ASSET PURCHASE AGREEMENT dated August 4, 2005 by and between MEDICINE MADE EASY and FRONTIER PHARMACY & NUTRITION, INC.
dated
August 4, 2005
by
and
between
MEDICINE
MADE EASY
and
FRONTIER
PHARMACY & NUTRITION, INC.
This
ASSET PURCHASE AGREEMENT dated August 4, 2005, is by and between MEDICINE
MADE
EASY, a California corporation (“Buyer”), and FRONTIER PHARMACY & NUTRITION,
INC., a California corporation d/b/a PMW PHARMACY, INC. (“Seller”).
Seller
is
a licensed California pharmacy located at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇.
Buyer
desires to purchase and Seller desires to sell, transfer and deliver to Buyer
Seller’s right title and interest in and to all or substantially all of its
business, assets and properties, including without limitation its customer
lists, books and records, files and goodwill, on the terms and conditions
set
forth in this Agreement.
The
parties agree as follows:
ARTICLE
I
DEFINITIONS
The
terms
defined in this Article I, whenever used herein (including the schedules
hereto,
unless otherwise defined therein), shall have the following
meanings:
1.1 “Additional
Payment”
shall
have the meaning set forth in Section 2.2(b) of this Agreement.
1.2 “Affiliate”
shall
mean any Person that directly or indirectly controls, is controlled by or
is
under common control with another Person.
1.3 “Acquired
Assets”
shall
mean all of Seller's right, title and interest in and to its business, assets
and properties, whether tangible or intangible, and including, without
limitation, the Equipment, inventory, supplies, packaging and shipping
materials, tenant improvements, manufacturers warranties, customer lists,
books
and records, files and goodwill, and all other information pertaining to
the
Acquired Assets. “Acquired Assets” does not include any of the Contracts listed
on Schedule 4.9.
1.4 “Allion”
shall
mean Allion Healthcare, Inc., a Delaware corporation.
1.5 “Business
Day”
shall
mean any day other than a Saturday, Sunday or other day on which banks are
closed or are authorized to be closed in New York, New York.
1.6 “Buyer
Claimant”
shall
have the meaning set forth in Section 8.2 of this Agreement.
1.7 “Closing”
shall
mean the closing of the purchase and sale of the Acquired Assets, as
contemplated by this Agreement.
1.8 “Closing
Date”
shall
have the meaning set forth in Section 3.1 of this Agreement.
1.9 “Code”
shall
mean the Internal Revenue Code of 1986, as amended.
1.10 “Contract”
shall
have the meaning set forth in Section 4.9 of this Agreement.
1.11 “Employee
Benefit Plan”
means
any “employee benefit plan” within the meaning of Section 3(3) of ERISA, and any
other bonus, profit sharing, compensation, pension, severance, deferred
compensation, fringe benefit, insurance, welfare, medical, post-retirement
health or welfare benefit, medical reimbursement, health, life, stock option,
stock purchase, tuition refund,
service award, company car, scholarship, relocation, disability, accident,
sick
pay, sick leave, vacation, termination, individual employment, executive
compensation, incentive, bonus, commission, payroll practices, retention
or
other plan, agreement, policy, trust fund or arrangement, whether written
or
unwritten, and whether maintained, sponsored or contributed to by Seller
or any
entity that would be deemed a “single employer” with Seller under Section
414(b), (c), (m) or (o) of the Code or Section 4001(a)(14) of ERISA (an “ERISA
Affiliate”) on behalf of any of the current, former or retired employees of
Seller or its beneficiaries or with respect to which Seller or any ERISA
Affiliate has or has had any obligation on behalf of any such employee or
beneficiary.
1.12 “Encumbrance”
shall
mean any lien, charge, encumbrance, option, right of first refusal, security
interest, easement, obligation or claim or other third party right of any
kind.
1.13 “Environment”
shall
mean any surface or subsurface physical medium or natural resource, including,
air, land, soil, surface waters, ground waters, stream and river sediments,
and
biota.
1.14 “Environmental
Laws”
shall
mean any federal, state, local or foreign law, rule, regulation, ordinance,
code, order or judgment (including the common law and any judicial or
administrative interpretations, guidances, directives or opinions) relating
to
the injury to, or the pollution or protection of human health and safety
or the
Environment.
1.15 “Environmental
Liabilities”
shall
mean any claims, judgments, damages (including punitive damages), losses,
penalties, fines, liabilities, encumbrances, liens, violations, costs and
expenses (including attorneys and consultants fees) of investigation,
remediation or defense of any matter relating to human health, safety or
the
Environment of whatever kind or nature by any party, entity or authority,
(a)
which are incurred as a result of (i) the existence of Hazardous Substances
in,
on, under, at or emanating from any real property presently or formerly owned
or
operated by Seller or any of its Affiliates, (ii) the offsite transportation,
treatment, storage or disposal of Hazardous Substances generated by Seller
or
any of its Affiliates, or (iii) the violation of any Environmental Laws or
(b)
which arise under the Environmental Laws.
1.16 “Equipment”
shall
mean all items of machinery, equipment, computers, tools, parts, furniture
and
fixtures set forth on Schedule 4.6 and all other items of machinery, equipment,
computers, tools, parts, furniture and fixtures owned by Seller.
2
1.17 “ERISA”
shall
mean the Employee Retirement Income Security Act of 1974, as amended, and
the
regulations thereunder.
1.18 “ERISA
Affiliate”
shall
have the meaning set forth in the definition of “Employee Benefit
Plan”.
1.19 “Excluded
Assets”
shall
have the meaning set forth in Section 2.1(b) of this
Agreement.
1.20 “Excluded
Liabilities”
shall
have the meaning set forth in Section 2.1(c) of this
Agreement.
1.21 “Financial
Statements”
shall
mean (a) the unaudited balance sheet and profit and loss statements of the
Seller as of December 31, 2002, 2003 and 2004, and for each of the fiscal
years
then ended, (b) the unaudited balance sheet and profit and loss statements
of
the Seller as of May 31, 2005, and for the twelve month period then ended,
and
(c) the unaudited balance sheet and profit and loss statements of the Seller
as
of May 31, 2005 and for the five month period then ended.
1.22 “GAAP”
shall
mean generally accepted accounting principles.
1.23 “Hazardous
Discharge”
shall
mean any releasing, spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, leaching, migrating, disposing or dumping
(including the movement of any material through or in air, soil, surface
or
groundwater) of Hazardous Substances, whether on, off, under or from the
Real
Property or any other real property owned, operated, leased or used at any
time
by Seller or its predecessors.
1.24 “Hazardous
Substances”
shall
mean petroleum, petroleum products, petroleum-derived substances, radioactive
materials, hazardous wastes, polychlorinated biphenyls, lead based paint,
urea
formaldehyde, asbestos or any materials containing asbestos, and any materials,
wastes or substances regulated or defined as or included in the definition
of
“hazardous substances,”“hazardous materials,”“hazardous constituents,”“toxic
substances,”“pollutants,”“contaminants” or any similar denomination intended
to classify substances by reason of toxicity, carcinogenicity, ignitability,
corrosivity or reactivity under any Environmental Laws.
1.25 “Indemnitee”
and
“Indemnitor”
shall
have the meanings set forth in Section 8.4(a) of this
Agreement.
1.26 “Initial
Payment”
shall
have the meaning set forth in Section 2.2(a) of this Agreement.
1.27 “Intellectual
Property” means
(a)
all United States and foreign patents and pending patent applications,
trademarks, service marks and trade names, including, without limitation,
the
marks and patents described on Schedule 4.8 of this Agreement, and copyrights,
and registrations and pending applications, computer programs and software,
research and development, know-how, inventions and other proprietary processes
and information of any kind, and all software necessary or desirable to run
Equipment, all as set forth on Schedule 4.8 of this Agreement; (b) all copies
and tangible embodiments of the foregoing; and (c) the right to ▇▇▇ for past
and
future misappropriation or infringement of any of the foregoing.
3
1.28 “Inventory
Payment”
shall
have the meaning set forth in Section 2.2(c) of this Agreement.
