Document:

Unassociated Document

 

$6,000,000.00

 

AMENDMENT
NO. 6 AND CONSENT

 

TO

 

LOAN
AND SECURITY AGREEMENT

 

originally
dated as of April 21, 1999

 

by and
among

 

ALLION
HEALTHCARE, INC.

f/k/a
THE CARE GROUP, INC.

MAIL
ORDER MEDS OF TEXAS, INC.

f/k/a
MAIL ORDER MEDS, INC.

MOMS
PHARMACY, INC. (NEW YORK)

f/k/a
MAIL ORDER MEDS OF NEW YORK, INC.

MOMS
PHARMACY, INC. (CALIFORNIA)

MOMS
PHARMACY, LLC

MEDICINE
MADE EASY

NORTH
AMERICAN HOME HEALTH SUPPLY, INC.

SPECIALTY
PHARMACIES, INC.

 

(“Borrower”)

 

and

 

GE
HFS HOLDINGS, INC.

f/k/a
HELLER HEALTHCARE FINANCE, INC.

 

(“Lender”)

 

 

Amended
as of February 28, 2005

 

AMENDMENT
NO. 6 AND CONSENT TO LOAN AND SECURITY AGREEMENT

 

THIS
AMENDMENT NO. 6 AND CONSENT TO LOAN AND SECURITY AGREEMENT (this
“Amendment”) is made as of this 28th day of
February, 2005, by and among ALLION HEALTHCARE, INC. f/k/a THE CARE
GROUP, INC., a Delaware corporation (“Allion”), MAIL ORDER MEDS
OF TEXAS, INC., a Texas corporation (“Meds Texas”), MOMS
PHARMACY, INC. f/k/a MAIL ORDER MEDS OF NEW YORK, INC., a New York
corporation, (“Moms New York”), MOMS PHARMACY, INC., a
California corporation, (“Moms California”), MOMS PHARMACY,
LLC, a Florida limited liability company (“Moms Florida”),
MEDICINE MADE EASY, a California corporation (“Medicine Made
Easy”), NORTH AMERICAN HOME HEALTH SUPPLY, INC., a California
corporation (“North American” and, collectively with Allion, Meds Texas, Moms
New York, Moms California, Moms Florida and Medicine Made Easy, the “Existing
Borrower”), SPECIALTY PHARMACIES, INC., a Washington
corporation (the “Additional Borrower”; the Existing Borrower and the Additional
Borrower, collectively, the “Borrower”), and GE HFS HOLDINGS, INC f/k/a
HELLER HEALTHCARE FINANCE, a Delaware corporation
(“Lender”).

 

RECITALS

 

WHEREAS,
pursuant to that certain Loan and Security Agreement dated April 21, 1999 by and
between Existing Borrower and Lender (as previously amended, as amended hereby
and as further amended, modified and restated from time to time, the “Loan
Agreement”), Lender agreed to make available to Existing Borrower a revolving
credit loan (the “Loan”);

 

WHEREAS,
Existing Borrower has informed Lender that Moms California has entered into (x)
a Stock Purchase Agreement, dated February 28, 2005 (the “Specialty Pharmacies
Stock Purchase Agreement”), with Pat Iantorno, Eric Iantorno, Jordan Iantorno
a/c/f Max Iantorno, Michael Winters and George Moncada (collectively, “Specialty
Pharmacies Seller”), pursuant to which Specialty Pharmacies Seller will sell to
Moms California all of the issued and outstanding shares of capital stock of
Additional Borrower, for aggregate consideration of $6,300,000 and warrants to
purchase 351,438 shares of common stock of Allion, payable in accordance with
Section 1.5 and Section 1.6 of the Specialty Pharmacies Stock Purchase
Agreement, and subject to adjustment as set forth in Section 1.7 of the
Specialty Pharmacies Stock Purchase Agreement, and (y) a Purchase Agreement,
dated February 28, 2005 (the “Tubb Purchase Agreement”), with Michael Tubb,
pursuant to which Michael Tubb will, among other things, sell to Moms California
any rights he has to capital stock of Additional Borrower, for aggregate
consideration of $1,200,000, payable in accordance with Section 1.4 of the Tubb
Purchase Agreement ((x) and (y), the “Proposed Transaction”);

 

WHEREAS,
Section 7.4 of the Loan Agreement prohibits Existing Borrower from acquiring all
or substantially all of the capital stock of any Person (as defined in the Loan
Agreement) if the aggregate consideration payable in respect of any single
acquisition exceeds $1,000,000;

 

2

WHEREAS,
connection with the closing of the Proposed Transaction, Existing Borrower has
requested that Lender provide its written consent to the Proposed Transaction,
permit the issuance of subordinated, unsecured promissory notes in an aggregate
principal amount of $2,500,000 by Moms California for the purpose of funding a
portion of the purchase price of the Proposed Transaction, and make certain
other modifications to the Loan Agreement; and

 

WHEREAS,
Existing Borrower has requested that Additional Borrower join in and become a
borrower under the Loan Agreement, and Additional Borrower desires to join in
and become a borrower under the Loan Agreement;

 

NOW,
THEREFORE, in consideration of the foregoing, the terms and conditions
set forth in this Amendment, and other good and valuable consideration, the
receipt and sufficiency of which
are hereby acknowledged, Lender and Borrower hereby agree as
follows:

 

Section 
1.   Definitions.   Unless otherwise defined
in this Amendment, all capitalized terms used but not defined herein shall have
the meanings assigned to such terms in the Loan Agreement.

