Document:

EXHIBIT 10.2

 

GOODWILL PROTECTION AGREEMENT

 

THIS GOODWILL PROTECTION
AGREEMENT is made effective the 26th day of March, 2008, between APOTHECARYRX,
LLC, an Oklahoma limited liability company (the “Buyer”) and JEREMY AVANCE, an
individual (the “Seller”).

 

W I T N E S S E T H:

 

WHEREAS, pursuant to that
certain Pharmacy Purchase Agreement dated effective March 24, 2008, (the “Purchase
Agreement”) among the Buyer, the Seller and Newt’s Discount Pharmacy, Inc.,
the Buyer purchased the Seller’s pharmacy business located in Guthrie, Oklahoma
(the “Business”) for a sum in excess of $1,000,000.00;

 

WHEREAS, the Seller has
operated the Business for numerous years during which time the Seller has built
a strong patronage which is the predicate on which the Seller’s Business is
based;

 

WHEREAS, the Seller has
partnered with the owner of Professional Discount Pharmacy located at 1900 N.
Classen Blvd., Oklahoma City, OK 73106 (“PD Pharmacy”) which pharmacy is also
being purchased by the Buyer at the same time as the Business; and

 

WHEREAS, to induce the Buyer
to perform the Purchase Agreement and to protect the goodwill purchased by the
Buyer in the Business, the Seller has agreed to execute, deliver and perform
this Goodwill Protection Agreement.

 

NOW, THEREFORE, for good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:

 

1.             Noncompetition Covenant.  The Seller agrees as follows:

 

1.1.                              For the five (5) year
period beginning on the date of this Goodwill Protection Agreement, the Seller
agrees that the Seller, the Seller’s affiliates and any person receiving a
portion of the Purchase Price under the Purchase Agreement will not undertake
any plan, program or effort designed or intended to, directly or indirectly,
contract or provide, solicit or offer to prepare, dispense or sell at retail
any pharmacy, prescription or over the counter drugs or pharmaceuticals (the “Pharmacy
Services”) to any person and the family members of any person, or any entity
and the affiliates of any entity, who acquired Pharmacy Services within the
past five (5) years from the Business.

 

1.2.                              For the five (5) year
period beginning on the date of this Goodwill Protection Agreement, the Seller
agrees that the Seller, the Seller’s affiliates and any person receiving a
portion of the Purchase Price under the Purchase Agreement will not, directly
or indirectly, conduct any Pharmacy Business in Oklahoma County, Oklahoma or
Logan County, Oklahoma.

 

 

1.3.                              For the five (5) year
period beginning on the date of this Goodwill Protection Agreement, the Seller
agrees that the Seller, the Seller’s parents, subsidiaries, affiliates and
shareholders and any person receiving a portion of the Purchase Price under the
Purchase Agreement will not, directly or indirectly, conduct any Pharmacy
Business within twenty (20) miles of the location of the Business.

 

1.4.                              For the five (5) year
period beginning on the date of this Goodwill Protection Agreement, the Seller
agrees that the Seller, the Seller’s parents, subsidiaries, affiliates and
shareholders and any person receiving a portion of the Purchase Price under the
Purchase Agreement will not, directly or indirectly, conduct any Pharmacy
Business within twenty (20) miles of the location of the PD Pharmacy.

 

For purposes of this Goodwill Protection Agreement, the term “Pharmacy
Business” means:  owning, managing,
operating, controlling, engaging in or being connected with as a partner,
investor, stockholder, creditor, guarantor, advisor, employee, independent
contractor or consultant, the business of offering, soliciting, conducting or
providing Pharmacy Services.  The Seller’s
employment with the Buyer will not violate the terms of this Agreement.