1.29 “IRS”
shall
mean the Internal Revenue Service
1.30 “Licenses
and Permits”
shall
have the meaning set forth in Section 4.12 of this Agreement.
1.31 “Losses”
shall
have the meaning set forth in Section 8.2 of this Agreement.
1.32 “Material
Adverse Effect”
shall
mean any material adverse effect, individually or in the aggregate, on the
condition (financial or otherwise), business, assets, operations or prospects
of
Seller or the Acquired Assets.
1.33 “Payment
Program”
shall
have the meaning set forth in Section 4.16 of this Agreement.
1.34 “Person”
shall
mean any natural person, corporation, professional corporation, limited or
limited liability partnership, general partnership, joint venture, association,
joint-stock company, limited liability company, company, trust, bank, trust
company, land trust, business trust or other organization, whether or not
a
legal entity, and any governmental unit or agency or political subdivision
thereof.
1.35 “Purchase
Price”
shall
have the meaning set forth in Section 2.2(c) of this Agreement.
1.36 “Real
Property”
shall
mean the real property and interests in real property described on Schedule
4.7
leased by Seller and the plants, buildings, structures, storage tanks, erections
and improvements of all kinds made to, located on or forming a part of the
real
property and interests in real property (including, without limitation, all
fixtures), together with all easements, rights-of-way, appurtenances and
tenements to, on or otherwise beneficial to the use of such real property
or
interests in real property.
1.37 “Related
Party”
shall
have the meaning set forth in Section 4.13 of this Agreement.
1.38 “Seller
Claimant”
shall
have the meaning set forth in Section 8.3 of this Agreement.
1.39 “Taxes”
(or
“Tax” where the context requires)
shall
mean all federal, state, local, foreign or other taxes, duties, or similar
charges (including, without limitation, income (whether net or gross), profits,
premium, estimated, excise, sales, use, environmental (including taxes under
Code Section 59A), occupancy, franchise, license, value added stamp, windfall
profits, social security, gross receipts, franchise, ad valorem, severance,
capital levy, production, transfer, gains, withholding, occupation, employment
and payroll related and property taxes, alternative or add-on, minimum or
estimated, import and export duties and other governmental charges and
assessments) imposed by any taxing or governmental authority on or payable
by
Seller or any other party with respect to the income, operations, products,
assets or properties of Seller, whether attributable to statutory or
nonstatutory rules and whether or not measured in whole or in part by net
income, and including interest, additions to tax or interest, and penalties
with
respect thereto, and including expenses associated with contesting any proposed
adjustment related to any of the foregoing.
4
ARTICLE
II
SALE
AND PURCHASE OF THE ASSETS
2.1 Purchase
of the Assets.
(a) Upon
the
terms and subject to the conditions hereof, and upon the basis of the
agreements, representations and warranties contained in, and the schedules
to,
this Agreement, at the Closing, Seller shall sell, transfer, assign, convey
and
deliver to Buyer, and Buyer shall purchase and acquire from Seller, all of
the
Acquired Assets, in each case free and clear of Encumbrances of any
kind.
(b) Notwithstanding
anything contained in this Agreement, Seller shall not sell, transfer, assign,
convey or deliver to Buyer, and Buyer shall not purchase or acquire from
Seller,
any of the assets of Seller listed on Schedule 2.1(b) (the “Excluded
Assets”).
(c) Buyer
shall not be required to assume, pay, fulfill, perform or otherwise discharge
any liabilities or obligations of Seller, including of Seller’s business, of any
kind whatsoever (the “Excluded Liabilities”), and Seller shall pay, fulfill,
perform and discharge such Excluded Liabilities. The Excluded Liabilities
include, without limitation:
(i) Legal,
accounting, brokerage, finder’s fees, Taxes or other expenses incurred by Seller
or any Affiliate, including, without limitation, in connection with this
Agreement or the consummation of the transactions contemplated
hereby;
(ii) Any
intercompany debt or other liability or obligation of any nature between
Seller
and any past or present Related Party of Seller;
(iii) Liabilities
or obligations incurred by Seller or any Affiliate of Seller after the
Closing;
(iv) Any
obligation or liability relating to any litigation or any claim arising out
of
any dispute, the elements of which occurred prior to the Closing, whether
or not
listed on any schedule hereto and regardless of whether accruing prior to
or
subsequent to the Closing;
(v) Any
liability for any Taxes accrued to or incurred by Seller or any Affiliate
of
Seller or relating to operations, products or assets of Seller or any Affiliate
of Seller or arising as a consequence of the transactions contemplated
hereby;
5
(vi) Any
liability or costs (including, without limitation, costs of remediation)
arising
out of or relating to a Hazardous Discharge or the release, discharge or
disposal of any solid wastes or the handling, storage, use, transportation
or
disposal of any of the foregoing, as these terms are defined by the
Environmental Laws in, on, under or from facilities of Seller at any time
prior
to the Closing, regardless of whether such liability or costs arise before
or
after Closing and whether or not in breach of any representation or warranty
under this Agreement;
(vii) Any
liability or obligation to employees, government agencies or other third
parties
in connection with any option plan, pension plan, other ERISA plan or other
Employee Benefit Plan, and any health, dental or life insurance benefits,
whether or not insured and whether or not disclosed on any schedule
hereto;
(viii) Any
liability or obligation under any contract or commitment that is not a Contract
assigned to Buyer hereunder or any Contract which relates to any default
in
respect of such contract or other commitment or obligation of
Seller;
(ix) Any
liability or obligation to employees in the nature of accrued payroll, vacation,
holiday or sick pay, worker’s compensation relating to the period prior to the
Closing, whether or not listed on any schedule hereto and regardless of whether
accruing prior or subsequent to the Closing;
(x) Any
trade
debt, accounts payable, notes payable and bank debts; or
(xi) Any
other
liability or obligation.
2.2 Purchase
Price.
(a) At
the
Closing, in consideration for the Acquired Assets, Buyer shall pay to Seller
an
amount in cash equal to Eight Million Seven Hundred Thirty Thousand Dollars
($8,730,000), less any deposits received by Seller or its counsel from Buyer
or
its Affiliates (the “Initial Payment”), plus the amounts set forth in Sections
2.2(b) and (c) below. Buyer and Seller acknowledge and agree that the total
amount of the Initial Payment has or will be deposited with Seller and/or
its
counsel as of the date that this Agreement is executed and deliver by Buyer
and
Seller, subject to release upon and only upon the Closing.
(b) On
the
three (3) month anniversary of the Closing Date, in consideration for the
Acquired Assets, Buyer shall pay to Seller an amount equal to Nine Hundred
Seventy Thousand Dollars ($970,000) (the “Additional Payment”), provided that
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ has during such three (3) month period provided during normal
business hours such reasonable assistance to Buyer as Buyer from time to
time
has requested to transition the business of Seller and the Acquired Assets
to
Buyer.
(c) On
the
date that is one business day after Buyer and Seller conduct an inventory
(which
inventory the parties agree will take place as soon as practicable after
the
Closing), Buyer shall pay to Seller an amount equal to Seller’s acquisition cost
for its inventory (having a shelf life of at least one year, or having a
shelf
life of between six month and one year if representatives of Buyer and Seller
mutually agree in good faith that such inventory is saleable by Buyer in
the
ordinary course of business after the Closing) on hand as of the close of
business on August 5, 2005, up to $150,000 (the “Inventory Payment” and,
collectively with the Initial Payment and Additional Payment, the “Purchase
Price”), which inventory Seller has used its commercially reasonable best
efforts to minimize as of such time.
6
2.3 Allocation
of Purchase Price. The
Purchase Price for the Acquired Assets shall be allocated for federal, state,
local and foreign tax purposes by each party among the Acquired Assets as
determined in good faith by the parties. For all pertinent tax purposes,
each
party hereto shall report the purchase and sale provided for, and with the
characterization given these transactions in this Agreement, to taxing
authorities on a basis consistent with such allocation, and each party agrees
not to take a position inconsistent with such allocation. After the Closing,
Seller and Buyer each shall timely file form 8594 with the IRS detailing
this
allocation. In the event that Buyer determines, subject to Seller's reasonable
approval, that any adjustments to such allocation are necessary, Seller shall
make such modifications as are necessary, reporting the same on Seller's
form
8594 (if required) or any tax report or return filed or to be filed by Seller
in
order to conform to Buyer's allocation as adjusted.