 

Section
2.   Amendments to Loan
Agreement.   As of the Effective Date, the
Loan Agreement shall be modified as follows:

 

(a)   The final
sentence of Section 1.42 of the Loan Agreement is hereby amended and restated in
its entirety to read as follows:

 

“Notwithstanding
the foregoing, the Accounts of Specialty Pharmacies, Inc. shall not be Qualified
Accounts until such time as Lender has completed an audit and appraisal with
respect to such Accounts with results satisfactory to Lender in its sole
discretion.”

 

(b)   Section
1.47(a) of the Loan Agreement is hereby amended and restated in its entirety to
read as follows:

 

“Section
1.47(a).   Stock Purchase
Agreement.   ‘Stock Purchase Agreement’ means,
collectively, (i) that certain Stock Purchase Agreement, dated May 1, 2003, by
and among Moms Pharmacy, Inc., a California corporation, Allion, Darin A.
Peterson and Allan H. Peterson, (ii) that certain Stock Purchase Agreement,
dated January 4, 2005, by and among Moms Pharmacy, Inc., a California
corporation, Michael Stone and Jonathan Spanier, (iii) that certain Stock
Purchase Agreement, dated February 28, 2005, by and among Moms Pharmacy, Inc.,
Pat Iantorno, Eric Iantorno, Jordan Iantorno a/c/f Max Iantorno, Michael Winters
and George Moncada, and (iv) that certain Purchase Agreement, dated February 28,
2005, by and between Moms Pharmacy, Inc. and Michael Tubb.”

 

3

(c)   Section
1.47(b) of the Loan Agreement is hereby amended and restated in its entirety to
read as follows:

 

“Section
1.47(b).   Subordinated
Obligations.   ‘Subordinated Obligations’ means,
collectively, (i) those certain Subordinated Secured Promissory Notes due May 1,
2005 issued by Allion on May 1, 2003 to Darin A. Peterson and Allan H. Peterson,
in an aggregate principal amount of $1,250,000, (ii) that certain Indemnity
Agreement between Borrower and John Pappajohn dated as of November 1, 2000,
(iii) those certain Promissory Notes due January 1, 2006 issued by Moms
Pharmacy, Inc., a California corporation, on January 4, 2005 to Michael Stone
and Jonathan Spanier, in an aggregate principal amount of $675,000, (iv) those
certain Promissory Notes due January 1, 2007 issued by Moms Pharmacy, Inc., a
California corporation, on January 4, 2005 to Michael Stone and Jonathan
Spanier, in an aggregate principal amount of $700,000, (v) those certain
Promissory Notes due February 28, 2006 issued by Moms Pharmacy, Inc., a
California corporation, on February 28, 2005 to Pat Iantorno, Eric Iantorno,
Jordan Iantorno a/c/f Max Iantorno, Michael Winters and George Moncada, in an
aggregate principal amount of $1,900,000, (vi) that certain Promissory Note due
March 31, 2006 issued by Moms Pharmacy, Inc., a California corporation, on
February 28, 2005 to Michael Tubb, in a principal amount of $600,000, and (vii)
obligations to make cash payment under those certain Warrants, issued by Allion
on February 28, 2005 to Pat Iantorno, Eric Iantorno, Jordan Iantorno a/c/f Max
Iantorno, Michael Winters and George Moncada.”

 

(d)   Section
1.47(c) of the Loan Agreement is hereby amended and restated in its entirety to
read as follows:

 

“Section
1.47(c).   Subordination
Agreement.   ‘Subordination Agreements’ means,
collectively, (i) that certain Subordination Agreement, dated as of January 31,
2003, by and among Borrower, Lender and John Pappajohn, (ii) that certain
Subordination Agreement, dated as of May 1, 2003, by and among Borrower, Lender,
Darin A. Peterson and Allan H. Peterson, (iii) that certain Subordination
Agreement, dated as of January 4, 2005, by and among Borrower, Lender, Michael
Stone and Jonathan Spanier and (iv) that certain Subordination Agreement, dated
as of February 28, 2005, by and among Borrower, Lender, Pat Iantorno, Eric
Iantorno, Jordan Iantorno a/c/f Max Iantorno, Michael Winters, George Moncada
and Michael Tubb.”

 

(e)   Section
7.1 of the Loan Agreement is hereby amended by deleting clause (ix) thereof in
its entirety and inserting the following:

 

4

“(ix) unsecured
indebtedness of Moms Pharmacy, Inc., a California corporation, in respect of the
Subordinated Obligations in an aggregate principal amount not to exceed
$6,375,000 (in the case of such Subordinated Obligations issued to Michael Stone
and Jonathan Spanier) less any reduction in such amount pursuant to the Stock
Purchase Agreement executed by Michael Stone and Jonathan Spanier, $6,300,000
(in the case of such Subordinated Obligations issued to Pat Iantorno, Eric
Iantorno, Jordan Iantorno a/c/f Max Iantorno, Michael Winters and George
Moncada) less any reduction in such amount pursuant to the Stock Purchase
Agreement executed by Pat Iantorno, Eric Iantorno, Jordan Iantorno a/c/f Max
Iantorno, Michael Winters and George Moncada, $1,200,000 (in the case of such
Subordinated Obligations issued to Michael Tubb) less any reduction in such
amount pursuant to the Purchase Agreement executed by Michael Tubb, unsecured
indebtedness of Allion in respect of the Subordinated Obligations payable on
June 1, 2006 (if Allion has not consummated an initial public offering prior to
that date) in an aggregate principal amount not to exceed $2,200,000 (in the
case of such Subordinated Obligations issued to Pat Iantorno, Eric Iantorno,
Jordan Iantorno a/c/f Max Iantorno, Michael Winters and George Moncada), less
any reduction in such amount, pursuant to Section (l)(2) the Warrants issued on
February 28, 2005 by Allion to Pat Iantorno, Eric Iantorno, Jordan Iantorno
a/c/f Max Iantorno, Michael Winters and George Moncada, and unsecured
indebtedness of Allion in respect of the Subordinated Obligations payable upon
an initial public offering by Allion in an aggregate principal amount not to
exceed $1,581,471 (in the case of such Subordinated Obligations issued to Pat
Iantorno, Eric Iantorno, Jordan Iantorno a/c/f Max Iantorno, Michael Winters and
George Moncada), less any reduction in such amount, pursuant to Section (l)(1)
of the Warrants issued on February 28, 2005 by Allion to Pat Iantorno, Eric
Iantorno, Jordan Iantorno a/c/f Max Iantorno, Michael Winters and George
Moncada.”

