PURCHASE AGREEMENT
This
PURCHASE AGREEMENT (the “Agreement”), is
made and entered into this February 28, 2005, by and among MOMS PHARMACY, INC.,
a California corporation (“Buyer”), and
Xxxxxxx Xxxx (“Seller”).
BACKGROUND:
Seller
owns or may be entitled to own equity or rights to equity in Specialty
Pharmacies, Inc. (“Target”), a
Washington corporation, or one or more of its past, present or future affiliates
(the “Rights”).
Target operates a specialty retail pharmacy business in the States of California
and Washington (the “Business”).
Buyer
desires to purchase, and Sellers desire to sell, transfer and deliver to Buyer,
all the Rights on the terms and conditions of this Agreement.
In
consideration of the foregoing, the mutual representations, warranties and
covenants set forth in this Agreement, and for the good and valuable
consideration, the sufficiency of which is hereby acknowledged, the parties
hereto agree as follows:
ARTICLE
1
THE
TRANSACTION
1.1 Sale
and Purchase of the Rights. Upon
the terms and subject to the conditions contained in this Agreement, at the
Closing (as
defined below), Seller
shall sell, transfer, assign and convey the Rights to Buyer, free and clear of
any security interest, lien, charge, restriction, adverse claim, right or
encumbrance of any kind, and
Buyer shall purchase, acquire and accept from the Seller all right, title and
interest in and to the Rights.
1.2 Purchase
Price. The
aggregate consideration for the Rights is One Million Two Hundred Thousand
Dollars ($1,200,000), subject
to the terms and conditions of the Note (as defined below) (the “Purchase
Price”).
1.3 Closing
Time and Place. The
closing of the transactions contemplated by this Agreement (the “Closing”) will
take place at the offices of Xxxxx Peabody LLP at 10:00 a.m. on the date of
the closing of the stock purchase agreement among the Buyer and the holders of
all of the capital stock of Target (the “Closing
Date”). If the
Closing has not occurred on or before April 15, 2005, this Agreement shall be
null and void, and neither party shall have any rights against or obligations to
the other party.
1.4 Payment
of Purchase Price at Closing. At the
Closing, Buyer shall pay the Purchase Price as follows:
(a) Six
Hundred Thousand Dollars ($600,000), by wire
transfer of immediately available funds to the account of Seller.
(b) Buyer
will deliver a promissory note in the principal amount of Six Hundred Thousand
Dollars ($600,000), half of which principal amount shall be due and payable on
the twelve month anniversary of the Closing Date and the balance of which
principal amount shall be due and payable on the thirteen month anniversary of
the Closing Date, subject to the terms and conditions of such promissory note
(the “Note”). The
Note shall be in the form attached as Exhibit A.
ARTICLE
2
REPRESENTATIONS
AND WARRANTIES OF SELLER
Seller
hereby represents and warrants to Buyer as of the date hereof and as of the
Closing Date as follows:
2.1 Enforceability. This
Agreement has been duly executed and delivered by Seller and constitutes the
legal, valid and binding obligation of such Seller, enforceable against such
Seller in accordance with its terms.
2.2 No
Conflicts; No Violation. The
execution and delivery by Seller of this Agreement does not, and the
consummation by the Seller of the transactions contemplated hereby and thereby,
will not conflict
with, constitute or result in any breach, default or violation of (or an event
which would, with or without the passage of time or the giving of notice or
both, constitute or result in a breach, default or violation of) any agreement
to which Seller is a party or any judgment or order of any governmental
authority applicable to Seller.
2.3 Compliance
with Laws. To the
Seller’s knowledge, the business, operations and assets of Target have been
conducted and are in compliance in all material respects with all applicable
federal, state, local or foreign laws, rules, regulations, ordinances,
judgments, decrees, orders or other requirements of any governmental authority.
Seller has not made any illegal or improper payment to, or provided any illegal
or improper benefit or inducement for, any governmental official, supplier,
customer or other individual, entity or firm (a “Person”), in an
attempt to influence and such Person to take or to refrain from taking any
action relating to Target.
2.4 Payment
Programs. To the
Seller’s knowledge, (a)
Target has not received written notice that it is subject to any restriction or
limitation on the receipt of payment under the Medicare or Medicaid programs,
any other federally funded health care program or any other third party payor
(collectively, the “Payment
Programs”); (b)
Target has valid and current provider agreements with the Payment Programs; (c)
Target is in compliance in all material respects with the conditions of
participation for the Payment Programs; (d) Target has not received written
notice that a Payment Program has requested or threatened any recoupment, refund
or set-off from Target, or had imposed upon it any fine, penalty or other
sanction, nor has Target been excluded from participation in a Payment Program
and (e) Target has not submitted to a Payment Program any false or fraudulent
claim for payment, nor has Target at any time violated in any material respect
any condition for participation, or any published rule, regulation, policy or
standard of a Payment Program.