2.4 Nonassignable
Contracts. To
the
extent that the assignment of any Contract to be assigned to Buyer pursuant
to
this Agreement shall require the consent of any other Person, this Agreement
shall not constitute a contract to assign the same if an attempted assignment
would constitute a breach thereof. Seller shall use all reasonable efforts,
and
Buyer shall cooperate where appropriate, to obtain any consent necessary
to any
such assignment where such consent is requested by Buyer. If any such consent
is
not obtained, Seller shall cooperate with Buyer in any reasonable arrangement
designed to provide for Buyer the benefit, monetary or otherwise, of the
Contracts, including enforcement of any and all rights of Seller or Seller’s
business against the other party thereto arising out of a breach or cancellation
thereof by such other party or otherwise.
ARTICLE
III
CLOSING
3.1 The
Closing.
Subject
to the terms and conditions of this Agreement, the Closing shall occur on
August
5, 2005 (the
“Closing Date”) and will be effective as of the close of business on the Closing
Date.
3.2 Obligations
of Seller. At
the
Closing, Seller shall deliver to Buyer the following:
(a) A
▇▇▇▇ of
sale, in customary form, duly executed by Seller.
(b) Copies
of
the resolutions of the Board of Directors and shareholders of Seller certified
by the secretary or assistant secretary of Seller, which resolutions shall
approve and authorize the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby.
(c) All
consents to the assignment to Buyer of each of the Acquired Assets.
7
(d) Such
other instruments of assignment and conveyance as may be necessary or
appropriate to fully and effectively transfer to Buyer the Assets.
(e) The
Discontinuation of Pharmacy Form required to be filed with the California
State
Board of Pharmacy, duly executed by Seller, which form shall be filed by
Seller
within 45 days after the Closing Date, evidence of which shall promptly
thereafter be delivered to Buyer.
(f) All
of
the other documents and instruments required to be delivered by
Seller.
3.3 Obligations
of Buyer. At
the
Closing, Buyer shall deliver to Seller the following:
(a) The
Initial Payment.
(b) Copies
of
the resolutions of the Board of Directors of Buyer certified by the secretary
or
assistant secretary of Seller, which resolutions shall approve and authorize
the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby.
(c) All
of
the other documents and instruments required to be delivered by
Buyer.
ARTICLE
IV
REPRESENTATIONS
AND WARRANTIES REGARDING SELLER
AND
SELLER’S BUSINESS
Seller
hereby represents and warrants to Buyer, as of the date hereof and as of
the
Closing, as follows:
4.1
Organization
and Qualification.
Seller
is a corporation duly organized, validly existing and in good standing under
the
laws of the State of California, with full corporate power and authority
to own,
lease and operate its properties and assets and to conduct its business as
it is
now being conducted. Seller has no subsidiaries or equity interest in any
other
Person. Seller is duly qualified and in good standing as a foreign corporation
and has all requisite corporate power and authority to do business in the
jurisdictions set forth on Schedule 4.1, which jurisdictions are the only
jurisdictions wherein the character of the properties owned or leased or
the
nature of activities conducted by Seller make such qualification
necessary.
4.2 Authority. Seller
has all requisite power and authority to execute and deliver this Agreement
and
all documents, certificates, agreements, instruments and writings related
hereto
to which it is a party and to perform, carry out and consummate the transactions
contemplated hereby and thereby. The execution, delivery and performance
of this
Agreement have been duly authorized by all necessary corporate action on
the
part of Seller. This Agreement has been duly and validly executed by Seller
and
constitutes the legal, valid and binding obligations of Seller, enforceable
against Seller in accordance with its terms.
8
4.3
No
Breach. Neither
the execution and delivery of this Agreement by Seller nor the consummation
of
the transactions contemplated hereby will: (a) violate any provision of the
Certificate of Incorporation or Bylaws of Seller; (b) conflict with, result
in a
breach of or constitute a default (or an event which, with or without notice,
lapse of time or both, would constitute a default) under the Contracts or
any
other material agreement, document, certificate or other instrument to which
Seller is a party or by which Seller or any of its properties or assets
(including the Assets) is subject or bound; (c) result in the creation of,
or
give any party the right to create, any Encumbrance upon any of the Acquired
Assets; (d) conflict with, violate, result in a breach of or constitute a
default under any judgment, decree, order or process of any court or
governmental authority; (e) conflict with or violate any material statute,
law
or regulation applicable to Seller or any of the Acquired Assets; or (f)
require
Seller to obtain any authorization, consent, approval or waiver from, or
to make
any filing with, any governmental or regulatory authority.
4.4
Financial
Statements and Sales Information.
Prior to
the date hereof, Seller has delivered to Buyer the Financial Statements attached
hereto as Schedule 4.4(a). The Financial Statements: (a) were prepared from
the
books and records of Seller, which books and records have been maintained
in
accordance with all legal and accounting requirements and completely and
accurately reflect all financial transactions of Seller, including, without
limitation, the accounts receivable, accounts payable and revenue of Seller
for
the periods covered by and as at the dates of the Financial Statements; (b)
were
prepared in accordance with GAAP consistently applied; and (c) present fairly
the financial condition of Seller and the results of its operations for the
periods covered by, and as at the dates of, each of the Financial Statements.
The statements of profit and loss included in the Financial Statements do
not
contain any material items of special or non-recurring income or other income
not earned in the ordinary course of business except as expressly specified
therein. All liabilities (whether accrued, unmatured, contingent or otherwise,
and whether due or to become due) of Seller are set forth or adequately reserved
against on the face of the most recent Financial Statements, except for
liabilities incurred since the date thereof in the ordinary course of business
as theretofore conducted, which liabilities are not, individually or in the
aggregate, materially adverse to the condition (financial or otherwise),
business, assets, operations or prospects of Seller. Seller is neither aware
nor
ought reasonably to be aware of any basis for the assertion against Seller
of
any materially adverse liability or loss contingency. Prior to the date hereof,
Seller has provided Buyer with sales information, by patient, for its past
three
fiscal years. The books and records of Seller are accurate and complete and
have
been maintained in accordance with good business practices.
4.5
Absence
of Certain
Changes or Events.
Since
December 31, 2004: Seller’s business has been conducted and the Acquired Assets
have been acquired and operated only in the ordinary and usual course consistent
with past practice; neither Seller’s business nor the Acquired Assets have
suffered any event or condition that has had a Material Adverse Effect; and
Seller has not become aware of any event or condition that has occurred or
would
reasonably be expected to occur that could result in a Material Adverse Effect,
except for changes affected generally in the industry by government policies
regarding the reimbursement for certain kinds of drugs.
4.6
Assets.
Seller
has good and freely transferable title to all of the Acquired Assets, free
and
clear of all Encumbrances, and has the complete and unrestricted power and
right
to sell and transfer the Assets to Buyer in accordance with the terms hereof.
Schedule 4.6 sets forth a complete and accurate list of all items of Equipment.
Each piece of Equipment is and will when delivered be adequate for the uses
to
which it is being put, is and will when delivered be in good order and working
condition, ordinary wear and tear excepted, and have no material defects,
and no
condition exists or will when such Equipment is delivered exist which interferes
with the value thereof or the use thereof. Seller has maintained the Equipment
in accordance with good business practices. The Acquired Assets constitute
all
of the properties and assets used by Seller in connection with the operation
of
Seller’s business, and include all of the properties and assets necessary to
operate Seller’s business as it has been operated.
9
4.7
Real
Property.