 

(f)    Section 7.19 of the Loan
Agreement is hereby amended and restated in its entirety to read as
follows:

 

5

“Section
7.19.   Restricted
Payments.   Borrower will not make any
payment or prepayment of principal of, premium, if any, or interest, fees or
other charges on or with respect to, or any redemption, purchase, retirement,
defeasance, sinking fund or similar payment and any claim for rescission with
respect to, any of the Subordinated Obligations, except (a) scheduled payments
of principal and interest with respect thereto and payments of principal with
respect to the Subordinated Obligations issued to Darin A. Peterson and Allan H.
Peterson upon the occurrence of an Early Maturity Date thereunder (and as
defined therein); (b) payments of principal in an aggregate amount of $675,000
(less any reduction in such amount pursuant to the Stock Purchase Agreement
executed by Michael Stone and Jonathan Spanier) and interest with respect
thereto on January 1, 2006 with respect to the Subordinated Obligations issued
to Michael Stone and Jonathan Spanier that mature on such date; (c) payments of
principal in an aggregate amount of $700,000 (less any reduction in such amount
pursuant to the Stock Purchase Agreement executed by Michael Stone and Jonathan
Spanier) and interest with respect thereto on January 1, 2007 with respect to
the Subordinated Obligations issued to Michael Stone and Jonathan Spanier that
mature on such date; (d) payments of principal in an aggregate amount of
$1,900,000 (less any reduction in such amount pursuant to the Stock Purchase
Agreement executed by Pat Iantorno, Eric Iantorno, Jordan Iantorno a/c/f Max
Iantorno, Michael Winters and George Moncada) and interest with respect thereto
on February 28, 2006 with respect to the Subordinated Obligations issued to Pat
Iantorno, Eric Iantorno, Jordan Iantorno a/c/f Max Iantorno, Michael Winters and
George Moncada; (e) payments of principal in an aggregate amount of $2,200,000
and interest with respect thereto on June 1, 2006 (if Allion has not consummated
an initial public offering prior to that date) with respect to the Subordinated
Obligations issued to Pat Iantorno, Eric Iantorno, Jordan Iantorno a/c/f Max
Iantorno, Michael Winters and George Moncada under Section (l)(2) of the
Warrants issued on February 28, 2005 by Allion to such persons; (f) payments in
an aggregate amount of $1,581,471 (if Allion has consummated an initial public
offering) with respect to the Subordinated Obligations issued to Pat Iantorno,
Eric Iantorno, Jordan Iantorno a/c/f Max Iantorno, Michael Winters and George
Moncada under Section (l)(1) of the Warrants issued on February 28, 2005 by
Allion to Pat Iantorno, Eric Iantorno, Jordan Iantorno a/c/f Max Iantorno,
Michael Winters and George Moncada; and (g) two payments of principal each in
the amount of $300,000 and interest with respect thereto on February 28, 2006
and March 31, 2006 with respect to the Subordinated Obligations issued to
Michael Tubb; provided that, in each such case (i.e., clauses (a) through
(g) above), both before and after giving effect to any such payment and any
Loans funded in connection therewith, (i) no default or Event of Default has
occurred and is continuing or would result after giving effect thereto and (ii)
such payment shall be made at such times as will permit the delivery of
financial statements necessary to determine current compliance with the
financial covenants set forth herein prior to each such payment;
provided, further, that in the case of clauses (b), (c), (d), (e),
(f) and (g) above, both before and after giving effect to any such payment and
any Loans funded in connection therewith, the aggregate unrestricted cash of
Borrower and availability in the Borrowing Base shall equal or exceed
$1,000,000.”

 

(g)   All the schedules to the
Loan Agreement are hereby amended and restated in their entirety in the form of
the schedules attached to this Amendment (the “Updated Schedules”). The Updated
Schedules update all information as necessary to make the schedules previously
delivered correct. Borrower hereby represents and warrants that the information
set forth on the Updated Schedules is true and correct as of the date of this
Amendment. The Updated Schedules are hereby incorporated into the Loan Agreement
as if originally set forth therein.

 

6

Section
3.   Consents.   In reliance on the
information previously provided by Borrower to Lender regarding the Proposed
Transaction, including but not limited to the fully executed Specialty
Pharmacies Stock Purchase Agreement and Tubb Purchase Agreement (together with
any and all exhibits and schedules thereto), Lender hereby consents to the
Proposed Transaction on the terms and conditions set forth in the Specialty
Pharmacies Stock Purchase Agreement and Tubb Purchase Agreement as in effect on
the date hereof. Lender hereby acknowledges that Cardinal Health, Inc. presently
has a security interest in the assets of Additional Borrower as set forth on
Schedule 1.36 of the Updated Schedules and hereby consents to the existence of
such security interest, and waives any default under the Loan Agreement
resulting solely from the existence of such security interest, provided
that (a) such security interest is not modified to cover any additional assets
of Additional Borrower after the date hereof, (b) the Accounts of Additional
Borrower shall not be Qualified Accounts until such time as such security
interest is terminated and released, (c) no additional debt is hereafter
incurred by Additional Borrower to Cardinal Health, Inc. and (d) any debt
existing to Cardinal Health, Inc. is discharged by Additional Borrower in the
ordinary course of business, and Cardinal Health, Inc.’s commitment to extend
further credit to Additional Borrower shall have been terminated, in each case
not to exceed sixty (60) days from the date hereof.

