Exhibit 99.1
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT ("Agreement") is dated as of the 31st
day of July, 2009, by and between Priority Diabetes Supply, Inc., a Florida
corporation ("Buyer"), and Sirius Medical Supply Co., a Florida corporation
("Seller").
Recitals
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Seller is in the business of providing diabetic supplies and
equipment.
Seller desires to sell certain assets of Seller's business, and
Buyer desires to purchase such assets on the terms and conditions set forth in
this Agreement.
Terms and Conditions
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In consideration of the mutual covenants contained in this Agreement
and other good and valuable consideration, Seller and Buyer agree as follows:
1. PURCHASE AND SALE OF ASSETS.
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1.1 Purchased Assets. On the Closing Date (as defined in Section 5.1),
Seller will sell to Buyer, and Buyer will purchase from Seller, free and clear
of all claims, liens, and encumbrances, the following assets (the "Purchased
Assets") related to Seller's business:
(a) The name, address, phone number, birth date, insurance
carrier, Health Insurance Claim Number ("HICN"), attending
physician, and date of last shipment of products for all
current customers of Seller, as set forth in Exhibit 1.1(a).
(b) The name, address and phone number of Seller's customers who
have ordered products from Seller within fifteen months of
the Closing Date and may still be contacted by Buyer
pursuant to applicable rules and regulations of the Centers
for Medicare and Medicaid Services ("CMS") Conditions of
Participation and Conditions for Coverage ("Seller's Recent
Customers"), as set forth in Exhibit 1.1(b).
(c) Client lists of Seller's prospective customers, as
maintained by Seller, if any, as of the Closing Date.
(d) Entire Noble House database.
1.2 Excluded Assets. The following assets are excluded from the
purchase and sale, and Seller will retain title to such assets:
ASSET PURCHASE AGREEMENT Page 1 of 10
(a) All assets of Seller, as of the Closing Date, which are not
the "Purchased Assets," including, but not limited to:
(1) All accounts receivable, existing as of the Closing
Date.
(2) All rights to ▇▇▇▇ and collect from patients and
third-party payors for services rendered before the
Closing Date.
(3) All contracts and agreements, including, without
limitation, third-party payor agreements, space leases,
equipment leases, and supply contracts.
(4) All provider numbers, permits, licenses, intellectual
property, including, without limitation, trademarks,
service marks, trade names, trade secrets (except those
specifically constituting the Purchased Assets),
marketing information and other know-how.
(5) All cash and cash equivalents.
(6) Goodwill related to Seller's business.
(7) Use of the "Sirius," "Sirius Medical," or "Sirius
Medical Supply Co." name, or any combination thereof.
1.3 Liabilities. Except for any liabilities that may arise from the
Purchased Assets after the Closing Date, and as set forth in this paragraph 1.3,
Buyer will not assume any liabilities of Seller, and Seller will remain
responsible for all liabilities of Seller related to Seller's business. After
the Closing Date, Buyer shall be solely responsible for compliance with all
applicable governmental laws, rules and regulations applicable to use of the
Purchased Assets, including, without limitation, applicable CMS and the Health
Insurance Portability and Accountability Act of 1996, as amended ("HIPAA") rules
and regulations.
1.4 Purchase Price. The purchase price for the Purchased Assets will
be $225.00 per patient, payable as follows: $80,000 (the "Initial Payment") by
certified check or wire transfer on the Closing Date and the remaining balance
after any and all adjustments by certified check or wire transfer on or before
the period ending 180 days after the Closing Date ("Final Payment").