Seller
does not own any real property. Schedule 4.7 sets forth an accurate and
complete
list of all leases of Real Property used by Seller in connection with Seller’s
business. Seller has peaceful possession of the Real Property and has no
other
interest in real property in connection with Seller’s business. The Real
Property is and will when delivered be in good order and working condition,
ordinary wear and tear excepted, and have no material defects. No condition
exists or will when such property is delivered exist which, to the knowledge
of
Seller, interferes with the value thereof or the use thereof in the manner
used
by or for Seller’s business prior to the Closing Date. Seller has maintained the
Real Property in accordance with good business practices.
4.8
Intellectual
Property.
Seller
owns or licenses all the Intellectual Property, including, without limitation,
all patents, trademarks, service marks, trade names and copyrights, in each
case
registered or unregistered, inventions, know-how, trade secrets and other
intellectual property rights used in the Seller’s business as presently
conducted. Schedule 4.8 contains a list of all Intellectual Property owned
and
used by Seller and any Intellectual Property which is licensed for use by
others. No Intellectual Property infringes any rights owned or held by any
other
person. There is no pending or, to the knowledge of Seller, threatened claim
or
litigation against Seller or Seller’s business contesting its right exclusively
to use any Intellectual Property. To the knowledge of Seller, no person is
infringing the rights of Seller or Seller’s business in any Intellectual
Property. No product or service sold or provided by Seller’s business violates
or infringes any intellectual property right owned or held by any other person.
The source code of Lab Tracker has not been disclosed by Seller or any of
its
employees, agents or representatives to any Person other than pursuant to
a duly
executed confidentiality agreement. To the knowledge of Seller, all Intellectual
Property used in the Seller’s business as presently conducted is valid,
enforceable and subsisting, and all application, issuance, renewal, maintenance
and other payments that are or have become due with respect thereto have
been
timely paid and all assignments, certificates and other instruments necessary
to
perfect and record Seller’s rights thereto have been timely filed with the
relevant governmental offices.
4.9
Contracts
and Commitments.
The
contracts listed on Schedule 4.9 are all of Seller’s leases, agreements,
arrangements, contracts, commitments or understandings, written or oral,
and
whether legally binding or otherwise, relating to Seller’s business
(“Contracts”). Seller is not in breach or default, nor is there any basis for
any valid claim of breach or default by Seller, under any Contract. The
Contracts are valid and in full force and effect and, assuming the obtaining
of
any consents to the assignment thereof, consummation of the transactions
contemplated by this Agreement will not cause any Contract to cease to be
valid
and in full force and effect. Accurate and complete copies of the Contracts,
including all amendments thereto, have been heretofore delivered to
Buyer.
10
4.10
Litigation,
Etc.
There
has not been in the five years prior to the date hereof, nor is there currently,
any claim, action, suit, inquiry, proceeding or, to the best of Seller's
knowledge, investigation of any kind or nature whatsoever, by or before any
court or governmental or other regulatory or administrative agency, commission
or tribunal brought, asserted or initiated by Seller, or pending or, to the
best
of Seller's knowledge, threatened against or involving Seller. To the best
of
Seller’s knowledge, there is no valid basis for any such claim, action, suit,
inquiry, proceeding or investigation. Seller is not subject to any judgment,
order or decree.
4.11 Employee
Benefit Plans; Employees.
(a)
Schedule 4.11(a) hereto sets forth a true and complete list of each Employee
Benefit Plan.
(b)
Each
of the Employee Benefit Plans is and has been in compliance with all applicable
laws, including without limitation ERISA and the Code in all material respects;
each of the Employee Benefit Plans intended to be “qualified” within the meaning
of Section 401(a) of the Code is so qualified and has received a determination
letter from the Internal Revenue Service pursuant to Revenue Procedure 93-39
to
the effect that such Employee Benefit Plan is qualified under Section 401(a)
of
the Code; no Employee Benefit Plan has or is expected to have an accumulated
or
waived funding deficiency within the meaning of Section 412 of the Code;
neither
Seller nor any ERISA Affiliate has incurred or is expected to incur, directly
or
indirectly, any liability (including any contingent liability) to or on account
of a Employee Benefit Plan pursuant to Title IV of ERISA; no proceedings
have
been instituted to terminate any Employee Benefit Plan that is subject to
Title
IV of ERISA; no “reportable event,” as such term is defined in Section 4043(b)
of ERISA, has occurred or is expected to occur with respect to any Employee
Benefit Plan; and no condition exists that presents a risk to Seller or any
ERISA Affiliate of incurring a liability to or on account of an Employee
Benefit
Plan pursuant to Title IV of ERISA.
(c)
The
current value of the assets of each of the Employee Benefit Plans that are
subject to Title IV of ERISA, based upon the actuarial assumptions (to the
extent reasonable) presently used by the Employee Benefit Plans, exceeds
the
present value of the accrued benefits under each such Employee Benefit Plan
calculated as the projected benefit obligation using the methodology under
Financial Accounting Standards Board Statement No. 87; no Employee Benefit
Plan
is a multiemployer plan (within the meaning of Sections 3(37) or 4001(a)(3)
of
ERISA or Section 414(f) of the Code (“Multiemployer Plan”) and no Employee
Benefit Plan is a multiple employer plan subject to Sections 4063 and 4064
of
ERISA or as defined in Section 413 of the Code (“Multiple Employer Plan”); and
all contributions or other amounts payable by Seller as of the Closing with
respect to each Employee Benefit Plan in respect of current or prior plan
years
have been paid. Neither Seller nor any ERISA Affiliate is or was obligated
to
contribute to any Multiemployer Plan or Multiple Employer Plan. There are
no
pending, threatened or, to the best knowledge of Seller, anticipated claims
(other than routine claims for benefits) by, on behalf of or against any
of the
Employee Benefit Plans or any trusts related thereto.
(d)
No
Employee Benefit Plan provides death or medical benefits (whether or not
insured), with respect to current or former employees of Seller or any ERISA
Affiliate beyond their retirement or other termination of service other than
(i)
coverage mandated by applicable law or (ii) death benefits under any “employee
pension plan” (as that term is defined in Section 3(2) of ERISA) that is
qualified under Section 401(a) of the Code.
11
4.12
Compliance
with Law.
Seller
is and has been conducting its business, marketing and selling its services
and/or products, and owning and operating all of its assets, in compliance
in
all material respects with all applicable laws, rules, regulations, orders,
building and other codes, zoning and other ordinances, authorizations, judgments
and decrees, including all material Environmental Laws, of all federal, state,
local, foreign or other governmental or regulatory authorities.
Seller
has made available to Buyer true and complete copies of all permits, licenses,
registrations, franchises, certificates, concessions and other governmental
approvals and authorizations held by Seller or any of the owners, occupants,
subcontractors, sublessees, licensees or operators of the Real Property or
the
operations of Seller, as amended, supplemented and modified through the date
hereof (the “Licenses and Permits”). Schedule 4.12 contains a list of each of
such Licenses and Permits. Seller and each of its employees or agents providing
services at the pharmacy, as applicable, (a) hold all Licenses and Permits
required for the operation of Seller’s business, including, without limitation,
all Licenses and Permits required by federal, state and local law and all
applicable regulatory agencies, and (b) are in compliance in all material
respects with all applicable laws, regulations and agreements. All such Licenses
and Permits are in full force and effect and Seller is not in default in
any
respect with respect to any such Licenses and Permits. No notice from any
authority with respect to the revocation, termination, suspension or limitation
of any such Licenses and Permits has been issued or given, nor is Seller
aware
of the proposed or threatened issuance of any such notice..
4.13
Finders. Neither
Seller, nor any of its Affiliates, nor any of Seller’s directors or officers,
has taken any action that, directly or indirectly, would obligate Buyer or
any
of its Affiliates to anyone acting as broker, finder, financial advisor or
in
any similar capacity in connection with this Agreement or any of the
transactions contemplated hereby.
4.14
Related
Party Transactions; Intercompany Accounts. Except
as
set forth on Schedule 4.14 hereto, there are no Contracts between Seller,
on one
hand, and any shareholder, director, officer, employee, consultant or Affiliate
of Seller (each, a “Related Party”), on the other, related to Seller’s business.