 

Section
4.   Additional
Borrower.   The Additional Borrower shall
from and hereafter be a “Borrower” for all purposes of the Loan Agreement and
all other Loan Documents and, by its execution hereof, hereby joins in as a
co-maker (with all other Borrowers) of and borrower under the Note. The terms of
the Note, as so amended, are incorporated herein by this reference and made a
part hereof. Accordingly, the Additional Borrower hereby agrees to be bound by
all of the terms, conditions, covenants, representations, warranties, and other
agreements set forth in the Loan Agreement with the same force and effect as if
the Additional Borrower had been named a Borrower in the Loan Agreement. Without
limiting the generality of the foregoing, the Additional Borrower hereby grants
to Lender a continuing first priority lien on and security interest in, upon,
and to the Collateral, pursuant to and in accordance with the terms of the Loan
Agreement.

 

Section
5.   Confirmation
of Representations and Warranties.   Each Borrower hereby (a) confirms
that all of the representations and warranties set forth in Article IV of the
Loan Agreement are true and correct with respect to such entity (except to the
extent such representation or warranty relates to a particular date, in which
case, such confirmation relates to such date), and (b) specifically represents
and warrants to Lender that it has good and marketable title to all of its
Collateral, free and clear of any lien or security interest in favor of any
other person or entity.

 

Section
6.   Fees;
Expenses.   Notwithstanding anything in this
Amendment to the contrary, Borrower shall be responsible for payment of legal
fees for the services of Lender’s in-house counsel in connection with the
preparation of this Amendment. Lender shall be entitled to deduct, and Borrower
by its signature below hereby authorizes Lender to deduct, the full amount of
the fees set forth in this Section 6 from the proceeds of the next subsequent
Revolving Credit Loan made by Lender under the Loan Agreement (as amended
hereby).

 

7

Section
7.   Enforceability.   This Amendment
constitutes the legal, valid and binding obligation of each Borrower and Lender,
and is enforceable against each Borrower and Lender in accordance with its
terms.

 

Section
8.   Conditions
to Effectiveness.   This Amendment shall become
effective on the date that all of the following conditions are satisfied in
Lender’s sole discretion (such date, the “Effective Date”):

 

(a)   Lender
shall have received two (2) originals of this Amendment duly executed by an
authorized officer of each entity comprising Borrower;

 

(b)   Lender
shall have received a Third Amended and Restated Revolving Credit Note duly
executed by an authorized officer of each entity comprising
Borrower;

 

(c)   Lender’s
receipt of a (i) Secretary’s Certificate, (ii) Incumbency Certificate, (iii)
Board of Directors Resolution and (iv) Certificate of Chief Financial Officer,
in substantially the form provided to Additional Borrower by Lender, for each
entity comprising Additional Borrower and duly executed as required by the terms
of each such document;

 

(d)   Lender’s
receipt of the Updated Schedules;

 

(e)   Lender’s
receipt of an executed third party legal opinion substantially in substantially
the form previously provided to Borrower, provided that such opinion shall be
limited to the Additional Borrower;

 

(f)   Lender
shall have received fully executed copies of the Stock Purchase Agreement and
the Subordinated Obligations, and all other agreements and instruments executed
in connection therewith;

 

(g)   (i) The Proposed
Transaction shall have been consummated in accordance with the terms and
conditions of the Specialty Pharmacies Stock Purchase Agreement as in effect on
the date hereof, and (ii) the issuance of the Subordinated Obligations shall
have been consummated in accordance with the terms of the Subordinated
Obligations as in effect on the date hereof;

 

(h)   Lender
shall have received the Subordination Agreements, duly executed by an authorized
officer of each entity comprising Borrower and each of the holders of the
Subordinated Obligations;

 

(i)   there
shall have occurred and be continuing no Event of Default and no event which,
with the giving of notice or the lapse of time or both, could constitute such an
Event of Default and, after giving effect to this Amendment, there shall have
occurred no Event of Default and no Event which, with the giving of notice or
lapse of time or both, could constitute an Event of Default; and

 

8

(j)   the representations and
warranties set forth in Section 5 of this Amendment and in Article IV of the
Loan Agreement shall be true and correct as of the date hereof and after giving
effect to this Amendment (unless any such representation or warranty by its
terms is intended to refer specifically to any earlier date, in which case such
representation or warranty shall have been true and correct as of such
date).

 

Section
9.   Reference
to the Effect on the Loan Agreement.

 

(a)   Upon the
effectiveness of this Amendment, each reference in the Loan Agreement to “this
Agreement,” “hereunder,” “hereof,” “herein” or words of similar import shall
mean and be a reference to the Loan Agreement as amended by this
Amendment.

 

(b)   Except as
specifically amended above, the Loan Agreement, and all other Loan Documents,
shall remain in full force and effect, and are hereby ratified and
confirmed.

 

(c)   The
execution, delivery and effectiveness of this Amendment shall not, except as
expressly provided in this Amendment, operate as a waiver of any right, power or
remedy of Lender, nor constitute a waiver of any provision of the Loan
Agreement, or any other documents, instruments and agreements executed or
delivered in connection with the Loan Agreement.

