will
      (a)
      afford Buyer and its Representatives (collectively, “Buyer’s Advisors”) full and
      free access to the Facility and the Customer Date and reasonable access to
      Seller’s personnel, properties, contracts, books and records and other documents
      and data, in each case only to the extent related to the Assets and Assumed
      Obligations, and (b) furnish Buyer and Buyer’s Advisors with copies of all such
      contracts, books and records, and other existing documents and data related
      to
      the Assets and Assumed Obligations as Buyer may reasonably
      request.

     

    (c) No
      Negotiations.
      Neither
      Seller nor any of its Representatives, shall, directly or indirectly, in any
      way
      contact, initiate, enter into or conduct any discussions or negotiations, or
      enter into any agreements, whether written or oral, with any Person with respect
      to the sale of all or any portion of the Assets other than the sale of inventory
      in the Ordinary Course without Buyer’s consent.

     

    
      
        
        

      

      
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    (d) Confidentiality.
      Seller
      agrees to hold confidential and not to disclose to any Person (i) that
      discussions have taken place regarding the sale of the Business or that this
      Agreement has been entered into, (ii) any proprietary information received
      from
      Buyer, or made available to Seller and its representatives by Buyer, relating
      to
      Buyer, the Business or the Assets, including, without limitation, all financial,
      business and operating information in whatever form or medium as such may exist
      (“Buyer Proprietary Information”). All such Buyer Proprietary Information shall
      be used by Seller only for the purpose of evaluating the transaction
      contemplated by this Agreement. In the event the transaction contemplated by
      this Agreement shall not occur for any reason, Seller will promptly upon request
      of Buyer return to Buyer all Buyer Proprietary Information as may be in the
      possession or control of Seller or its Representatives, and shall continue
      to be
      bound by the covenant of confidentiality set forth in this Section
      7.1(d).

     

    (e) Customer
      Information.
      Seller
      agrees that as of the date hereof it shall provide Buyer, in the form of
Schedule
      2.1(c),
      with an
      abridged list of Customers, listing only the name and address of each Customer
      (the “Preliminary Customer Data”), which list shall be supplemented as of the
      Closing by Seller’s delivery of all the Customer Data. Seller is providing the
      Preliminary Customer Data to Buyer on the date hereof in reliance on Buyer’s
      covenant to use such Preliminary Customer Data solely for purposes of assisting
      in the post-Closing transition in accordance with Section 7.2(f) and Buyer’s
      covenant to consummate the transactions proposed by this Agreement on the terms
      and conditions set forth herein. 

     

    7.2. Buyer’s
      Covenants.

     

    Buyer
      hereby covenants that, except as otherwise consented to in writing by Seller,
      from and after the date hereof until the Closing or the earlier termination
      of
      this Agreement:

     

    (a) Cooperation.
      Buyer
      shall use its best efforts to cause the transactions contemplated by this
      Agreement to be consummated as promptly as practicable in accordance with the
      terms and conditions hereof.

     

    (b) Disclosure
      Regarding Buyer.
      Buyer
      shall, upon reasonable request, provide Seller with such information and
      documentation concerning Buyer as may be reasonably necessary for Seller to
      verify performance of and compliance with the representations, warranties,
      covenants and conditions of Buyer contained herein.

     

    (c) Applications.
      Buyer
      shall promptly apply for, and shall use Buyer’s best efforts to obtain, all
      Approvals necessary for Buyer to consummate the transactions contemplated by
      this Agreement.

     

    (d) Confidentiality.
      Buyer
      agrees to hold confidential and not to disclose to any Person (i) that
      discussions have taken place regarding the sale of the Business or that this
      Agreement has been entered into, (ii) any proprietary information received
      from
      Seller, or made available to Buyer and its representatives by Seller, relating
      to Seller, the Business or the Assets, including, without limitation, all
      financial, business and operating information (including, but not limited to,
      any information provided or obtained during the Buyer’s due diligence
      investigation of Seller and the Business, or otherwise obtained pursuant to
      Section 7.4 below) in whatever form or medium as such may exist (“Seller
      Proprietary Information”). All such Seller Proprietary Information shall be used
      by Buyer only for the purpose of evaluating the transaction contemplated by
      this
      Agreement. In the event the transaction contemplated by this Agreement shall
      not
      occur for any reason, Buyer will promptly upon request of Seller return to
      Seller all Seller Proprietary Information as may be in the possession or control
      of Buyer or its Representatives, and shall continue to be bound by the covenant
      of confidentiality set forth in this Section 7.2(d).

     

    
      
        
        

      

      
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    (e) Interview
      of Seller Employees.
      Notwithstanding the permission granted by Seller for Buyer to conduct interviews
      of Seller’s employees at the Facility commencing as of the start of business on
      Tuesday, December 27, 2005, in no event shall Buyer extend an offer of
      employment to any such employee of Seller, or accept any offer from any such
      employee to be employed by Buyer, until the Closing shall have occurred.

     

    (f) Limited
      Use of Preliminary Customer Data.
      Buyer
      agrees to use the Preliminary Customer Data solely for purposes of assisting
      in
      the transition of the Business to Seller following the Closing, including,
      but
      not limited to, establishing routing information for the Customers for use
      following the Closing. Buyer covenants that prior to the Closing it shall not,
      without Seller’s prior written consent, use the Preliminary Customer Data for
      any purpose competitive with the Business of Seller, including, but not limited
      to, communicating directly or indirectly with the Customers using any method
      or
      medium. Buyer acknowledges that the Preliminary Customer Data is proprietary
      information of Seller and is of a special, unique, unusual and extraordinary
      character, which gives it a peculiar value, and that a breach by Buyer of the
      provisions of this Section 7.2(f) cannot reasonably or adequately be compensated
      in damages in an action at law; and such a breach of the provisions contained
      in
      this Section 7.2(f) shall cause Seller irreparable injury and damage. Buyer
      acknowledges that any use of the Preliminary Customer Data in violation of
      this
      Section 7.2(f) would be extremely detrimental to Seller. By reason thereof,
      Buyer agrees that Seller shall be entitled, in addition to any other remedies
      it
      may have under this Agreement or otherwise, to preliminary and permanent
      injunctive and other equitable relief to prevent a breach or curtail any breach
      or threatened breach of this Agreement by Buyer; provided, however, that no
      specification in this Agreement of a specific legal or equitable remedy shall
      be
      construed as a waiver or prohibition against the pursuing of other legal or
      equitable remedies in the event of such a breach.