Set forth on Schedule 4.14 is a true and complete list of each transaction
during the prior 18 months between Seller, on one hand, and any Related Party,
on the other, related to Seller’s business. Except for compensation for services
rendered, no amounts are owed by or to Seller to or by any Related Party,
related to Seller’s business. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇ are the only
shareholders of Seller.
4.15
Tax
Matters.
All
Taxes that are due or payable by Seller, whether or not disputed by Seller,
have
been paid in full, or provision has been made for payment of taxes and all
amounts due or payable will be paid. All tax returns to be filed in connection
with Taxes have been accurately prepared and duly and timely filed.
4.16 Improper
Payments. Neither
Seller, nor any of Seller’s officers and employees nor, to the best of Seller’s
knowledge, Seller’s agents have made any illegal or improper payments to, or
provided any illegal or improper benefit or inducement for, any governmental
official, supplier, customer or other person, in an attempt to influence
any
such person to take or to refrain from taking any action relating to Seller’s
business.
12
4.17
Payment
Programs.
Neither
Seller, nor any of its officers or employees, nor, to the best knowledge
of
Seller, agents has received written notice that it is subject to any restriction
or limitation on the receipt of payment under the Medicare or Medicaid programs,
any other federally funded health care program or any other third party payor
(collectively, the “Payment Programs”). Seller has valid and current provider
agreements with the Payment Programs. Seller is in compliance in all material
respects with the conditions of participation for the Payment Programs. Neither
seller, nor any of Seller’s officers or employees, nor, to the best knowledge of
Seller, agents has received written notice that a Payment Program has requested
or threatened any recoupment, refund or set-off from target, or imposed any
fine, penalty or other sanction on Seller, nor has Seller been excluded from
participation in a payment program. Seller has not submitted to a Payment
Program any false or fraudulent claim for payment, nor has Seller at any
time
violated in any material respect any condition for participation, or any
published rule, regulation, policy or standard of a Payment
Program.
4.18
Fraud
and Abuse.
Neither
Seller, nor any of Seller’s officers, employees or agents, has engaged in any
activities that are prohibited under Federal Medicare and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇
▇.▇.▇. §§ ▇▇▇▇▇-▇, ▇▇▇▇▇-▇▇, ▇▇▇▇▇-▇▇ or the Federal False Claims Act, 31 U.S.C.
§ 3729 et seq., the regulations promulgated pursuant to such statutes, or
any
related state or local statutes or regulations.
4.19
Physician
Self-Referrals.
Seller’s operations are in compliance in all material respects with and do not
otherwise violate the Federal Medicare and Medicaid statutes regarding physician
self-referrals, 42 U.S.C. §§ 1395nn and 1396b(s), the regulations promulgated
pursuant to such statutes, or any related state or local statutes or
regulations.
Neither
Seller, nor any of Seller’s officers, employees or agents, has engaged in any
activities that may violate such statutes or regulations.
4.20
Controlled
Substances.
Seller
has not engaged in any activities which are prohibited under the Federal
Controlled Substances Act, 21 U.S.C. § 801 et seq., or the regulations
promulgated pursuant to such statute or any related state or local statutes
or
regulations concerning the dispensing and sale of controlled
substances.
4.21 Customers
and Suppliers.
Schedule
4.21 hereto sets forth a list of Seller’s fifteen largest suppliers and
referrers of customers in order of dollar volume of referrals and purchases,
respectively, during its last three fiscal years, showing the approximate
total
referrals and purchases, respectively, in dollars and product description
to or
from each such referral source and supplier, respectively, during each such
period. There has not been any adverse change, other than price changes that
may
have been mandated by the Medicare or Medicaid programs, and there are no
facts
known to Seller which may reasonably be expected to indicate that any adverse
change may occur in the business relationship of Seller or, after the Closing,
Buyer with any referral source or supplier named on Schedule 4.21.
4.22
Insurance.
Schedule 4.22 contains a complete and correct list of all policies
of
insurance of any kind or nature covering Seller, including, without limitation,
policies of life, fire, theft, casualty, product liability, workmen’s
compensation, business interruption, employee fidelity and other casualty
and
liability insurance, indicating the type of coverage, name of insured, the
insurer, the premium, the expiration date of each policy and the amount of
coverage. All such policies (i) are with insurance companies reasonably
believed by Seller to be financially sound and reputable and are in full
force
and effect; (ii) are sufficient for compliance with all requirements
of law
and of all applicable agreements; (iii) are valid, outstanding and
enforceable policies; and (iv) provide full insurance coverage for
the
assets and operations of Seller for all risks normally insured against by
persons carrying on the same business as Seller. Complete and correct copies
of
such policies have been furnished to Buyer.
13
4.23
Disclosure. No
representation, warranty or other statement by Seller herein or made in writing
in connection herewith contains or will contain an untrue statement of a
material fact, or omits or will omit to state a material fact necessary to
make
the statements contained herein or therein not misleading.
ARTICLE
V
REPRESENTATIONS
AND WARRANTIES REGARDING BUYER
Buyer
hereby represents and warrants to Seller as follows:
5.1 Organization
and Qualification. Buyer
is
a corporation duly organized, validly existing and in good standing under
the
laws of the State of California, with full corporate power and authority
to own,
lease and operate its properties and assets and to conduct its business as
it is
now being conducted.
5.2 Authority. Buyer
has
all requisite power and authority to execute and deliver this Agreement and
to
perform, carry out and consummate the transactions contemplated hereby. The
execution, delivery and performance of this Agreement have been duly authorized
by all necessary corporate action on the part of Buyer. This Agreement
constitutes the legal, valid and binding obligations of Buyer, enforceable
against Buyer in accordance with its terms.
5.3 No
Breach.
Neither
the execution and delivery of this Agreement by Buyer nor the consummation
of
the transactions contemplated herein will: (i) violate any provision of the
Certificate of Incorporation or Bylaws of Buyer; (ii) conflict with, result
in a
breach of or constitute a default (or an event which, with or without notice,
lapse of time or both, would constitute a default) under, or give any third
party the right to terminate or modify, any material agreement or other
instrument to which Buyer is a party or by which it or any of its assets
is
bound; (iii) conflict with, violate, result in a breach of or constitute
a
default under any judgment, decree, order or process of any court or
governmental authority; (iv) conflict with or violate any material statute,
law
or regulation applicable to the business of Buyer; or (v) require Buyer to
obtain any authorization, consent, approval or waiver from, or to make any
filing with, any governmental or regulatory authority.
5.4 Finders. Neither
Buyer, nor any of its Affiliates, nor any of their respective directors or
officers, has taken any action that, directly or indirectly, would obligate
Seller or any of its Affiliates to anyone acting as a broker, finder, financial
advisor or in any similar capacity in connection with this Agreement or any
of
the transactions contemplated hereby.
14
ARTICLE
VI
COVENANTS
6.1 Obtaining
Consents. Seller
shall use its best efforts to obtain all consents to the assignment to Buyer
of
all Contracts to be assigned to Buyer pursuant to this Agreement, in each
case
without any condition or qualification adverse to Buyer. Buyer and Seller
shall
use all reasonable efforts to obtain all consents, approvals and waivers
from,
and give all notices to, and make all declarations, filings and registrations
with, any governmental and regulatory agencies that are required to consummate
the transactions contemplated hereby. Buyer and Seller shall coordinate and
cooperate with one another and supply such assistance as may be reasonably
requested by each in connection with the foregoing.
6.2 Transfer
and Retention of Records. Except
as
may be required for tax purposes or other regulatory purposes, neither Seller,
nor any of its respective successors and assigns, will retain any document,
databases or other media embodying any confidential or proprietary information
relating to Seller’s business or use, publish or disclose to any third person
any such confidential or proprietary information relating to Seller’s business;
provided,
however,
that
Seller shall be entitled to retain copies of any of the foregoing (and have
access to the same after the Closing) to the extent necessary in connection
with
prosecuting or defending any matter not assumed by Buyer. Seller shall take
all
actions requested by Buyer to transfer records relating to Seller’s business to
Buyer, which may include making duplicate copies of any records retained
by
Seller in the form of papers or computer media.
6.3 Employee
Matters.