 

2.             Separate Covenants.  This Goodwill Protection Agreement will be
deemed to consist of a series of separate covenants independent from any
provision of the Purchase Agreement.  The
Seller expressly agrees that the character, duration and geographical scope of
this Goodwill Protection Agreement are reasonable in light of the circumstances
as existing on the date of this Goodwill Protection Agreement.  However, should a determination nonetheless
be made by a court of competent jurisdiction at a later date that the
character, duration or geographical scope of this Goodwill Protection Agreement
is unreasonable in light of the circumstances as then existing or existing at
the execution of this Goodwill Protection Agreement, then it is the intention
and the agreement of the Seller and the Buyer that this Goodwill Protection
Agreement be construed by the court and given effect in such a manner as to
impose only the restrictions on the conduct of the Seller which are reasonable
in light of the circumstances as then existing and as are necessary to assure
the Buyer of the intended benefit of this Goodwill Protection Agreement.  If, in any judicial proceeding, a court
refuses to enforce all of the separate covenants deemed included herein
because, taken together such covenants are more extensive than necessary to
assure the Buyer of the intended benefit of this Goodwill Protection Agreement,
it is expressly understood and agreed between the parties that those covenants
not to be enforced in such proceeding will, for the purpose of such proceeding,
be deemed eliminated from the provisions hereof.

 

3.             Periodic Payments.  As additional consideration for the Seller’s
execution, delivery and performance of this Goodwill Protection Agreement, the
Buyer agrees to pay to the Seller sixty (60) monthly payments each in the
amount of $1,666.66.  The monthly
payments will commence on May 1, 2008, and be made on the 1st day of each
month thereafter through and including April 1, 2013.  Each such payment will be sent by regular
mail to the addresses provided under Paragraph 6.1 of this Goodwill Protection
Agreement.  The Buyer will be in default
if (i) a monthly payment is not delivered to the Seller within five (5) days
of its due date and (ii) such payment has not been delivered ten (10) days
after the Buyer’s receipt of notice of non-payment.

 

4.             Default by Seller.  If the Seller fails to perform any obligation
contained in this Goodwill Protection Agreement, the Purchase Agreement or any
instrument entered into in connection 

 

2

 

therewith,
the Buyer will serve written notice to the Seller specifying the nature of such
default and demanding performance.  If
such default has not been cured within five (5) business days after
receipt of such default notice, the Buyer will be entitled to demand specific
performance, suspend performance of any obligation under this Goodwill
Protection Agreement, the Purchase Agreement or any instrument entered into in
connection therewith, or exercise all remedies available at law or in equity.  Given the nature of the Pharmacy Business,
the parties acknowledge and agree that the goodwill sold by the Seller and
purchased by the Buyer cannot be protected if the provisions of this Goodwill
Protection Agreement are not strictly enforced. 
Accordingly, the parties acknowledge and agree that if there is a breach
by the Seller of the provisions of this Goodwill Protection Agreement, money
damages alone will not be adequate and the Buyer will be entitled to an
injunction restraining the Seller from violating the provisions of this
Goodwill Protection Agreement.  In
addition to the foregoing and any other remedies available to the Buyer, at law
or in equity, in the event the Seller is in default and the Buyer is diligently
pursuing a judicial remedy, the periods specified in paragraphs 1.1, 1.2 and
1.3 will be tolled until the conclusion of the judicial action (the “Tolling
Period”) and such periods will be automatically extended by the number of days
elapsed during the Tolling Period.  The
remedies provided by this Goodwill Protection Agreement are cumulative and will
not exclude any other remedy to which a party might be entitled under this
Goodwill Protection Agreement.  In the
event, a party elects to selectively and successively enforce such party’s
rights under this Goodwill Protection Agreement, such action will not be deemed
a waiver or discharge of any other remedy.

 

5.             Default by Buyer.  If the Buyer defaults in the payments under
this Agreement or the Promissory Note delivered to the Seller pursuant to the
Purchase Agreement, then (i) the Seller’s obligations under this Agreement
will immediately terminate, (ii) the remaining payments due under
paragraph 3 will be accelerated and will be immediately due and payable, and (iii) the
Seller may exercise all remedies available at law or in equity to collect the
remaining balance due.

