EXHIBIT 99.1
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "AGREEMENT"), dated the 9th day of
December, 2003 (the "EFFECTIVE DATE"), is entered into by and between Accent Rx,
Inc., a Florida corporation ("SELLER"), Accentia Inc., a Florida corporation
(the "PARENT"), and Chronimed Inc., a Minnesota corporation ("BUYER") (Seller,
Parent and Buyer are sometimes hereinafter referred to individually as a "PARTY"
and collectively as the "PARTIES", with Parent a Party to this Agreement with
respect to and for purposes of Articles 3, 5 and 6).
WHEREAS, Seller owns all of the assets of a mail service pharmacy
business known and operated as Accent Rx, which is engaged in the sale of
prescription drugs primarily to patients who have HIV/AIDS, have had an organ
transplant, or suffer from certain other chronic medical conditions (the
"PHARMACY BUSINESS"); and
WHEREAS, Parent owns all of the issued and outstanding equity interests
of Seller;
WHEREAS, Buyer desires to purchase from Seller, and Seller desires to
sell to Buyer, specified assets constituting Seller's Pharmacy Business, in
accordance with the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and the
representations, warranties, covenants and agreements contained herein, the
Parties agree as follows:
ARTICLE 1
SALE OF ASSETS
1.1 PURCHASE AND SALE. On and subject to the terms and conditions of
this Agreement, for the consideration specified in Section 1.2 of this
Agreement, Seller agrees to sell, assign and transfer to the Buyer, and the
Buyer agrees to purchase from Seller, all of the right, title and interest that
Seller possesses in and to the certain assets used in connection with the
Pharmacy Business (collectively referred to herein as the "PURCHASED ASSETS") as
specified below:
(i) the patient and customer lists, records, and data listed
on Exhibit 1.1(i) (the "CUSTOMER RECORDS");
(ii) if any, the contracts, agreements or commitments listed
on Exhibit 1.1(ii) (the "ASSUMED CONTRACTS");
(iii) the trademarks, domain names and telephone numbers
listed in Exhibit 1.1(iii) (the "PROPRIETARY RIGHTS");
(iv) if any, the equipment, furniture, or other tangible
assets set forth on Exhibit 1.1(iv) (the "TANGIBLE ASSETS");
and
(v) all goodwill associated with Seller's Pharmacy Business.
1.2 PURCHASE PRICE. The total purchase price for the Purchased Assets
shall be Four Million Two Hundred Thousand Dollars ($4,200,000.00), less
$17,674.63 representing pre-existing accounts due from Seller to Buyer (the
"PURCHASE PRICE") and shall be payable at the Closing by wire transfer or other
same day funds. The Parties hereby agree that the Purchase Price is based on an
arms length, fair market valuation of the Purchased Assets. The Parties agree
that the Purchase Price is not determined in a manner that takes into account
the volume or value of any referrals or business otherwise generated between the
Parties or any Party's affiliate for which payment may be made, in whole or in
part, under Medicare or any state health care program, as defined under Section
1128B of the Social Security Act, including, without limitation, Section 1877 of
the Social Security Act. The Parties further agree that the transaction being
performed under this Agreement does not involve the counseling or promotion of a
business arrangement or other activity that violates any federal or state law.
1.3 ASSUMPTION OF LIABILITIES. On or at the Closing, subject to the
terms and conditions of this Agreement, Buyer shall assume and agree to pay,
perform or discharge the liabilities and obligations of Seller specifically set
forth in Exhibit 1.3 hereto (the "ASSUMED LIABILITIES"). Buyer shall not assume
or become liable for any Seller obligation or liability, except only for
liabilities arising from the Assumed Liabilities, and only with respect to
actions, omissions, and transactions occurring pursuant to such Assumed
Liabilities after the Closing Date.
Without limiting the generality of the foregoing, it is specifically
understood and agreed as follows:
(a) Buyer will be offering employment to certain employees of
Seller, to be identified by Buyer prior to Closing. Persons accepting
employment with Buyer shall be given credit for the period of their
employment by Seller in determining eligibility for all Buyer's
employee benefit and similar programs which have any waiting, vesting
or similar requirement. Such persons employed by Buyer shall be deemed
to have elected participation in such programs as of January 1, 2004.
Seller shall be responsible for any and all Seller liabilities owed to
any of its employees who accept employment with Buyer, including but
not limited to any termination payments, accrued vacation pay, unpaid
wages, and earned but unpaid bonuses or commissions, including those
accruing to Seller prior to the Closing Date. All such obligations of
Seller to such employees shall
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be satisfied, or arrangements for the satisfaction thereof acceptable
to Buyer shall be made, on or before the Closing Date.
(b) Except as specifically provided in Section 1.3(a), Buyer
assumes no liability with respect to any of Seller's employees,
including as examples any continuing right to employment, offer of
employment, wages, unemployment compensation, workers compensation,
vacation or paid time off, severance agreements, insurance benefits,
qualified benefits, retirement, deferred compensation, profit sharing,
stock purchase or stock option plans maintained by Seller on behalf of
its employees ("SELLER'S PLANS"). In the event Seller or employees of
Seller who may become employed by Buyer elect to participate in Buyer's
employee benefits, retirement, profit sharing or stock option purchase
plans following Closing, Seller or its employees shall bear the expense
of liquidating any of Seller's Plans, if liquidated by Seller.
(c) Buyer has no obligation with respect to Seller's operation
of the Pharmacy Business, including any actions or omissions involving
patients or customers first performed before or on the Closing Date, or
which arise from products or services sold or provided before or on the
Closing Date.
