EXHIBIT 10.4
STOCK REDEMPTION AGREEMENT
THIS STOCK REDEMPTION AGREEMENT (the "Agreement") is made and entered
into as of June 7, 1997, by and among PHARMASYSTEMS COST CONTAINMENT CORP., a
Florida corporation (the "Company"), PSI HOLDINGS, INC., a Florida corporation
("PSI") and XXXXXXX XXXXX-XXXXXXXXX XX., M.D. ("Xx. Xxxxx-Xxxxxxxxx"). PSI and
Xx. Xxxxx-Xxxxxxxxx are sometimes collectively referred to herein as the
"Shareholders".
WHEREAS, the Company's authorized common stock (the "Common Stock")
consists of 5,000,000 shares with a ------------ $0.001 par value per share; and
WHEREAS, PSI currently owns 607,237 shares of Common Stock and Xx.
Xxxxx-Xxxxxxxxx currently owns 100,000 shares of Common Stock; and
WHEREAS, PSI and Xx. Xxxxx-Xxxxxxxxx have arranged for Anchor Capital
Consultants, Ltd. to purchase (the "Third Party Stock Purchase") 245,314 and
40,400 shares of Common Stock, respectively, from each of them; and
WHEREAS, after the Third Party Stock Purchase, PSI shall own 361,923
shares (the "PSI Shares") of Common Stock and Xx. Xxxxx-Xxxxxxxxx shall own
59,600 shares (the "Xxxxx-Xxxxxxxxx Shares") of Common Stock; and
WHEREAS, PSI wishes for the Company to redeem the PSI Shares and Xx.
Xxxxx-Xxxxxxxxx wishes for the Company to redeem the Xxxxx-Xxxxxxxxx Shares
(these shares are collectively referred to herein as the "Shares"), all on the
terms and conditions specified herein; and
WHEREAS, the Company wishes to redeem the Shares on the terms and
conditions specified herein; and
WHEREAS, the PSI Shares are represented by Certificate No. ___ and the
Xxxxx-Xxxxxxxxx Shares are represented by Certificate No. ____ (collectively,
the "Certificates").
NOW, THEREFORE, in consideration of the mutual promises and agreements
contained herein, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto, intending to be
legally bound, hereby agree as follows:
1. Recitals. The recitals stated above are true and correct as of the
date hereof and are hereby incorporated by reference herein.
2. Redemption of Shares. Subject to the terms and conditions of this
Agreement, the Shareholders hereby sell, transfer, convey and assign
(collectively, the "Redemptions") all of the Shares to the Company, and the
Company hereby agrees to redeem and accept delivery of the Shares. The parties
hereto acknowledge and agree that the transactions contemplated herein shall be
treated for all purposes as a redemption of the Shares by the Company.
Notwithstanding any other provision of this Agreement, the parties hereto each
covenant and agree that no Redemption shall occur hereunder unless it is in
compliance with all applicable laws, including, without limitation, Florida
Statutes Sections 607.0631 and 607.06401.
3. Consideration; Closing.
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(a) The Company shall pay a total of $1,475,330.50 (the "Redemption
Price") to the Shareholders as consideration for all of the Shares, of which
$1,266,730.50 shall be paid to PSI and $208,600.00 shall be paid to Xx.
Xxxxx-Xxxxxxxxx.
(b) The Redemption Price shall be paid as follows:
(i) At the closing (the "Closing") of the transactions
contemplated herein, the Company shall execute promissory
notes (the "Notes") in the forms attached hereto as Exhibit
"A" and Exhibit "B" in favor of PSI and Xx.
Xxxxx-Xxxxxxxxx, respectively.
(ii) The parties agree and acknowledge that the Company
anticipates receiving certain capital contributions (the
"Capital Contributions") as more specifically described on
Exhibit "C" hereto, and that the total amount of the
Capital Contributions is anticipated to be $3,000,000.00.
