Exhibit 10.9
MANAGEMENT SERVICES (LOAN OUT) AGREEMENT
BY AND BETWEEN
TEGRX PHARMACY MANAGEMENT CO., INC.
AND
▇-▇▇▇▇▇▇▇.▇▇▇
MARCH 6, 2001
TABLE OF CONTENTS
ARTICLE AND SECTION PAGE
1. DEFINITIONS 1
1.01 Definitions 1
2. RIGHTS AND RESPONSIBILITIES 3
2.01 Duties and Responsibilities of Manager 3
2.02 Books and Records; Financial Reports 4
2.03 No Assumption of Debt or Liabilities 4
2.04 Funding Other Operations 4
2.05 Additional Business Units 4
2.06 Expansion Plans 4
3. CONSIDERATION TO MANAGER 4
4. TERM AND TERMINATION 5
4.01 Term 5
4.02 Termination 5
4.03 Exceptions from Default 6
4.04 Notice of Default 6
4.05 Termination of Default 7
4.06 Effect of Termination 7
4.07 Dispute Escalation and Mediation 7
4.08 Special Early Termination 7
5. FINANCING 8
6. REPRESENTATIONS AND WARRANTIES OF THE OWNER 8
6.01 Owner Organization; Qualification and Capital Stock; Corporate Records 8
6.02 Authorization: No Violation of Law or Agreements, Consents or Defaults 9
6.03 Licenses 10
6.04 Government Contracts 10
6.05 Regulatory Matters 10
6.06 Tax Matters 11
6.07 Litigation; Claims 11
6.08 Properties; Contracts; Leases and Other Agreements 12
6.09 Employee Matters 13
6.10 Title to and Condition of Properties 14
6.11 Intellectual Property 14
6.12 Insurance 14
6.13 Relationships 15
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TABLE OF CONTENTS
ARTICLE AND SECTION PAGE
6.14 Compliance With Laws 15
6.15 No Undisclosed Liabilities or Obligations 16
6.16 Receivables 16
6.17 Provider Status 16
6.18 Statements and Disclosures True and Correct 17
7. REPRESENTATIONS AND WARRANTIES OF MANAGER 17
7.01 Organization 17
7.02 Authorization; No Violation of Laws of Agreements 18
8. ADDITIONAL UNDERTAKINGS SUBSEQUENT TO EFFECTIVE DATE 18
8.01 Assistance of Owner 18
8.02 Other Documents and Actions 18
8.03 Books and Records 18
8.04 Distribution 18
8.05 Additional Insured 18
8.06 Protection of Owner's Pharmacy Division 18
9. INDEMNIFICATION 19
10.01 Indemnification by Owner 19
10.02 Indemnification by Manager 19
10. MISCELLANEOUS 19
10.01 Publicity 19
10.02 No Third Party Beneficiaries 20
10.03 Binding Effect; Successors and Assigns 20
10.04 Assignment 20
10.05 Entire Agreement; Modification 20
10.06 Costs 20
10.07 Interpretation 20
10.08 Severability 21
10.09 Waiver of Obligations 21
10.10 Counterparts and Execution 21
10.11 Rights and Remedies Cumulative 21
10.12 Notices 21
10.13 Survival 22
10.14 Governing Law 22
10.15 Mediation and Arbitration 22
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TABLE OF CONTENTS
ARTICLE AND SECTION PAGE
EXHIBITS
Exhibit A - Locations
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MANAGEMENT SERVICES (LOAN OUT) AGREEMENT
THIS MANAGEMENT SERVICES (LOAN OUT) AGREEMENT ("Agreement") is made as
of the 1st day of March, 2001 by and between TegRx Pharmacy Management Co.,
Inc., a corporation duly organized and existing under the laws of the State of
Delaware ("Manager"); and ▇-▇▇▇▇▇▇▇.▇▇▇, a corporation duly organized and
existing under the laws of the State of Nevada ("Owner").
W I T N E S S E T H:
WHEREAS, Owner is engaged in the business of managing retail and
institutional pharmacies at the locations listed on Exhibit A and in actively
acquiring new pharmacies and related businesses in conjunction with Owner's
philosophy and business intention of significantly expanding its Pharmacy
Division (the "Business"); and
WHEREAS, Owner wishes to engage Manager, and Manager wishes provide
certain services to Owner, relating to the loan out of its staff for the benefit
of Owner as well as the management of the Business, on the terms and conditions
set forth herein.
NOW, THEREFORE, the parties hereto, intending to be legally bound,
agree as follows:
1. DEFINITIONS.
1.01 DEFINITIONS. The following terms shall have the meanings set
forth below when capitalized herein:
(a) "Affiliate" shall mean, as to any Person, any other Person
controlled by, under the control of, or under common control with, such Person.
As used in this definition, "control" shall mean possession, directly of
indirectly, of power to direct or cause the direction of management or policies
(whether through ownership of securities or partnership, membership or other
ownership interests, by contract or otherwise), provided that, in any event, any
Person which owns or holds directly or indirectly 5% or more of the voting
securities or 5% or more of the partnership, membership or other equity
interests of any other Person (other than as a limited partner of such other
Person) will be deemed to control such other Person.
(b) "Books and Records" shall mean all books and records of
Owner pertaining to the Business for the period prior to the Effective Date,
including customer referral lists, reports, plans, projections and advertising
and marketing materials and financial and accounting books and records;
(c) "Business Day" shall mean any day other than a Saturday,
Sunday or legal holiday in the State of Delaware.
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(d) "Contracts" shall mean all agreement between Owner and any
other Person, written or oral, for the provision of goods or services, including
without limitation the Material Contracts.
(e) "Contingent Management Fee" shall have the meaning set
forth in Section 3(b).
(f) "CPI" shall mean the United States Department of Labor
Bureau of Statistics consumer price index for all urban consumers.
(g) "Disclosure Index" shall mean an index of all Disclosure
Documents, with ▇▇▇▇▇ numbers, as attached hereto as DISCLOSURE SCHEDULE 1.01(r)
and as supplemented as provided herein.
(h) "Disclosure Schedules" shall mean the Disclosure Schedules
attached to this Agreement, as supplemented as provided herein.
(i) "Effective Date" shall mean March 1, 2001.
(j) "Fixed Management Fee" shall have the meaning as set forth
in Section 3(a) hereof.
(k) "Intellectual Property" shall mean (i) any patent,
copyright, trademark, registered design, trade name, service ▇▇▇▇, service name,
brand ▇▇▇▇, brand name, logo, corporate name, Internet domain name or industrial
design, any registrations thereof and pending applications therefor (to the
extent applicable), (ii) any other intellectual property right (including,
without limitation, any know-how, trade secret, trade right, formula,
conditional or proprietary report or information, customer or membership list,
any marketing data, and any computer program, software, database or data right),
(iii) any rights under licenses, consents, orders, statutes, or otherwise
(including without limitation license(s) to use specific telephone numbers)
relating to any of the foregoing, owned or used by Owner, and (iv) any goodwill
associated with any of the foregoing. Intellectual Property shall include
without limitation those items set forth on DISCLOSURE SCHEDULE 6.11(e).
(l) "Manager" shall mean TegRx Pharmacy Management Co., Inc.
(m) "Master Management Agreement" shall have the meaning set
forth in Section 4.03 hereof.
(n) "NCFE" shall mean National Century Financial Enterprises,
Inc.
(o) "Person" shall mean an individual, corporation,
partnership, limited liability company, limited liability partnership, joint
venture, trust or unincorporated organization, joint stock company or other
similar organization, government or any political subdivision thereof, or any
other legal entity.