(d) All Seller liabilities that Seller has to suppliers or
creditors shall be promptly paid and satisfied by Seller, or adequate
provision made therefore, either before Closing or following Closing in
the ordinary course of business, so as to avoid any adverse impact upon
the Pharmacy Business and Purchased Assets in the hands of Buyer.
ARTICLE 2
CLOSING
2.1 CLOSING. The closing of the transactions contemplated by this
Agreement shall take place on December 9, 2003 (such closing being called the
"CLOSING" and such date being called the "CLOSING DATE"). All business
transactions, obligations and rights pertaining to the operation of the Pharmacy
Business arising or occurring on the Closing Date shall accrue to the Seller.
Closing may be conducted by simultaneous transmission of facsimile signatures,
with Buyer to initiate any wire or other transfer of funds representing Purchase
Price upon receipt of those documents required of Seller under this Article 2.
At the Closing, in addition to the execution and delivery of the various
documents identified in this Article 2, Seller shall deliver those instruments
necessary to transfer the Pharmacy Business and title to the Purchased Assets,
and Buyer shall deliver the Purchase Price by wire transfer.
2.2 ASSIGNMENT OF TRADEMARKS. At the Closing, Seller shall deliver to
Buyer executed assignments of trademarks, in the form attached as Exhibit 2.2.
Notwithstanding
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anything contained elsewhere herein, Buyer shall hold Seller and its affiliates
harmless from and against any fees, penalties, fines, or third party claims due
to Buyer's failure to record any assignment of any such trademarks pursuant to
this Section 2.2.
2.3 ASSIGNMENT OF DOMAIN NAMES. At the Closing, Seller shall deliver to
Buyer executed assignments of domain names, in the form attached as Exhibit 2.3.
Notwithstanding anything contained elsewhere herein, Buyer shall hold Seller and
its affiliates harmless from and against any fees, penalties, fines, or third
party claims due to Buyer's failure to record any assignment of any such domain
names pursuant to this Section 2.3.
2.4 SELLER'S DELIVERIES. At the Closing, subject to the terms and
conditions set forth in this Agreement, Seller shall make the following
deliveries:
(a) The Xxxx of Sale, duly executed by Seller, in the form
attached as Exhibit 2.4(a) hereto, and any assignments, certificates of
title, and other instruments of conveyance reasonably requested by
Buyer;
(b) The Assignment and Assumption Agreement for the Contracts
assumed by Buyer and identified in Exhibit 1.1(ii), duly executed by
Seller, in the form attached as Exhibit 2.4(b) hereto;
(c) Appropriate releases or termination statements for any
security interests or liens against the Purchased Assets as identified
in Exhibit 3.3; and
(d) All other items or documents necessary or appropriate
hereunder.
2.5 BUYER'S DELIVERIES. At the Closing, subject to the terms and
conditions set forth in this Agreement, Buyer shall make the following
deliveries:
(a) Payment of the Purchase Price according to the terms
above;
(b) The Assignment and Assumption Agreement identified in
Section 2.4(b), duly executed by Buyer;
(c) All other items or documents necessary or appropriate
hereunder.
2.6 DELIVERY OF INSTRUMENTS AND INFORMATION.
(a) From time to time, at Buyer's request, whether at or after the
Closing and without further consideration, Seller will execute and deliver such
further instruments of conveyance and transfer and reasonably cooperate with
Buyer to convey and transfer to Buyer any of the Purchased Assets to be sold and
otherwise to effectuate the terms of this Agreement. Prior to the Closing Date,
Seller and Buyer shall work together to transfer as many of the Customer Records
as possible to Buyer in a manner to be agreed upon between the Parties,
recognizing each Parties' personnel, financial, and logistical constraints.
After the Closing, Seller and Parent shall
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continue to cooperate, on a reasonable basis, with Buyer in arranging for the
transfer of data to Buyer to the extent reasonably feasible. Seller and Parent
shall permit Buyer reasonable access to the Pharmacy Business operational
computer equipment, including but not limited to servers, laptops, desktops, and
telephone systems (collectively, the "Software Systems") for 120 days following
Closing on a read-only basis. If Seller or Parent maintains the Software Systems
for more than 120 days following Closing, Seller and Parent shall continue to
allow Buyer reasonable access to the Software Systems. Seller and parent shall
permit Buyer to have reasonable access to Seller employees capable of providing
transition support.
(b) Buyer recognizes that subsequent to the Closing, it may have
information and documents which relate to the Seller with respect to the period
prior to the Closing, including, without limitation, information pertaining to
the Pharmacy Business, the Purchased Assets, and the Assumed Liabilities to
which Seller or Parent may need access subsequent to the Closing. Buyer shall
provide Seller, Parent and their representatives access, during normal business
hours on reasonable notice, to all such information and documents (but excluding
attorney work product or other privileged communication), and to such of Buyer's
employees, which Seller or Parent reasonably request. Seller and Parent
recognize that subsequent to the Closing they may have information and documents
which relate to the Buyer with respect to the period prior to the Closing,
including, without limitation, information pertaining the Pharmacy Business, the
Purchased Assets, and the Assumed Liabilities to which Buyer may need access
subsequent to the Closing. Seller and Parent shall provide Buyer and its
representatives access, during normal business hours on reasonable notice, to
all such information and documents (but excluding attorney work product or other
privileged communication), and to Seller's and Parent's employees, which Buyer
reasonably requests.
(c) With respect to audits conducted by federal, state and local
authorities, the Buyer agrees to cooperate with Seller and Parent to the extent
Buyer has any information required by Seller to respond to information document
requests presented by such authorities as promptly as practicable. All
out-of-pocket costs associated with the delivery of the requested documents
shall be paid by Seller.