 

Section
10.   Governing
Law.   This Amendment shall be governed
by and construed in accordance with the laws of the State of Maryland without
regard to any otherwise applicable conflicts of law principles.

 

Section
11.   Headings.   Section headings in this
Amendment are included for convenience of reference only and shall not
constitute a part of this Amendment for any other purpose.

 

Section
12.   Counterparts.   This Amendment may be
executed in counterparts, each of which shall constitute an original and all of
which together shall constitute one and the same instrument.

 

[SIGNATURES
ON NEXT PAGE]

9

 

IN
WITNESS WHEREOF, the parties have caused this Amendment No. 6 and
Consent to Loan and Security Agreement to be executed as of the date first
written above.

 

	 	LENDER:	 
	 	 	 
	 	GE HFS HOLDINGS, INC.,
      	 
	 	a Delaware corporation	 
	 	 	 
	 	By:
      /s/ R. Hanes Whiteley	 
	 	Name: R. Hanes Whiteley	 
	 	Title:
      Duly Authorized Signatory	 
	 	 	 
	 	BORROWERS:	 
	 	 	 
	 	ALLION HEALTHCARE, INC.,
      	 
	 	a Delaware corporation	 
	 	 	 
	 	By:	 
	 	Name:	 
	 	Title:	 
	 	 	 
	 	MAIL ORDER MEDS OF TEXAS,
      INC., 	 
	 	a Texas corporation	 
	 	 	 
	 	By:	 
	 	Name:	 
	 	Title:	 
	 	 	 
	 	MOMS PHARMACY, INC.,
    	 
	 	a New York corporation	 
	 	 	 
	 	By:	 
	 	Name:	 
	 	Title:	 
	 		 
	 	 	 
	 	 	 

 

10

 

IN
WITNESS WHEREOF, the parties have caused this Amendment No. 6 and
Consent to Loan and Security Agreement to be executed as of the date first
written above.

 

	 	LENDER:	 
	 	 	 
	 	GE HFS HOLDINGS, INC.,
      	 
	 	a Delaware corporation	 
	 	 	 
	 	By:	 
	 	Name: 	 
	 	Title:	 
	 	 	 
	 	BORROWERS:	 
	 	 	 
	 	ALLION HEALTHCARE, INC.,
      	 
	 	a Delaware corporation	 
	 	 	 
	 	By:
      /s/ Michael P Moran	 
	 	Name: Mike Moran	 
	 	Title: President	 
	 	 	 
	 	MAIL ORDER MEDS OF TEXAS,
      INC., 	 
	 	a Texas corporation	 
	 	 	 
	 	By:
      /s/ Michael P Moran	 
	 	Name: Mike Moran	 
	 	Title: President	 
	 	 	 
	 	MOMS PHARMACY, INC.,
    	 
	 	a New York corporation	 
	 	 	 
	 	By:
      /s/ Michael P Moran	 
	 	Name: Mike Moran	 
	 	Title: President	 

 

[signature
page to Amendment No. 6]

11

 

 

	 	MOMS PHARMACY, INC.,
    	 
	 	a California corporation	 
	 	 	 
	 	By:
      /s/ Michael P Moran	 
	 	Name: Mike Moran	 
	 	Title: President	 
	 	 	 
	 	MOMS PHARMACY,
LLC,	 
	 	a Florida limited liability company	 
	 	 	 
	 	By:
      /s/ Michael P Moran	 
	 	Name: Mike Moran	 
	 	Title: President	 
	 	 	 
	 	MEDICINE MADE EASY,
    	 
	 	a California corporation	 
	 	 	 
	 	By:
      /s/ Michael P Moran	 
	 	Name: Mike Moran	 
	 	Title: President	 
	 	 	 
	 	NORTH AMERICAN HOME HEALTH
      SUPPLY, INC.,
	 	a California corporation	 
	 		 
	 	By:
      /s/ Michael P Moran	 
	 	
      Name:
      Mike Moran
	 
	 	Title: President	 
	 	 	 
	 	 	 
	 	SPECIALTY PHARMACIES, INC.,
      	 
	 	a Washington corporation	 
	 	 	 
	 	By:
      /s/ Michael P Moran	 
	 	Name: Mike Moran	 
	 	Title: President	 
	 	 	 

 

 

[signature
page to Amendment No. 6]

12Unassociated Document

PRIME
VENDOR AGREEMENT 

This
Prime Vendor Agreement (“Agreement”) is made as of September15, 2003 (“Effective
Date”) by AmerisourceBergen Drug Corporation, a Delaware corporation
(“Distributor”) and Allion Healthcare Inc., a Delaware Corporation
(“Customer”).

A.   Distributor
is a national distributor of pharmaceutical and other products
and services, including prescription (Rx) and over-the-counter (OTC)
pharmaceuticals, nutritional, health and beauty care (HBC) and home health care
(DME) products (collectively, “Products”);

B.   Customer
owns and operates one or more specialty pharmacies (Facilities”);
and

C.   The
parties intend by this Agreement to set forth their obligations to each
other for an arrangement under which Distributor will provide Products and
services to Customer (“Program”).

NOW
THEREFORE, the parties agree as follows:

1.    PRICING
AND PAYMENT TERMS

Distributor
will be the Primary Vendor of all requirements of Customer’s Facilities for
Products. Customer will pay, within terms, Product costs and Program fees
pursuant to payment terms in Exhibit
“1”
(“Pricing/Payment Terms”). “Primary Vendor” means Customer purchases from
Distributor no less than *% of all prescription pharmaceuticals Products it
purchases (excluding Products that Distributor does not sell), as verified
quarterly, and meets minimum periodic purchase levels in Paragraph 3(A) of the
Pricing/Payment Terms. Orders for Products will be electronically transmitted
(other than Schedule II controlled substances) and will describe Products that
Distributor will provide to Customer, the quantity and designated delivery
location. All payment plans (except pre-pay) must be by electronic funds
transfer (EFT).