1.5 Purchase Price Adjustment. During the period from the Closing Date
and 180 days thereafter (the "Adjustment Period"), if Buyer determines after
reasonable diligence and inquiry that the information concerning any of the
customers contained in Exhibits 1.1(a) or (b) is inaccurate in any material
respect (i.e., the customer is no longer eligible to receive Medicare benefits,
is deceased, or the provider has changed the customer's classification as a
result of a deteriorating health condition) or the customer does not order
diabetic testing strips and supplies within the 180 days, (collectively, a
"Customer Deficiency"), Buyer shall be entitled to withhold an amount equal to
$225.00 per customer from the Final Payment. In order to be entitled to withhold
ASSET PURCHASE AGREEMENT Page 2 of 10
any amounts from the Final Payment, Buyer must present reasonable evidence to
Seller prior to the expiration of the period 180 days after the Closing Date of
a Customer Deficiency and that Buyer has received less than 355 customers
contained in Exhibits 1.1(a) and 1.1(b) who do not constitute a Customer
Deficiency. No adjustments to the Purchase Price will be allowed after the 180
day period expires.
a. Upward Price Adjustment. In addition to a potential deduction
from the Final Payment, as provided above, Seller shall be entitled to an upward
price adjustment above the Initial Payment, for all those customers contained in
Exhibits 1.1(a) and 1.1(b) who do not constitute a Customer Deficiency above 355
in the aggregate.
b. With respect to this paragraph 1.5, "reasonable diligence and
inquiry" means that as soon as practicable after the Closing, but in event no
later than 90 days after the Closing, Buyer shall use its best efforts to
contact and solicit orders from each of the customers set forth in Exhibits
1.1(a) and 1.1(b). Buyer further agrees to provide Seller with weekly updates in
writing as to its efforts to contact such customers and the results thereof,
except that Buyer will notify Seller of any customer who declines services or
products from Buyer within 24 hours thereof. The weekly updates shall contain at
least a list of the customers contacted by Buyer, and the customers that have,
and have not, ordered products from Buyer.
c. In the event that during the Adjustment Period, Buyer determines
and provides reasonable proof to Seller of a Customer Deficiency, Seller shall
cooperate with and assist Buyer in removing such deficiency, where reasonably
possible, for such customer.
1.6 Effective Date. The sale and purchase of the Purchased Assets will
be effective as of 12:01 a.m. on July 31, 2009.
2. REPRESENTATIONS AND WARRANTIES.
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2.1 Representations and Warranties of Seller. Seller represents and
warrants to Buyer as follows:
(a) Title. Seller has good and marketable title to the
Purchased Assets, free of any encumbrance, with full right and power to
sell the Purchased Assets.
(b) Authority. Seller has full power and authority to execute,
deliver, and perform this Agreement; and upon execution and delivery,
this Agreement will be a legally binding obligation of Seller,
enforceable in accordance with its terms.
(c) Consents and Approvals. No consent or approval of any
person, including any governmental authority, is required for the
execution and delivery of this Agreement by Seller and the performance
of Seller's obligations under this Agreement.
(d) No Encumbrances; No Litigation. There are no liens or
encumbrances of any kind affecting the Purchased Assets. There are no
pending, outstanding, or, to Seller's knowledge, threatened claims,
suits, proceedings, judgments, or orders against or involving Seller or
ASSET PURCHASE AGREEMENT Page 3 of 10
any of the Purchased Assets that will materially adversely affect the
Purchased Assets or Seller's ability to fulfill its obligations under
this Agreement.
(e) Due Diligence Information. The financial and other
information provided by Seller to Buyer concerning Seller's business is
accurate in all material respects. All information requested by Buyer
from Seller has been provided.
(f) Customers. Exhibit 1.1(a) contains a list of all current
active customers of Seller's business. The list shall include customer
name, address, phone number, HICN, and date of last shipment. Exhibit
1.1(b) contains a list of Seller's Recent Customers, including the
name, address and phone number of such customers. Exhibit 1.1(c)
contains a list of all customers within Seller's Noble House software
database. Seller represents that the information contained in Exhibits
1.1(a) is current and accurate as of the Closing Date. However, the
sole remedy for any material breach of such representation (i.e., in
the event of a Customer Deficiency) is an adjustment to the Purchase
Price as provided and limited in Section 1.5.
(g) Representations Complete. None of the representations or
warranties made by Seller in this Agreement contains, or will contain
at the Closing Date, any untrue statement of a material fact or omits,
or will omit at the Closing Date, to state any material fact.
