Exhibit 10.16
AGREEMENT
This AGREEMENT is made and entered into as of this 31st day of
May, 1996, by and among, Le Bonheur Health Systems, Inc., a Tennessee
not-for-profit corporation ("LHS"); PharmaThera, Inc., a Tennessee corporation
("PharmaThera"); Welsh, Carson, Xxxxxxxx & Xxxxx VII, L.P., a Delaware limited
partnership ("WCAS VII"); Southern Health Systems, Inc., a Tennessee corporation
("SHS"); Nova Factor, Inc., a Tennessee corporation ("Nova Factor"); and Nova
Holdings, Inc., a Delaware corporation (the "Company"). SHS, Nova Factor and the
Company are referred to herein as the "Purchaser Group."
WHEREAS, LHS, SHS, WCAS VII, and the Company have entered into
a Stock Purchase Agreement pursuant to which the Company will purchase all of
the shares of capital stock of SHS owned by LHS (the "Purchase Agreement");
WHEREAS, prior to closing of the Purchase Agreement, LHS will
acquire PharmaThera from SHS;
WHEREAS, in order to protect the value of PharmaThera and Nova
Factor after closing of the Purchase Agreement the parties agreed to certain
covenants set forth herein;
NOW, THEREFORE, in consideration of the covenants and
agreements herein contained, and other good and valuable consideration, the
receipt of which is hereby acknowledged, the parties hereto agree as follows:
1. Definitions
1.1 In this Agreement, the following terms shall mean
the following:
(a) "Distributed Drugs Business" shall mean the business of
marketing, advertising, selling, distributing or otherwise providing (1) the
drugs listed on Schedule 1.1(b) (which shall be deemed to include all present or
future hemophilia drugs) and (2) prescribed Premium drugs distributed or sold
pursuant to a contract whereby the drug's manufacturer or distributor has
granted the pharmacy an exclusive or Preferred right to distribute or act as a
dealer, agent or representative for one or more drugs, whether or not title to
such drug passes to the pharmacy. A Preferred right is defined as a right
granted to four or fewer entities to distribute drugs from the manufac-
turer or the manufacturer's distributor. A Premium drug is a pharmaceutical with
an average monthly sales price per patient exceeding $749. The Distributed Drugs
Business also includes those ancillary medical supplies and oral medications
that are prescribed with the disease therapy which uses such drugs listed on
Schedule 1.1(b) or such Premium Drugs.
(b) "Infusion Therapy Business" shall mean the business of
marketing, advertising, selling, leasing, renting, distributing or otherwise
providing prescribed services ordered by a physician in the provision of the
following drugs and therapies: parenteral and enteral nutrition therapy,
antibiotics, anti-infectives, chemotherapeutic agents, narcotic analgesics,
drugs for congestive heart failure, terbutaline drug therapy, hydration therapy,
pain management therapy, and chelation therapy, along with the required medical
equipment and supplies to administer, provide care or monitor patients.
(c) "Territory" shall mean the states of Alabama, Arkansas,
Florida, Georgia, Mississippi, Tennessee or Texas, and a radius of two hundred
(200) miles from any of PharmaThera's current pharmacies, offices, warehouses or
other staffed locations, regardless of which states such territory may include.
1.2 In addition to the terms defined in Section 1.1 hereof,
other terms defined elsewhere in this Agreement shall have the meanings set
forth therein. Terms defined in the Purchase Agreement but not defined herein
shall have the meanings set forth in the Purchase Agreement, including the terms
"Excluded Group" and "Acquired Group".
2. Confidentiality
(i) Proprietary and Confidential Information
of Company .
Except as permitted under this Agreement, the Purchase
Agreement or any agreement entered into pursuant to the Purchase Agreement, WCAS
VII and each member of the Purchaser Group agrees, severally and not jointly,
that from and after the date hereof (which agreement shall be binding on any
purchaser of all or substantially all of their respective assets), it shall not,
directly or indirectly, use or disclose to any third party any of the
proprietary or confidential information of PharmaThera or its consolidated
partnerships, (Texas Health Infusion Resources, Teddy Bear Home Care/Infusion
2
or Campus Home Care/Infusion L.L.C.), except when, after, and only to the extent
that: (a) such proprietary or confidential information is or becomes generally
available to the public through no fault of it; or (b) such information is
required to be used or disclosed in connection with any tax returns heretofore
or hereafter filed, or (c) which use or disclosure is required by court order or
applicable law. As used herein, the term "proprietary or confidential
information" shall include present or prospective market, sales, product,
customer and referral source information; prices and pricing structure;
contractual arrangements; operating information, policies, procedures and
practices; financial information; product and process knowledge; cost and
supplier information; personnel data; and any strategy or plans related to any
of the foregoing) which has not been generally available or disclosed to the
public by PharmaThera.