2.    PRO
GENERICS PROGRAM PARTICIPATION

 

Customer
will participate in Distributor’s preferred generic formulary program,
“Preferred Rx Options (PRO Generics)”, pursuant to requirements as amended from
time to time by Distributor. Customer will order all generic pharmaceutical
Products from Distributor and will participate in the PRO Generics automatic
substitution (ACAP or its successor). Customer authorizes Distributor as its
sole agent to develop and implement a generic pharmaceutical Product list for
the Term, including Product selection, the way substitutions are made and all
agreements with generic suppliers. 

3.    CUSTOMER
LOCATIONS & DELIVERIES

Distributor
will deliver Products to each Facility five days a week (Monday –
Friday),
once a day except holidays. Customer’s current Facilities are located
at:

33 Walt
Whitman Road, Suite 200A, Huntington Station, NY 11746

2800
South IH 35, Suite 108, Austin, TX 78704

2330 W.
205th Street,
Torrance, CA 90501

4500
Biscayne Boulevard, Miami, FL

Facility
means each of Customer’s specialty pharmacies, together with any other
facilities Customer acquires, is Affiliated (as defined below) with or operates
during the Term in the United States. For purposes of this Agreement, a facility
that Customer is Affiliated with is one that controls, is controlled by or under
common control with Customer. Newly acquired facilities with existing agreements
with other distributors will become Facilities under this Agreement upon the
earlier of expiration of such existing agreement or the date Customer may
terminate such agreement, with or without cause, without breaching it or paying
any termination penalty. Newly opened “start up” locations will also become
“Facilities” under this agreement. All Facilities listed will receive normal
daily deliveries by 9:00 AM the next business day except the Facility located at
33 Walt Whitman Road, Suite 200A, Huntington Station, NY will received a
delivery by 7:30 AM, five days a week (Monday - Friday).

4.    RETURNED
GOODS POLICY

 

Customer
will only return goods to Distributor in accordance with Distributor’s
standard
policy for returned goods (“Returned Goods Policy”), as amended from time to
time by Distributor.

5.    ADDITIONAL
SERVICES & PROVISIONS

 

Services
are listed in Exhibit
“2”. Terms,
conditions and other provisions are set forth in
Exhibit
“3”
(“Provisions”). Distributor may, from time to time, develop policies and
procedures relative to new or existing services offered to customers, on an
interim or as-needed basis. If Distributor develops such policies or procedures
or changes current ones, Distributor will provide Customer with written notice
at least thirty (30) days before such changes are effective.

6.    TERM
OF AGREEMENT

	A.      	
      Subject
      to Paragraph 5 of the Provisions, the initial Term will begin on the
      Effective Date and end on September 14, *. After the expiration of the
      Term as set forth in subparagraph A. above, the Term will, thereafter, be
      extended on a month-to-month basis until either party gives at least
      ninety (90) days’ prior written notice to the other of its intention to
      not extend this Agreement.

7.    NOTICES

	A.      	
      Subject
      to Paragraph 9.3 of the Provisions, notices to Customer will be sent
      to:

Allion
Healthcare Inc.

33 Walt
Whitman Road

Suite
200A

Huntington
Station, NY 11746

Attn:
Michael P. Moran 

Fax:
631-547-6532

8.    EXHIBITS

 

The
following exhibits to this Agreement are incorporated by this
reference.

 

	1.  	
      Value-Added
      Services

	2.  	
      Provisions

	3.  	
      Pricing/Payment
      Terms

IN
WITNESS WHEREOF, the parties have had a duly authorized officer, partner or
principal execute this Prime Vendor Agreement as of the Effective
Date.

	
       CUSTOMER:
Allion Healthcare
      Inc.

       

       

       
	 	 	 DISTRIBUTOR:
AmerisourceBergen Drug
      Corporation 
	By: /s/ Michael
      P. Moran	 	 	By: /s/ Donald H.
      Clarfeld
	
      

    	 	 	
      

    
	Name: Michael P. Moran
      
Title:   President & CEO	 	 	Name: Donald H.
      Clarfeld
Title:   Vice President, Alternate
    Care

IN
WITNESS WHEREOF, the parties have had a duly authorized officer, partner or
principal execute this Prime Vendor Agreement as of the Effective
Date.

	
      CUSTOMER:
Allion Healthcare Inc.

       

       

       
	 	 	 DISTRIBUTOR:
AmerisourceBergen Drug
      Corporation 
	By: /s/ Michael
      P. Moran	 	 	By: /s/ Donald H.
      Clarfeld
	
      

    	 	 	
      

    
	Name: Michael P. Moran
      
Title:   President & CEO	 	 	Name: Donald H.
      Clarfeld
Title:   Vice President, Alternate
    Care

EXHIBIT
1 TO

PRIME
VENDOR AGREEMENT

PRICING
/ PAYMENT TERMS

In
addition to payment for Products, Customer will pay Distributor the following
Program and other fees for Distributor’s Product distribution and Services for
Customer and its Facilities. Except as otherwise provided, payments for other
services not specifically set forth in this Agreement are due within 10 days
from Distributor’s invoice date. Pricing does not reflect any administrative or
other fees to a group purchasing organization or buying group (“GPO”). If
Customer contracts with a GPO, Customer will pay any such fees to the applicable
GPO.