     

    7.3. Risk
      of Loss.

     

    Prior
      to
      the Closing, the risk of loss or damage to, or destruction of, any or all of
      the
      Business or any or all of the Assets, other than as a result of Buyer’s acts or
      gross negligence, shall remain with Seller.

     

    
      
        
        

      

      
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    8. Conditions
      to Closing.

     

    8.1. Conditions
      to Seller’s Obligations to Close.

     

    The
      obligation of Seller to consummate and effect the sale of the Assets pursuant
      to
      this Agreement shall be subject to the following conditions, unless waived
      by
      Seller:

     

    (a) Buyer
      shall have performed in all material respects all agreements, acts and
      covenants, and shall have satisfied in all material respects all conditions
      and
      obligations, required by this Agreement to be performed or satisfied by Buyer
      at
      or prior to the Closing, including making the deliveries required by Section
      9.3.

     

    (b) All
      of
      the representations and warranties of Buyer herein shall have been true and
      correct in all material respects on and as of the Closing Date as though made
      on, as of, and with reference to such date and Seller shall have received a
      certificate of Buyer dated the Closing Date to such effect signed by a duly
      authorized representative of Buyer.

     

    (c) All
      Approvals required to be obtained by Buyer in connection with the sale of the
      Assets, including all clearances from all Governmental Authorities and any
      required approvals from Seller’s lender(s), shall have been obtained and will
      have been furnished to Buyer prior to the Closing.

     

    (d) Buyer
      shall execute and deliver the Sublease.

     

    8.2. Conditions
      to Buyer’s Obligation to Close.

     

    The
      obligation of Buyer to consummate and effect the purchase of the Assets pursuant
      to this Agreement shall be subject to the following conditions, unless waived
      by
      Buyer:

     

    (a) Seller
      shall have performed in all material respects all agreements, acts and
      covenants, and shall have satisfied, in all material respects, all conditions
      and obligations, required by this Agreement to be performed or satisfied by
      Seller at or prior to the Closing, including making the deliveries required
      by
      Section 9.2.

     

    (b) All
      representations and warranties of Seller herein that are not qualified by
      reference to materiality shall have been true and correct in all material
      respects on and as of the Closing Date as though made on, as of and with
      reference to such date and all representations and warranties of Seller herein
      that are qualified by reference to materiality shall have been true and correct
      on and as of the Closing Date as though made on, as of and with reference to
      such date and Buyer shall have received a certificate of Seller dated the
      Closing Date to such effect signed by a duly authorized senior officer of
      Seller.

     

    (c) All
      Approvals required to be obtained by Seller in connection with the sale of
      the
      Assets, including all clearances from all Governmental Authorities, shall have
      been obtained.

     

    (d) Seller
      shall have executed and delivered to Buyer all documents necessary to convey
      effectively title to the Assets to Buyer as contemplated by this
      Agreement.

     

    
      
        
        

      

      
        -14-

        
          

        

      

      
        
        

      

    

     

    (e) All
      liens, encumbrances, claims against title, mortgages, and security interests
      of
      any type shall have been removed on all Assets.

     

    (f) Seller
      shall execute and deliver the Sublease.

     

    9. Closing.

     

    9.1. Closing
      and Closing Date.

     

    The
      delivery of title to the Assets and payment of the consideration in the manner
      contemplated by this Agreement (the “Closing”) shall take place as of 10:00 a.m.
      EST on December 27, 2005; or at such other time and date as may be mutually
      agreed upon by the parties, but in no event later than fifteen (15) days after
      the date hereof (the “Closing Date”), at the such other place(s) as may be
      mutually agreed upon by the parties.

     

    9.2. Seller’s
      Closing Documents.

     

    At
      the
      Closing, Seller will deliver to Buyer, in form and substance reasonably
      satisfactory to Buyer, (x) all consents and certificates required and obtained
      prior to the Closing under the Assigned Contracts; and (y) appropriate documents
      to effect or evidence the sale, conveyance, assignment and transfer to Buyer
      of
      the Assets as contemplated hereby and necessary to place Buyer, its officers,
      agents and employees in full possession and enjoyment of all Assets as
      contemplated hereby, including the following:

     

    (a) a
      General
      Assignment and Bill of Sale, in the form attached hereto as Exhibit D.

     

    (b) duly
      issued and valid titles to the Motor Vehicles, duly transferred to
      Buyer.

     

    (c) copies
      of
      consents of the board of directors of Seller authorizing the execution and
      delivery of, and performance of Seller’s obligations under, this Agreement,
      certified by the Secretary or an Assistant Secretary of Seller.

     

    (d) evidence
      of any Approval of any Governmental Authority or any other Person necessary
      in
      connection with this Agreement;

     

    (e) Such
      other documents as Buyer shall reasonably request prior to the
      Closing.

     

    9.3. Buyer’s
      Closing Documents.

     

    At
      the
      Closing, Buyer will:

     

    (a) Deliver
      to Seller the consideration described under Section 3. 

     

    (b) Duly
      and
      validly execute and deliver an Assumption Agreement, in the form attached hereto
      as Exhibit E,
      under
      which Buyer shall undertake to pay and fully discharge all Assumed
      Obligations.

     

    (c) Furnish
      to Seller a copy of resolutions of Buyer’s board of directors authorizing the
      execution and delivery, and performance of each of Buyer’s obligations under
      this Agreement and copies of the Certificate of Incorporation and bylaws of
      Buyer as in effect on the Closing Date, certified by the Secretary of
      Buyer.

     

    
      
        
        

      

      
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    (d) such
      other documents as Seller shall reasonably request.