2.2. Representations and Warranties of Buyer. Buyer represents and
warrants to Seller as follows:
(a) Authority. Buyer is a Florida company duly organized,
validly existing and in good standing under the laws of the state of
Florida. Buyer has all necessary authority to execute, deliver, and
perform this Agreement; and upon execution and delivery, this Agreement
will be a legally binding obligation of Buyer, enforceable in
accordance with its terms.
(b) Consents and Approvals. No consent or approval of any
person, including any governmental authority, is required for the
execution and delivery of this Agreement by Buyer and the performance
of Buyer's obligations under this Agreement.
(c) No Violation. The execution and delivery of this Agreement
do not, and Buyer's performance of its obligations under this Agreement
will not, conflict with, or result in a breach of or constitute a
default under, any agreement or instrument to which Buyer is a party or
by which Buyer may be bound, or any judgment or order of any court or
governmental agency, or any applicable law, rule, or regulation.
(d) Compliance. After the Closing Date, Buyer will use the
Purchased Assets in compliance with all applicable governmental laws,
rules and regulations, including, but not limited to, applicable CMS
and HIPAA rules and regulations.
(e) Financing. Buyer has, or as of the Closing Date will have,
the funds necessary to make the cash payments required by Section 1.4,
or has, or will have, entered into a credit facility for the receipt of
credit sufficient to make the cash payments required by Section 1.4,
and Buyer is not aware of any reason why the financing necessary to
make the required payments under Section 1.4 will not be available when
required.
ASSET PURCHASE AGREEMENT Page 4 of 10
3. COVENANTS.
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3.1 Covenants of Seller. Seller covenants that from and after the date
of this Agreement until the Closing Date:
(a) Best Efforts. Seller will use its best efforts to cause
all of the conditions of closing set forth in section 4.1 to be
satisfied on or before the Closing Date.
(b) Transfer of Telephone Number. Seller will use its best
efforts to cause the (▇▇▇) ▇▇▇-▇▇▇▇ telephone number used by Seller's
business to be transferred to Buyer. Seller can give no assurances that
the telephone carrier will permit the transfer of such telephone
number. The cost of such transfer, if any, shall be paid by Buyer.
(c) Transfer of Patient Information. The parties acknowledge
that Seller is required, pursuant to applicable CMS rules and
regulations, to maintain certain patient/customer records for a period
of seven years from last service for each customer. After the
applicable seven year period has expired, Seller will transfer to Buyer
all patient file records, to the extent permitted by applicable law,
related to the Purchased Assets. Prior to the transfer of such records,
Seller will make information from such files available to Buyer upon a
showing of reasonable need and to the extent permitted under applicable
law.
(d) Operation Pending Closing. From the date of execution of
this Agreement through the Closing Date, Seller will conduct its
business only in the ordinary course and consistent with past practice,
will maintain the Purchased Assets in at least as good order and
condition as existed on the date of this Agreement, and will comply
with all laws, rules, and regulations applicable to the Purchased
Assets.
3.2 Covenants of Buyer. Buyer covenants that from and after the date of
this Agreement until the Closing Date, Buyer will use its best efforts to cause
all of the conditions of closing set forth in section 4.2 to be satisfied on or
before the Closing Date.
4. CONDITIONS TO CLOSING.
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4.1 Conditions to Buyer's Obligation to Close. The obligation of Buyer
to close the purchase of the Purchased Assets is subject to the satisfaction, on
or before the Closing Date, of the following conditions:
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(a) Representations and Warranties. Each of the
representations and warranties of Seller in this Agreement and all
other information delivered under this Agreement will be true in all
material respects at and as of the Closing Date as though each
representation, warranty, and disclosure were made and delivered at and
as of the Closing Date.
(b) Compliance with Conditions. Seller will have complied with
and performed all agreements, covenants, and conditions in this
Agreement required to be performed and complied with by Seller. Seller
will have taken all actions and received all approvals required for
Seller to sell the Purchased Assets as provided in this Agreement.
(c) No Adverse Change. There will have been no material
adverse change in Seller's business or in the Purchased Assets.