(p) "Real Property" shall mean the land, together with the
buildings, structures and improvements erected thereon leased or owned by Owner
and used in connection
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with the Business, and all lighting, heating, ventilating, air conditioning,
mechanical, electrical and plumbing systems and other permanent fixtures within
such buildings or structures, described on DISCLOSURE SCHEDULE 1.01(p).
(q) "Receivables" shall mean all billed and unbilled accounts
receivable, trade receivables, work in progress, notes receivable and other
receivables arising out of or related to the Business, as of the Effective Date.
(r) "Owner" shall mean ▇-▇▇▇▇▇▇▇.▇▇▇.
(s) "Owner Confidential Information" shall mean all
documentation, know-how and information relating to Owner's past, present and
future business which is unique to Owner, and including without limitation (i)
proprietary computer software, (ii) business methods, (iii) practices, (iv)
marketing strategies and plans, (v) financial information, (vi) projections,
(vii) operations manuals, (viii) bulletins, (ix) directories, (x) memoranda,
(xi) production processes, (xii) devices, (xiii) techniques, (xiv) databases,
(xv) tables, (xvi) calculations, (xvii) letters, (xviii) informal specifications
and testing procedures, (xix) price and fee lists, pricing methodologies and
bidding procedures, (xx) suppliers, clients and customers, including client
and/or customer lists, and materials relating to Owner's relationship with its
suppliers, clients and customers, (xxi) information provided to Owner by clients
and customers, (xxii) engineering date, (xxiii) billing and collection practices
and procedures and (xxiv) any other confidential information which is not
generally known to the public, which if misused or disclosed could have a
reasonable possibility affecting the business of Owner.
2. RIGHTS AND RESPONSIBILITIES.
2.01 DUTIES AND RESPONSIBILITIES OF MANAGER. Owner hereby appoints
Manager as the exclusive manager of the Business and grants Manager all the
power and authority necessary to carry out, in the manner deemed best by
Manager, the management of the Business; provided, however, that this Agreement
shall in no way modify the responsibility of Owner to comply with state and
federal licensure laws and Medicare certification requirements. The relationship
between Manager and Owner is one of principal and agent. Manager and Owner are
not partners or joint-venturers and it is agreed that Manager is acting solely
as the agent of Owner in performing services to be provided hereunder.
Notwithstanding the foregoing, the responsibility of Manager to operate the
Business shall be exclusive, including to the exclusion of Owner. As the
exclusive manager to the Business, Manager is responsible for the following, but
only with respect to the Business:
a. executive management;
b. finance (i.e., general ledger, payroll and other
bookkeeping functions);
c. human resources;
d. benefits administration;
e. facilities administration;
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f. reimbursement;
g. compliance;
h. accounts payable, including approval, cash
management, and payment;
i. procurement;
j. asset management;
k. disbursements;
l. tax compliance; and
m. expansion.
At the request of Owner, Manager shall provide the services set forth
above, except for maintaining the general ledger and complying with Securities
and Exchange Commission reporting requirements, for all business operations of
Owner.
2.02 BOOKS AND RECORDS; FINANCIAL REPORTS. Manager shall establish
and administer accounting procedures, controls and systems for the development,
preparation and safekeeping of records and books of accounts relating to
financial affairs of the Business. Manager shall provide quarterly operational
reports to Owner.
2.03 NO ASSUMPTION OF DEBT OR LIABILITIES. Manager is not assuming
any of Owners debt, obligations or liabilities arising either before or after
the Effective Date.
2.04 OTHER OPERATIONS. Manager and its Affiliates shall have the
right to conduct any other business activity and to own any assets, regardless
of location, except that, during the term of this Agreement, Manager shall not
own, operate or manage any retail drug store within five (5) miles of any
location listed on Exhibit A without the prior consent of Owner. Manager
acknowledges that it has affiliations with certain affiliates (e.g., Chartwell
Management Company, Inc.) who also operate pharmacy-related businesses and
Manager stipulates and agrees that, to the extent such affiliates operate any
retail drug store, such operation will never be permitted by Manager to
materially interfere with Manager's obligations hereunder; provided, however,
that the foregoing provision shall not apply to joint ventures of Manager's
Affiliates with unrelated third parties which are referred to as the National
Centers of Excellence ("NCOE").
2.05 ADDITIONAL BUSINESS UNITS. In the event that during the term
hereof Manager acquires any retail or institutional pharmacies, such pharmacies
shall be operated for the benefit of Owner and managed pursuant to the terms of
this Agreement.
2.06 EXPANSION PLANS. The parties hereto acknowledges and agree that
(a) they both have long-term relationships with NCFE and understand the nature
of NCFE's business, (b) Owner is currently planning on acquiring several
additional pharmacies with total organizational
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revenue bases in excess of $80 million, (c) Owner would not enter into this
Agreement absent assurances that Manager will work with reasonable diligence to
comply with Owner's expansion plans and (d) Manager hereby provides those
assurances.
3. CONSIDERATION TO MANAGER. In consideration of Manager's performance
of the management services required under this Agreement, Owner shall compensate
Manager as follows:
a. Owner shall pay Manager one hundred thousand dollars ($100,000)
on the fifteenth (15th) and on the last day of each month, for a total of two
hundred thousand dollars ($200,000) each month. Such amount shall be adjusted
annually, on the anniversary of the Effective Date, by a percentage equal to the
percentage increase in the CPI between the Effective Date and such anniversary
Date ("Fixed Management Fee").
b. On or before the twentieth (20th) day of each month, Owner shall
pay Manager forty percent (40%) of the EBITDA (earnings before interest, taxes,
depreciation and amortization) generated by the Business for the previous month,
less the amount of Fixed Payment in the previous month ("Contingent Management
Fee").
c. In the event that any payment due Owner shall become overdue for
a period of five (5) days, a late charge of five cents ($.05) for each dollar
($1.00) so overdue may be charged by Owner for the purpose of defraying the
expense incident to handling such delinquent payment.
d. Owner, with the written consent of Manager, shall have the right
to designate certain senior staff of Manager (not to exceed three (3)), whose
sole responsibilities are to provided services in connection with the Business,
to become employees of Owner. Such employees shall be compensated by Owner and
shall remain under the management and supervision of Manager. Any compensation
negotiated directly with such employees shall not be considered in determining
EBITDA in connection with the calculation of the Contingent Management Fee.
4. TERM AND TERMINATION.
4.01 TERM. This Agreement shall have a term of ten (10) years
("Term"), commenting on the Effective Date.
4.02 TERMINATION.
(a) Owner shall have no right to terminate this Agreement
unless and until one of the following events occur (hereinafter collectively
referred to as "Manager Default"), after which Owner shall have the right - but
not the obligation - to declare a termination of this Agreement in accordance
with the termination protocols set forth below;
(i) appointment of a receiver or trustee to manage the
assets of Manager;
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(ii) assignment for the benefit of creditors of the assets
of Manager;
(iii) any act of bankruptcy by Manager; and/or
(iv) breach of any material term of this Agreement, where
such breach has not been cured within thirty (30) days after the giving of
written notice of the breach, specifying the nature of the breach, and complying
with all provisions regarding mediation set forth herein.
(b) Manager shall have no right to terminate this Agreement
unless and until one of the following events occur (hereinafter "Owner
Default"), after which Manager shall have the right - but not the obligation -
to declare a termination of this Agreement in accordance with the termination
protocols set forth below:
(i) appointment of a receiver or trustee to manage the
assets of Owner;
(ii) assignment for the benefit of creditors of the assets
of Owner;
(iii) any act of bankruptcy by Owner;
(iv) breach of any material term of this Agreement, where
such breach has not been cured within thirty (30) days after the giving of
written notice of the breach, specifying the nature of the breach, and complying
with all provisions regarding mediation set forth herein; and/or
(v) insufficient funding is provided by Owner or any other
source for the operation of the Business; provided, however, that Manager shall
in no event be required to provide any funding for the operation of the
Business.