     

    10. Post-Closing
      Covenants.

     

    10.1. Consummation
      of Transactions: Further Assurances.

     

    (a) Subject
      to the other provisions of this Agreement, each of the parties agrees to use
      its
      reasonable best efforts to bring about the satisfaction of the conditions
      required to be performed, fulfilled or complied with by it hereunder and to
      take
      or cause to be taken, all reasonable actions, and to do, or cause to be done,
      all reasonable things necessary, proper or advisable under applicable Laws
      and
      regulations to consummate and make effective the transactions contemplated
      by
      this Agreement as expeditiously as practicable.

     

    (b) In
      case
      at any time after the Closing any further action is reasonably necessary or
      desirable to carry out the purposes of this Agreement, the appropriate party
      will take all such reasonable actions, including the execution and delivery
      of
      such further instruments and documents as may be reasonably requested by the
      other party or parties for such purposes or otherwise, to complete or perfect
      the transactions contemplated hereby. After the Closing, each of Buyer and
      Seller shall cooperate fully with the other and shall make available to the
      other and to any taxing authority all information, records or documents in
      its
      possession which are reasonably requested in connection with the preparation
      of
      any tax returns or in connection with any tax Liability of Seller for any period
      prior to or following the Closing, and otherwise shall cooperate in connection
      with all matters, including litigation and personnel matters, involved in the
      transfer of the Assets from Seller to Buyer.

     

    (c) Buyer
      and
      Seller shall cooperate with each other in filing any necessary applications,
      reports or other documents with any Governmental Authorities (including federal,
      state or local taxing authorities as to the allocation of the Purchase Price
      to
      the Assets) having jurisdiction with respect to the transactions contemplated
      by
      this Agreement and in seeking any necessary consultation with, and favorable
      action by, any such Governmental Authorities. Additionally, Seller will provide
      to Buyer the use of, or at Buyer’s reasonable discretion will itself make use
      of, Seller’s controlled drug distribution license from the U.S. Drug Enforcement
      Agency with respect to the Facility until such time as Buyer is able to obtain
      such license with respect to the Facility.

     

    10.2. Payments
      Due to Other Party.

     

    Seller
      and Buyer agree that if subsequent to the Closing Date either of them shall
      receive any payment due to the other, each shall promptly remit the same to
      the
      other.

     

    10.3. Post-Closing
      Access.

     

    Buyer
      shall give Seller and its authorized representatives such reasonable access,
      during normal business hours and upon prior notice, to the records and other
      written information regarding the Business that Buyer purchased as part of
      the
      Assets, as Seller may reasonably request. Buyer shall store such Records for
      at
      least three (3) years after the Closing Date, and shall notify Seller prior
      to
      destruction thereof so that Seller may take possession of such items at Seller’s
      sole cost and expense. 

     

    
      
        
        

      

      
        -16-

        
          

        

      

      
        
        

      

    

     

    10.4. Post-Closing
      Employment.

     

    Buyer
      shall have no obligation to offer employment to any employees of the Seller,
      but
      shall have the right to offer employment to any employees of Seller who are
      in
      engaged in the Business. Buyer shall have no liability, and Seller shall be
      solely responsible for, any and all severance pay, back pay, vacation pay or
      bonuses owed by Seller to any Seller employee hired by Buyer. In the event
      Buyer
      does offer employment to any employees of Seller who are engaged in the
      Business, Buyer shall promptly notify Seller of all such employees who accept
      an
      offer of employment from Buyer.

     

    Buyer
      shall have the obligation to offer and provide health care coverage to former
      Seller employees hired by Buyer in accordance with Buyer's existing plans,
      policies and practices for similarly situated employees of Buyer, including
      any
      obligations to provide health care continuation coverage under the provisions
      of
      Section 4980B of the Code (COBRA). Seller shall not have any obligation to
      offer
      or provide health care continuation coverage under COBRA to such employees
      hired
      by Buyer.

     

    10.5 Customer
      Orders from and after the Closing.
      

     

    Seller
      agrees that any orders received by Seller from Customers from and after the
      time
      of the Closing shall be considered orders placed with Buyer and Seller shall
      immediately provide Buyer with sufficient information as shall be necessary
      to
      permit Buyer to fill such orders and to invoice such Customers as if such orders
      had been placed directly with Buyer. Buyer agrees that it shall fill such orders
      and invoice such customers under such terms and conditions as Seller shall
      have
      offered to such ordering Customers. Any payments received by Seller with respect
      to orders placed as described in this Section 10.5 shall be subject to the
      provisions of Section 10.2.

     

    10.5 Buyer
      Post-Closing Covenants

     

    (a) Collection
      Efforts.
      Seller
      shall continue to collect the open Accounts Receivable from the date of Closing.
      Collection efforts shall include, but not be limited to, sending statements
      to
      customers, contacting customers, and directing payments to Seller’s lock boxes.
      For a period of one hundred eight (180) days following the Closing (the
“Collection Period”), Buyer shall cooperate with Seller in its efforts to
      collect, for and on behalf of Seller, the open Accounts Receivable with respect
      to customers Buyer continues to serve following the Closing. Any payments
      received by Buyer, on Seller’s behalf, in respect of outstanding Accounts
      Receivable from a customer shall be deemed paid in respect of the oldest
      outstanding invoice owing from such customer or as otherwise directed by such
      customer, and, further, any such payments shall be held by Buyer in trust for
      Seller and shall not be redirected by Buyer. During the Collection Period,
      Buyer’s collection team shall cooperate and work closely with Seller’s
      collection team to maximize collections. During the Collection Period, Buyer’s
      collection team shall provide a report no less than twice each month detailing
      collection progress of the Accounts Receivable. Buyer shall remit to Seller
      any
      funds received directly from a customer applicable to the open Accounts
      Receivable for which the Buyer has collected, less a 2.5% fee thereon, on the
      15th day of each calendar month (or the first prior business day if the 15th
      is
      not a business day) and the last business day or each calendar month. At the
      conclusion of the Collection Period, Buyer shall return to Seller any
      information regarding the remaining outstanding Accounts Receivable in Buyer’s
      possession and thereafter Seller may continue its own collection efforts with
      respect to such Accounts Receivable. During the Collection Period, and if so
      requested by Seller, Buyer shall permit Seller to occupy, on a month-to-month
      basis, one (1) to two (2) small offices at the Facility, at no cost to Seller,
      to facilitate collections by Seller on the Accounts Receivable.