 

6.             Miscellaneous.  It is further agreed as follows:

 

6.1.                              Notices.  Except as expressly provided herein, any
notice, demand or communication required or permitted to be given by any
provision of this Goodwill Protection Agreement will be in writing and will be
deemed to have been given and received when delivered personally or by
telefacsimile, or on the date following the day sent by overnight courier, or
on the third (3rd) business day after the same is sent by certified mail,
postage and charges prepaid, directed to the following addresses or to such
other or additional addresses as any party might designate by written notice to
the other parties:

 

	
  To the Buyer:

  	
  ApothecaryRx, LLC

  
	
   

  	
  C/o Mr. Lewis P.
  Zeidner, President

  
	
   

  	
  5500 Wayzata Boulevard,
  Suite 210

  
	
   

  	
  Golden Valley, Minnesota
  55416

  
	
   

  	
  Fax: (763) 647-1137

  

 

3

 

	
  With a copy to:

  	
  Michael Meleen, Esquire

  
	
   

  	
  Commercial Law Group, P.C.

  
	
   

  	
  210 Park Avenue, Suite 700

  
	
   

  	
  Oklahoma City, Oklahoma
  73102

  
	
   

  	
  Fax: (405) 232-5553

  
	
   

  	
   

  
	
  To the Seller:

  	
  Jeremy Avance

  
	
   

  	
  102 W. Noble Avenue

  
	
   

  	
  Guthrie, Oklahoma 73044

  
	
   

  	
  Fax: (   )
          

  
	
   

  	
   

  
	
  With a copy to:

  	
  Robert F. Morgan, Jr.

  
	
   

  	
  1900 NW Expressway,
  Suite 450

  
	
   

  	
  Oklahoma City, Oklahoma
  73118

  
	
   

  	
  Fax: (405) 840-5183

  

 

6.2.                              Severability.  If any clause or provision of this Goodwill
Protection Agreement is illegal, invalid or unenforceable under any present or
future law, the remainder of this Goodwill Protection Agreement will not be
affected thereby.  It is the intention of
the parties that if any such provision is held to be illegal, invalid or
unenforceable, there will be added in lieu thereof a provision as similar in
terms to such provisions as is possible and to be legal, valid and enforceable.

 

6.3.                              Entire
Agreement.  This
Goodwill Protection Agreement, together with the Purchase Agreement and the
other instruments executed in connection therewith, constitute the entire
agreement between the parties with respect to the subject matter hereof and
there are no agreements, understandings, warranties or representations except
as set forth herein.  Neither this
Goodwill Protection Agreement nor any of the provisions hereof can be changed,
waived, discharged or terminated except by an instrument signed by the party
against whom enforcement of the change, waiver, discharge or termination is
sought.

 

6.4.                              Attorneys’ Fees.  If any party institutes an action or
proceeding against any other party relating to the provisions of this Goodwill
Protection Agreement, the party to such action or proceeding which does not
prevail will reimburse the prevailing party therein for the reasonable expenses
of attorneys’ fees and disbursements incurred by the prevailing party.

 

6.5.                              Waiver.  Waiver of performance of any obligation or
term contained in this Goodwill Protection Agreement by any party, or waiver by
one party of the other’s default hereunder will not operate as a waiver of
performance of any other obligation or term of this Goodwill Protection
Agreement or a future waiver of the same obligation or a waiver of any future
default.

 

6.6.                              Assignment.  The Buyer may assign all or any portion of
its rights hereunder to: (a) any other entity or person which at any time
controls or is under common control with the Buyer, or (b) any entity or
person which acquires all or any portion of the Business.

 

4

 

6.7.                              Governing Law.  This Goodwill Protection Agreement will be
interpreted, construed and enforced in accordance with the laws of the State of
Oklahoma, regardless of any applicable principles of conflicts of law.

 

[Signature Pages Follow]

 

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SIGNATURE PAGE TO GOODWILL PROTECTION AGREEMENT

 

IN WITNESS WHEREOF, this
Agreement has been executed by the parties effective the date first above
written.

 

 

	
   

  	
  /S/JEREMY AVANCE

  
	
   

  	
  JEREMY AVANCE, individually

  
	
   

  	
   

  
	
   

  	
  (the “Seller”)

  

 

 

SIGNATURE PAGE TO GOODWILL PROTECTION AGREEMENT

 

IN WITNESS WHEREOF, this
Agreement has been executed by the parties effective the date first above
written.