4.03 EXCEPTIONS FROM DEFAULT. Notwithstanding any provision of this
Agreement to the contrary, Manager agrees that no event occurring with respect
or appertaining to the Management Services and Joint Venture Agreement dated as
of April 7, 2000 by and between Prime Med Pharmacy Services, Inc. and Owner
(hereinafter "Master Management Agreement") (including, without limitation, an
adverse judicial ruling of Owner's rights under that Master Management Agreement
or any other result having anything to do with that Master Management Agreement)
shall permit Manager to in any way declare a default hereunder; it being the
intention of the parties hereto that Manager shall develop and grow Owner's
Pharmacy Division irrespective of any outcome arising from the Master Management
Agreement. On the other hand, to the extent Owner continues to operate under the
Master Management Agreement, Manager is expected hereunder to fully perform its
duties arising by reason of the Master Management Agreement.
4.04 NOTICE OF DEFAULT. Neither a Manager Default or Owner Defaults
shall be deemed to have occurred unless the non-defaulting Party has complied
with the escalation procedure set forth in Section 4.07 and the non-defaulting
Party has given written notice (a
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"Default Notice") to the defaulting Party in accordance with the requirements of
this Section 4.04. A Default Notice shall specify in reasonable detail the
events which the non-defaulting Party believes have occurred and which
constitute or evidence a Default, the provisions of this Agreement which have
not been performed or complied with, and the actions which, in the opinion of
the non-defaulting Party, would be required to fulfill the requirements of this
Agreement and cure the Default. A Default shall not be deemed to have occurred
unless and until ninety (90) days has lapsed since the non-defaulting Party
provided notice to the defaulting party of the Defaulting and the defaulting
Party has not cured the Default. For the purposes of this agreement, all
defaults shall be presumed curable and no default shall be deemed to occur
unless and until the non-defaulting Party provides, in writing, an outline of
the acts necessary to achieve a cure.
4.05 TERMINATION OF DEFAULT. Only upon (a) the occurrence of any
Default under Section 4.02 which is not excused pursuant to this Agreement, (b)
the inability to resolve the dispute under Section 4.07, (c) the delivery of a
Default Notice to the defaulting Party as provided in Section 4.04, (d) the
circumstance where a specific remedy for the Default is not set forth above
and/or such a specific remedy is so set forth but compliance with such remedial
procedure has not yielded a resolution of the Default, and (e) the defaulting
Party's failure to cure the Default set out in the Default Notice prior to the
expiration of the cure period specified in Section 4.04 above and any extension
of that cure period, the defaulting Party shall be deemed to be in breach of
this Agreement and the non-defaulting Party shall have the right to terminate
this Agreement by delivering written notice of termination to the defaulting
Party.
4.06 EFFECT OF TERMINATION. Upon termination of this Agreement (and
irrespective of which Party terminates this Agreement), all of the following
shall apply:
(a) Manager shall turn over to Owner a complete set of books
and records appertaining to the Business within thirty (30) days after the
termination has become effective and all cure periods and other required time
has lapsed; and
(b) Subject to subsection (c) below; Manager shall have no
further right to operate the Business, whether directly or indirectly; and
(c) All sums due Manager hereunder, whether appertaining to
expenses, unreimbursed expenses or the Management Fee shall be due and payable
by Owner to Manager within one hundred eighty (180) days after the effectiveness
of the termination.
4.07 DISPUTE ESCALATION AND MEDIATION. The parties hereto agree that
they will use all reasonable efforts to resolve any disputes arising out of this
Agreement in a cooperative and expeditious manner. If the staff members for each
party are unable to resolve the dispute within ten (10) days after it arises,
either party hereto may escalate the dispute to Manager's Chief Executive
Officer then to Owner's Chairman (hereinafter collectively "Mediation
Officers"). Upon such escalation, which must be announced by the party wishing
to avail itself of the remedy within ten (10) days after the dispute arises and
if not so announced is waived, the Mediation Officers shall meet in person to
discuss the outstanding issues and attempt in good faith to reach a resolution.
If the foregoing procedure fails to resolve the dispute within thirty (30) days
after such meeting, the parties hereto shall be entitled to any and all remedies
provided
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by law. Nothing herein shall permit one party to (a) claim a default by the
other hereunder, (b) attempt to terminate this Agreement but (c) not attend the
meeting noticed by the party wishing to avail itself of the escalation and
mediation procedure set forth herein. In the event a party under such
circumstances attempts to terminate this Agreement, such termination shall be
void ab initio and until the party asserting breach and termination shall have
fully complied with this subparagraph.
4.08 SPECIAL EARLY TERMINATION. Notwithstanding any provision in
this Agreement to the contrary, Manager may terminate this Agreement during the
first forty-five (45) days after the date of this Agreement but only in the
event that (a) any cause for termination arising from an Owner Default has
occurred under Section 4.02(b) prior to the expiration of that first forty-five
(45) days period, (b) notwithstanding written notice to Owner by Manager in the
form of a Default Notice, Manager has not cured the default identified by
Manager within the passage of twenty (20) days after the Owner's receipt of such
notice and (c) the default materially interferes with Manager's discharge of its
responsibilities hereunder. Nothing in this subparagraph shall require Manager
to comply with Section 4.04's notice provisions or Section 4.05's termination
provisions in availing itself of the Special Early Termination provisions of
this subparagraph.
5. FINANCING. Manager shall use its best efforts to obtain sufficient
funding for the Business in the form of loans or equity in such manner that
Manager shall determine. In the event, after utilizing its best efforts in this
manner, Manager is unable to obtain sufficient financial commitments within the
first forty-five (45) day period then Manager may terminate this Agreement
pursuant to the provisions of Section 4.08 above, it being the intention of the
parties that it is the Owner or assets controlled by Owner that is to be
utilized to generate financing for the Business managed by Manager.
6. REPRESENTATIONS AND WARRANTIES OF THE OWNER. As a material
inducement for Manager to enter into this Agreement and to consummate the
transactions contemplated hereby, Owner hereby makes the following
representations and warranties as of the Effective Date, each of which is relied
upon by Manager regardless of any investigation made or information obtained by
Manager.
6.01 OWNER ORGANIZATION; QUALIFICATION AND CAPITAL STOCK; CORPORATE
RECORDS.
(a) Owner is a corporation duly organized, validly existing and
in good standing under the laws of the State of Nevada, and has the corporate
power to own all of its property and assets, to incur all of its liabilities and
to carry on the Business as now being conducted.
(b) Owner is duly qualified and in good standing in each
jurisdiction in which the nature or conduct of the Business or the character or
location of its properties makes such qualification necessary; provided,
however, that Manager understands, acknowledges and agrees that it is aware that
many - if not all - of the locations where Business is conducted are locations
where Owner is merely a manager of the Business under the Master Management
Agreement and that Manager is fully aware of the Master Management Agreement,
accepts its
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terms and agrees to be fully bound by its terms during the term of this
Agreement. A list of all such jurisdictions appear on DISCLOSURE SCHEDULE
6.01(b).
(c) The names of the directors and officers of Owner, together
with the offices they hold, are set forth on DISCLOSURE SCHEDULE 6.01(c).
Attached to DISCLOSURE SCHEDULE 6.01(c) are true and correct copies of the
articles of Incorporation of Owner, together with all amendments thereto, and
the bylaws of Owner, together with all amendments thereto.
(d) Except as set forth on DISCLOSURE SCHEDULE 6.01(d), Owner
has not conducted the Business under any name other than its own, DISCLOSURE
SCHEDULE 6.01(d) includes a list of all of Owner's fictitious name
registrations.