(d) If, subsequent to Closing, Seller receives payment on accounts
receivable for Pharmacy Business operations conducted by Buyer, Seller shall
forward to Buyer on a weekly basis any such accounts receivable payments. If,
subsequent to Closing, Buyer receives payment on accounts receivable for
Pharmacy Business operations conducted by Seller, Buyer shall forward to Seller
on a weekly basis any such accounts receivable payments. Any action taken by
Seller to collect accounts receivable related to the Pharmacy Business shall be
taken in a manner intended to minimize disruption of ongoing customer relations
of the Pharmacy Business as operated by Buyer following Closing.
2.7 ALLOCATION. Within forty-five (45) days after the Closing Date,
Buyer and Seller will mutually agree to an allocation of the Purchase Price and
to jointly complete Form 8594 based upon such allocation and to separately file
such form with their respective federal income tax returns for their respective
tax years in which the Closing Date occurs. Seller and Buyer will file all other
income tax returns required to be filed by them with any governmental or taxing
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authority for their respective tax years in which the Closing Date occurs in a
manner consistent with the Purchase Price Allocation in Form 8594.
ARTICLE 3
SELLER'S REPRESENTATIONS AND WARRANTIES
Seller and Parent represent and warrant to Buyer that, except as set
forth herein:
3.1 ORGANIZATION, QUALIFICATION AND CORPORATE POWER. Seller and Parent
are duly incorporated, validly existing, and in good standing under the laws of
the states of their formation. Seller has the corporate power and authority to
own and hold its properties and to carry on its business as now conducted.
3.2 NO BREACH. The execution, delivery and performance by Seller and
Parent of this Agreement and related agreements contemplated herein do not: (i)
contravene or conflict with the Articles of Incorporation or Bylaws of Seller or
Parent; (II) contravene, violate, or conflict with any law, regulation,
judgment, order or decree applicable to Seller or Parent; or (III) constitute a
default under or give rise to any right to terminate any agreement, contract or
other instrument binding upon Seller or Parent, or any material license, permit
or other similar authorization held by Seller in order to conduct the Pharmacy
Business, which in each case or in the aggregate would not have a material
adverse effect on the Purchased Assets.
3.3 TITLE TO PROPERTIES Exhibit 3.3 identifies all mortgages, pledges,
security interests, liens, charges, claims, restrictions and other encumbrances
affecting the Purchased Assets. Seller has, and at Closing will deliver to
Buyer, good and marketable title to the Purchased Assets, free and clear of any
and all mortgages, pledges, security interests, liens, charges, claims,
restrictions and other encumbrances.
3.4 COMPLIANCE WITH LAW. To the best of Seller's and Parent's
knowledge, Seller has complied with and is in compliance with all laws, rules,
regulations and ordinances applicable to the Pharmacy Business, and has the
lawful authority and has obtained and now holds all material state, federal,
special or local governmental authorizations, licenses, certificates and permits
(collectively "PERMITS") needed or required to operate the Pharmacy Business, as
such operation is presently being conducted, the absence of which would have a
material adverse effect on the Pharmacy Business. Seller has made all material
filings required by applicable law and regulations. Exhibit 3.4 contains a list
and brief description of all Permits, including those granted or derived from
governmental sources, issued or granted to Seller for the operation of the
Pharmacy Business.
3.5 VALIDITY. Seller and Parent have the full legal power and authority
to execute and deliver this Agreement and all other agreements and documents
necessary to consummate the transactions contemplated hereunder, and all
corporate action of Seller and Parent necessary for such execution and delivery
and the performance thereof will have been duly taken on or before the Closing.
This Agreement and all agreements related to the contemplated transaction, when
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duly executed and delivered by Seller and Parent, and when duly executed by the
other parties hereto and thereto, will constitute the legal, valid and binding
obligation of Seller and Parent, enforceable in accordance with their terms
(subject as to enforcement of remedies to the discretion of courts in awarding
equitable relief and to applicable bankruptcy, reorganization, insolvency,
moratorium and similar laws affecting the rights of creditors generally). The
execution and delivery by Seller and Parent of this Agreement, and the
performance of its obligations hereunder, does not require any action or consent
of any party other than Seller pursuant to any material contract, agreement or
other undertaking of Seller, or to the knowledge of Seller pursuant to any order
or decree to which Seller is a party, or to which the Pharmacy Business is
subject, except as set forth on Exhibit 3.5.
3.6 LITIGATION AND INVESTIGATIONS. Except as disclosed on Exhibit 3.6,
there is no: (i) action, suit, claim, proceeding or investigation pending or, to
the knowledge of Seller or Parent, threatened against or affecting the Pharmacy
Business, or any of the employees providing services relating to the Pharmacy
Business, by any private party or any federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign; (II) arbitration proceeding relating to the Pharmacy
Business pending under collective bargaining agreements or otherwise; or (III)
governmental or professional inquiry pending or, to the knowledge of Seller or
Parent, threatened against or affecting the Pharmacy Business, any of which
would have a material adverse effect on the Pharmacy Business. Seller is not in
default with respect to any order, writ, injunction or decree known to or served
upon it of any court or of any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, which default would have a material adverse effect on the Pharmacy
Business.