     

    
      
        
        

      

      
        -17-

        
          

        

      

      
        
        

      

    

     

    (b) Short-Term
      Co-Occupation of Facility.
      For a
      period of fifteen (15) days following the Closing (or as may be extended by
      mutual agreement of Buyer and Seller), Buyer shall permit Seller to co-occupy
      the Facility for purposes of completing the transfer of Seller’s remaining
      Business operations to Seller’s corporate facilities and to allow for the
      distribution by Seller of any of its inventories, provided
      that
      such transition and distribution activities by Seller shall not unreasonably
      detract from Buyer’s ability to conduct its business operations at the Facility
      during such period. Seller shall use best efforts to remove all controlled
      substance inventory of Seller from the Facility promptly following Closing
      and
      in any event within such fifteen day period. Seller shall segregate its
      inventory from Buyer’s inventory. From and after such 15-day period, for an
      additional forty-five (45) days, Seller may store any remaining over-the-counter
      inventory separately within the Facility on such storage racking as Buyer shall
      direct. Additionally, to facilitate the removal and/or storage of Seller's
      remaining inventory, during such fifteen day period from and after the Closing
      Buyer shall, if requested by Seller, furnish to Seller the labor of such
      then-former employees of Seller as Buyer shall have employed,
      materials, tools, supplies and equipment reasonably necessary for such purposes.
      Seller shall pay to Buyer for such services at the then-applicable hourly rate
      for all such employees for each hour worked during such period.  

     

    10.6. Assignment
      and Assumption of Real Property Lease.

     

    To
      the
      extent that the Landlord obtains the consent of the Pennsylvania Industrial
      Development Authority and National City Bank to the Lease Amendment and the
      assignment and assumption of the Real Property Lease between Seller and Buyer
      not more than sixty (60) days from and after the Closing Date, Seller shall
      be
      obligated to assign the Real Property Lease, as amended by the Lease Amendment,
      to Buyer, and Buyer shall be obligated to assume the Real Property Lease from
      Seller (which assignment and assumption shall be evidenced by an Assignment
      and
      Assumption of Lease in substantially the form of Exhibit
      F)
      and
      concurrent with such assignment and assumption, Buyer shall pay the Holdback
      to
      Seller by wire transfer of immediately available funds to an account identified
      in writing by Seller to Buyer.

     

    11. Survival
      of Representations and Warranties; Indemnification.

     

    11.1. Survival
      of Representations and Warranties.

     

    All
      representations and warranties contained in this Agreement shall survive the
      Closing for a period of twelve (12) months after the Closing Date. 

     

    
      
        
        

      

      
        -18-

        
          

        

      

      
        
        

      

    

     

    11.2. Indemnification
      by Buyer.

     

    Buyer
      agrees to indemnify, defend and hold harmless Seller from, against and in
      respect of any or all losses, costs, obligations, liabilities, settlement
      payments, awards, judgments, fines, penalties, actions, damages, expenses,
      deficiencies or other charges (collectively “Losses”), asserted against, imposed
      upon or incurred by Seller, directly arising out of the breach of (i) any of
      the
      representations or warranties of Buyer made in or pursuant to this Agreement
      during the survival period set forth in Section 11.1, (ii) Buyer’s failure to
      perform any of the Assumed Obligations under Section 2.4 to the extent Seller’s
      liability therefore has not been satisfied, extinguished or substituted by
      Buyer
      or (iii) all Liabilities arising out of Buyer’s ownership and operation of the
      Assets following the Closing.

     

    11.3. Buyer’s
      Maximum Liability.

     

    Anything
      else contained in this Agreement to the contrary notwithstanding, the maximum
      liability of Buyer in the aggregate for all claims under this Section 11 shall
      not exceed One Hundred Thousand U.S. Dollars ($100,000).

     

    11.4. Indemnification
      by Seller.

     

    Seller
      agrees to indemnify, defend and hold harmless Buyer from, against and in respect
      of any and all Losses asserted against, imposed upon or incurred by Buyer,
      directly arising out of (i) the breach of any of the representations, warranties
      or covenants of Seller made in or pursuant to this Agreement during the survival
      period set forth in Section 11.1, (ii) all Excluded Obligations, or (iii) all
      Liabilities arising out of Seller’s ownership and operation of the Business
      prior to the Closing including, without limitation, with respect to Taxes,
      and
      (iv) any noncompliance with any bulk sale laws or fraudulent transfer law in
      respect of the contemplated transactions.

     

    11.5. Seller’s
      Maximum Liability.

     

    Anything
      else contained in this Agreement to the contrary notwithstanding, the maximum
      liability of Seller in the aggregate for all claims shall not exceed One Hundred
      Thousand U.S. Dollars ($100,000).

     

    11.6. Indemnification
      Procedure.

     

    (a) A
      party
      agreeing to indemnify against any matter pursuant to this Agreement is referred
      to herein as the “Indemnifying Party” and the other party claiming indemnity is
      referred to as the “Indemnified Party.”

     

    (b) Whenever
      any claim or threatened claim shall arise for which indemnification may be
      sought hereunder, the Indemnified Party shall notify the Indemnifying Party
      in
      writing promptly after the Indemnified Party has actual knowledge of such claims
      and the acts constituting the basis for such claim or threatened claim (the
      “Notice of Claim”), provided,
      however, that the omission so to notify the Indemnifying Party shall not relieve
      the Indemnifying Party from any Liability which the Indemnifying Party may
      have
      to the Indemnified Party otherwise than under this Section 11, or from any
      Liability under this Section 11 except to the extent and solely to the extent
      that the Indemnifying Party is prejudiced as a result of the failure to give
      such notice promptly. The Notice of Claim shall specify all material facts
      known
      to the Indemnified Party giving rise to such indemnification claim and the
      amount or an estimate of the amount of the Liability arising
      therefrom.