Buyer
shall not assume or be responsible in any way for the obligations, liabilities
or responsibilities (a) of any Employee Benefit Plan of Seller, (b) of Seller,
any Affiliate of Seller or any fiduciary under, arising from, or with respect
to
any Employee Benefit Plan of Seller or (c) to any of Seller's officers,
directors, employees and agents, arising from
or
related to the transactions contemplated by this Agreement. Buyer shall not
be
deemed to be a successor employer with respect to the employment of any employee
of Seller or with respect to any of Seller's Employee Benefit Plans.
Buyer
may offer employment to any or all of Seller’s employees and former employees,
but shall not be obligated to do so.
6.4 Insurance.
Seller
shall cause Seller’s business to obtain and/or continue to maintain in full
force and effect “occurrence” based general liability insurance policies or
other insurance arrangements reasonably satisfactory to Buyer through the
Closing Date and shall not allow any breach, default, termination or
cancellation of such insurance policies or agreements to occur or
exist.
6.5 Further
Assurances.
Buyer
and Seller shall, and shall cause their respective Affiliates to, at the
request
and the expense of the other, execute and deliver such other instruments
of
conveyance and transfer and assumption and take such other action as may
be
reasonably requested so as to consummate the transactions contemplated hereby
or
otherwise to consummate the intent of this Agreement. Without limiting the
generality of the foregoing, the Seller will, and will cause its management
to,
execute management representation letters reasonably requested by Allion’s
outside auditors in connection with the audit of Seller required by applicable
law.
15
6.6 Certain
Covenants of Seller.
Seller
hereby covenants that (unless Buyer otherwise gives its written approval
in its
sole discretion) Seller shall at its sole cost and expense take the actions
set
forth below:
(a) At
the
Closing, Seller shall pay or otherwise discharge (in full, without discount
or
compromise) all the Excluded Liabilities.
(b) Prior
to
the Closing, Seller shall operate its business in the ordinary course as
historically conducted, and maintain the Assets in good operating condition.
Prior to the Closing, Seller shall pay its debts and accounts payable in
the
ordinary course of business and on a timely basis.
(c) Prior
to
and after the Closing, Seller shall afford Buyer, its attorneys, accountants,
consultants and representatives, free and full access to Seller, the Assets,
the
books and records of Seller relating thereto and employees of Seller, at
all
reasonable times upon reasonable notice and during normal business hours,
and
shall provide to Buyer and its representatives such additional financial
and
operating data and other information as Buyer shall from time to time reasonably
request. The access will be provided to the fullest extent permitted by law,
including applicable provisions of HIPAA.
(d) Prior
to
and after the Closing, Seller shall use its best efforts to preserve for
Buyer
the goodwill of its customers and suppliers, and others having business
relations with Seller, and prior to and after the Closing shall do all things
reasonably requested by Buyer for such purpose. However, at no time prior
to the
Closing shall Seller engage in marketing activities on behalf of Buyer, or
activities which include the promotion of Buyer or its business.
(e) Prior
to
and after the Closing, Seller shall promptly advise Buyer in writing of the
commencement or threat against Seller of any suit, litigation or legal
proceeding that relates to or might affect Seller or the Assets.
(f) Prior
to
the Closing, Seller shall not, and shall not permit its shareholders, officers,
directors, employees or agents to, directly or indirectly, initiate, solicit
or
knowingly encourage (including by way of furnishing non-public information
or
assistance) any offer or proposal for, or enter into negotiations of any
type,
or any letter of intent or purchase agreement, merger agreement or other
similar
agreement with any individual or entity with respect to, a sale of any Assets
(other than in the ordinary course of business consistent with past practice)
or
license of any Assets, or a merger, consolidation or business combination
in
which Seller is a constituent entity, any sale of all or any portion of Seller’s
equity, or any liquidation or similar extraordinary transaction with respect
to
Seller. Prior to Closing, Seller shall, and shall cause its shareholders,
officers, directors, employees and agents to, immediately cease all discussions
and negotiations with respect to any such transaction, and promptly advise
Buyer
of any solicitation or other request by any individual or entity relating
to any
such transaction.
(g) Prior
to
the Closing, Seller shall not dispose, encumber or cause, permit or allow
any
Encumbrance to be placed on any of the Assets, except for sales in the ordinary
course of business.
16
(h) Prior
to
the Closing, Seller shall use its best efforts to take any action where the
failure or omission to take such action would cause (i) any representation
or warranty in Article IV hereof to be untrue or incorrect as of the Closing
or
(ii) any of the conditions to the Closing not to be satisfied.
ARTICLE
VII
RESTRICTIVE
COVENANTS
7.1 Non-Competition. Seller
and its shareholders hereby agree that as a material inducement to Buyer
to
enter into this Agreement, and for other good and valuable consideration,
the
receipt and sufficiency of which are hereby acknowledged, Seller and its
shareholders covenant and agree that they, and each of Seller’s officers,
directors and Affiliates, shall not, for the period from the date hereof
until
three (3) years following the Closing Date (the “Restricted Period”), directly
or indirectly, on their own behalf or in the service of or on the behalf
of
others, as a director, trustee, owner (except as the owner of less than two
percent (2%) of the outstanding stock of a publicly held corporation), employee,
consultant, advisor, independent contractor or in any other capacity, engage
in
the pharmacy business within twenty-five (25) miles of ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ (the “Restricted Territory”). Notwithstanding
the foregoing, ▇▇▇▇▇▇ ▇▇▇▇▇, a shareholder of Seller, shall be permitted
to own
and operate his present pharmacy, Care Health, Inc., in Orange County,
California, provided that (x) such pharmacy serves only the Orange, Riverside
and San Bernardino communities and (y) nothing contained herein shall in
any way
limit the covenants contained in Section 6.2 relating to confidential or
proprietary information of Seller (including permit ▇▇. ▇▇▇▇▇ or his pharmacy
to
use or disclose such information), or Section 7.2.
7.2 Non-Interference.
Seller
and its shareholders further agree that, during the Restricted Period and
within
the Restricted Territory, Seller and its shareholders will not, directly
or
indirectly; (i) induce any former customer of Seller or customer of
Buyer
to patronize any Person who competes with Buyer; (ii) request or advise
any
former customer of Seller or customer of Buyer to withdraw, curtail or cancel
such Person’s business with Buyer; (iii) enter into any contract, the
purpose or result of which would benefit such Seller if any former customer
of
Seller or customer of Buyer were to withdraw, curtail, or cancel such customer’s
business with Buyer; or (iv) disclose to any other Person the names
or
addresses of any former customer of Seller or customer of Buyer, either
individually or collectively.
7.3 Acknowledgements.
If
the
provisions of this Article VII are violated, in whole or in part, Buyer shall
be
entitled, upon application to any court of proper jurisdiction, to a temporary
restraining order or preliminary injunction to restrain and enjoin Seller
and
its shareholders from such violation without prejudice as to any other remedies
Buyer may have at law or in equity. In the event of a violation, Seller and
its
shareholders agree that it would be virtually impossible for Buyer to calculate
its monetary damages and that Buyer would be irreparably harmed. If Buyer
seeks
such temporary restraining order or preliminary injunction, Buyer shall not
be
required to post any bond with respect thereto, or, if a bond is required,
it
may be posted without surety thereon. If any restriction contained in this
Article VII is held by any court to be unenforceable, or unreasonable, as
to
time, geographic area or business limitation, Buyer, Seller and its shareholders
agree that such provisions shall be and are hereby reformed to the maximum
time,
geographic area or business limitation permitted by applicable laws. The
parties
further agree that the remaining restrictions contained in this Article VII
shall be severable and shall remain in effect and shall be enforceable
independently of each other. Seller and its shareholders specifically
acknowledge, represent and warrant that the covenants set forth in this Article
VII are reasonable and necessary to protect the legitimate interests of Buyer,
and that Buyer would not have entered into this Agreement or paid the Purchase
Price in the absence of such covenants.
17
ARTICLE
VIII
INDEMNIFICATION
8.1 Survival
of Representations and Warranties. All
representations and warranties contained in Articles IV and V of this Agreement
shall survive the Closing indefinitely.