 

 

	
   

  	
  APOTHECARYRX, LLC,

  
	
   

  	
  an Oklahoma limited liability company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /S/LEWIS P. ZEIDNER

  
	
   

  	
        Lewis P. Zeidner, PresidentEXHIBIT 10.3

 

TRANSITION AGREEMENT

 

This TRANSITION AGREEMENT
(the “Agreement”) is made effective the 26th day of March, 2008, among
APOTHECARYRX, LLC, an Oklahoma limited liability company (the “Buyer”), NEWT’S DISCOUNT
PHARMACY, INC., an Oklahoma corporation (the “Company”) and JEREMY AVANCE, an
individual (“Avance” and together with the Company, the “Seller”).

 

WHEREAS, pursuant to the
Pharmacy Purchase Agreement dated effective March 24, 2008, (the “Purchase
Agreement”) between the Buyer and the Seller, the Buyer purchased the Seller’s
pharmacy business in Guthrie, Oklahoma, known as “Newt’s Discount Pharmacy”
(the “Business”) effective on the date hereof; and

 

WHEREAS, the Seller and the
Buyer desire to foster a smooth transition of the Business from the Seller to
the Buyer and, in the interests of facilitating such transition, the Buyer
desires to use the Seller’s Licenses (as hereinafter defined) to operate the
Business for a short period of time after the Closing Date, and the Seller is
willing to allow the Buyer to use the Seller’s Licenses to operate the Business
for a short period of time after the Closing Date, pursuant to the terms and
conditions of this Agreement.

 

NOW, THEREFORE, in
consideration of the foregoing and the mutual covenants and agreements
hereinafter set forth, and in consideration of the execution and performance of
the Purchase Agreement, the parties hereto agree as follows:

 

1.             Definitions.  Capitalized terms used and not defined herein
shall have the meanings set forth in the Purchase Agreement.

 

2.             Transition Services.  Commencing at the Time of Transfer and
continuing until the termination of this Agreement, the Buyer shall be entitled
to utilize, in connection with its operation of the Business and in strict
accordance with the terms of this Agreement, the following permits, licenses,
registrations or certifications of the Seller related to the Business
(collectively, the “Licenses”):

 

2.1.                              Oklahoma
Pharmacy License;

 

2.2.                              Oklahoma
Narcotics Registration;

 

2.3.                              Drug
Enforcement Agency Registration;

 

2.4.                              National
Council for Prescription Drug Programs Provider Number; and

 

2.5.                              Credit Card
Services.

 

To effect the foregoing
authorization, on the Closing Date, the Seller will execute the Limited Power
of Attorney in the form attached at Exhibit “A” authorizing the Buyer to
act on the Seller’s behalf in connection with the Licenses, and other
documents, if any, as may be required or requested by a government agency,
including, without limitation, powers of attorney.  In 

 

 

addition, during the term of
this Agreement, the Seller agrees to keep open the bank accounts used for
payments from insurance companies, Medicare, Medicaid and credit card services
(whether one or more, the “Accounts”) and furnish to the Buyer all information
regarding the Accounts and payments by third parties to the Accounts so that
the Buyer may perform the accounting described in paragraph 5 below.

 

3.             Termination of Right to Use
Licenses.  The Buyer’s
right to use the Licenses will terminate upon the written notice of either
party upon the earlier of:  (a) the
issuance to the Buyer of the same types of permits, licenses, registrations or
certifications as the Licenses (the “Required Licenses”); or (b) sixty
(60) days from the Closing Date; provided, in the event that the Buyer has not
obtained the Required Licenses within the required time period, the term of
this Agreement and the Power of Attorney will be extended by twenty (20) days
if (i) the Buyer has not breached and is not in default of the terms of this
Agreement, the Purchase Agreement or any document executed in connection
therewith, and (ii) the Buyer is actively seeking and using best efforts
to obtain the Required Licenses as promptly as possible.