3.7 CONTRACTS. Exhibit 3.7 identifies each and every material
agreement, obligation or commitment of Seller which is primarily or exclusively
related to the Pharmacy Business, whether assumed by Buyer or otherwise. Except
as identified in Exhibit 3.7, Seller is not a party to any material written or
other agreement, obligation or commitment primarily or exclusively affecting the
Pharmacy Business. Seller has delivered to Buyer a correct and complete copy of
each Assumed Contract. Except as set forth in Exhibit 3.7, with respect to each
Assumed Contract: (i) the Assumed Contract is legal, valid, binding, enforceable
in accordance with its terms (subject to bankruptcy, insolvency, reorganization,
moratorium and other laws affecting creditors' rights generally and except for
limitations upon the availability of equitable remedies, including specific
performance) and in full force and effect; (ii) the Assumed Contract will
continue to be legal, valid, binding, enforceable and, except as otherwise
provided herein, in full force and effect on identical terms following the
consummation of the transactions contemplated hereby (including the assignments
and assumptions referred to in Article 1, above); (iii) to Seller's knowledge,
no party is in breach or default, and no event has occurred which, with notice
or lapse of time, would constitute a breach or default or permit termination,
modification or acceleration, under the Assumed Contract; (iv) no party has
repudiated any provision of the Assumed Contract; (v) none of the transactions
contemplated by this Agreement creates in any party to such Assumed Contract the
right to revise the terms of, to terminate, to accelerate any obligation of
Seller or otherwise declare that such Assumed Contract has been breached; (vi)
Seller is not aware of any defaults and does not have any reason to believe that
a default may occur by Seller or any other party to the Assumed Contract to
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which the Buyer may become a party (by assignment, transfer by operation of law,
succession or otherwise); and (v) to Seller's knowledge, Seller has received no
notification from a third party payer indicating the payer's intention to
materially reduce or discontinue reimbursement rates or relationships with
Seller.
3.8 TRADEMARKS AND DOMAIN NAMES. Set forth in Exhibit 3.8 is a list of
the trademarks and domain names owned by, or registered in the name of, Seller
and used exclusively in the Pharmacy Business (the "PRIMARY TRADEMARK" and the
"PRIMARY DOMAIN NAME"). In addition, Exhibit 3.8 sets forth additional
trademarks and domain names owned by, or registered in the name of, Seller that
are not currently being used by the Company but which relate to the Pharmacy
Business (the "Optional Marks"). To the best of Seller's knowledge, and except
as otherwise set forth on Exhibit 3.8, Seller has sufficient title and ownership
of the Primary Trademark and the Primary Domain Name. Seller has not received
any communications alleging that the Primary Trademark or the Primary Domain
Name violate any of the trademarks of any other person or entity. The Optional
Marks are being transferred on an as-is basis and Seller disclaims any and all
warranties or representations with respect to the Optional Marks.
3.9 TANGIBLE ASSETS. Buyer has had the opportunity to inspect the
Tangible Assets. Seller represents that the Tangible Assets are in reasonably
merchantable condition.
3.10 FEES AND COMMISSIONS. Neither Seller nor Parent have agreed to pay
or become liable to pay any broker's, finder's, or originator's fees or
commissions by reason of services alleged to have been rendered for, or at the
instance of, Seller or Parent in connection with this Agreement and the
transactions contemplated hereby.
3.11 OTHER APPROVALS. Except as set forth on Exhibit 3.11, there are no
consents, approvals, qualifications, orders or authorizations of, or filings
with, any governmental authority, including any court or other governmental
third party, required in connection with Seller's or Parent's valid execution,
delivery or performance of this Agreement, or the consummation of any
transaction contemplated by this Agreement.
3.12 FINANCIAL STATEMENTS. The Seller financial statements for the year
ending September 30, 2003 and the period ending October 31, 2003 (the "SELLER
STATEMENTS") attached as Exhibit 3.12 are true, complete and correct and have
been prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods indicated, subject only to
non-material adjustments applied in the audit process. The Seller Statements
fairly present the results of operations of Seller for the periods then ended.
Seller shall deliver to Buyer, on or before January 31, 2004, Seller's audited
financial statements for the fiscal year ended September 30, 2003, audited and
certified by Aidman Xxxxx & Co., certified public accountants, and interim
Seller Statements for the period ended December 31, 2003.
3.13 LIABILITIES. Except as and to the extent reflected or reserved
against in the Seller Statements, or otherwise disclosed herein, Seller had, as
of the date of such Seller Statements, no liabilities which, individually or in
the aggregate, would have a material adverse effect on the Purchased Assets or
Pharmacy Business (the "Seller Liabilities"). As of the date of this
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Agreement, Seller is not subject to and does not have any Seller Liabilities,
except as disclosed herein or in the Seller Statements, and except for such
Seller Liabilities as have arisen in the ordinary course of business of Seller
since the date of said Seller Statements, none of which newly arisen Seller
Liabilities would have a material adverse effect upon the Purchased Assets or
the Pharmacy Business.
3.14 CUSTOMER RECORDS COMPLETE. Seller's Customer Records for its
customers are true, accurate and complete as maintained by Seller in the
ordinary course of Seller's operation of the Pharmacy Business. Seller and
Parent will enforce any agreements, not assumed by Buyer, which protect the
confidentiality of the Customer Records and any other Seller proprietary
information, including but not limited to employee confidentiality and
non-compete agreements and vendor or referral source records.