1.  
  PROGRAM
FEES

 

A.     Distribution
Fee (Price of Goods).   Customer will pay the
following Price of Goods,
which includes Distributor’s fees for distribution, subject to the following
adjustments for Average Per-Facility Monthly Net Purchase volume and payment
terms. For Products other than SuperNet Products, Customer’s Price of Goods will
be based upon *. Distributor will add to the billed amount any applicable sales,
use, business and occupation or similar tax. After the first contract year, the
Price of Goods for Branded Pharmaceutical Products will begin at a Tier to be
determined based on the Average Per-Facility Monthly Net Purchase Volume during
the previous contract year, in accordance with the table set forth below, unless
otherwise agreed to in writing by the parties. Specifically, the Price of Goods
will be reviewed on an annual basis (at the end of each contract year) whereby
the Price of Goods for the following contract year will be adjusted in
accordance with * provided that Customer is, in all material respects, in
compliance with it’s obligations under this Agreement including but not limiting
to being current on all payments due to Distributor. In the event that Customer
is not in material compliance with its obligations under this Agreement, the
Price of Goods table set forth below shall apply.

 

If,
during the Term, Customer acquires additional Facilities or opens any new
Facilities, those Facilities will not be averaged into the Price of Goods for
the initial six months or the remainder of the contract year whichever is
longer.

 

Notwithstanding
any language set forth herein to the contrary, for the first contract year (i.e.
September 15, 2003 to September 14, 2004) only, the Price of Goods for all
Facilities will be Cost minus *% for all Branded Rx Pharmaceutical Products
provided that Customer is, in all material respects, in compliance with its
obligations under this Agreement including but not limiting to being current on
all payments due to Distributor. In the event that Customer is not in material
compliance with its obligations under this Agreement, the price of Goods table
set forth below shall apply.

 

	
       
	
      Pricing
      Tiers
	
       
	
      Price
      of Goods*
	 
	 	 	 	 	 
	
      Average
      Per-Facility Monthly Net Purchase Volume
	 
	
      No.
	 	 	 	 
	 	
      Branded
      Rx Pharmaceutical Products
	
      31
      Day DSO

      Options
	
      Semi-Monthly

      EFT
      Payment
	
      Monthly
      Pre-Pay

	
      1
	
      $800,000.00
      to $900,000.00
	
      *
	
      *
	
      *

	
      2
	
      $900,000.01
      to $1,000,000.00
	
      *
	
      *
	
      *

	
      3
	
      $1,000,000.01
      to $1,500,000.00
	
      *
	
      *
	
      *

	
      4
	
      $1,500,000.01
      to $2,000,000.00
	
      *
	
      *
	
      *

	
      5
	
      $2,000,000.01
      to $3,000,000.00
	
      *
	
      *
	
      *

	
      6.
	
      $3,000,000.01
      to $4,000,000.00
	
      *
	
      *
	
      *

	
      7.
	
      $4,000,000.01
      to $5,000,000.00
	
      *
	
      *
	
      *

	
      8
	
      $5,000,000.01
      & above
	
      *
	
      *
	
      *

	 	
      Contract
      Items and HBC/OTC Product
	
      *
	
      *
	
      *

	 	 	 	 	 
	 PRO
      Generics, repackaged branded Rx, drop shipments, supplies (bottles &
      vials), home healthcare (DME), private label, food, nutritionals, gift
      items, school and office supplies, fragrance, cosmetics, slow-moving
      items, bulk/case goods, etc.	
      *
	 	 

*“Cost”
means *

**
“SuperNet” applies to *

B.   Price
of Goods after First Contract Year.   After the first contact
year, Customer
shall be entitled to an Additional Discount for the Price of Goods for Branded
Rx Pharmaceuticals as set forth in the table below, based on the previous
Contract Year Total Combined Net Purchase Volume for all of Customer’s
Facilities (excluding SuperNet** purchases as defined in Section A above).
Specially, the Price of Goods for Branded Rx Pharmaceuticals will be reviewed on
an annual basis (at the end of each contract year) whereby the Price of Goods
for Branded Rx Pharmaceuticals for the following contract year will be adjusted
in accordance with *, unless otherwise agreed to by the
parties.

	
      No.
	
      Contract
      Year Total Combined Net
	
      Additional

	 	
      Purchase
      Volume
	
      Discount
      Percentage
      (%)

	 	 	 
	
      1
	
      $60,000,000.01
      to $80,000,000.00
	
      *%

	
      2
	
      $80,000,000.01
      to $100,000,000.00
	
      *%

	
      3
	
      $100,000,000.01
      to $120,000,000.00
	
      *%

	
      4
	
      $120,000,000.01
      & above
	
      *%

C.     Additional
Value-Added Services.   The additional
value-added services in Exhibit
“2” will be
provided to Customer by Distributor for * per month per Facility for Facilities
that meet minimum Net Purchase levels.

 

D.     Ordering
Hardware/Softeware.   In addition to the
foregoing value-added Services
fee, Customer will pay the per-month fees in Exhibit
“2” for
ordering and reporting software and hardware selected by Customer for each
installation on system hardware at Customer’s Facilities and other
locations.

E.     Set-Up
Fee.
*

F.     Contract
Administration.   In administering
Customer’s GPO/supplier contracts,
Customer must (i) provide a copy of new contracts, (ii) comply with the
supplier’s terms, (iii) use all products for its “own use” (as defined in
judicial and legislative interpretations), (iv) notify Distributor at least 45
days before it changes suppliers, and (v) upon changing suppliers, assist
Distributor in disposing of any excess inventory acquired for Customer. When
invoiced, Customer will promptly reimburse Distributor for any unpaid
chargebacks that are (x) denied by a GPO or manufacturer/supplier; or (y) not
paid within 45 days; and, in either case, Customer will look solely to such GPO
or manufacturer/supplier for redress.