 

4.             Will Call Prescriptions.  The company performing the Inventory will
account for all orders at the Business for prescriptions placed but not paid
for prior to the Time of Transfer (“Will Call Prescriptions”) and determine the
cash amount owed by customers for Will Call Prescriptions (the “Will Call Receivables”).  On the Closing Date, the Buyer will pay the
Seller the amount of the Will Call Receivables. 
All Will Call Receivables will be the property of the Buyer.  All other receivables from third parties in
connection with the Will Call Prescriptions will be the property of the Seller
subject to paragraph 5 of this Agreement.

 

5.             Third Party Receivables.  All accounts receivable generated prior to
the Time of Transfer other than the Will Call Receivables (the “Seller
Receivables”), will be the property of the Seller.  The Buyer will collect the Seller Receivables
on behalf of the Seller and furnish an accounting of all Seller Receivables
(reconciled to the transaction generating such Seller Receivables) to the Seller
on a monthly basis.  The Buyer will pay
the Seller all collected Seller Receivables on a weekly basis.  The Buyer will conduct the foregoing
collection, accounting and reconciliation at the Buyer’s expense.  All accounts receivable generated after the
Time of Transfer will be the property of the Buyer and the Seller agrees to
promptly deliver to the Buyer any such receivables delivered to the Seller.  It is anticipated that all mail addressed to
the Seller will be forwarded to the Buyer and that for the first thirty (30)
days after the Closing Date, the Buyer will simply forward to the Seller all
checks received as payment of the Seller Receivables on a weekly basis.

 

6.             Consulting.  During the term of this Agreement, Avance
agrees to provide information reasonably requested by the Buyer regarding the
Seller’s and the Business’s operations, arrangements, policies and similar
matters, regardless of whether Avance is employed by the Buyer or the Buyer’s
agents or affiliates.

 

7.             Indemnification.  The Buyer shall indemnify and hold harmless
the Seller and the Seller’s partners, employees, agents and affiliated entities
(the “Indemnified Parties”) for any loss, damage, claim, liability, debt,
obligation or expense (including reasonable legal fees and expenses of
litigation), whether or not actually incurred or paid that the Indemnified
Parties may suffer, sustain or become subject to, as a result of:  (a) any actions or omissions of the
Buyer or any employees, agents, representatives or other personnel of the Buyer
related to the Business 

 

2

 

and
the Licenses occurring after the Closing Date; or (b) the parties entering
into this Agreement or the Buyer’s use of the Licenses.

 

8.             Entire Agreement.  This Agreement, the Purchase Agreement and
the documents executed in connection therewith constitute the entire agreement
among the parties with respect to the subject matter hereof and supersede all
prior communications, representations, agreements and understandings between
the parties hereto, whether oral or written.

 

9.             Assignment.  This Agreement, and all rights and
obligations hereunder, shall not be assignable by any party in whole or in
part.

 

10.           Amendment.  This Agreement may be amended only by written
agreement duly executed by representatives of both parties hereto.

 

11.           Applicable Law.  This Agreement shall be construed in
accordance with the laws of the state of Oklahoma, disregarding conflicts of
laws principles which may require the application of the laws of another
jurisdiction.

 

12.           Audit Rights.  The Seller shall have the right, at all times
during the term hereof, to monitor, review and audit at the Seller’s expense
the accounts, books, records, documents and procedures relating to the Buyer’s
performance under this Agreement and use of the Licenses.

 

13.           No Third Party Rights.  This Agreement is not intended and shall not
be construed to create any rights in any parties other than the Seller and the
Buyer and no other person shall assert any rights as a third party beneficiary
hereunder.

 

14.           Waivers.  Any waiver of rights hereunder must be set
forth in writing.  A waiver of any breach
or failure to enforce any of the terms or conditions of this Agreement shall
not in any way affect, limit or waive a party’s rights at any time to enforce
strict compliance thereafter with every term and condition of this Agreement.

 

15.           Independent Contractor.  By executing this Agreement, the parties
intend to create an independent contractor relationship, and nothing contained
in this Agreement shall be construed to make either the Seller or the Buyer a
partner, joint venturer, principal, agent or employee of the other, and neither
party shall have any right, power or authority, express or implied, to bind the
other.  Notwithstanding the foregoing,
this Agreement does not amend or affect the terms of any other agreements among
the parties that may expressly create any of the foregoing relationships.