(d) No Litigation. No legal or administrative suit or
proceeding will have been commenced or threatened relating to any of
the transactions contemplated by this Agreement.
(e) Consents of Others. Seller will provide to Buyer written
consents from all persons whose consent is required with respect to the
consummation of this transaction by Seller.
4.2 Conditions to Seller's Obligation to Close. The obligation
of Seller to close the sale of the Purchased Assets is subject to the
satisfaction, on or before the Closing Date, of the following conditions:
(a) Representations and Warranties. Each of the
representations and warranties of Buyer in this Agreement and all other
information delivered under this Agreement will be true in all material
respects at and as of the Closing Date as though each representation,
warranty, and disclosure were made and delivered at and as of the
Closing Date.
(b) Compliance with Conditions. Buyer will have complied with
and performed all agreements, covenants, and conditions in this
Agreement required to be performed and complied with by Buyer. Buyer
will have taken all actions and received all approvals required for
Seller to sell the Purchased Assets as provided in this Agreement.
(c) No Litigation. No legal or administrative suit or
proceeding will have been commenced or threatened relating to any of
the transactions contemplated by this Agreement.
ASSET PURCHASE AGREEMENT Page 6 of 10
5. CLOSING.
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5.1 Time and Place of Closing. The closing of the purchase and sale of
assets will take place at Seller's place of business on or before July 31, 2009,
or at such other time and place as Seller and Buyer may agree (the "Closing
Date").
5.2 Seller's Deliveries. At the Closing, Seller will deliver to
Buyer:
(a) A ▇▇▇▇ of sale in the form attached as Exhibit A,
sufficient to convey to Buyer all of Seller's right, title, and
interest in and to all of the Purchased Assets.
(b) Subject to Section 3.1(c), copies of documents related to
the Purchased Assets, as specifically requested by Buyer within 10 days
of the Closing Date, in the possession of Seller required by Seller to
be maintained pursuant to applicable CMS rules and regulations. .
5.3 Buyer's Deliveries. At the Closing, Buyer will deliver to
Seller the first installment of the Purchase Price, in the amount of $80,000 by
certified check or wire transfer.
6. POST-CLOSING OBLIGATIONS.
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6.1 Further Assurances. Upon Buyer's request, Seller will execute,
acknowledge, deliver, and record such further instruments, and do such further
acts as may be reasonably necessary, desirable, or proper to carry out the
intent of this Agreement.
6.2 Access to Records. From and after the Closing Date, and, as
applicable, subject to Section 3.1(c), Seller will allow Buyer and its counsel,
accountants, and other representatives access to records that are in the custody
or control of Seller as reasonably required for Buyer to comply with its legal
obligations or when reasonably necessary for the use of the Purchased Assets by
Buyer.
7. NONCOMPETETION COVENANT.
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7.1 Covenant. For a period of two years after the Closing Date, Seller
will not engage in the business of the sale of diabetic testing supplies,
directly or indirectly, as principal, agent, shareholder, member, partner,
director, officer, consultant, employee, or otherwise, within a one hundred
(100) mile radius of Clearwater, Florida, or via delivery to other locations in
the United States through the mail or other common carrier.
7.2 Reasonableness of Limitations. Seller acknowledges and agrees
that the covenant not to compete contained in section 7.1 is ancillary to or
part of this Asset Purchase Agreement and that the limitations contained in this
covenant are reasonable as to time, geographical area, and scope of activity to
be restrained, and do not impose a greater restraint than is necessary to
protect the business interests of Buyer.
ASSET PURCHASE AGREEMENT Page 7 of 10
7.3 Partial Invalidity. If a court of competent jurisdiction
determines that the restrictions contained in this covenant not to compete are
not enforceable as written, then such restrictions will be interpreted,
modified, or rewritten to include as much of the duration, scope, and geographic
area identified in section 7.1 as will render such restrictions valid and
enforceable.
7.4 Remedies. In the event of a breach or threatened breach of this
covenant by Seller, Buyer will be entitled to injunctive relief without the
necessity of posting bond, as well as all other remedies to which Buyer may be
entitled at law or in equity.