(iii) The Cash Portion (the "Cash Portion") of the Redemption
Price shall be calculated as follows:
Total Capital Cash Portion of
Contribution Amount Purchase Price
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up to $3,000,000 $ 590,132
$4,000,000 $ 737,665
$5,000,000 $ 885,198
$6,000,000 $1,032,731
$7,000,000 $1,180,264
$8,000,000 $1,323,797
$9,000,000 $1,475,330
(iv) Except as otherwise provided herein, within five (5)
business days of its receipt of any Capital Contribution
the Company shall pay 21.5% of such Capital Contribution to
PSI and 3.5% of such Capital Contribution to Xx.
Xxxxx-Xxxxxxxxx until the Cash Portion is paid in full.
(v) If the Company is unable to pay the payments required
hereunder because of restrictions imposed by any applicable
law, including, without limitation, Florida Statutes
Sections 607.0631 and 607.06401, the amount that is unable
to be paid shall be placed in an escrow account with an
escrow agent acceptable to all parties hereto. The terms of
such escrow arrangement shall provide that these escrowed
funds shall be immediately released to the Shareholders
when the restriction imposed by applicable law no longer
prohibits such payment.
(vi) The Shareholders agree and acknowledge that there can be no
guarantee that any of the Capital Contributions will
actually be received by the Company.
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(vii) The Cash Portion shall be increased due to funds received
by the Company, if any, from an offering of its equity
securities registered under the Securities Act of 1933, as
amended. This increase in the Cash Portion shall be made as
described in Section 3(b)(iii) hereof for increases in the
Cash Portion due to additional Capital Contributions. The
Cash Portion shall not be increased due to any debt
financings (which raise funds for operational purposes) or
any private equity offerings which the Company may effect.
(viii)All amounts due hereunder (and any accrued interest
thereon) shall be payable to the Shareholders on the one
(1) year anniversary of the date of this Agreement.
(c) The Closing shall occur on or before June __, 1997.
4. Stock Pledge Agreement. The Company's obligations under the Notes
shall be secured by pledges (the "Pledges") of the applicable Shares; provided,
however, that only the number of Shares necessary to cover the Company's
then-outstanding obligations (based on a per Share value of $3.50) shall be
subject to the Pledges. As the Company pays its obligations under the Notes,
Shares shall be released from the Pledges in accordance with this Section and
Redemptions of such Shares shall be deemed to occur at the time such Shares are
released from the applicable Pledge. The Pledges shall be documented in the
Stock Pledge Agreements (the "Stock Pledge Agreements") in the forms attached
hereto as Exhibit "D." The Stock Pledge Agreements shall be executed at the
Closing.
5. Releases.
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(a) Each Shareholder, on behalf of itself or himself and all of its
or his heirs, assigns, successors, executors, administrators, personal
representatives, agents and beneficiaries (collectively, the "Releasors") hereby
releases and forever discharges (each, a "Shareholder's Release") the Company
and its officers, agents, employees, shareholders, directors, attorneys,
accountants, consultants, successors and assigns (collectively, the "Releasees")
of and from all claims, costs, expenses, damages any other obligations
(including legal fees and expenses), whether currently known or unknown to the
parties, and whether direct or consequential, fixed or contingent, that the
Releasors ever had, now have or hereafter may have against the Releasees or that
the Releasors may hereafter sustain by reason of any matter, cause or thing
whatsoever, arising out of or in connection with such Shareholder's ownership of
Shares, except for the obligations arising under this Agreement or the Stock
Pledge Agreements.
(b) The Company hereby releases and forever discharges (each, a
"Company Release") each Shareholder and, as applicable, its officers, agents,
employees, shareholders, directors, attorneys, accountants, consultants,
successors and assigns of and from all claims, costs, expenses, damages any
other obligations (including legal fees and expenses), whether currently known
or unknown to the parties, and whether direct or consequential, fixed or
contingent, that the Company ever had, now has or hereafter may have against
each Shareholder or that the Company may hereafter sustain by reason of any
matter, cause or thing whatsoever, arising out of or in connection with such
Shareholder's ownership of the Shares, except for the obligations arising under
this Agreement or the Stock Pledge Agreements.
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(c) Notwithstanding any other provision of this Agreement, the
Shareholders' Releases and the Company Releases shall become effective upon the
payment in full of all amounts due under the Notes.
6. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to the Shareholders that (a) it is duly incorporated and
presently existing under the laws of the State of Florida, (b) it has all
requisite corporate power and authority to enter into this Agreement and to
carry out and perform its obligations hereunder, and (c) the execution of this
Agreement and the Company's Stock Pledge Agreement have been duly authorized by
all requisite corporate actions and all required corporate approvals have been
obtained.
7. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS.
(a) Each Shareholder hereby represents and warrants to the Company
that it or he, as applicable, (i) has good title to, and has all right and
authority to transfer and deliver all of, the Shares owned by it or him to the
Company hereunder, (ii) can effectively transfer to the Company the full right,
title and interest in and to the Shares owned by it or him, free and clear of
all options, warrants, rights, liens, claims, charges and any other
encumbrances, (iii) has provided the original Certificate or Certificates
representing the Shares owned by it or him to the Company, (iv) has obtained
independent professional advice regarding the tax, accounting, legal and
financial merits and consequences of the transactions contemplated herein, (v)
and its or his advisors have made such independent investigations of the Company
as the Shareholder and his advisors deem necessary or advisable in connection
with the transactions contemplated herein, (vi) has received all information
which he and his advisors deem necessary regarding the transactions contemplated
herein, and, in connection therewith, it or he and its or his advisors have been
provided with access to all books, records and documents of the Company, (vii)
is aware of the business activities and operations of the Company and is
satisfied that there are no material facts regarding the Company or the Shares
of which it or he has not been fully informed, and (viii) has had the
opportunity to consult its or his own counsel regarding the transactions
contemplated in this Agreement.
(b) In addition to the representations and warranties contained in
Section 7(a) hereof, PSI hereby represents and warrants that (i) it is duly
incorporated and presently existing under the laws of the State of Florida, (ii)
it has all requisite corporate power and authority to enter into this Agreement
and to carry out and perform its obligations hereunder, and (iii) the execution
of this Agreement and the Stock Pledge Agreement have been duly authorized by
all requisite corporate actions and all required corporate approvals have been
obtained.
8. Conditions Precedent.
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(a) Non-Participating PSI Shareholders. The parties hereto (i)
acknowledge and agree that the PSI shareholders listed on Exhibit "E" hereto
(the "Non-Participating PSI Shareholders") do not wish to participate in the
transactions contemplated herein, and (ii) covenant and agree that, as a
condition precedent to the consummation of the transactions contemplated herein,
PSI shall have redeemed all of the PSI common stock owned by the
Non-Participating PSI Shareholders in exchange for shares of Common Stock of the
Company currently held by PSI.
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(b) THIRD PARTY STOCK PURCHASE. The consummation of the Third Party
Stock Purchase shall be a condition precedent to the consummation of the
transactions contemplated herein.
9. NOTICES. All notices required or desired to be given hereunder shall
be written and shall be given by hand delivery or recognized overnight delivery
service to the following addresses:
(a) PharmaSystems Cost Containment Corp.
0000 X.X. 0xx Xxxxxx
Xxxxx #000
Xxxxx, Xxxxxxx 00000
Attention: Xxxx X. Xxxxxxxxx, M.D., President
(b) PSI Holdings, Inc.
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Attention: Xxxxxx Xxxxxxxx, Esq., President
(c) Xxxxxxx Xxxxx-Xxxxxxxxx, Xx., M.D.
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10. CERTIFICATES. On the effective date of each Redemption, each
Shareholder shall surrender the Certificate(s) which represent(s) the Shares
which are redeemed in that Redemption. If applicable, the Company shall then
issue new certificates reflecting each Shareholder's revised ownership of Common
Stock.
11. PROXIES; RESIGNATIONS. At the Closing each Shareholder shall
execute (a) an irrevocable proxy in the form attached hereto as Exhibit "F"
(collectively, the "Proxies") to Xxxx X. Xxxxxxxxx, M.D., giving Xx. Xxxxxxxxx
the power to vote each Shareholder's Shares on all matters, and (b) a
resignation in the form attached hereto as Exhibit "G" pursuant to which such
Shareholder resigns as a member of the Company's Board of Directors and from all
offices held with the Company, if applicable. All of the Proxies shall be
effective immediately and shall terminate on the earlier to occur of (i) the
Redemption of all of such Shareholder's Shares, or (ii) the Termination Date.