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2.5 Fraud
and Abuse. Seller
has not engaged in any activities that are prohibited under Federal Medicare and
Xxxxxxxx xxxxxxxx, 00 X.X.X. §§ 0000x-0, 0000x-0x, 0000x-0x or the Federal False
Claims Act, 31 U.S.C. § 3729 et seq., the regulations promulgated pursuant to
such statutes, or any related state or local statutes or
regulations.
2.6 Physician
Self-Referrals. To the
Seller’s knowledge, (a) Target’s operations are in compliance in all material
respects with and do not otherwise violate the Federal Medicare and Medicaid
statutes regarding physician self-referrals, 42 U.S.C. §§ 1395nn and 1396b(s),
the regulations promulgated pursuant to such statutes, or any related state or
local statutes or regulations; and (b)
neither Seller, nor any of Target’s officers, employees or agents have violated
any such statute or regulation.
2.7 Controlled
Substances. To the
Seller’s knowledge, Target has not engaged in any activities which are
prohibited under the Federal Controlled Substances Act, 21 U.S.C. § 801 et seq.,
or the regulations promulgated pursuant to such statute or any related state or
local statutes or regulations concerning the dispensing and sale of controlled
substances.
2.8 Qui
Tam Lawsuits. Seller
is not aware of any facts or set of facts, or any inquiry or investigation
threatened or pending that may uncover any facts or set of facts, relating to
his employment by Target, that could be the basis for a qui tam lawsuit under
the Federal Civil False Claims Act against Target.
2.9 Disclosure. No
representation or warranty in this Agreement contains any untrue statement of a
material fact, or omits to state a material fact necessary to make the
statements or facts contained herein or therein not misleading in light of the
circumstances in which they were made.
ARTICLE
3
RESTRICTIVE
COVENANTS
3.1 Non-Solicitation. Neither
Seller, none of his respective Affiliates, nor any Person controlled, directly
or indirectly, by any of them may, directly or indirectly, alone or in
association with any other Person, whether as owner, partner, shareholder,
member, consultant, agent, employee, co-venturer or otherwise, (i) for a period
of two (2) years from and after the Closing Date, employ, attempt to employ,
recruit or otherwise solicit, induce or influence any person who is then
currently employed or retained by Buyer or any of its affiliates to leave such
employment or otherwise terminate its relationship with Buyer or any of its
affiliates or otherwise interfere with any such person’s employment or
relationship with Buyer or any of its affiliates; or (ii) until the later of (a)
three (3) years after the Closing Date and (b) two (2) years after Seller’s
employment with Target terminates, solicit or induce, directly or indirectly,
any Person, customer or supplier to terminate or otherwise modify adversely its
business relationship with Buyer or any of its affiliates for so long as the
Buyer, Target or any of their respective affiliates has a business relationship
with such Person.
3.2 Non-Competition. Until
the later of (a) three (3) years after the Closing Date and (b) two (2) years
after Seller’s employment with Target terminates, neither Seller nor any
Person controlled, directly or indirectly, by Seller may, directly or
indirectly, alone or in
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association
with any other Person, whether as owner, partner, shareholder, member,
consultant, agent, employee, co-venturer or otherwise, engage, participate or
assist in any business competitive with the retail HIV/AIDS pharmacy business
conducted by Buyer or any of its Affiliates in the Counties of San Francisco,
Alameda and San Mateo (a “Competitive
Business”), or
carry on, or be engaged or concerned in, solicit on behalf of, take part in or
render consulting services to, or own, share in the earnings of, or invest in
the stock, bonds or other securities of, any Person engaged in Competitive
Business for so along as, with respect to each county listed above, the Buyer,
Target or any of their respective affiliates are conducting such a business in
such county; provided,
however, that
ownership of two percent (2%) or less of any outstanding stock of a publicly
held corporation shall not be a violation of the provisions of this
Section
3.2.
3.3 Confidential
Information; Confidentiality. As used
in this Agreement, “Confidential Information” of a Person means information
belonging to Target or Buyer that is of value to Target or Buyer in the course
of conducting its business and the disclosure of which would reasonably be
expected to result in a competitive disadvantage to Target or Buyer. By way of
example and not in derogation of the foregoing definition, Confidential
Information includes, without limitation, (A) financial information, reports and
forecasts; inventions, improvements and other intellectual property; trade
secrets; know-how; designs, processes and formulae; software-marketing and sales
information and plans, and customer and supplier lists; and business plans,
prospects and opportunities (such as possible acquisitions or dispositions of
businesses or facilities) that have been discussed or considered by Target or
Buyer; (B) information developed by Seller in connection with or related to
Target or its business, as well as other information to which Seller may have
access in connection with or related to Target or its business; and (C) the
lawfully acquired confidential information of others with which Target has a
business relationship. Notwithstanding the foregoing, Confidential Information
does not include information in the public domain, unless due to a breach of the
Seller’s obligations under this Section 3.3 or
developed by Seller after the Closing Date or acquired by Seller after the
Closing from a third party, not in breach of any confidentiality obligation
owned to the Buyer or Target, and not related to Target or the
Business.