(e) Owner has full power and authority to enter into this
Agreement and perform its duties and obligations hereunder. All corporate
actions of Owner required to authorize the execution of this Agreement and the
transactions contemplated hereby have been duly performed in accordance with
applicable law and its articles of incorporation and bylaws and are
appropriately reflected in Owner's minute books. This Agreement is a valid
obligation of Owner, legally binding upon it and enforceable in accordance with
its terms. There is no claim, action, suit or proceeding (including, without
limitation, current investigations by governmental agencies) pending against
Owner seeking to enjoin the execution and delivery of this Agreement or
consummation of the transactions contemplated hereby.
(f) The Books and Records of the Business are in all material
respects complete and correct and have been maintained in accordance with good
business practice. True and complete copies of all minutes, resolutions, stock
certificates and stock transfer records of Owner are contained in the minute
books and stock transfer books that have been delivered to Manager for
inspection and will be delivered to Manager on the Effective Date. The minute
books, stock certificate books, stock transfer records and such other books and
records as may be requested by Manager, as exhibited to Manager and its
representatives, are complete and correct in all material respects.
6.02 AUTHORIZATION: NO VIOLATION OF LAW OR AGREEMENTS, CONSENTS OR
DEFAULTS.
(a) The delivery of this Agreement and the consummation of the
transactions contemplated hereby will not (i) result in any breach or violation
of any of the terms or provisions of, or constitute a default under, the
articles of incorporation or bylaws or Owner, (ii) result in any breach or
violation of any of the terms or provisions of, constitute a default under, or
require any consent, authorization, approval, registration or filing under any
judgment, order, decree, proceeding, statute, rule or regulation of any court or
governmental agency or body, federal, state, local or foreign, having
jurisdiction over Owner.
(b) The delivery of this Agreement and the consummation of the
transactions contemplated hereby will not result in a breach or violation of the
terms of, constitute a default under or require the consent of any Person under,
any agreement, instrument, or commitment to which Owner is a party, by which
they are bound, or to which any of Owner's property is subject, and no consent
or approval is required from any third party for this Agreement.
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(c) Owner is not in default under, or in violation of any
provision of, its articles of incorporation, bylaws, or any promissory note,
indenture or any evidence of indebtedness or security therefor, lease, contract,
purchase or other commitment or any other agreement which is material to Owner.
(d) The parties hereto acknowledge and agree that the Master
Management Agreement provides, at paragraph 7.1, that the Master Management
Agreement shall not be assigned or transferred without the prior written consent
of the parties to the Master Management Agreement, and the parties further
acknowledge and agree that this Agreement does not create any such assignment
but - rather - provides staffing and turn key services to Owner under the Master
Management Agreement and otherwise.
6.03 LICENSES. Owner has all licenses, permits, consents, approvals,
appointments, certificates, franchises and other authorizations required for the
operation of the Business in all jurisdictions and/or required in connection
with the execution and performance by Owner of this Agreement ("Licenses");
provided, however, that Manager understands, acknowledges and agrees that it is
aware that many - if not all - of the Business controlled by Owner is such that
the licenses referenced herein are not owned or held by Owner but, rather are
managed by Owner under the Master Management Agreement. All such Licenses are
set forth on DISCLOSURE SCHEDULE 6.03. Such Licenses are valid and Owner has not
received any notice that any governmental authority intends to cancel, terminate
or not renew any such License. Owner holds all Licenses, the absence of any of
which could have a material adverse effect on its business.
6.04 GOVERNMENT CONTRACTS. To the best of Owner's knowledge, all
representations, certifications and disclosures made by Owner or by any other
Person with an ownership interest in the Business to any Government Contract
Party have been in all material respects current, complete and accurate at the
times they were made. To the best of Owner's knowledge, there have been no acts,
omissions or noncompliance with regard to any applicable public contracting
statute, regulation or contract requirement (whether expenses or incorporated by
reference) relating to any of the contracts with any Government Contract Party
in either case that have led to or could lead to, either before or after the
Effective Date, (a) any claim or dispute involving Owner and any Government
Contract Party, or (b) any suspension, debarment, contract renegotiation, or
contract termination, or proceeding related thereto. To the best of Owner's
knowledge, there has been no act or omission that relates to the marketing,
licensing or selling to any Government Contract Party of any of Owner's
Intellectual Property that has led to or could lead to, (either before or after
the Effective Date) any material cloud on any of Owner's rights in and to its
Intellectual Property. All of Owner's development of Intellectual Property was
developed exclusively at private expense. "Government Contract Party" shall mean
any independent or executive agency, division, subdivision, audit group or
procuring office of the federal government, including any prime contractor of
the federal government and any higher level subcontractor of a prime contractor
of the federal government, and including any employees or agents thereof, in
each case acting in such capacity.
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6.05 REGULATORY MATTERS.
(a) Except as may be disclosed in DISCLOSURE SCHEDULE 6.05, (i)
Owner is not aware of any pending or threatened investigation, audit, review or
other examination or Owner or the Business by any federal or state governmental
agency having supervisory or regulatory authority with respect to Owner or the
Business, and (ii) Owner and the Business are not subject to, nor has Owner
received any notice or advice that it may become subject to, any order,
agreement, memorandum of understanding or other regulatory enforcement action or
proceeding with or by or any federal or state governmental agency having
supervisory or regulatory authority with respect to Owner or the Business.
(b) Owner is not aware of any proposed or pending change in any
law or regulation affecting the Business, which would adversely affect the
operations, financial condition or prospects of Owner;
(c) Except as set forth on DISCLOSURE SCHEDULE 6.05, Owner and
the Business have not been audited, examined or otherwise reviewed by any
federal, state or local authorities during the current or past three (3) fiscal
years of Owner.
6.06 TAX MATTERS.
(a) Owner has filed, either on its own behalf, or there have
been filed on behalf of it as part of a consolidated group, with the appropriate
governmental agencies, all federal, state and local income, franchise, excise,
sales, use, real and personal property and other tax returns, information
statements and reports required to be filed by or on behalf of Owner relating to
the Business prior to the date hereof. All such tax returns for the last three
(3) completed tax years of Owner are listed on DISCLOSURE SCHEDULE 6.06.
(b) All such returns were prepared in accordance with
applicable laws and regulations and fairly reflect the information required to
be presented therein, and Owner has not paid any penalty, surcharge, fine or
interest in connection with any alleged underpayment of taxes.
(c) Owner, and any consolidated group of which it is a part,
have paid all taxes that have become due and payable to (or claimed to be due
and payable by) and federal, state, county, local, foreign or other taxing
authority. All estimated tax payments which have become due and payable prior to
the date of this Agreement have been paid.
(d) To the best of the Owner's knowledge, no event,
transaction, act or omission has occurred which could result in Owner becoming
liable for any tax which is primarily or directly chargeable against or
attributable to a Person other than Owner or which is charged by reference to
the income or gains of another Person. In the event that Owner has been part of
a consolidated group of taxpayers, Owner is not liable for any tax obligations
of the other members of the group.
(e) To the best of Owner's knowledge, no return (or item in a
return) is currently under audit by any taxing authority, and there are no
agreements for the extension of time for the assessment or payment of any tax.
Owner is not, and does not expect to be, involved
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in a dispute in relation to any tax matters, and to the best of the Owner's
knowledge no taxing authority has investigated or indicated that it intends to
investigate Owner's tax matters. Owner is not aware of any facts which may
constitute the basis for the proposal of any tax deficiencies for any unexamined
year.
(f) Owner has not entered into any transaction or course of
conduct (other than legitimate tax planning) designed in whole or not in part to
avoid taxes.