12. EXPENSES. Each party hereto shall bear all expenses incurred by
such party in connection with this Agreement and in the consummation of the
transactions contemplated hereby.
13. ATTORNEY'S FEES. In any action or proceeding brought to enforce any
provision of this Agreement, the prevailing party shall be entitled to recover
reasonable attorneys' fees, including attorneys' fees for any appeal and costs
incurred in bringing such action or proceeding, in addition to any other
available remedy. Such party shall be deemed to have been successful if such
action or claim is concluded pursuant to (a) a court order or final judgment
which is not subject to appeal, (b) a settlement agreement or (c) a dismissal of
the principal claims.
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14. ENTIRE AGREEMENT; AMENDMENT. This Agreement and the other
agreements contemplated herein constitute the entire agreement among the parties
hereto regarding the subject matter hereof, and supersede all prior agreements,
understandings and arrangements, expressed or implied, both oral and written,
among the parties hereto with respect to the subject matters hereof. This
Agreement may only be amended or modified by a written amendment signed by all
of the parties hereto.
15. GOVERNING LAW; VENUE. The Agreement shall be construed, governed
and enforced in accordance with the laws of the State of Florida without regard
to its principles of conflicts of laws. Any action or proceeding which is
brought by any party hereto for any dispute, claim, disagreement or controversy
arising directly or indirectly out of or in connection with this Agreement shall
be brought in the state or federal courts in Dade County, Florida. The parties
hereto covenant and agree that they will not challenge the selection of such
venue in any such action or proceeding for any reason, including, without
limitation, on the grounds that such venue is an inconvenient forum.
16. SUCCESSORS; PERMITTED ASSIGNS. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective heirs,
personal representatives, successors and permitted assigns.
17. SEVERABILITY. The provisions of this Agreement are severable, and
the invalidity of any provision shall not affect the validity of any other
provision. If any court of competent jurisdiction determines that any provision
of this Agreement or the application thereof is unenforceable because of the
duration or scope thereof, the parties hereto acknowledge and agree that such
court shall have the power to reduce the duration and scope of such provision to
the extent necessary to make it enforceable and that this Agreement in its
reduced form shall be valid and enforceable to the full extent permitted by
applicable law.
18. NO WAIVER. No waivers of any of the terms and conditions hereof
extended by any party hereto to any other party shall be construed as a waiver
of any breach on the part of such other party, nor shall any waiver by any party
hereto of any of the terms and conditions hereof be construed as a general or
continuing waiver by such party.
19. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Notwithstanding any
other provision of this Agreement, each Shareholder covenants and agrees that
all of the representations, warranties and covenants made hereunder, including,
without limitation, the representations and warranties made in Section 7 hereof,
shall be true and correct on the date of each Redemption of his or its Shares
hereunder and shall be deemed to be given by each Shareholder as of the date of
each such Redemption.
20. NO UNDUE DURESS. The parties hereto acknowledge and agree that all
of the terms of this Agreement were negotiated at arms' length and that this
Agreement, and all documents executed in connection herewith, were prepared and
executed without duress, undue influence or coercion of any kind exerted by, or
on behalf of, any party hereto upon any other party.
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21. CAPTIONS. The captions of this Agreement are for convenience and
reference only and in no way define, describe, extend or limit the scope or
intent of this Agreement or the intent of any provision hereof.
22. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original and all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have duly executed this Stock
Redemption Agreement as of the date first above written.
PHARMASYSTEMS COST CONTAINMENT CORP.
By: /s/ Xxxx X. Xxxxxxxxx
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Its: President
PSI HOLDINGS, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
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Its: President
/s/ Xxxxxxx Xxxxx-Xxxxxxxxx, Xx. M.D.
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XXXXXXX XXXXX-XXXXXXXXX, XX., M.D.