3.15 TAXES, TAX RETURNS. Seller has duly and timely filed all federal,
state and local tax returns and reports related to the Pharmacy Business and
known to Seller to be required to be filed, and has paid or made provision for
payment of all taxes (including all interest, penalties, assessments and
deficiencies) due or claimed to be due under such duly filed tax returns or has
made provision therefor. Seller is not delinquent, and there are no material,
asserted or assessed deficiencies that have not been settled, with respect to
the payment of any income, sales, use and withholding taxes or other taxes. To
Seller's and Parent's knowledge there are no alleged material tax deficiencies
proposed or discussed by the IRS or other appropriate tax authority (whether or
not such matters have been settled) that are likely to be proposed or asserted
against Buyer or the Purchased Assets if Buyer continues to operate the Pharmacy
Business after the Closing in substantially the same manner as it has been
operated by Seller. To Seller's and Parent's knowledge, no tax returns of Seller
filed or required to be filed are being examined, nor has any action, audit,
proceeding or investigation been threatened, by the Internal Revenue Service or
other appropriate taxing authority.
3.17 MATERIAL CHANGE. Since the date of the most recent Seller
Statements there has been no material change in the condition or operations,
financial or otherwise, of Seller, the Pharmacy Business, or the Purchased
Assets from that shown in said Seller Statements, except changes occurring in
the ordinary course of business, which changes have not materially adversely
affected the Purchased Assets, Pharmacy Business, or Seller.
Except as identified in Exhibit 3.17, to Seller's and Parent's
knowledge no statute, order, judgment, writ, injunction, decree, permit, rule or
regulation of any court or governmental or regulatory body has been adopted or
entered, or is proposed to be adopted or entered, which may materially and
adversely affect Seller, the Purchased Assets or the Pharmacy Business. To
Seller's and Parent's knowledge there has been no event or occurrence affecting
Seller, the Purchased Assets, or the Pharmacy Business which may have a material
adverse effect upon the Pharmacy Business or Purchased Assets.
3.18 DISCLOSURE. No representation or warranty made by Seller or Parent
herein or in any agreements, certificates or documents delivered in connection
with this Agreement contains
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any untrue statement of a material fact, nor omits to state a material fact
necessary to make such representation or warranty true.
3.19 REPRESENTATIONS AND WARRANTIES TRUE AT CLOSING. The
representations and warranties of Seller and Parent contained in this Agreement
or in any certificate or document delivered pursuant to the provisions hereof or
in connection with the transactions contemplated hereby shall be true on and as
of the Closing Date as though such representations and warranties were made at
and as of such date.
3.20 OPERATION OF PHARMACY. Notwithstanding Seller's covenant in
Section 6.1, Seller will maintain a pharmacy operation sufficient to finish
dispensing prescriptions received by the Pharmacy Business on and before the
Date of Closing and which have not been transferred to Buyer. Seller will
maintain such pharmacy operations in a manner consistent with the quality and
care applied to the Pharmacy Business prior to Closing. Seller will operate such
pharmacy through December 24, 2003.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller that, except as set forth
herein:
4.1 ORGANIZATION, QUALIFICATION AND CORPORATE POWER. Buyer is, and on
the Closing Date will be, duly incorporated, validly existing, and in good
standing under the laws of the State of Minnesota. Buyer has the corporate power
and authority to own and hold its properties and to carry on its business as now
conducted.
4.2 NO BREACH. The execution, delivery and performance by Buyer of this
Agreement and related agreements contemplated herein do not (i) contravene or
conflict with the Articles of Incorporation or Bylaws of Buyer; (II) contravene,
violate or conflict with any material law, regulation, judgment, order or decree
applicable to Buyer; or (III) constitute a default under or give rise to any
right to terminate any material agreement, contract or other instrument binding
upon Buyer, or any material license, permit or other similar authorization held
by Buyer, any of which would have a material adverse effect on Buyer.
4.3 COMPLIANCE WITH LAW. Buyer has complied with and is complying with
all applicable laws, rules, regulations and ordinances, and has the lawful
authority and has obtained and now holds all material licenses, certificates,
permits, and authorizations needed or required to conduct its businesses, as
such businesses are presently being conducted, the absence of which would have a
Material Adverse Effect on Buyer, and has made all material filings required by
applicable law and regulations. With respect to the Purchased Assets, Buyer will
comply with all applicable laws and regulations, including by way of example
laws related to pharmacy operation, patient records privacy, and records
retention.
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4.4 VALIDITY. Buyer has the full legal power and authority to execute
and deliver this Agreement and all other agreements and documents necessary to
consummate the transactions contemplated hereunder, and all corporate action of
Buyer necessary for such execution and delivery and the performance thereof will
have been duly taken. This Agreement and all agreements related to the
contemplated transaction, when duly executed and delivered by Buyer, and when
duly executed by the other parties thereto, will constitute the legal, valid and
binding obligation of Buyer, enforceable in accordance with their terms (subject
as to enforcement of remedies to the discretion of courts in awarding equitable
relief and to applicable bankruptcy, reorganization, insolvency, moratorium and
similar laws affecting the rights of creditors generally). To the knowledge of
Buyer, the execution and delivery by Buyer of this Agreement, and the
performance of its obligations hereunder, does not require any action or consent
of any party other than Buyer pursuant to any material contract, agreement or
other undertaking of Buyer, or pursuant to any order or decree to which Buyer is
a party or to which its properties or assets are subject.
4.5 FEES AND COMMISSIONS. Buyer has not agreed to pay or become liable
to pay any broker's, finder's, or originator's fees or commissions by reason of
services alleged to have been rendered for, or at the instance of, Buyer in
connection with this Agreement and the transactions contemplated hereby.
4.6 OTHER APPROVALS. Except as set forth in Exhibit 4.6, there are no
consents, approvals, qualifications, orders or authorizations of, or filings
with, any governmental authority, including any court or other governmental
third party, required in connection with Buyer's valid execution, delivery or
performance of this Agreement, or the consummation of any transaction
contemplated by this Agreement.