8.2 Indemnification
by Seller and its Shareholders.
Seller
and its shareholders shall indemnify and save Buyer and its Affiliates, their
respective directors, officers, employees, agents and representatives and
all of
their successors and assigns (collectively “Buyer Claimants” and individually a
“Buyer Claimant”) harmless from and defend each of them from and against any and
all demands, claims, actions, liabilities, losses, costs, damages or expenses
whatsoever (including any reasonable attorneys' fees) (collectively, “Losses”)
asserted against, imposed upon or incurred by Buyer Claimants resulting from
or
arising out of (a) any inaccuracy or breach of any representation or warranty
of
Seller and its shareholders contained herein; (b) any breach of any covenant
or
obligation of Seller contained herein; (c) any liability of Seller arising
out
of events occurring, conditions existing, products sold or activities of
Seller;
(d) noncompliance with any applicable bulk sales or similar laws (including
laws
which may impose transferee liability on Buyer or an Affiliate of Buyer or
create Encumbrances on the Assets relating to Seller's liability for sales,
use
or other taxes or withholdings arising out of the operations of Seller);
and (e)
any liability arising out of or related to Seller’s business prior to Closing,
or the assertion against a Buyer Claimant of a claim which, if valid, would
constitute a liability arising out of or related to Seller’s business prior to
Closing.
8.3 Indemnification
by Buyer.
Buyer
shall indemnify and save Seller and its respective Affiliates and their
respective directors, officers, employees, agents and representatives
(collectively “Seller Claimants” and individually a “Seller Claimant”) harmless
from and defend each of them from and against any and all Losses asserted
against, imposed upon or incurred by Seller Claimants resulting from or arising
out of (a) any inaccuracy or breach of any representation or warranty of
Buyer
contained herein; (b) any breach of any covenant or obligation of Buyer
contained herein; and (c) except as described in Section 8.2 above, Buyer's
ownership of the Assets and operation of its business from and after the
Closing
Date.
8.4 Indemnification
Procedures.
(a) The
rights and obligations of each party claiming a right to indemnification
hereunder (“Indemnitee”) from the other party (“Indemnitor”) shall be governed
by the following rules:
18
(i) The
Indemnitee shall give prompt written notice to the Indemnitor of any state
of
facts which Indemnitee determines will give rise to a claim by the Indemnitee
against the Indemnitor based on the indemnity agreements contained herein,
stating the nature and basis of said claims and the amount thereof, to the
extent known. No failure to give such notice shall affect the indemnification
obligations of Indemnitor hereunder, except to the extent such failure
materially prejudices such Indemnitor's ability successfully to defend the
matter giving rise to the indemnification claim.
(ii) In
the
event any action, suit or proceeding is brought against the Indemnitee, with
respect to which the Indemnitor may have liability under the indemnity
agreements contained herein, then upon the written acknowledgment by the
Indemnitor within thirty days of the bringing of such action, suit or proceeding
that it is undertaking and will prosecute the defense of the claim under
such
indemnity agreements and confirming that the claim is one with respect to
which
the Indemnitor is obligated to indemnify and that it will be able to pay
the
full amount of potential liability in connection with any such claim, the
action, suit or proceeding (including all proceedings on appeal or for review
which counsel for the Indemnitee shall deem appropriate) may be defended
by the
Indemnitor. However, in the event the Indemnitor shall not offer reasonable
assurances as to its financial capacity to satisfy any final judgment or
settlement, the Indemnitee may assume the defense and dispose of the claim,
after 30 days prior written notice to the Indemnitor. The Indemnitee shall
have
the right to employ its own counsel in any such case, but the fees and expenses
of such counsel shall be at the Indemnitee's own expense unless (A) the
employment of such counsel and the payment of such fees and expenses both
shall
have been specifically authorized by the Indemnitor in connection with the
defense of such action, suit or proceeding or (B) the Indemnitee shall have
reasonably concluded and specifically notified the Indemnitor that there
may be
specific defenses available to it which are different from or additional
to
those available to the Indemnitor.
(iii) In
addition, in any event specified in clause (B) of the second sentence of
subparagraph (ii) above, the Indemnitor, to the extent made necessary by
such
different or additional defenses, shall not have the right to direct the
defense
of such action, suit or proceeding on behalf of the Indemnitee. If Indemnitor
and Indemnitee cannot agree on a mechanism to separate the defense of matters
extending beyond the scope of indemnification, such matters shall be defended
on
the basis of joint consultation.
(iv) The
Indemnitee shall be kept fully informed by the Indemnitor of such action,
suit
or proceeding at all stages thereof, whether or not it is represented by
counsel. The Indemnitor shall, at the Indemnitor's expense, make available
to
the Indemnitee and its attorneys and accountants all books and records of
the
Indemnitor relating to such proceedings or litigation, and the parties hereto
agree to render to each other such assistance as they may reasonably require
of
each other in order to ensure the proper and adequate defense of any such
action, suit or proceeding.
(v) The
Indemnitor shall make no settlement of any claims which Indemnitor has
undertaken to defend, without Indemnitee's consent, unless the Indemnitor
fully
indemnifies the Indemnitee for all losses, there is no finding or admission
of
violation of law by, or effect on any other claims that may be made against,
the
Indemnitee and the relief granted in connection therewith requires no action
on
the part of and has no effect on the Indemnitee.
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ARTICLE
IX
CONDITIONS
PRECEDENT TO OBLIGATIONS OF BUYER
The
obligation of Buyer under this Agreement to consummate the transactions
contemplated hereby at the Closing shall be subject to the satisfaction,
at or
prior to the Closing, of all of the following conditions, any one or more
of
which may be waived in writing by Buyer:
9.1 Representations
and Warranties Accurate. All
representations and warranties of Seller contained in this Agreement shall
be
true and accurate in all material respects on and as of the Closing Date
as if
made again at and as of such date.
9.2 Performance
by Seller. Seller
shall have performed and complied with all agreements required by this Agreement
to be performed and complied with by it prior to or on the Closing
Date.
9.3 Certificate. Buyer
shall have received a certificate, dated the Closing Date, signed on behalf
of
Seller by a principal corporate officer of Seller, to the effect that the
conditions set forth in Sections 9.1 and 9.2 have been satisfied.
9.4 Legal
Prohibition.
No suit,
action, investigation, inquiry or other proceeding by any court or regulatory
or
governmental body or other Person shall have been instituted or threatened
which
(a) could reasonably be expected to result in a material adverse change in
the
business, condition (financial or otherwise), prospects, assets or operations
of
Seller’s business or, after the Closing, Buyer; (b) arises out of or relates to
this Agreement or the transactions contemplated hereby; or (c) questions
the
validity hereof or seeks to obtain damages in respect thereof. On the Closing
Date, there shall be no effective permanent or preliminary injunction, writ,
temporary restraining order or any order of any nature issued by a court
of
competent jurisdiction directing that the transactions provided for herein
not
be consummated as so provided.
9.5 Closing
Deliveries. Buyer
shall have received all deliveries to be made to it pursuant to Article III
of
this Agreement
ARTICLE
X
CONDITIONS
PRECEDENT TO
OBLIGATIONS OF
SELLER
The
obligations of Seller under this Agreement shall be subject to the satisfaction,
at or prior to the Closing, of all of the following conditions, any one or
more
of which may be waived in writing by Seller.
10.1 Representations
and Warranties Accurate. All
representations and warranties of Buyer contained in this Agreement shall
be
true and accurate in all material respects on and as of the Closing Date
as if
made again at and as of such date.
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10.2 Performance
by Buyer. Buyer
shall have performed and complied with all agreements required by this Agreement
to be performed and complied with by it prior to or on the Closing
Date.
10.3 Certificate. Seller
shall have received a certificate, dated the Closing Date, signed on behalf
of
Buyer by a principal corporate officer of Buyer, to the effect that the
conditions set forth in Sections 10.1 and 10.2 have been satisfied.
10.4 Legal
Prohibition.