(ii) Proprietary and Confidential Information
of Nova Factor .
Except as permitted under this Agreement, the Purchase
Agreement or any agreement entered into pursuant to the Purchase Agreement, each
of LHS and Pharmathera agrees that from and after the date hereof, it shall not,
directly or indirectly, use or disclose to any third party any of the
proprietary or confidential information of SHS, Nova Factor, CM Factor Care,
Kid's Home Care Partnership, Texas Health Pharmaceutical Resources, Teddy Bear
Home Care/Drug Therapies, or Campus Home Health Care Home Hemophilia L.L.C.,
except when, after, and only to the extent that: (a) such proprietary or
confidential information is or becomes generally available to the public through
no fault of it; or (b) such information is required to be used or disclosed in
connection with any tax returns heretofore or hereafter filed, or (c) which use
or disclosure is required by court order or applicable law. As used herein, the
term "proprietary or confidential information" shall include present or
prospective market, sales, product, customer and referral source information;
prices and pricing structure; contractual arrangements; operating information,
policies, procedures and practices; financial information; product and process
knowledge; cost and supplier information; personnel data; and any strategy or
plans related to any of the foregoing) which has not been generally available or
disclosed to the public by WCAS VII, the Company, SHS or Nova Factor.
3
2.1 No Solicitation.
(i) Commencing on the date hereof and continuing for a period
of three years thereafter, each member of the Purchaser Group agrees, severally
and not jointly, that it shall not directly or indirectly, hire, offer to hire,
or entice away, or in any other manner persuade or attempt to persuade, any
officer or manager of the Excluded Group who devotes a majority of his or her
time to the Infusion Therapy Business in the Territory to discontinue his or her
relationship with such entity. It is understood and agreed that the prohibitions
contained in this Section 2.1(i) shall apply to all current and future officers
and managers of the Excluded Group (including, but not limited to, any former
officer or manager of the Excluded Group), whether or not any such person is
then currently an officer or manager of the Excluded Group or whether any such
prohibited activity is in connection with employment, an offer of employment or
other action within or outside the Territory.
(ii) Commencing on the date hereof and continuing for a period
of three years thereafter, PharmaThera agrees that it shall not directly or
indirectly, hire, offer to hire, or entice away, or in any other manner persuade
or attempt to persuade, any officer or manager of the Acquired Group, to
discontinue his or her relationship with such entity. It is understood and
agreed that the prohibitions contained in this Section 2.1 (ii) shall apply to
all current and future officers and managers of such entities (including, but
not limited to any former officer or manager of such company or entity), whether
or not any such person is then currently an officer or manager of such company
or whether any such prohibited activity is in connection with employment, an
offer of employment or other action within or outside the Territory.
3. Covenants Not to Compete
3.1 Covenant.
(a) Each member of the Purchaser Group agrees (which
covenants shall be binding on any purchaser of all or substantially all of their
respective assets), severally and not jointly, that, commencing on the date
hereof and continuing for a period of three (3) years thereafter, it will not,
directly or indirectly, engage in the Infusion Therapy Business in the
Territory. For purposes of this Article 3, PharmaThera shall
4
include Texas Health Infusion Resources, Teddy Bear Home Care/Infusion and
Campus Home Care/Infusion, L.L.C.
(b) Without limiting the generality of the provisions of
Section 3.1(a) hereof, this Covenant Not to Compete shall be construed so that a
member of the Purchaser Group shall also be in breach hereof if (i) it is a
controlling shareholder, investor, trustee, agent, principal or partner of, or a
consultant or advisor to or for, or a manager for, a person, firm, corporation,
partnership, joint venture, association, trust or other entity which is engaged
in the Infusion Therapy Business in the Territory, or (ii) it consents, in its
capacity as a general partner, to a change of the purposes of a consolidated
general partnership to enable such partnership to enter the Infusion Therapy
Business in the Territory. Notwithstanding anything to the contrary contained in
this Section 3.1(b), a member of the Purchaser Group shall not be deemed to be
in breach of this Covenant Not to Compete (i) solely by reason of owning an
interest of less than one percent (1%) of the shares of any company traded on a
national securities exchange or in the over the counter market, or (ii) if it
engages in Infusion Therapy Business activities for patients of physicians who
(or whose practices) are, or become associated with or receive management or
administrative services from Care Matrix Group, a California corporation or
subsidiaries or affiliates thereof.
(c) PharmaThera hereby agrees, commencing on the date
hereof and continuing for a period of three (3) years not to, directly or
indirectly, engage in the Drug Distribution Business within the United
States, nor sell or distribute (i) Pulmozyme-Registered Trademark- for
patients of any consolidated partnerships or entities managed by Nova Factor
or (ii) Lilly Humatrope-Registered Trademark- growth hormone for patients of
any of the consolidated partnerships or entities managed by Nova Factor.