4.7 DISCLOSURE. No representation or warranty made by Seller herein or
in any agreements, certificates or documents delivered in connection with this
Agreement contains any untrue statement of a material fact, nor omits to state a
material fact necessary to make such representation or warranty true.
4.8 RETENTION OF CUSTOMER RECORDS. Buyer shall retain the Customer
Records transferred by Seller for a period of seven years following Closing and
shall permit Seller to have reasonable access to such Customer Records as may be
reasonably necessary in the event of an audit or claim pertaining to Seller's
operation of the Pharmacy Business prior to Closing. Buyer will provide services
and supplies to Customers in the same professional manner as for all Buyer
patients and without regard to race, age, color, religion, sex, national origin,
creed, ancestry, marital status, source of payment or disability of any
Customer. Buyer will not be required to continue providing services and supplies
if a Customer refuses to follow medical advice or prescribed treatment, or upon
other good cause.
4.9 REPRESENTATIONS AND WARRANTIES TRUE AT CLOSING. The representations
and warranties of Buyer contained in this Agreement or in any certificate or
document delivered pursuant to the provisions hereof or in connection with the
transactions contemplated hereby
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shall be true on and as of the Closing Date as though such representations and
warranties were made at and as of such date.
ARTICLE 5
INDEMNIFICATION
5.1 SELLER'S AND PARENT'S INDEMNIFICATION. Seller and Parent agree to
indemnify and hold Buyer harmless from and against any and all of the following:
5.1.1 any and all liabilities, losses, damages, costs and
expenses (including reasonable attorneys' fees) incurred or maintained
by Buyer because of any inaccuracy in, or breach or violation of, the
representations, warranties and covenants made by Seller or Parent in
this Agreement;
5.1.2 any and all liabilities, claims and obligations of, or
claims against, Buyer arising from the use of the Purchased Assets
transferred hereunder which arose prior to or on the Closing Date,
irrespective of whether notice of such liability is received prior to
or after the Closing Date; and
5.1.3 all claims, liabilities, losses, damages, costs and
expenses (including reasonable attorneys' fees) incurred or maintained
by Buyer arising out of the activities or Seller's operation of the
Pharmacy Business prior to or on the Closing Date.
5.2 BUYER'S INDEMNIFICATION. Buyer agrees to indemnify and hold Seller
and Parent harmless from and against any and all of the following:
5.2.1 any and all liabilities, losses, damages, costs and
expenses (including reasonable attorneys' fees) incurred or sustained
by Seller because of any inaccuracy in, or breach or violation of, the
representations, warranties and covenants made by Buyer in this
Agreement;
5.2.2 any and all liabilities, claims and obligations of, or
claims against, Seller arising from the activities of the Pharmacy
Business or the use of the Purchased Assets transferred hereunder after
the Closing Date.
5.3 LIMITATION ON AND EXPIRATION OF INDEMNIFICATION. Notwithstanding
anything in this Article 5 to the contrary, the Parties' rights to
indemnification shall be limited as follows:
5.3.1 All rights of the Parties hereto to indemnification
hereunder for breaches of representations and warranties shall expire
twenty-four (24) months after the Closing Date; provided, however, if,
prior to such expiration, a state of facts shall have become known
which threatens to give rise to a liability against which any Party
hereto would be entitled to indemnification hereunder and the
Indemnified Party shall have given notice
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of such facts to the Indemnifying Party, then the rights of the
Indemnified Party to indemnification with respect to such liability
shall continue until such liability shall have been finally determined
and disposed of.
5.3.2 No Party shall be entitled to indemnification pursuant
to Sections 5.1 or 5.2 unless and until the aggregate amount of damages
to which the foregoing indemnity relates, sustained by such Party with
respect to any individual claim, exceeds $25,000 whereupon
indemnification shall be required to be made to the full extent of the
Party's claim including such deductible amount.
5.3.3 The maximum of a Party's liability for its
indemnification obligations shall be limited in the aggregate to an
amount equal to the Purchase Price.
5.4 NOTICE AND CONTROL OF LITIGATION. If any claim or liability is
asserted in writing against a Party entitled to indemnification under this
Article 5 (the "INDEMNIFIED PARTY") which would give rise to a claim under this
Article 5, the Indemnified Party shall notify the person providing the indemnity
("INDEMNIFYING PARTY") in writing of the same within fifteen (15) days of
receipt of such written assertion of a claim or liability. The Indemnifying
Party shall have the right to defend a claim and control the defense, settlement
and prosecution of any litigation. If the Indemnifying Party, within fifteen
(15) days after notice of such claim, fails to defend such claim, the
Indemnified Party will (upon further notice to the Indemnifying Party) have the
right to undertake the defense, compromise or settlement of such claim on behalf
of and for the account and risk of the Indemnifying Party, subject to the right
of the Indemnifying Party to assume the defense of such claim at any time prior
to settlement, compromise or final determination thereof. Anything in this
Article 5 notwithstanding, (i) if there is a reasonable probability that a claim
may materially and adversely affect the Indemnified Party other than as a result
of money damages or other money payments, the Indemnified Party shall have the
right, at its own cost and expense, to defend, compromise and settle such claim,
and (II) the Indemnifying Party shall not, without the written consent of the
Indemnified Party, settle or compromise any claim or consent to the entry of any
judgment which does not include as an unconditional term thereof the giving by
the claimant to the Indemnified Party a release from all liability in respect to
such claim. All parties agree to cooperate fully as necessary in the defense of
such matters. Should the Indemnified Party fail to notify the Indemnifying Party
in the time required above, this indemnity shall terminate and be of no further
force and effect with respect to the subject matter of the required notice in
the event that the Indemnified Party's failure to notify in the time required
above materially adversely affects the Indemnifying Party's ability to defend
such matter.