6.07 LITIGATION; CLAIMS.
(a) There is not action, suit, claim, investigation or
proceeding, whether at law or in equity (a "Legal Proceeding"), pending or,
to the knowledge of Owner, threatened that questions the validity of this
Agreement or the related agreements or any action taken or to be taken by
Owner or the Business in connection with the consummation of the transactions
contemplated hereby, or which seeks to prohibit, enjoin or otherwise
challenge any of the transactions contemplated hereby, including but not
limited to any qui tam actions.
(b) DISCLOSURE SCHEDULE 6.07(b) sets forth an accurate and
complete list, and a brief description (setting forth the names of the parties
involved, the court or other governmental or mediating entity involved, the
relief sought and the substantive allegations and the status thereof), of each
Legal Proceeding pending or, to the knowledge of Owner, threatened against or
affecting Owner or the Business. To the knowledge of Owner, no event has
occurred and no circumstance, matter or set of facts exist which would
constitute a valid basis for the assertion by any third party of any claim or
Legal Proceeding, other than those listed on DISCLOSURE SCHEDULE 6.07(b). Except
as set forth in DISCLOSURE SCHEDULE 6.07(b), there is no outstanding or, to the
knowledge of Owner, threatened judgment, injunction, judgment, order or consent
or similar decree or agreement (including, without limitation, any consent or
similar decree or agreement with any governmental entity) against, affecting or
naming Owner or the Business. To the best of Owner's knowledge, neither Owner
nor the Business is under an obligation with respect to the return of goods in
the possession of customers.
(c) To the best of Owner's knowledge, except as disclosed in
DISCLOSURE SCHEDULE 6.07(c), there is no claim (whether based on statute,
negligence, breach of warranty, strict liability or any other theory) relating
directly or indirectly to any product manufactured or sold, or any services
performed, by Owner.
6.08 PROPERTIES; CONTRACTS; LEASES AND OTHER AGREEMENTS.
(a) All of the owned or leased real estate used in connection
with the Business is set forth on DISCLOSURE SCHEDULE 6.08(a). Except as
described on DISCLOSURE SCHEDULE 6.08(a), Owner has not received written notice
of a violation of any applicable ordinance or other law, order, decree,
regulation, or requirement with respect to the Real Property which could have a
material adverse effect on Manager or Owner, has received no written notice of
any current violation of any applicable ordinance or other law, order,
regulation, and has not received notice of any condemnation, lien, assessment,
or the like, relating to any part of the Real Property or the operation thereof,
and, to the best of Owner's knowledge, there is not presently contemplated or
proposed any condemnation or similar action or zoning action or proceeding with
respect to the Real Property or the operation thereof. The Real Property is in
compliance with all applicable zoning ordinances (including without
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limitation parking requirements) (excepting only any noncompliance that would
not, individually or in the aggregate, have a material adverse effect on the use
of the Real Property in the business by Manager or Owner), and the consummation
of the transactions contemplated herein will not result in a violation of any
applicable zoning ordinance or the termination of any applicable zoning variance
now existing. To Owner's knowledge, the Real Property and all buildings,
improvements, and fixtures thereon or therein, and all parts thereof and
appurtenances thereto, including, without limitation, the plumbing, electrical,
mechanical, heating, ventilation, and air conditioning systems, are in good
operating condition and in a reasonable state of maintenance and repair, normal
wear and tear excepted.
(b) No contracts, rental orders, orders or agreements for
services, orders for sale of equipment and other contracts material to the
Business will terminate or are subject to modification by reason of the
execution of this Agreement.
(c) Owner is not in default, technical or otherwise, under any
real estate lease, equipment lease, loan or credit agreement, or any other
contact or agreement to which Owner is a party in connection with the Business,
and no event or condition has occurred or exists which, with the passage of
time, giving of notice or both, would cause any party to be in default
thereunder.
(d) All Material Contracts which relate to the Business,
including, without limitation, the Master Management Agreement (i) are valid and
enforceable in accordance with their respective terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally and subject, as to enforceability, to
general principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity); (ii) to the best of Owner' knowledge, no
Default (as defined below) exists under any Material Contract either by Owner or
by any other party thereto; (iii) Owner is not aware of the assertion by any
third party of any claim of Default or breach under any of the Material
Contracts. For purposes of this Agreement, the term "Default" means, with
respect to any Material Contract, (x) any breach of or default under such
Contract, (y) any event, other than the normal passage of time, which would
(either with or without notice or lapse of time or both) give rise to any right
of termination, cancellation or acceleration or any obligation to repay with
respect to such Contract, or (z) any event, other than the normal passage of
time, which would result in either a significant increase in the obligations or
liabilities of, or a loss of any significant benefit of, the party in question
under such Contract.
6.09 EMPLOYEE MATTERS.
(a) DISCLOSURE SCHEDULE 6.07(a) sets forth all officers,
directors, key employees and key consultants (other than attorneys and
accountants) employed in connection with the Business and the current
compensation and benefits of such persons as of the date of this Agreement.
Except as contemplated by this Agreement, Owner have no knowledge of any facts
indicating that any of such officers, directors or key employees intends to
leave the Business.
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(b) Except as may be disclosed in DISCLOSURE SCHEDULE 6.09(b):
(i) Owner is and has been in material compliance with all
applicable laws respecting employment and employment practices, terms and
conditions of employment and wages and hours, including, without limitation, any
such laws respecting employment discrimination and occupational safety and
health requirements, and Owner is not engaged in any unfair labor practices, and
Owner is not aware of any claims or suits alleging any unfair labor practices;
(ii) there is no material unfair labor practice complaint
against Owner pending or to the knowledge of Owner, threatened before the
National Labor Relations Board;
(iii) there is no labor dispute, strike, slowdown or
stoppage actually pending, or to the knowledge of Owner, threatened against or
directly relating to Owner; and
(iv) Owner has not experienced any material work stoppage
or other material labor difficulty during the past year.
6.10 TITLE TO AND CONDITION OF PROPERTIES.
(a) Except as described elsewhere in this Agreement or in
DISCLOSURE SCHEDULE 6.10(a), Owner is the sole owner of all assets used
primarily in connection with the operation of the Business, free and clear of
all encumbrances and rights to the possession of third parties. Other than as
disclosed in DISCLOSURE SCHEDULE 6.10(a), or specifically provided for in this
Agreement, Owner has not entered into any leases, licenses, easements or other
agreements, recorded or unrecorded, granting rights to third parties in any real
or personal property of Seller, and no person or other company has any right to
possession, use or occupancy of any of the property of Seller.
(b) Except as disclosed in DISCLOSURE SCHEDULE 6.10(b), each
item of tangible personal property used in connection with the Business is in
good and workable condition, reasonable wear and tear excepted, of a quality and
quantity usable in the ordinary course of business.
6.11 INTELLECTUAL PROPERTY.
(a) DISCLOSURE SCHEDULE 6.11(a) sets forth a list of all
Intellectual Property which is owned by the Owner, licensed by Owner, licensed
by Owner, licensed to Owner, or otherwise used or able to be used by Owner in
the Business (other than commonly-used computer software which is generally
available to the public and the rights to which were legally acquired by Owner
or Subsidiary either for free or through established retail facilities) and
indicates, with respect to each item of Intellectual Property listed thereon,
the owner thereof and, if applicable, the name of the licensor and licensee
thereof and the terms of such license or other contract relating thereto. Owner
owns or has the lawful right to use all Intellectual Property as currently used
or as necessary for the conduct of the Business as now conducted. After the
Effective Date, Manager will have the right to use all of the Intellectual
Property as currently used or as necessary for the conduct of the Business as
now conducted.