     

    
      
        
        

      

      
        -19-

        
          

        

      

      
        
        

      

    

     

    (c) If
      the
      facts giving rise to any such indemnification shall involve any actual,
      threatened or possible claim or demand by any Person against the Indemnified
      Party, the Indemnifying Party shall be entitled to assume control of the defense
      of any Action (without prejudice to the right of the Indemnified Party to
      participate at its expense through counsel of its choice) to contest, defend,
      compromise or settle (without imposing any Liability or obligation on the
      Indemnified Party) such claim at the Indemnifying Party’s expense and through
      counsel of its choice, so long as the Indemnifying Party gives written notice
      to
      the Indemnified Party within thirty (30) days after receipt of the Notice of
      Claim of its intention to do so. The Indemnified Party shall provide such
      cooperation and such access to its books, records and properties as the
      Indemnifying Party shall reasonably request with respect to such matter and
      the
      parties hereto agree to cooperate with each other in order to ensure the proper
      and adequate hereof.

     

    (d) No
      tax
      effect of any claim (such as that a loss or damage for which indemnification
      is
      sought may be tax deductible or Seller’s payment to Buyer therefor may be income
      to Buyer or vice versa) shall be given consideration in determining the
      Indemnified Party’s loss or damage in respect of which any claim for
      indemnification may be made under this Agreement.

     

    (e) In
      the
      event of payment by an Indemnifying Party to the Indemnified Party as
      contemplated in this Section 11 the Indemnifying Party shall be subrogated
      to and shall stand in the place of the Indemnified Party as to any events or
      circumstances in respect of which the Indemnified Party may have any right
      or
      claim against any third party relating to such event giving rise to the claim
      for which the Indemnifying Party shall have made payment to the Indemnified
      Party. The Indemnified Party shall cooperate with the Indemnifying Party in
      any
      reasonable manner in prosecuting any such subrogated right or
      claim.

     

    11.7. Remedies
      Exclusive.

     

    This
      Section 11 sets forth the exclusive and entire post-closing remedy of the
      Parties against one another in respect to any Losses or claims arising out
      of or
      related to the transactions contemplated by this Agreement and the limitations
      contained in this Section 11 apply to all claims, actions and Losses covered
      in
      substance by this Section 11, regardless of form, whether based on contract,
      tort, statute or any other theory or basis of liability, and whether of a legal,
      equitable or other nature. 

     

    11.8. Successors.

     

    The
      merger, consolidation, liquidation, dissolution or winding up of, or any similar
      transaction with respect to, the Indemnifying Party shall not affect in any
      manner the obligations of the Indemnifying Party pursuant to this
      Section 11 or any other term or provision of this Agreement, and the
      Indemnifying Party covenants and agrees to make adequate provision for its
      Liabilities and obligations hereunder in the event of any such
      transaction.

     

    
      
        
        

      

      
        -20-

        
          

        

      

      
        
        

      

    

     

    12. Miscellaneous
      Provisions.

     

    12.1. Public
      Announcements.

     

    Except
      as
      required by applicable Law, judicial order or stock exchange rule, none of
      the
      parties hereto, any of their respective affiliates, successors or assigns,
      or
      any of the Representatives of any of them shall issue any press release or
      make
      any public announcement or disclosure with respect to this Agreement or the
      transactions contemplated hereby without the prior written consent of the other
      party or parties hereto, which consent shall not be unreasonably withheld or
      delayed. Neither party hereto nor any of its Representatives will, without
      the
      prior written consent of the other party, disclose to any other Person any
      information that has been made available in connection with this Agreement
      (other than information which has been published or made publicly available
      other than by unauthorized disclosure of a party).

     

    12.2. Dispute
      Resolution.

     

    Buyer
      and
      Seller agree to submit any disputes arising under this Agreement to an
      arbitration panel conducting a binding arbitration in Hartford, Connecticut,
      in
      accordance with the Commercial Arbitration Rules of the American Arbitration
      Association in effect on the date of such arbitration, and judgment upon the
      award rendered by the arbitrator or arbitrators may be entered in any court
      having jurisdiction thereof. The award of the arbitrators shall be final and
      shall be the sole and exclusive remedy between the parties regarding any claims,
      counterclaims, issue or accounting presented to the arbitration panel. The
      parties hereto further agree that the arbitration panel shall consist of one
      (1) person mutually acceptable to Buyer and Seller, provided
      that if
      the parties cannot agree on an arbitrator within fifteen (15) days of filing
      a
      notice of arbitration, the arbitration panel shall consist of three (3) persons,
      one selected by the Buyer, one selected by Seller and one selected by the
      arbitrators so selected by the parties hereto, or if the parties hereto cannot
      agree, selected by the manager of the principal office of the American
      Arbitration Association in Hartford, Connecticut. All fees and expenses of
      the
      arbitration, including a transcript if either party requests, shall be borne
      equally by the parties. Any action to enforce or vacate the arbitrator’s award
      shall be governed by the Federal Arbitration Act, if applicable, and otherwise
      by applicable state law. If either Buyer or Seller pursues any claim, dispute
      or
      controversy against the other in a proceeding other than the arbitration
      provided for herein, the responding party shall be entitled to dismissal or
      injunctive relief regarding such action and recovery of all costs, losses and
      attorney’s fees related to such action.

     

    12.3. Construction.

     

    Unless
      the context of this Agreement otherwise clearly requires, references to the
      plural include the singular, references to the singular include the plural,
      references to any gender include the other genders, the terms “include” or
“including” are not limiting and has the respective inclusive meaning
      represented by the phrases “include without limitation” and “including without
      limitation;” and the term “or” has the inclusive meaning represented by the
      phrase “and/or.” The terms “hereof,”“herein,”“hereunder” and similar terms in
      this Agreement refer to this Agreement as a whole and not to any particular
      provision of this Agreement. All Section, clause, Exhibit and Schedule
      references herein are to this Agreement unless otherwise specified. The terms
      “warrant” and “warranty” shall have the same meanings, respectively, as
“represent” and “representation” and shall not impose on any Person any
      obligation to maintain a particular set of facts or conditions.