(d) Without limiting the generality of the provisions of
Section 3.1 (c) hereof, the PharmaThera Covenant Not To Compete shall be
construed so that PharmaThera shall also be in breach thereof if (i) it is a
controlling shareholder, investor, trustee, agent, principal or partner of, or a
consultant or advisor to or for, or a manager for, a person, firm, corporation,
partnership, joint venture, association, trust or other entity which is engaged
in the Drug Distribution Business or (ii) it consents, in its capacity as a
general partner, to a change of the purposes of a consolidated general
partnership to enable such partnership to enter the Drug Distribution Business
in the
5
Territory. Notwithstanding anything to the contrary contained in this Section
3.1(c), PharmaThera shall not be deemed to be in breach of this Covenant Not to
Compete solely by reason of owning an interest of less than one percent (1%) of
the shares of any company traded on a national securities exchange or in the
over the counter market.
(e) The prohibitions of this Article 3 shall not include
Lupron-Registered Trademark-.
3.2 Remedies.
Each party agrees that the remedy at law for any breach of
obligation under this Covenant Not to Compete will be inadequate and that in
addition to any other rights and remedies to which it may be entitled hereunder,
at law or in equity, each party shall be entitled to injunctive relief, and
reimbursement for all reasonable attorneys' fees and other expenses incurred in
connection with the enforcement hereof. It is the intention of the parties that
these Covenants Not to Compete be fully enforceable in accordance with these
terms and that the provisions thereof be interpreted so as to be enforceable to
the maximum extent permitted by applicable law. To the extent that any
obligation to refrain from competing within an area for a period of time is held
invalid or unenforceable, it shall, to the extent that it is invalid or
unenforceable, be deemed void ab initio. The remaining obligations imposed by
the provisions of the Covenants Not to Compete shall be fully enforceable as if
such invalid or unenforceable provisions had not been included herein and shall
be construed, to the extent possible, such that the purpose of the Covenants Not
to Compete, as intended by the Parties, can be achieved in a lawful manner.
4. Governing Law
The interpretation and performance of this Agreement shall be
governed by the laws of the State of Tennessee, without giving effect to its
conflicts of law provisions. Each party hereby agrees that any claims, demands,
lawsuits, proceedings and controversies arising from or relating to this
Agreement shall exclusively be brought and heard in federal or state courts of
general jurisdiction located in Shelby County in the State of Tennessee, and
each party hereby consents to the subject matter and personal jurisdiction of
such courts in respect thereof.
5. Notice
6
All notices, requests, demands, reports, statements, consents,
approvals, or other communications required to be given hereunder or relating to
this Agreement shall be given as provided in the Purchase Agreement.
6. Non-Waiver
The failure of any party hereto to enforce at any time any of
the provisions of this Agreement shall not be construed to be a waiver of any
such provisions, nor in any way affect the validity of this Agreement or any
part hereof or the right of any party thereafter to enforce any such provisions.
No waiver of any breach of this Agreement shall be deemed a waiver of any other
or subsequent breach, whether of the same provision or otherwise.
7. Successors and Assigns. This Agreement shall inure to the
benefit of and be binding on the parties hereto and their respective successors
and assigns.
8. Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed one and the same instrument.
7
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
Le Bonheur Health Systems, Inc.
By: /s/ Le Bonheur Health Systems, Inc.
--------------------------------------
Title:
Southern Health Systems, Inc.
By: /s/ Southern Health Systems, Inc.
--------------------------------------
Title:
Nova Factor, Inc.
By: /s/ Nova Factor, Inc.
--------------------------------------
Title:
PharmaThera, Inc.
By: /s/ PharmaThera, Inc.
--------------------------------------
Title:
Welsh, Carson, Xxxxxxxx
& Xxxxx VII, L.P.
By: /s/ Welsh, Carson, Xxxxxxxx & Xxxxx VII, L.P.
----------------------------------------------
Title:
Nova Holdings, Inc.
By: /s/ Nova Holdings, Inc.
--------------------------------------
Title:
8
Schedule 1.1(b)
- Protropin-Registered Trademark-, Nutropin-Registered Trademark-
- Ceredase-Registered Trademark-, Cerezyme-Registered Trademark-
- Avonex-Registered Trademark-, Betaseron-Registered Trademark-,
Copaxone-Registered Trademark-
- Myotrophin-Registered Trademark-
- Rilutek-Registered Trademark-
- Hemophilia industry: distribution of any blood clotting
pharmaceutical, ancillary medical supplies and other related products
and services as prescribed by a physician and required for the
administration of product to hemophilia patients.
9