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(b) Except for Intellectual Property licensed to Owner, Owner
has full legal and beneficial ownership (free and clear of any and all
Encumbrances) of all of the Intellectual Property, and Owner has not received
any notice or claim (whether written, oral or otherwise) challenging Owner's
ownership or rights in such Intellectual Property or suggesting that any other
entity has any claim of legal or beneficial ownership with respect thereto.
(c) To the best of Owner's knowledge, the use of any of the
Intellectual Property will not conflict with, infringe upon, violate or
interfere with or constitute an appropriation of any right, title or interest
held by any other Person, and there have been no claims made with respect
thereto. To the best of Owner's knowledge, no other Person is infringing in any
respect on any part of the Intellectual Property.
(d) Owner has not conducted the Business, and has not used or
enforced (or failed to use or enforce) any Intellectual Property, in a manner
that would result in the abandonment, cancellation or unenforceability of any
item of Intellectual Property, and Owner has not taken or failed to take any
action that would result in the forfeiture or relinquishment of any Intellectual
Property used in the conduct of its business as now conducted.
6.12 INSURANCE. All material insurable properties owned or held by
Owner, and all insurable risks related to the Business, are adequately insured
by insurers which are to the best of Owner's knowledge financially sound and
reputable, in such amounts and against fire and other risks insured against by
extended coverage and public liability insurance, property damage, product
liability, general liability, workers compensation, fidelity bonds, professional
liability insurance and errors and omissions insurance, and against other risks
and in such amounts as would be prudently insured against by comparable
businesses and as may be required by law or any agreement to which Owner is a
party. DISCLOSURE SCHEDULE 6.12 lists all policies of insurance owned or held by
Owner, or insuring the Business. All current premiums and any other obligations
under such insurance have been paid and all such policies are valid and
enforceable and in full force and effect on the date hereof. Owner has not
received any notice of cancellation or of premium increase under any such
policies within the last ninety (90) days.
6.13 RELATIONSHIPS.
(a) Owner does not have knowledge of any present or future
conditions or state of facts or circumstances which would materially adversely
affect the Business after the Effective Date.
(b) Owner's relationships with its customers, referral sources,
payors and vendors are satisfactory, and Owner does not have knowledge of any
facts or circumstances which might materially alter, negate, impair or in any
way materially adversely affect the continuity of any such relationships. Owner
is not aware of any present intention on the part of any significant customer or
supplier or other business partner of Owner to either (i) terminate or
significantly change its existing business relationship with Owner either now or
in the foreseeable future, or (ii) fail to renew or extend its existing business
relationship with Owner at the end of the term of any existing contractual
arrangement such Person may have with Owner.
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(c) Owner has no knowledge of any present or future condition
or state of facts or circumstances which would prevent the Business from being
conducted by Manager after the Effective Date in essentially the same manner as
it is presently being conducted by Owner.
6.14 COMPLIANCE WITH LAWS.
(a) The operations and activities of the Business have
previously complied and continue to comply in all material respects with all
applicable federal, state or provincial and local laws, statutes, codes,
ordinances, rules, regulations, permits, judgments, orders, writs, awards,
decrees or injunctions of the United States (collectively, the "Laws"), as in
effect on or before the date of this Agreement, including without limitation,
(i) all applicable federal and state securities laws and regulations, (ii) all
applicable federal, state or provincial and local laws, ordinances and
regulations, and all orders, writs, injunctions, awards, judgments and decrees,
pertaining to (A) the sale, licensing, leasing, ownership or management of
Owner's owned, leased or licensed real or personal property, products or
Intellectual Property; (B) employment or employment practices, terms and
conditions of employment, or wages and hours; or (C) safety, health, fire
prevention, environmental protection (including matters described in Section
6.19 hereof), building standards, zoning or other similar matters; (iii) laws,
regulations, rules, orders, writs, injunctions, judgments or decrees applicable
to the export or re-export of controlled commodities or technical data; and (iv)
the Immigration Reform and Control Act. All products manufactured or sold by
Owner comply in all material respects with all applicable Laws governing their
design, manufacture, sale and intended use.
(b) To the best of Owner's knowledge, the conduct of the
Business as presently conducted does not conflict with the rights of any other
Person, or violate, or with or without the giving of notice or the passage of
time, or both, will violate, conflict with or result in a default, right to
accelerate or loss of rights under, any terms or provisions of its articles of
incorporation or bylaws as presently in effect, or any encumbrance, lease,
license, Contract, understanding, or Law to which Owner is a party or by which
it may be bound or affected. Owner has not received notice or communication from
any Person asserting a failure to comply with any Laws, nor has Owner received
any notice that any authority or third party intends to seek enforcement against
Owner to compel compliance with any such Laws.
(c) Neither Owner, nor to the best knowledge of Owner, any
officer, employee or agent of Owner acting on its behalf, nor any other Person
acting on its behalf or on behalf of the Business, has directly or indirectly
within the past three (3) years given or agreed to give any gift or similar
benefit to any customer, supplier, governmental employee or other Person who is
or may be in a position to help or hinder Owner (or assist Owner in connection
with any actual or proposed transaction) which (i) might subject Owner to any
damage or penalty in any civil, criminal or governmental litigation or
proceeding (ii) if not given in the past might have had an adverse effect on the
Assets, Business or operations of Owner, or (iii) if not continued in the
future, might adversely affect the Assets, the Business or the operations or
prospects of Manager.
6.15 NO UNDISCLOSED LIABILITIES OR OBLIGATIONS. Owner does not have
any material liability or obligation, known or unknown, asserted or unasserted,
absolute or
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contingent, accrued or unaccrued, liquidated or unliquidated, and due or to
become due (and there is no past or present fact, situation, circumstance,
condition or other basis for any present or future action, suit or proceeding,
hearing, charge, complaint, claim or demand against Owner giving rise to any
such liability or obligation).
6.16 RECEIVABLES. All of the Receivables represent usual, customary
and reasonable charges for services actually rendered or equipment and supplies
sold and delivered, are valid and enforceable claims for services rendered
and/or goods supplied by the Business and are not subject to any defenses,
offsets, claims, or counterclaims of any kind. Owner does not know of any reason
why such Receivables (net of contractual discounts and any reserve for
uncollectible accounts in an amount to be agreed upon by the parties and NCFE)
will not be collected on a timely basis consistent with past experience. Owner
warrants that all of the Receivables will be collected by Manager or Owner. All
prescriptions, letters of medical necessity, patient agreements, purchase orders
and other documents necessary to collect the Receivables have been obtained by
Owner and have been submitted to third party payors and/or patients as necessary
for payment. Owner owns its Receivables free and clear of any claims, liens or
encumbrances. Owner has all of the provider numbers required for the collection
of the Receivables and the conduct of the Business. All such provider numbers
are set forth on DISCLOSURE SCHEDULE 6.16.
6.17 PROVIDER STATUS.
(a) With regard to the Business, Owner is an approved
participating provider of services in and under the governmental and other
third-party payment programs listed on DISCLOSURE SCHEDULE 6.17(a).
(b) With regard to the Business, Owner and each of its licensed
employees are in material compliance with all applicable statutes, laws,
ordinances, rules, orders and regulations of any governmental authority with
respect to matters relating to patient healthcare, including without limitation
Section 1128B(b) of the Social Security Act, as amended, 42 U.S.C. Section
1320a7(b) (Criminal Penalties Involving Medicare, Medicaid or State Health Care
Programs) commonly referred to as the "Federal Anti-Kickback Statute," the
Social Security Act, as amended, Section 1877, 42 U.S.C. Section 1395nn
(Prohibition Against Certain Referrals), commonly referred to as "▇▇▇▇▇
Statute," and the federal False Claims Act, 31 U.S.C. Section 3729
(collectively, "Healthcare Laws"). Owner has maintained all records required to
be maintained by the Food and Drug Administration, Drug Enforcement Agency,
State Boards of Pharmacy, Social Security Administration, Health Care Financing
Administration, state healthcare agencies and the Medicare and Medicaid
programs, and, there are no presently existing facts or circumstances which
would result or likely would result in material violations of Healthcare Laws.