Seller
will keep in confidence and trust all Confidential Information, and will not use
or disclose Confidential Information without the written consent of Buyer,
except as required by law or legal process. If a Seller is required by law or
legal process to disclose any Confidential Information, Seller shall not be in
breach of this Section 3.3 if Seller provides Buyer with prompt notice thereof
so that Buyer may seek a protective order or other appropriate remedy to prevent
or limit disclosure of any Confidential Information. Seller shall cooperate, to
the extent practicable and without material cost or expense to the Seller, with
Buyer’s application for a protective order or remedy, and, in any event, shall
disclose only that portion of the Confidential Information that Seller is
legally required to disclose.
3.4 Acknowledgements. If the
provisions of this Article 3 are violated, in whole or in part, Buyer shall be
entitled, upon application to any court of proper jurisdiction, to a temporary
restraining order or preliminary injunction to restrain and enjoin Seller from
such violation without prejudice as to any other remedies Buyer may have at law
or in equity. In the event of a violation, Seller agrees that it would be
virtually impossible for the Buyer to
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calculate
its monetary damages and that Buyer would be irreparably harmed. If Buyer seeks
such temporary restraining order or preliminary injunction, Buyer shall not be
required to post any bond with respect thereto, or, if a bond is required, it
may be posted without surety thereon. Seller specifically acknowledges,
represents and warrants that the covenants set forth in this Article 3 are
reasonable and necessary to protect the legitimate interests of Buyer, and that
Buyer would not have entered into this Agreement or paid the Purchase Price in
the absence of such covenants.
ARTICLE
4
MISCELLANEOUS
4.1 Successors
and Assigns. This
Agreement, and all rights and powers granted hereby, will bind and inure to the
benefit of the parties hereto and their respective successors and
assigns.
4.2 Construction. The
parties have participated jointly in the negotiation and drafting of this
Agreement. In the event an ambiguity or question of intent or interpretation
arises, this Agreement shall be construed as if drafted jointly by the parties
and no presumption or burden of proof shall arise favoring or disfavoring any
party by virtue of the authorship of any of the provisions of this
Agreement.
4.3 Headings. The
headings preceding the text of the sections and subsections hereof are inserted
solely for convenience of reference and shall not constitute a part of this
Agreement, nor shall they affect its meaning, construction, or
effect.
4.4 Counterparts. This
Agreement may be executed in two or more counterparts, each of which shall be
deemed an original, but which together shall constitute one and the same
instrument.
Facsimile copies shall be deemed binding originals.
4.5 Further
Assurances. After
Closing, each party shall cooperate and take such action as may be reasonably
requested by another party in order to more fully carry out the provisions and
purposes of this Agreement and the transactions contemplated
hereby.
4.6 Course
of Dealing. No
course of dealing and no delay on the part of any party hereto in exercising any
right, power, or remedy conferred by this Agreement shall operate as a waiver
thereof or otherwise prejudice such party’s rights, powers and remedies. The
failure of any of the parties to this Agreement to require the performance of a
term or obligation under this Agreement or the waiver by any of the parties to
this Agreement of any breach hereunder shall not prevent subsequent enforcement
of such term or obligation or be deemed a waiver of a subsequent breach
hereunder. No single or partial exercise of any rights, powers or remedies
conferred by this Agreement shall preclude any other or further exercise thereof
or the exercise of any other right, power or remedy.
4.7 Severability.
If any
provision of this Agreement or any part of any such provision is held under any
circumstances to be invalid or unenforceable in any jurisdiction, then: (a) such
provision or part thereof shall, with respect to such circumstances and in such
jurisdiction, be deemed amended to conform to applicable laws so as to be valid
and enforceable to the fullest possible extent; (b) the invalidity or
unenforceability of such provision or part thereof under such
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circumstances
and in such jurisdiction shall not affect the validity or enforceability of such
provision or part thereof under any other circumstances or in any other
jurisdiction; and (c) such invalidity or enforceability of such provision or
part thereof shall not affect the validity or enforceability of the remainder of
such provision or the validity or enforceability of any other provision of this
Agreement. Each provision of this Agreement is separable from every other
provision of this Agreement, and each part of each provision of this Agreement
is separable from every other part of such provision.
4.8 Entire
Agreement. This
Agreement and the exhibit hereto, which is hereby incorporated herein, set forth
all of the promises, covenants, agreements, conditions and undertakings between
the parties hereto and their respective affiliates, successors and assigns with
respect to the subject matter hereof and supersede all prior and contemporaneous
agreements and understandings, inducements or conditions, express or implied,
oral or written. Without limiting the generality of the foregoing, all promises,
covenants, agreements, conditions and undertakings between Seller and Target
are, subject to the Closing, hereby terminated, including, without limitation,
the agreement dated October 21, 2004 between Seller and Target and the
agreements it amended are, subject to the Closing, hereby terminated. This
Agreement may not be amended except by an instrument in writing signed by the
party sought to be charged with effect of such amendment.
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement the day and
year first above written.
MOMS
PHARMACY, INC.
By:
/s/
Xxxxxxx Moran___________
Name: Xxxxxxx Xxxxx
Title:
President and CEO
SELLER:
/s/
Xxxxxxx Xxxx
Xxxxxxx
Xxxx
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