No suit,
action, investigation, inquiry or other proceeding by any court or regulatory
or
governmental body or other person shall have been instituted which arises
out of
or relates to this Agreement or the transactions contemplated hereby or
questions the validity hereof or seeks to obtain substantial damages in respect
thereof. On the Closing Date, there shall be no effective permanent or
preliminary injunction, writ, temporary restraining order or any order of
any
nature issued by a court of competent jurisdiction directing that the
transactions provided for herein not be consummated as so provided.
10.5 Closing
Deliveries. Seller
shall have received all deliveries to be made to them pursuant to Article
III of
this Agreement.
ARTICLE
XI
MISCELLANEOUS
11.1 Termination.
(a) This
Agreement may be terminated at any time prior to Closing Date:
(i) by
mutual
consent of the parties hereto;
(ii) by
Buyer,
by written notice given to the Seller, if any of the conditions set forth
in
Article IX shall have become incapable of fulfillment and shall not have
been
waived by Buyer; or
(iii) by
Seller, by written notice given to the Buyer, if any of the conditions set
forth
in Article X shall have become incapable of fulfillment and shall not have
been
waived by Seller; or
(iv) by
either
of the parties hereto:
(A) if
a
court of competent jurisdiction or governmental, regulatory or administrative
agency or commission shall have issued an order, decree or ruling or taken
any
other action (which order, decree or ruling the parties hereto shall use
their
best efforts to lift), in each case permanently restraining, enjoining or
otherwise prohibiting the transactions contemplated by this Agreement, and
such
order, decree, ruling or other action shall have become final and nonappealable;
or
(B) if
the
Closing Date shall not have occurred on or before August 15, 2005; provided,
however,
that
the right to terminate this Agreement shall not be available to any party
whose
breach of this Agreement has been the cause of, or resulted in, the failure
of
the Closing to occur on or before such date; or
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(v) by
Buyer,
if there has been a breach in any material respect of any representation
or
warranty by Seller.
(b) In
the
event of termination pursuant to Section 11.1(a) of this Agreement, written
notice thereof shall forthwith be given to the other party to this Agreement
and
this Agreement shall terminate, without further action by either of the parties
hereto. If this Agreement is terminated as provided herein, no party hereto
shall have any liability or further obligation to any other party to this
Agreement resulting from such termination except (A) that the provision of
this
Section 11.1(b) and the proviso of Section 11.1(a)(iv)(B) of this Agreement
shall remain in full force and effect and (B) no party waives any claim or
right
against a breaching party to the extent that such termination results from
the
breach by a party hereto of any of its representations, warranties, covenants
or
agreements set forth in this Agreement.
11.2 Expenses. Each
party hereto shall pay its own expenses incurred in connection with this
Agreement, except as otherwise specified in this Agreement and except that
all
sales, transfer and other similar taxes, levies and charges that may be imposed,
levied or assessed in connection with the consummation of the transactions
contemplated hereby shall be borne by Seller.
11.3 Amendment. This
Agreement may not be terminated, amended, altered or supplemented except
by a
written agreement executed by the parties hereto.
11.4 Entire
Agreement. This
Agreement, including the schedules hereto, and the instruments and other
documents delivered pursuant to this Agreement, contain the entire agreement
of
the parties relating to the subject matter of this Agreement and supersede
all
other agreements and understandings of any kind between the parties respecting
such subject matter. Each and every representation, warranty and covenant
shall
be deemed to include the information contained in the schedules
thereto.
11.5 Waivers. Waiver
by
either party of either breach of or failure to comply with any provision
of this
Agreement by the other party shall not be construed as, or constitute, a
continuing waiver of such provision, or a waiver of any other breach of,
or
failure to comply with, any other provision of this Agreement. No waiver
of any
such breach or failure or of any term or condition of this Agreement shall
be
effective unless in a written notice signed by the waiving party and delivered,
in the manner required for notices generally, to each affected
party.
11.6 Notices. All
notices, consents, directions, approvals, instructions, requests and other
communications required or permitted by the terms of this Agreement to be
given
to any Person shall be in writing, and any such communication shall become
effective five Business Days after being deposited in the United States mails,
certified or registered (return receipt requested), with appropriate postage
prepaid for first class mail or, if delivered by hand or courier service
or in
the form of a telex, telecopy or telegram, when received (if received during
normal business hours on a Business Day, or if not, then on the next Business
Day thereafter), and shall be directed to the following address or telex
or
telecopy number:
22
If
to
Seller:
Frontier
Pharmacy & Nutrition, Inc.
▇▇▇▇
▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
Telecopier:
_________________
With
a
copy to:
The
▇▇▇▇▇
Firm
▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Telecopier:
▇▇▇-▇▇▇-▇▇▇▇
If
to
Buyer:
Medicine
Made Easy
c/o
Allion Healthcare, Inc.
▇▇▇▇
▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention:
Mr. ▇▇▇▇ ▇▇▇▇▇
Telecopier:
▇▇▇-▇▇▇-▇▇▇▇
With
a
copy to:
▇▇▇▇▇
Peabody LLP
▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention:
▇▇▇▇▇ ▇. ▇▇▇▇▇
Telecopier:
(▇▇▇) ▇▇▇-▇▇▇▇
or
to
such other address as a party may have furnished to the other parties in
writing
in accordance herewith, except that notices of change of address shall only
be
effective upon receipt. Any notice which is so mailed shall be deemed delivered
on the fourth Business Day (or Days) after mailing; any notice which is
transmitted by telecopier shall be deemed delivered when transmitted to the
telecopier number specified above and acknowledgment of receipt of such
facsimile is received.
11.7 Counterparts.
This
Agreement may be executed in two or more counterparts, and by the different
parties hereto in separate counterparts each of which when executed shall
be
deemed to be an original, but all of which together shall constitute one
and the
same document.
11.8 Governing
Law; Submission to Jurisdiction.
This
Agreement shall be governed by, and construed in accordance with, the law
of the
State of California, without regard to applicable principles of conflict
of laws
that might otherwise govern.
23
11.9 Binding
Effect; Assignment.
This
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and assigns. Neither party shall assign
or transfer this Agreement nor any right or obligation hereunder by operation
of
law or otherwise without the consent of the other party, except that Buyer
may
assign its rights under this Agreement to an Affiliate of Buyer.
11.10
Severability. If
any
provision of this Agreement or any part of any such provision is held under
any
circumstances to be invalid or unenforceable in any jurisdiction, then: (a)
such
provision or part thereof shall, with respect to such circumstances and in
such
jurisdiction, be deemed amended to conform to applicable laws so as to be
valid
and enforceable to the fullest possible extent; (b) the invalidity or
unenforceability of such provision or part thereof under such circumstances
and
in such jurisdiction shall not affect the validity or enforceability of such
provision or part thereof under any other circumstances or in any other
jurisdiction; and (c) such invalidity or enforceability of such provision
or
part thereof shall not affect the validity or enforceability of the remainder
of
such provision or the validity or enforceability of any other provision of
this
Agreement. Each provision of this Agreement is separable from every other
provision of this Agreement, and each part of each provision of this Agreement
is separable from every other part of such provision.
11.11 Headings.
The
headings contained in this Agreement (including the schedules) are for reference
purposes only and shall not affect in any way the meaning or interpretation
of
this Agreement.
11.12 No
Agency.
Neither
party hereto shall be deemed hereunder to be an agent of, or partner or joint
venture with, the other party hereto.
11.13 Third
Parties.
Nothing
herein is intended or shall be construed to confer upon or give to any person
other than the parties hereto any rights or remedies under or by reason of
this
Agreement.
11.14 Passage
of Title and Risk of Loss.
Legal
title, equitable title and risk of loss with respect to the Assets will not
pass
to Buyer until the Assets are transferred at the Closing.
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement effective
as of
the date first above written.
SELLER:
FRONTIER
PHARMACY & NUTRITION, INC.
By:
Authorized Officer
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BUYER:
MOM’S
PHARMACY, INC.
By:
▇▇▇▇▇▇▇ ▇▇▇▇▇
President and Chief Executive Officer
AGREED
AS
TO ARTICLE VII:
▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇▇
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