8. INDEMNIFICATION.
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8.1 Buyer's Indemnification. Buyer shall protect, defend, indemnify
and hold harmless Seller, its parent, and sister subsidiary, and their
respective officers, directors, employees, successors and assigns from and
against any losses, damages (including, without limitation, consequential
damages and penalties) and expenses (including, without limitation, reasonable
counsel fees, costs and expenses incurred in investigating and defending against
the assertion of such liabilities) which may be sustained, suffered or incurred
by Seller or its sister subsidiary and their respective officers, directors,
employees, successors and assigns and which (a) are based upon the existence of
any liability assumed by Purchaser, or (b) are related to any breach by
Purchaser of its representations and warranties, or of its covenants, in this
Agreement, (c) arise out of the use by Purchaser of the Purchased Assets after
the Closing Date.
8.2 Seller's Indemnification. Seller shall protect, defend, indemnify
and hold harmless Buyer, and its members, managers, officers, directors,
employees, successors and assigns from and against any losses, damages
(including, without limitation, consequential damages and penalties) and
expenses (including, without limitation, reasonable counsel fees, costs and
expenses incurred in investigating and defending against the assertion of such
liabilities) which may be sustained, suffered or incurred by Buyer and its
members, managers, officers, directors, employees, successors and assigns and
which are based upon (a) any claims asserted by third parties against Buyer with
respect to the Purchased Assets which claims arise from acts or omissions of
Seller prior to the Closing Date; or (b) any breach by Seller of its
representations and warranties, or of its covenants, in this Agreement.
9. MISCELLANEOUS.
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9.1 Survival of Representations, Warranties, and Covenants. The
representations, warranties, covenants, and agreements of the parties contained
in this Agreement or in any writing delivered pursuant to this Agreement will
survive the Closing Date.
9.2 Assignment. This Agreement may not be assigned by either party
without the prior written consent of the other party. Subject to the foregoing,
this Agreement will be binding on and inure to the benefit of the parties to
this Agreement and their respective successors and permitted assigns.
ASSET PURCHASE AGREEMENT Page 8 of 10
9.3 Governing Law. This Agreement will be governed by and construed in
accordance with the laws of Florida.
9.4 Litigation Costs. In the event that any suit or action is
instituted to enforce any provision in the Agreement, the substantially
prevailing party in such dispute shall be entitled to recover from the other
party all fees, costs and expenses of enforcing any right of such substantially
prevailing party under or with respect to the Agreement, including without
limitation, such reasonable fees and expenses of attorneys and accountants,
which shall include, without limitation, all fees, costs and expenses of
appeals.
9.5 Amendment; Waiver. This Agreement may be amended only by a writing
executed by authorized officers of both parties. No waiver of any provision of
this Agreement will arise from any action or inaction of any party, except an
instrument in writing expressly waiving the provision executed by the party
entitled to the benefit of the provision.
9.6 Entire Agreement. This Agreement, together with the schedules and
other documents delivered pursuant to this Agreement, constitutes the entire
agreement between the parties with respect to its subject matter, and supersedes
all prior and contemporaneous agreements and understandings, express or implied,
oral or written.
9.7 Notices. All notices required or permitted pursuant to this
Agreement will be in writing, and will be delivered personally by
nationally-recognized overnight delivery service with signed evidence of receipt
or by registered or certified mail, return receipt requested, postage prepaid as
follows:
If to Seller: Sirius Medical Supply Co.
Attn.: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
If to Buyer: Priority Diabetes Supply, Inc.
Attn.: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
9.8 Co-Extensive Drafting Responsibility. The parties hereby
acknowledge that each party hereto bear co-extensive and identical
responsibility for the language and for any ambiguity or alleged ambiguity
contained herein.
ASSET PURCHASE AGREEMENT Page 9 of 10
IN WITNESS WHEREOF, Seller and Buyer have executed this Agreement as of
the date first set forth above.
PRIORITY DIABETES SUPPLY, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President
SIRIUS MEDICAL SUPPLY CO.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President
ASSET PURCHASE AGREEMENT Page 10 of 10