(c) No action is pending to suspend, limit, exclude, terminate
or revoke the status of Owner or any entity with an ownership interest in the
Business as a provider in any governmental program or under any contract with a
non-governmental payor or to require repayment by Owner or such other entity of
any amounts paid to Owner or such other entity under any such program or
contract, and neither Owner or such other entity has knowingly committed and or
is knowingly committing any act, practice, course of conduct or other activity
17
which could provide grounds for any such suspension, limitation, exclusion,
termination, revocation or repayment to any payor. Owner or such other entity
has not been provided notice by any Fiscal Intermediary, any other federal or
state agency having jurisdiction over Owner or such entity or any such
third-party insurer or other payor of its intention to suspend, limit,
terminate, revoke or fail to renew any contractual arrangement with Owner or
such other entity as a participating provider of services in whole or in part.
6.18 STATEMENTS AND DISCLOSURES TRUE AND CORRECT. The information
contained in this Agreement, including the Disclosure Schedules, Disclosure
Index and Disclosure Documents, does not fail to state all material facts with
respect to the Owner and the Business, and all other facts necessary to make the
statements therein not misleading. Each Disclosure Schedule is true and correct.
All ▇▇▇▇▇ of Disclosure Documents are true and correct copies of the originals,
and to the extent that such Disclosure Documents are agreements with other
parties all such agreements are valid and binding on the parties thereto
enforceable in accordance with their terms and no default, or event which with
the passage of time or notice, or both, would constitute in default, has
occurred thereunder. The Disclosure Documents contain all relevant material
documents pertaining to Owner and the Business and are complete and full
responses to Manager's requests for information.
7. REPRESENTATIONS AND WARRANTIES OF MANAGER. Manager hereby represents
and warrants to Owner as follows:
7.01 ORGANIZATION. Manager is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware.
7.02 AUTHORIZATION; NO VIOLATION OF LAWS OF AGREEMENTS. Manager has
full power and authority, and has taken all requisite corporate action, to enter
into and perform under this Agreement and all other agreements and documents
contemplated by or related to this Agreement to which Manager is a party.
Nothing in the articles of incorporation or bylaws of Manager, as amended, or
any other agreement, instrument, decree, proceeding, law or regulation (except
as specifically referred to in or contemplated by this Agreement) by or to which
Manager is bound or subject would prohibit or inhibit Manager from consummating
this Agreement on the terms and conditions herein contained. Upon execution and
delivery, this Agreement and any agreement or document to be executed by Manager
pursuant hereto shall constitute a legal, valid and binding obligation of
Manager in accordance with its terms.
8. ADDITIONAL UNDERTAKINGS SUBSEQUENT TO EFFECTIVE DATE.
The parties agree that subsequent to the Effective Date:
8.01 ASSISTANCE OF OWNER. Owner shall render all reasonable
assistance to Manager following the Effective Date to effect an orderly
transition of management of the Business, and shall disclose to Manager full
information about the Business, customers and suppliers of Owner.
8.02 OTHER DOCUMENTS AND ACTIONS. The parties shall execute such
documents and take such additional actions as may be necessary and appropriate
to carry out the purpose and intent of this Agreement.
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8.03 BOOKS AND RECORDS. Owner shall transfer all Books and Records
to Manager on the Effective Date.
8.04 DISTRIBUTION. On or before the twentieth (20th) day of each
month, Manager shall distribute to Owner cash generated by the Business during
the previous month in excess of the needs of the Business.
8.05 ADDITIONAL INSURED. Owner shall cause Manager to be named as an
additional insured on all insurance policies owned or held by Owner or any other
entity in connection with the Business.
8.06 PROTECTION OF OWNER'S PHARMACY DIVISION. Owner and Manager
recite, acknowledge and agree that (a) they are aware that the relationship
between Prime Med Pharmacy Services, Inc. and Owner under the Master Management
Agreement has been strained for quite some time and may very well escalate to
litigation or may already have escalated thereto (hereinafter "Prime Med
litigation"), (b) the Prime Med litigation may result in a modification to the
Business, (c) Manager shall continue to reasonably exercise its responsibilities
hereunder notwithstanding any result form the Prime Med litigation in that
Manager understands and acknowledges the underlying intention of Owner in
entering into this Agreement (as set forth in Section 2 above) which is to
continuously expand Owner's Pharmacy Division.
9. INDEMNIFICATION.
9.01 INDEMNIFICATION BY OWNER. Subject to the limitations set forth
in this Article 9, Owner agrees to indemnify and hold harmless Manager from and
after the Effective Date against and with respect to any and all claims,
demands, losses, costs, expenses, obligations, liabilities, damages, recoveries,
and deficiencies, including interest, penalties, and reasonable attorneys' fees
and expenses, costs of litigation and costs of investigation (but not including
any adjustments or credits expressly provided for in this Agreement) (together
referred to as "Manager Losses"):
(a) resulting from any breach of a representation or warranty
contained in Article 6 of this Agreement;
(b) with respect to the operation of the Business;
(c) with respect to the Prime Med litigation;
(d) otherwise resulting form the operations of Owner prior to
the Effective Date; and
(e) any and all demands, claims, actions, suits or proceedings,
assessments, judgments, costs and legal and other expenses incident to the
foregoing.
9.02 INDEMNIFICATION BY MANAGER. Subject to the limitations set
forth in this Article 9, Manager hereby agrees to indemnify and hold harmless
Owner at all times from and after the Effective Date against and with respect to
any and all claims, demands, losses, costs,
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expenses, obligations, liabilities, damages, recoveries, and deficiencies,
including interest, penalties, and reasonable attorneys' fees and expenses,
costs of litigation and costs of investigation (but not including any
adjustments or credits expressly provided for in this Agreement) ("Owner
Losses"):
(a) resulting from any breach of a representation or warranty
contained in Article 7 of this Agreement;
(b) errors and omissions by Manager in exercising its duties
and responsibilities hereunder; and
(c) any and all demands, claims, actions, suits or proceedings,
assessments, judgments, costs and legal and other expenses incident to the
foregoing.
10. MISCELLANEOUS.
10.01 PUBLICITY. Manager and Owner shall cooperate with each other
in the development and distribution of all news releases and other public
disclosures concerning this Agreement. Owner shall not issue any news releases
or make any other public disclosure without the prior consent of Manager, and
the Manager shall not issue any news releases or other public disclosure without
the prior consent of Owner, unless such is required by law upon the written
advice of counsel or is in response to published newspaper or other mass media
reports regarding the transaction contemplated hereby, in which such latter
event the parties shall consult with each other regarding such responsive public
disclosure.
10.02 NO THIRD PARTY BENEFICIARIES. Any provision hereof to the
contrary notwithstanding, nothing in this Agreement is intended, nor shall it be
deemed, to confer upon any Person other than the parties hereto and their
respective successors and assigns as any rights or remedies under or by reason
of this Agreement.
10.03 BINDING EFFECT; SUCCESSORS AND ASSIGNS. This Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, including any representative appointed to
administer or liquidate their respective estates in any way whatsoever.
10.04 ASSIGNMENT. Neither of the parties hereto may assign any of
its rights or obligations hereunder without the prior written consent of the
other party hereto.