2.  
  PAYMENT
TERMS

 

Customer
agrees to the following payment terms for Product purchases. (Check
only one
box below):

 

	 	
      SEMI-MONTHLY
      EFT PAYMENT
	 	
      SEMI-MONTHLY
      EFT PAY

	 	
      (Default
      if no box checked)
	 	
      “31
      DAY DSO OPTION

	 	 	 	 
	 o	
      Purchases
      form the 1st through the 15th

      of
      the month are due by the 25th of the

      same
      month. Purchases from the 16th

      through
      the end of the month are due

      by
      the 10th of the following month.
	o	
      Purchases
      made from the 1st 

      through
      the 15th of the month

      are
      due on the 10th of the 

      following
      month. Purchases 

      made
      through the 16th 

      through
      the End of the Month 

      of
      the Month are due on the

      25th
      of the following month.

	 	 	 	 
	x	
      WEEKLY
      EFT PAY
	o	
      MONTHLY
      PRE-PAY

	
       
	
      “31
      DAY DSO OPTION”
	 	 
	 	
      Purchases
      made from Monday

      through
      Saturday are due 28 days

      from
      the weekly statement generated

      the
      following Monday.
	 	
      For
      anticipated purchases,

      payment
      for the next month’s

      purchases
      is due and payable 

      on
      the 25th day of the current 

      month,
      adjusted to reflect

      actual
      purchases. Requested

      payment
      is based on an average
of the three (3) previous months’
purchases
      with a reconciliation
statement produced at month
  end.

All
payments must be received by EFT for deposit to Distributor’s account by the due
date. Distributor may change available payment plans from time to time. Payment
term changes may affect Price of Goods. If Customer does not select an option or
the option selected is not available, Distributor will bill Customer on
Semi-Monthly terms until otherwise notified by Customer. Subject to credit
approval, Customer may change payment terms upon thirty (30) days’ written
notice prior to the beginning of a calendar month. Price of Goods adjustments
for payment terms changes are subject to changes from time to time by
Distributor to reflect *.

3.    MIMIMUM
ORDER VOLUME

A.    Customer’s
minimum annual Net Purchase (total purchases less returns, credits,
rebates, late payment fees and similar items) volume during the second contract
Year shall be $* million. Customer’s Net Purchases during subsequent contract
years are projected to increase at a rate of *% per Year during each year of the
Term. Customer’s aggregate Net Purchase volume during the Term of this Agreement
will be no less than $* million. Year one shall be from the Effective Date until
September 14, 2004.

 

B.    Customer
acknowledges that Price of Goods and Service pricing available under
this Agreement are based upon Customer’s meeting the minimum Net Purchases
provided in 3 (A) above and, if Customer fails to do so, Distributor and
Customer agree to the liquidated damages set forth in 3 (C) below as the sole
remedy of Distributor for failure to purchase of Customer.

 

C.    In the
event of early termination without cause by Customer or because of Customer
default that has not been cured within the applicable time periods set forth in
section 5 of the Provisions, or if Customer fails to meet the minimum aggregate
Net Purchases, a prorated amount will be provided as repayment to Distributor at
the end of the Agreement or upon termination of the Agreement as
follows:

The
prorated amount is equal to * basis points (*%) of the projected volume
remaining on the Term of the Agreement, in the event of termination as set forth
above, regardless of the aggregate Net Purchase at the time of early
termination.

The
projected volume in each contract year, beginning the second year, is calculated
based on the stated annual growth rate as follows:

Year 2:
$* million

Year 3:
$* million

Year 4:
$* million

Year 5:
$* million

For
example and for illustrative purposes only, if Customer terminates this
Agreement without cause at the end of year 4, Customer will pay to the
Distributor $* ($* million multiplied by *).

Customer
and Distributor agree that such amounts are reasonable in
nature.

EXHIBIT
2 TO 

PRIME
VENDOR AGREEMENT

ADDITIONAL
VALUE-ADDED SERVICES

The
following Services are offered to Customer by Distributor for the monthly fees
in Paragraph 1(B) of Exhibit
“1”
(Pricing/Payment Terms).

·Bar-Coded
Shelf Labels

·DEA
Scheduled Pharmaceuticals Purchased Report

·Monthly
Usage and 80/20 Report

·Price
Stickers - Rx and OTC

Distributor
reserves the right to discontinue any Services as it deems appropriate, in which
case Distributor will make a reasonable proportionate reduction in the monthly
fee based upon the value of the discontinued Services. In addition, for time to
time Distributor may offer such new Services, at such additional fees as it
determines.

Ordering
and Reporting Sortware and Hardware

	
      ·
	
      Internet
      ordering software (iBergen Catalog and Order Entry (CEO), iECHO or
      similar software, as appropriate) for $* per month per
      installation.

	
      ·
	
      UltraPhase/Telxon
      handheld electronic order entry terminal (one per pharmacy) for * per
      installation.

	
      ·
	
      InterLinx
      reporting software for $* per month per installation. (Note: InterLinx is
      subject to a separate software license
agreement.)

Distributor
retains title to all ordering and reporting hardware and software and, pursuant
to Provisions Paragraph 5.2, Customer must return them upon termination of this
Agreement.

Computer
consulting and related services will be offered at Distributor’s then-current
standard charges for such services.

Recalls

Distributor
will notify customer of all recalls as instructed in the supplier’s
notification.

Drop
Ship Service

Distributor
provides drop ship service when Customer’s needs dictate this approach and the
supplier meets Distributor’s liability insurance and other requirements. Drop
shipments may be subject to an additional charge.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00082-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00082-of-00352.parquet"}]]