     

    
      
        
        

      

      
        -21-

        
          

        

      

      
        
        

      

    

     

    12.4. Amendment.

     

    Neither
      this Agreement, nor any of the terms or provisions hereof, may be amended,
      modified, supplemented or waived except by a written instrument signed by all
      of
      the parties hereto (or, in the case of a waiver, by the party or parties
      granting such waiver).

     

    12.5. Waiver
      of Compliance.

     

    Any
      failure of Seller, on the one hand, or Buyer, on the other hand, to comply
      with
      any obligation, covenant, agreement or condition herein may be expressly waived
      in writing by an authorized officer of Buyer or Seller, respectively, but such
      waiver or failure to insist upon strict compliance with any such obligation,
      covenant, agreement or condition shall not operate as a waiver of, or estoppel
      with respect to, any subsequent or other failure.

     

    12.6. Expenses.

     

    Whether
      or not the transactions contemplated by this Agreement are consummated, each
      of
      the parties hereto shall pay the fees and expenses of their own respective
      counsel, accountants and other experts, and each shall pay all other expenses
      it
      incurs incident to the negotiation, preparation, execution and consummation
      of
      this Agreement. The provisions of this Section 12.6.
      shall
      survive any termination of this Agreement.

     

    12.7. Notices.

     

    All
      notices, requests, demands and other communications required or permitted
      hereunder shall be in writing and shall be deemed to have been duly given
(i)
      upon
      delivery if delivered by hand; (ii)
      upon
      receipt if mailed by express, certified or registered mail, with postage
      prepaid, in the continental United States; or (iii)
      upon
      receipt if sent by a nationally recognized overnight courier service that
      regularly maintains records of items picked up and delivered;

    

      
        	
                If
                  to Seller:

              	
                Edgardo
                  A. Mercadante, R.Ph.

                President
                  and CEO

                DrugMax,
                  Inc.

                312
                  Farmington Avenue

                Farmington,
                  CT 06032

                Fax:
                  (860) 679-9337

              
	
                 

                 

              	 
	
                with
                  a copy to:

                 

              	
                John
                  B. Lynch, Jr., Esq.

                Robinson
                  & Cole LLP

                280
                  Trumbull Street

                Hartford,
                  CT 06103-3597

                Fax:
                  860-275-8299

              

      

    

     

    or
      to
      such other Person or address as Seller shall furnish to Buyer in
      writing.

     

    
      
        
        

      

      
        -22-

        
          

        

      

      
        
        

      

    

     

    

      
        	
                If
                  to Buyer:

              	
                Rochester
                  Drug Cooperative, Inc. 
                  50
                    Jet View Drive 
                    Rochester,
                      New York 14624 
                      Attn:
                        Lawrence F. Doud III 

                    

                  

                

              
	
                 

              	 
	
                with
                  a copy to:

              	
                Peter
                  S. Russ, Esq. 
                  Buchanan
                    Ingersoll PC 
                    One
                      Oxford Centre

                    301
                      Grant Street, 20th Fl 
                      Pittsburgh,
                        PA 15219 
                        Fax:
                          (412)
                          562-1041

                      

                    

                  

                

              

      

    

    

    or
      to
      such other Person or address as Buyer shall furnish to Seller in
      writing.

     

    12.8. Binding
      Effect; Assignment.

     

    This
      Agreement and all of the provisions hereof shall be binding upon and inure
      to
      the benefit of the parties hereto and their respective administrators, legal
      representatives, successors and permitted assigns, but neither this Agreement
      nor any of the rights, interests or obligations hereunder shall be assigned
      or
      assignable by any of the parties hereto without the prior written consent of
      the
      other party. Any attempted assignment in violation of this Agreement shall
      be
      null and void.

     

    12.9. Governing
      Law.

     

    This
      Agreement shall be governed by and construed and enforced in accordance with
      the
      Laws of the State of Connecticut, without regard to its principles of conflict
      or choice of Law.

     

    12.10. Counterparts.

     

    This
      Agreement may be executed in two or more counterparts (including by way of
      facsimile), each of which shall be deemed an original, but all of which together
      shall constitute the same instrument.

     

    12.11. Headings.

     

    The
      headings of the sections of this Agreement are inserted for convenience only
      and
      shall not constitute a part or affect in any way the meaning or interpretation
      of this Agreement.

     

    12.12. Entire
      Agreement.

     

    (a) This
      Agreement sets forth the entire agreement and understanding of the parties
      hereto in respect of the subject matter contained herein, and supersedes all
      prior agreements, promises, letters of intent, covenants, arrangements,
      communications, representations or warranties, whether oral or written, by
      any
      party hereto or by any officer, director or affiliate of any party
      hereto.

     

    
      
        
        

      

      
        -23-

        
          

        

      

      
        
        

      

    

     

    (b) All
      Exhibits attached hereto, the Disclosure Schedule, any exhibits thereto and
      all
      certificates, documents and other instruments delivered or to be delivered
      pursuant to the terms hereof are hereby expressly made a part of this Agreement
      as fully as though set forth herein, and all references herein to the terms
      “this Agreement,”“hereunder,”“herein,”“hereby” or “hereto” shall be deemed to
      refer to this Agreement and to all such writings.

     

    12.13. Third
      Parties.

     

    Nothing
      in this Agreement, express or implied, is intended or shall be construed to
      confer upon or give to any Person other than the parties hereto, and their
      respective affiliates, successors or permitted assigns, any rights or remedies
      under or by reason of this Agreement.