10.05 ENTIRE AGREEMENT; MODIFICATION. This Agreement, together with
the exhibits and schedules hereto, is the entire agreement between the parties
hereto with respect to the subject matter hereof, and supersedes all prior and
contemporaneous communications, agreements and understandings with respect to
the subject matter hereof, express or implied, oral or written, all of which are
merged herein. No employee, agent or other representative of a party hereto
shall have any authority to bind such party with respect to any statement,
representation, warranty or other expression unless the same is specifically set
forth herein. No usage of trade, course of dealing or other regular practice or
method of dealing between the parties hereto shall be used to modify, interpret,
supplement or alter in any manner the terms of this Agreement.
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This Agreement may not be modified other than by an agreement in writing signed
by all parties hereto.
10.06 COSTS. Except as expressly provided herein, each party hereto
shall bear its own costs, including counsel fees and accounting fees, incurred
in connection with the negotiation, preparation and execution of this Agreement,
and all matters incident thereto. In any action or proceeding to enforce any of
the provisions of this Agreement, the unsuccessful party to such proceeding, as
determined by the court or arbitrator in any final judgment or decree, shall pay
to the successful party or parties all costs, expenses, and reasonable
attorneys' fees and expenses incurred by the successful party or parties, and if
the successful party recovers a judgment, such costs, expenses and fees shall be
included in and as a part of such judgment.
10.07 INTERPRETATION.
(a) The parties hereto acknowledge and agree that this
Agreement has been negotiated at arm's length and between parties equally
sophisticated and knowledgeable in the matters dealt with in this Agreement, and
that each party has been advised by counsel of its choosing with respect hereto.
Accordingly, any rule of law or legal decision that would require interpretation
of any ambiguities in this Agreement against the party that has drafted it is
not applicable and is hereby waived. The terms of this Agreement shall be
interpreted in a reasonable manner in order to effect the intent of the parties
as set forth herein.
(b) All references to days in this Agreement mean calendar
days unless otherwise provided. Any day or deadline or time period hereunder
which falls on a non-Business Day shall be deemed to refer to the next Business
Day.
(c) Whenever required by the context, as used in this
Agreement, the singular number shall include the plural and VICE VERSA, the
neuter shall include the masculine or the feminine gender, and the masculine
gender shall include the neuter or the feminine gender.
(d) The Article and Section headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
10.08 SEVERABILITY. Except as expressly provided to the contrary
herein, each Article, Section, term and provision of this Agreement, and any
portion thereof, shall be considered severable and if for any reason any such
portion of this Agreement is held to be invalid, contrary to, or in conflict
with any applicable present or future law or regulation in a final, unappealable
ruling issued by any court, agency or tribunal with competent jurisdiction, that
ruling shall not impair the operation of, or have any other effect upon, such
other portions of this Agreement as may remain otherwise intelligible, which
shall continue to be given full force and effect and binding upon the parties
hereto, although any portion held to be invalid shall be deemed not to be part
of this Agreement.
10.09 WAIVER OF OBLIGATIONS. Neither party shall be deemed to have
waived or impaired any right, power, or option reserved by this Agreement
(including, without limitation, its right to demand exact compliance with every
term, condition and covenant herein) by virtue of (i) any custom or practice of
the parties at variance with the terms hereof; (ii) any failure by
21
such party to demand strict compliance with this Agreement; or (iii) any waiver,
forbearance, delay, failure or omission to exercise any right, power or option.
No failure, refusal or neglect to exercise any right under this Agreement or to
insist upon full compliance by the other parties hereto with their obligations
hereunder shall constitute a waiver of any provision of this Agreement.
10.10 COUNTERPARTS AND EXECUTION. This Agreement may be executed in
multiple counterparts, each of which shall be deemed an original Agreement for
all purposes, and all of which when taken together shall constitute one
Agreement among each of the parties hereto, notwithstanding that all of the
parties are not signatories to the original or the same counterpart. Executed
signature pages to any counterpart instrument may be detached and affixed to a
single counterpart, with such single counterpart with multiple executed
signature pages affixed thereto constituting the original counterpart
instrument. All of those counterpart pages shall be read as though one, and they
shall have the same force and effect as if all the signers had executed a single
signature page.
10.11 RIGHTS AND REMEDIES CUMULATIVE. The rights and remedies
provided by this Agreement are cumulative and the use of any one right or remedy
by any party shall not preclude or waive its right to use any or all other
remedies. Such rights and remedies are given in addition to any other rights the
parties may have by law, statute, ordinance, or otherwise.
10.12 NOTICES. Any notice called for hereunder shall be deemed
properly given if (i) sent by certified mail, return receipt requested, (ii)
personally delivered, (iii) dispatched by any form of private or governmental
express mail or delivery service providing receipted delivery, (iv) sent by
telefacsimile or (v) sent e-mail, to the following addresses or to such other
address as either party may designate by notice in accordance with this Section.
If to Owner: ▇-▇▇▇▇▇▇▇.▇▇▇, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇, CEO
with a copy to:
Manatt, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇, Esquire
If to Manager: TegRx Pharmacy Management Co., Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Fax: ▇▇▇-▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇., President
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with a copy to:
S. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esquire
Shaiman, Drucker, ▇▇▇▇▇▇▇ & ▇▇▇▇▇, LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Notice shall be deemed given on the earlier of (i) actual receipt by the
receiving party, (ii) the date shown on a telefacsimile transmission
confirmation, (iii) the date on which an e-mail transmission was received by the
receiving party's on-line access provider, (iv) the date reflected on a signed
delivery receipt, or (v) two (2) Business Days following tender of delivery or
dispatch by express mail or delivery service.
10.13 SURVIVAL. All representations, warranties, indemnifications,
covenants and undertakings set forth herein shall survive the Effective Date and
shall remain binding on the parties hereto.
10.14 GOVERNING LAW. All issues relating to this Agreement and its
formation, performance and enforcement shall be governed by and construed in
accordance with the substantive laws of the State of Delaware in the United
States of America without reference to the rules governing conflict of laws.
10.15 MEDIATION AND ARBITRATION. To the maximum extent not
prohibited by law, any controversy, dispute or claim ("dispute") arising out of,
in connection with, or relating to this Agreement or the relationship
established herein, shall, at the request of either party (either before or
after the commencement of judicial proceedings), be submitted to mediation in
accordance with the rules of the American Arbitration Association ("AAA"). If
such dispute cannot be resolved within thirty (30) days, such dispute shall, at
the request of either party, be settled by arbitration in accordance with the
Commercial Arbitration Rules of the AAA. In any such arbitration proceeding: (i)
all statues of limitation which would otherwise be applicable shall apply; (ii)
the proceeding shall be conducted in Los Angeles, California by a single
arbitrator, if the amount in controversy is $1 million or less, or by panel of
three arbitrators if the amount in controversy is over $1 million; (iii) the
Federal rules of Civil Procedure and Evidence, as applicable in the Federal
District Court for the Central District of California, shall apply. Any award
rendered in any such arbitration proceeding shall be final and binding, an
judgment upon any such award may be entered in any court to resolve any such
controversy, dispute or claim, such action shall not constitute a waiver of the
right of such arty or a bar to the right of any other party to seek arbitration
under the provisions of this Section of that or any other claim, dispute or
controversy, and the court shall, upon motion of any party to the proceeding,
direct that such controversy, dispute or claim be arbitrated in accordance with
this Section. The arbitrator or arbitrators shall have the right to award
attorney fees and costs.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the day and year first above written.
TEGRX PHARMACY MANAGEMENT CO., INC. ▇-▇▇▇▇▇▇▇.▇▇▇
By: By:
----------------------------- ------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇., ▇▇▇▇ ▇▇▇▇▇▇▇, CEO
President
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