 

16.           Severability; Partial
Invalidity.  If any
provision of this Agreement or portion thereof is held to be unenforceable or
invalid by any court of competent jurisdiction, such provision or portion
thereof shall be deemed amended to conform to applicable law so as to be valid
and enforceable, or if the provision or portion thereof cannot be so amended
without materially altering the parties’ intent, the provision or portion
thereof shall be stricken, and the validity and enforceability of the remainder
of this Agreement shall not be affected thereby.

 

3

 

17.           Notices.  All notices permitted or required hereunder
shall be given in the manner specified in the Purchase Agreement.

 

[Signature Pages Follow]

 

4

 

SIGNATURE
PAGE TO TRANSITION AGREEMENT

 

IN WITNESS WHEREOF, this Agreement
has been executed by the parties effective the date first above written.

 

	
   

  	
  NEWT’S DISCOUNT PHARMACY, INC.,

  
	
   

  	
  an Oklahoma corporation

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /S/JEREMY AVANCE

  
	
   

  	
   

  	
  Jeremy Avance, President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /S/JEREMY AVANCE

  
	
   

  	
  JEREMY AVANCE, individually

  
	
   

  	
   

  	
   

  
	
   

  	
  (together, the “Seller”)

  	
   

  
				

 

 

SIGNATURE PAGE TO TRANSITION AGREEMENT

 

IN WITNESS WHEREOF, this
Agreement has been executed by the parties effective the date first above
written.

 

	
   

  	
  APOTHECARYRX, LLC,

  
	
   

  	
  an Oklahoma limited liability company

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /S/LEWIS P. ZEIDNER

  
	
   

  	
   

  	
  Lewis P. Zeidner, President

  
	
   

  	
   

  	
   

  
	
   

  	
  (the “Buyer”)

  	
   

  
				

 

 

EXHIBIT “A”

 

LIMITED
POWER OF ATTORNEY

 

This LIMITED POWER OF
ATTORNEY (the “Power”) is made effective the       
day of                       ,
2008, among NEWT’S DISCOUNT PHARMACY, INC., an Oklahoma corporation (the “Company”),
JEREMY AVANCE, an individual (“Avance” and together with the Company, the “Principal”),
and APOTHECARYRX, LLC, an Oklahoma limited liability company (the “Agent”).

 

WHEREAS, pursuant to the Pharmacy
Purchase Agreement dated effective March     , 2008,
(the “Purchase Agreement”) between the Principal and the Agent, the Agent
purchased the Principal’s pharmacy business known as “Newt’s Discount Pharmacy”
located at 102 W. Noble Ave., Guthrie, OK 73044 (the “Business”) effective on
the date hereof; and

 

WHEREAS, pursuant to the
Transition Agreement between the Principal and the Agent of even date herewith
(the “Transition Agreement”), the Principal agreed to allow the Agent to use
the Principal’s permits, licenses, registrations and certifications described
at Exhibit “A” attached as a part hereof (the “Licenses”) in the operation
of the Business.

 

NOW THEREFORE, the Principal
hereby nominates, constitutes and appoints the Agent as the Principal’s
attorney-in-fact to take any and all actions in the Principal’s name, place and
stead, to the extent permitted by law, to use the Licenses in connection with
the operation of the Business as follows:

 

1.             Power.  The Principal hereby irrevocably gives and
grants to the Agent the full power and authority to use the Licenses and to
perform any actions necessary for the operation of the Business.  This Limited Power of Attorney is a present
appointment of the Agent, effective immediately.

 

2.             Acceptance.  The Agent hereby accepts the Principal’s
appointment as the Principal’s attorney-in-fact and agrees to be bound by the
terms and provisions of this Agreement.

 

3.             Termination.  This Agreement is intended to grant the Agent
a power of attorney which will be irrevocable and binding on the Principal
until terminated in accordance with paragraph 3 of the Transition
Agreement.  The Agent hereby agrees to
execute and deliver, on reasonable request by the Principal, any documents
necessary or helpful in terminating the Agent’s appointment as the Principal’s
attorney-in-fact.

 

[Signature Pages Follow]

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