     

    12.14. Severability.

     

    The
      invalidity of any one or more of the words, phrases, sentences, clauses,
      sections or subsections contained in this Agreement shall not affect the
      enforceability of the remaining portions of this Agreement or any part hereof,
      and, if any one or more of the words, phrases, sentences, clauses, sections
      or
      subsections contained in this Agreement shall be declared invalid by a court
      of
      competent jurisdiction, this Agreement shall be construed to most closely
      effectuate the intentions of the parties and to be valid.

     

    12.15. Termination.

     

    (a) This
      Agreement may be terminated at any time prior to the Closing by mutual written
      consent of Seller and Buyer.

     

    (b) If
      this
      Agreement is terminated as provided herein: (i)
      each
      party will redeliver all documents, work papers and other material of the other
      party or parties relating to the transactions contemplated hereby, whether
      so
      obtained before or after the execution hereof, to the party furnishing the
      same;
      (ii)
      no
      information received by any party hereto with respect to the business of the
      other party or their affiliated companies (other than information which is
      a
      matter of public knowledge or which has heretofore been or is hereafter
      published in any publication for public distribution or filed or available
      as
      public information with any Governmental Authority) shall at any time be used
      for the advantage of, or disclosed to third parties, by such party for any
      reason whatsoever; and (iii)
      no
      party shall have any Liability or further obligation to any other party to
      this
      Agreement except as provided by this Section 12.15.

     

    THE
      NEXT
      PAGE IS THE SIGNATURE PAGE

     

    
      
        
        

      

      
        -24-

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF, the parties hereto here executed, or caused to be executed,
      this Agreement on the date first written above.

     

    
      	 	 	 
	 	SELLER:
	 	 
	 	VALLEY
              DRUG COMPANY
	 
 	 
 	 
 
	 	By  	/s/
              Edgardo A. Mercadante
	 	
              
Name:
              Edgardo A. Mercadante
	 	Title:
              President & CEO

    

     

    
      	 	 	 
	 	BUYER:
	 	 
	 	ROCHESTER DRUG COOPERATIVE,
              INC.
	 
 	 
 	 
 
	 	By  	/s/
              Lawrence F. Doud III 
	 	
              
Name:
              Lawrence F. Doud III 
	 	Title:
              CEOUnassociated Document

     

    Exhibit
      10.2

    

      EXECUTION
        FORM

       

    

    AMENDMENT
      NO. 1 TO LEASE

     

    THIS
      AMENDMENT NO. 1 TO LEASE (this
      “Agreement”) is dated and effective as of December 21, 2005, by and between
VALLEY
      DRUG COMPANY, an
      Ohio
      corporation with its
      principal place of business in
      New
      Castle, Pennsylvania (“Tenant”), and BECAN
      DEVELOPMENT LLC,
      a
      Pennsylvania limited liability company (“Landlord”).

     

    WHEREAS,
      Tenant
      and Landlord are parties to a Commercial Lease dated January 1, 2004 (the
“Lease”), with respect to Tenant’s distribution facility located at 209 Green
      Ridge Road, New Castle, Pennsylvania (the “Facility”); and 

     

    WHEREAS,
      Tenant
      and Landlord have agreed to certain modifications to the Lease to become
      effective upon the execution and delivery of this Agreement.

     

    NOW,
      THEREFORE,
      in
      consideration of the premises and the mutual covenants contained herein, and
      other good and valuable consideration, the receipt and sufficiency of which
      are
      hereby acknowledged by the parties, the parties agree as follows: 

     

    1. Amendments
      to Lease.
      The
      parties agree that, effective as of the date hereof, the Lease shall be amended
      as follows:

     

    (a) Section
      2
      of the Lease is hereby amended and restated as follows:

     

    “2. PREMISES.
      Landlord hereby leases to Tenant and Tenant leases from Landlord upon all of
      the
      conditions set forth herein, that certain real property situated at 209 Green
      Ridge Road, New Castle, PA, 16105, and described as a 45,000 square foot
      building as described in Exhibit “A” attached hereto and made a part hereof.
      Said real property, including the land, all improvements thereon and all
      fixtures purchased and installed thereon by Landlord, is herein called the
      “Property”“.

     

    (b) Section
      3.1 of the Lease is hereby amended and restated as follows:

     

    “3.1 Initial
      Term; Renewal Terms.
      The
      initial term hereof shall be for five (5) years commencing on December 21,
      2005
      (the “Initial Term”), unless terminated sooner pursuant to any provision hereof.
      The Tenant shall have the right to extend the term of this Lease for two (2)
      consecutive five-year renewal terms (collectively, the “Renewal Term”) by
      sending written notice of its election to renew to Landlord not later than
      six
      (6) months prior to the end of the then existing term of the
      Lease.”

     

    (c) The
      following new Section 48 is hereby added to the Lease:

     

    “48. Purchase
      Option.
      The
      Tenant shall have the option, exercisable at any time on or after December
      21,
      2008, to purchase the Property from the Landlord. The Tenant shall exercise
      the
      purchase option by sending written notice of its election to purchase to
      Landlord. The notice of election to purchase shall specify a closing date for
      the purchase and sale which closing date shall be not less than sixty (60)
      nor
      more than ninety (90) days from the date of the notice of purchase. The purchase
      price shall be the “fair market value” of the Property determined as set forth
      below. The purchase price shall be paid in full in immediately available funds
      at closing. The closing shall be conducted, and all closing adjustments shall
      be
      made in accordance with, the local customs for commercial real estate
      transactions in New Castle, Pennsylvania.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    The
“fair
      market value” of the Property shall be determined as follows: Within ten (10)
      days of the exercise of the purchase option by Tenant, each of Landlord and
      Tenant shall engage, at its own expense, a licensed independent appraiser
      experienced in commercial real estate appraisals. Such appraisers shall conduct
      appraisals of the Property to be completed within thirty (30) days of their
      engagement. Upon receipt of the appraisals, the Landlord and Tenant shall share
      with one another the appraisal reports. In the event the fair market value
      of
      the Property as determined by Landlord’s and Tenant’s independent appraisers
      does not vary by more than ten percent (10%) of the lower of the appraised
      fair
      market values, the fair market value for purposes of this Lease shall be the
      average of the two appraised values. In the event the fair market value of
      the
      Property as determined by Landlord’s and Tenant’s independent appraisers varies
      by more than ten percent (10%) of the lower of the appraised fair market values,
      then both appraisals shall be disregarded and the two independent appraisers
      shall appoint a third independent appraiser to determine the appraised fair
      market value of the Property. The fair market value as determined by the third
      appraiser shall be binding upon Landlord and Tenant. The expenses of the third
      appraiser shall be borne equally by Landlord and Tenant.”