5.5 ADJUSTMENT FOR INSURANCE AND TAXES. The amount which an
Indemnifying Party is required to pay to, for or on behalf of the Indemnified
Party pursuant to this Article 7 shall be adjusted (including, without
limitation, retroactively) (i) by any insurance proceeds actually recovered by
or on behalf of such Indemnified Party in reduction of the related indemnifiable
loss (the "INDEMNIFIABLE LOSS") and (ii) to take account of any tax benefit
realized as a result of any Indemnifiable Loss. Amounts required to be paid, as
so reduced, are hereinafter sometimes called an "INDEMNITY PAYMENT." If an
Indemnified Party has received or
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has had paid on its behalf an Indemnity Payment for an Indemnifiable Loss and
subsequently receives insurance proceeds for such Indemnifiable Loss, or
realizes any tax benefit as a result of such Indemnifiable Loss, then the
Indemnified Party shall (a) promptly notify the Indemnifying Party of the amount
and nature of such proceeds and benefits and (b) pay to the Indemnifying Party
the amount of such insurance proceeds or tax benefit or, if lesser, the amount
of the Indemnity Payment.
5.6 MITIGATION OF LOSS. Each Indemnified Party is obligated to use all
reasonable efforts to mitigate to the fullest extent practicable the amount of
any Indemnifiable Loss for which it is entitled to seek indemnification
hereunder, and the Indemnifying Party shall not be required to make any payment
to an Indemnified Party in respect of such Indemnifiable Loss to the extent such
Indemnified Party failed to comply with the foregoing obligation.
5.7 SUBROGATION. Upon making any Indemnity Payment, the Indemnifying
Party will, to the extent of such payment, be subrogated to all rights of the
Indemnified Party against any third party in respect of the Indemnifiable Loss
to which the payment relates; provided, however, that until the Indemnified
Party recovers full payment of its Indemnifiable Loss, any and all claims of the
Indemnifying Party against any such third party on account of such payment are
hereby made expressly subordinated and subjected in right of payment of the
Indemnified Party's rights against such third party. Without limiting the
generality of any other provision hereof, each such Indemnified Party and
Indemnifying Party will duly execute, upon request, all instruments reasonably
necessary to evidence and perfect the above-described subrogation and
subordination rights.
5.8 EXCLUSIVE REMEDY. Following the Closing, the indemnities provided
for in this Article 5 shall be the sole and exclusive remedies of the Parties
and their respective officers, directors, employees, affiliates, agents,
representatives, successors and assigns for any breach of or inaccuracy in any
representation or warranty or any breach, non-fulfillment or default in the
performance of any of the covenants or agreements contained in this Agreement
(but not any such covenants or agreements to the extent they are, by their
terms, to be performed after the Closing Date). The parties shall not be
entitled to a rescission of this Agreement or to any further indemnification
rights or claims of any nature whatsoever in respect thereof (whether by
contract, common law, statute, law, regulation or otherwise, including, without
limitation, under the Racketeer Influence and Corrupt Organizations Act of 1970,
as amended), all of which the Parties hereby waive, provided, however, nothing
in this Article 5 is intended to waive any claim of a Party based on fraud, nor
is any fraud based claim subject to the limitations established in Section 5.3.
ARTICLE 6
MISCELLANEOUS
6.1 COVENANT AGAINST COMPETITION. In consideration of the Purchase
Price and Buyer's representations, covenants and warranties, Seller and
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Parent covenant that they will refrain from competing with Buyer according to
the specific terms of this Section 6.1:
6.1.2 For a period of three years following the Closing Date,
SELLER shall not: (i) solicit any employee hired by Buyer pursuant to
Section 1.3(a), (ii) solicit any customer identified in the Customer
Records purchased by Buyer pursuant to Section 1.1(i), (iii) use the
trade name "AccentRx" or any trade name that is similar thereto or
confusing therewith, or (iv) engage in any mail order pharmacy business
other than with products owned or licensed by Parent ("COMPETING
BUSINESS ACTIVITY") whether as an owner, principal, agent, partner,
advisor, or otherwise, or own twenty per cent (20%) or more of the
outstanding stock in any corporation engaged in the Competing Business
Activity during such three year period. Notwithstanding this Section
6.1, Seller will be permitted to collect accounts receivable, dispense
any non-transferred prescriptions under Section 3.20, or otherwise wind
up the affairs of the Pharmacy Business.
6.1.3 For a period of three years following the Closing Date,
PARENT shall not: (i) solicit any employee hired by Buyer pursuant to
Section 1.3(a), (ii) solicit any customer identified in the Customer
Records purchased by Buyer pursuant to Section 1.1(i), (iii) use the
trade name "AccentRx" or any trade name that is similar thereto or
confusing therewith, (iv) engage in any mail order pharmacy business
other than with products owned or licensed by Parent, or (v) be
directly or indirectly associated by ownership, merger, consolidation,
joint-venture or otherwise with any other entity engaged in a
COMPETITIVE BUSINESS ACTIVITY (a "Covered Entity"), unless the Covered
Entity complies with this Section 6.1 in the utilization of Parent's
assets, operations and personnel.
6.2 AMENDMENTS. This Agreement may not be amended or modified without
the written consent of the Parties hereto.
6.3 WAIVER. Failure to insist upon strict compliance with any of the
terms, covenants or conditions of this Agreement at any one time shall not be
deemed a waiver of such term, covenant or condition at any other time nor shall
any waiver or relinquishment of any right or power herein at any time be deemed
a waiver or relinquishment of the same or any other right or power at any other
time.
6.4 NOTICES. All notices, requests, demands, claims and other
communications hereunder shall be in writing and shall be deemed given if
delivered by certified or registered mail (first class postage pre-paid),
guaranteed overnight delivery or facsimile transmission, if such transmission is
confirmed by delivery by certified or registered mail (first class postage
pre-paid) or guaranteed overnight delivery, to the following addresses and
telecopy numbers (or to such other addresses or telecopy numbers which such
party shall designate by like notice to the other parties):
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If to Seller:
Accent Rx, Inc.
0000 Xxxxxxx Xxxxxx Xxxxx
Xxxxx 000
Xxxxx, Xxxxxxx 00000
If to Parent:
Accentia, Inc.
0000 Xxxxxxx Xxxxxx Xxxxx
Xxxxx 000
Xxxxx, Xxxxxxx 00000
with copy to (both Seller and Parent):
Xxxxxx X. Xxxxxx
0000 Xxxxx Xxxxx Xxxxx
Xxxxxx, Xxxxxxx, 00000
and
Xxxxx XxXxxxx
0000 Xxxxxxx Xxxxx Xxxxx
Xxxxx 000
Xxxxx, Xxxxxxx 00000
If to Buyer:
Chronimed Inc.
00000 Xxx Xxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Attn: CEO
Telecopy: (000) 000-0000
with a copy to:
Chronimed Inc.
00000 Xxx Xxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Attn: General Counsel
Telecopy: (000) 000-0000
6.5 ENFORCEABILITY AND SEVERABILITY. In the event any provision of this
Agreement or portion thereof is found to be wholly or partially invalid,
illegal, or unenforceable in any proceeding, then such provision shall be deemed
to be modified or restricted to the extent and in
16
the manner necessary to render the same valid and enforceable, or shall be
deemed excised from this Agreement, as the case may require, and this Agreement
shall be construed and enforced to the maximum extent permitted by law as if
such provision had been originally incorporated herein as so modified or
restricted or as if such provision had not been originally incorporated herein,
as the case may be.
6.6 GOVERNING LAWS AND CONSENT TO JURISDICTION. The laws of the State
of Minnesota (irrespective of its choice of law principles) shall govern all
issues concerning the validity of this Agreement, the construction of its terms
and the interpretation and enforcement of the rights and duties of the parties.
Each Party irrevocably submits to the exclusive jurisdiction of the courts of
the State of Minnesota and the federal courts of the United States of America
located in the State of Minnesota (and the federal and state courts having
jurisdiction over appeals therefrom) in respect of the transactions contemplated
by this Agreement, the other agreements and documents referred to herein and the
transactions contemplated by this Agreement and such other documents and
agreements.
6.7 SECTION TITLES. The titles of the sections have been inserted as a
matter of convenience and reference only and shall not control or affect the
meaning or construction of this Agreement.
6.8 ASSIGNMENT. This Agreement shall not be assignable or delegated by
any Party without the prior written consent of the others.
6.9 EXPENSES. Each Party hereto will pay its own expenses in connection
with the transactions contemplated hereby, whether or not such transactions
shall be consummated.
6.10 SURVIVAL OF AGREEMENTS. All representations and warranties made
herein or in any other agreement, certificate, or instrument delivered to any
Party pursuant to or in connection with this Agreement shall be effective as of
the Closing Date and shall survive the execution and delivery of this Agreement
until twenty-four (24) months from the date of Closing. All statements contained
in any certificate or other instrument delivered by the Parties hereunder, or in
connection herewith, shall be deemed to constitute representations and
warranties made by that entity. Such representations and warranties shall
survive until the time specified herein in full force and effect notwithstanding
any investigation by the Party relying upon them.
6.11 PARTIES IN INTEREST. All representations, covenants and agreements
contained in this Agreement by or on behalf of any of the Parties hereto shall
bind and inure to the benefit of the respective successors and assigns of the
Parties hereto whether so expressed or not.
6.12 REMEDIES. All remedies for breach of this Agreement shall be
cumulative.
6.13 THIRD PARTIES. Except as specifically provided herein, this
Agreement does not and is not intended to create any rights in any person or
entity which is not a Party to this Agreement.
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6.14 ENTIRE AGREEMENT. This Agreement, including the Exhibits hereto,
constitutes the sole and entire agreement and understanding of the Parties with
respect to the subject matter hereof. All Exhibits hereto are incorporated
herein by reference.
6.15 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the Parties hereto have duly executed this
Agreement to be effective as of the Effective Date.
ACCENT RX, INC. CHRONIMED INC.
/s/ X. X. X'Xxxxxxx, Xx. M.D. /s/ Xxxxx X. Xxxxxxxxxxx
---------------------------------- -------------------------------------
Name: X. X. X'Xxxxxxx, Xx. M.D. Name: Xxxxx X. Xxxxxxxxxxx
---------------------------- -------------------------------
Title: Chairman Title: CEO
--------------------------- ------------------------------
Date: Dec. 9, 2003 Date: Dec. 9., 2003
---------------------------- -------------------------------
ACCENTIA, INC.
/s/ X. X. X'Xxxxxxx, Xx. M.D.
----------------------------------
Name: X. X. X'Xxxxxxx, Xx. M.D.
----------------------------
Title: Chairman
---------------------------
Date: Dec. 9, 2003
----------------------------
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