     

    (d) The
      following new Section 49 is hereby added to the Lease:

     

    “49. Right
      of First Refusal.
      Tenant
      shall have a right of first refusal to purchase the Property upon the terms
      and
      subject to the conditions set forth herein. In the event that Landlord receives
      a bona fide offer from a third-party (the “Buyer Party”) to purchase the
      Property, and prior to its acceptance of any such bona fide offer, the Landlord
      shall promptly (but in any event within five (5) business days) notify Tenant
      in
      writing of such offer, including but not limited to: (i) the amount and the
      form
      of consideration proposed to be paid by the Buyer Party for the Property, (ii)
      the proposed closing date for such purchase and sale of the Property, and (iii)
      any material conditions to the closing of the purchase and sale of the Property
      (the “Sale Notice”). Within ten (10) business days from receipt of the Sale
      Notice, Tenant shall inform Landlord in writing of its desire to purchase the
      Property on terms and conditions identical to those offered by the Buyer Party
      and described in the Sale Notice (the “Purchase Notice”). In the event that
      Tenant delivers a Purchase Notice to Landlord within the ten-day period,
      Landlord shall be obligated to sell the Property to the Tenant upon the terms
      and subject to the conditions described in the Sale Notice, and Landlord shall
      promptly decline the offer from the Buyer Party. Notwithstanding the foregoing,
      nothing herein is intended to or shall prohibit a transfer of membership
      interests between the members of Landlord without first offering such membership
      interests to Tenant. 

     

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

    

    In
      the
      event that Tenant fails to deliver a Purchase Notice within such ten-day period,
      or in the event Tenant sooner notifies Landlord in writing that it does not
      desire to purchase the Property on the terms set forth in the Sale Notice,
      Landlord may proceed without further restriction to sell the Property to the
      Buyer Party on the terms and conditions set forth in the Sale Notice;
provided,
      that
      such Buyer Party shall purchase the Property subject to this Lease, which shall
      remain in full force and effect in accordance with the terms hereof, except
      that
      the purchase option granted to Tenant by Landlord pursuant to Section 48 and
      the
      right of first refusal granted to Tenant by Landlord in this Section 49 shall
      automatically be extinguished and terminated.”

    

    2. Consent
      to Assignment.
      Landlord hereby acknowledges that Tenant is party to a certain Asset Purchase
      Agreement, dated as of the date hereof, with Rochester Drug Cooperative, Inc.,
      a
      New York corporation (“RDC”), for the sale of certain of Tenant’s assets to RDC
      (the “Purchase Agreement”). Landlord further acknowledges that following the
      closing of the transactions contemplated by the Purchase Agreement, Tenant
      shall
      sublease the Facility to RDC on the same terms and conditions as are set forth
      in the Lease (as amended hereby) so that RDC may conduct certain business
      operations from the Facility. Landlord further acknowledges that it is the
      intention of Tenant and RDC that, upon the satisfaction of certain conditions
      set forth in the Purchase Agreement, Tenant shall assign the Lease (as amended
      hereby) to RDC, and RDC shall assume the Lease from Tenant, and the sublease
      of
      the Facility shall then be terminated (the “Lease Assignment”). Landlord
      consents to the sublease and the Lease Assignment, and in furtherance thereof
      Landlord hereby covenants and agrees to use best efforts to obtain, within
      sixty
      (60) days from the date hereof, the written consent of The Pennsylvania
      Industrial Development Authority (or any successor thereto, “PIDA”) and National
      City Bank (the “Bank”) to the Lease Assignment and this Agreement. Tenant shall
      cooperate with Landlord and use its own reasonable efforts to assist Landlord
      in
      obtaining the necessary consents from PIDA and the Bank.

     

    3. No
      Other Changes.
      Except
      as expressly provided in this Agreement, the Lease shall remain in full force
      and effect.

     

    4. Binding
      Effect.
      This
      Agreement and all of the provisions hereof shall be binding upon and inure
      to
      the benefit of the parties hereto and their respective successors and permitted
      assigns, but neither this Agreement nor any of the rights, interests or
      obligations hereunder shall be assigned or assignable by either of the parties
      hereto without the prior written consent of the other party (except as
      contemplated by the Lease Assignment). Any assignment in violation of this
      Agreement shall be null and void.

     

    5. Governing
      Law; Counterparts.
      This
      Agreement shall be governed by and construed and enforced in accordance with
      the
      laws of the Commonwealth of Pennsylvania, without regard to its principles
      of
      conflict or choice of law. This instrument may be executed in two or more
      counterparts, including by way of facsimile, each of which shall be deemed
      an
      original, but all of which together shall constitute the same
      instrument.

     

    [THE
      NEXT PAGE IS THE SIGNATURE PAGE]

     

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

       

    

    IN
      WITNESS WHEREOF,
      the
      parties hereto, intending to be legally bound, have caused this Amendment No.
      1
      to Lease to be duly executed and delivered on their behalf by their duly
      authorized representatives as of the day and date first above
      written.

     

    
      	 	 	 
	 	TENANT:
	 	 
	 	VALLEY DRUG COMPANY
	 
 	 
 	 
 
	 	By:  	/s/
              Edgardo A. Mercadante
	 	
              
Name:
              Edgardo A. Mercadante
	 	Title:
              President & CEO

    

    

    
      	 	 	 
	 	LANDLORD:
	 	 
	 	BECAN DEVELOPMENT
              LLC
	 
 	 
 	 
 
	 	By:  	/s/
              Philip Laird
	 	
              
Name:
              Philip Laird 
	 	Title:

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