Exhibit 2
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STOCK PURCHASE AGREEMENT
by and among
CURATIVE HEALTH SERVICES, INC.,
and
THE stockholders of
APEX THERAPEUTIC CARE, INC.
Dated as of January 27, 2002
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TABLE OF CONTENTS
Page
ARTICLE I. SALE AND PURCHASE OF SHARES 1
Section 1.1 Sale of Shares. 1
Section 1.2 Purchase Price and Payment for the Shares. 2
Section 1.3 Closing. 3
Section 1.4 Delivery of Buyer Common Stock. 3
Section 1.5 Stockholders' Representative. 4
ARTICLE II. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS 6
Section 2.1 Stockholders' Residency, Status and Investment Intent. 6
Section 2.2 Power of the Stockholders. 6
Section 2.3 Ownership and Status of Company Capital Shares. 7
Section 2.4 No Conflicts or Litigation. 7
Section 2.5 Stockholders' Agreements. 8
Section 2.6 No Disclosure of Confidential Information. 8
Section 2.7 Representation by Counsel. 8
Section 2.8 Disclosure. 9
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
RELATING TO THE COMPANY 9
Section 3.1 Organization, Good Standing and Qualification. 9
Section 3.2 Capitalization. 9
Section 3.3 Company Subsidiaries. 10
Section 3.4 Governmental Filings; No Violations. 10
Section 3.5 Company Financial Statements. 10
Section 3.6 Absence of Undisclosed Liabilities. 11
Section 3.7 No Material Adverse Changes. 11
Section 3.8 Certain Payments. 11
Section 3.9 Absence of Certain Changes. 12
Section 3.10 Litigation. 13
Section 3.11 Employee Benefits. 13
Section 3.12 Compliance with Laws; Permits. 15
Section 3.13 Taxes. 15
Section 3.14 Labor Matters. 17
Section 3.15 Intellectual Property. 18
Section 3.16 Certain Environment Matters; Medical Waste. 18
Section 3.17 Title to Property. 20
Section 3.18 Contracts. 20
Section 3.19 Insurance Matters. 21
Section 3.20 Affiliated Transactions. 21
Section 3.21 Changes in Suppliers and Third-Party Payors. 21
Section 3.22 Indebtedness. 21
Section 3.23 Inspections and Investigations. 22
Section 3.24 Certain Relationships. 22
Section 3.25 Xxxxx; Fraud and Abuse; False Claims. 23
Section 3.26 Rates and Reimbursement Policies. 24
Section 3.27 Customers and Orders. 24
Section 3.28 Inventories. 24
Section 3.29 Places of Business. 24
Section 3.30 Changes in Laws. 24
Section 3.31 Controlled Substances. 24
Section 3.32 Disclosure of Certain Financial Relationships. 25
Section 3.33 Guarantees, Warranties and Discounts. 25
Section 3.34 Accounts Receivable. 25
Section 3.35 Bank Accounts; Signing Authority; Powers Of Attorney. 26
Section 3.36 Brokers and Finders. 26
Section 3.37 Transaction Costs. 26
Section 3.38 Disclosure. 26
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF BUYER 27
Section 4.1 Organization, Good Standing and Qualification. 27
Section 4.2 Corporate Authority and Approval. 27
Section 4.3 Brokers and Finders. 27
Section 4.4 SEC Filings; Financial Statements. 27
Section 4.5 Buyer Shares. 28
Section 4.6 Litigation. 28
Section 4.7 Government Filings; No Violations. 28
Section 4.8 Compliance with Laws; Permits. 29
Section 4.9 Disclosure. 29
ARTICLE V. COVENANTS 30
Section 5.1 Interim Operations of the Company. 30
Section 5.2 Acquisition Proposals. 32
Section 5.3 Consents. 32
Section 5.4 Access. 32
Section 5.5 Supplemental Information. 33
Section 5.6 Reasonable Best Efforts. 34
Section 5.7 Shareholders' Meeting. 34
Section 5.8 Transaction Costs. 34
ARTICLE VI. CONDITIONS 34
Section 6.1 Conditions to Obligations of Buyer. 34
Section 6.2 Conditions to Obligation of the Stockholders. 37
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ARTICLE VII. LIMITATIONS ON COMPETITION 39
Section 7.1 Definitions. 39
Section 7.2 Trade Name and Non-Public Information. 40
Section 7.3 Non-competition. 40
Section 7.4 Non-Solicitation. 41
Section 7.5 Damages. 41
Section 7.6 Reasonable Restraint. 41
Section 7.7 Severability; Reformation. 42
Section 7.8 Independent Covenant. 42
Section 7.9 Materiality. 42
ARTICLE VIII. TERMINATION 42
Section 8.1 Method of Termination. 42
Section 8.2 Effect of Termination. 43
ARTICLE IX. SURVIVAL; INDEMNIFICATION 43
Section 9.1 Survival. 43
Section 9.2 Indemnification by the Stockholders. 44
Section 9.3 Indemnification by Stockholders. 45
Section 9.4 Indemnification by Buyer. 45
Section 9.5 Security for Indemnity. 45
Section 9.6 Limitations on Indemnification. 46
Section 9.7 Method of Asserting Claims. 46
ARTICLE X. MISCELLANEOUS AND GENERAL 48
Section 10.1 Modification or Amendment. 48
Section 10.2 Waiver. 48
Section 10.3 Counterparts. 48
Section 10.4 Governing Law; Waiver of Jury Trial. 48
Section 10.5 Notices. 49
Section 10.6 Entire Agreement. 51
Section 10.7 No Third Party Beneficiaries. 51
Section 10.8 Severability. 51
Section 10.9 Interpretation. 51
Section 10.10 Assignment. 52
Section 10.11 Schedules 52
Section 10.12 Press Releases and Announcements. 52
Section 10.13 Definitions. 52
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Exhibits
Exhibit A Form of Note
Exhibit B Form of Escrow Agreement
Exhibit C Form of Registration Rights Agreement
Exhibit D Form of Community Service Employment Agreement
Exhibit E Form of Xxxxxxxx Pledge Agreement
Exhibit F Form of Xxxxxxxx Promissory Note
Exhibit G Form of Shareholder Pledge Agreement
Exhibit H Form of Certificate of Trust
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of January 27,
2002 by and among Curative Health Services, Inc., a Minnesota corporation (the
"Buyer"), Xxx Xxxxxxxx, an individual resident of the State of California
("Xxxxxxxx"), the Tamiyasu Trust dated December 16, 1997 (the "Tamiyasu Trust"),
the Xxx and Xxxxx Xxxxxxxx Irrevocable Trust No. 1 (the "Tamiyasu Irrevocable
Trust"), the Xxxxx and Xxxxxxx Xxxxx Family Trust dated December 15, 1997 (the
"Xxxxx Trust"), the Xxxxx and Xxxxxxx Xxxxx Irrevocable Trust No. 1 (the "Xxxxx
Irrevocable Trust"), the Xxxx and Xxxx Xxxxxxxx Family Trust dated August 4,
1999 (the "Xxxxxxxx Trust"), the Xxxxxx and Xxxxxx Xxxxxx Family Trust dated
April 10, 1987 (the "Xxxxxx Trust" and together with the Tamiyasu Trust, the
Tamiyasu Irrevocable Trust, the Xxxxx Trust, the Xxxxx Irrevocable Trust, and
the Xxxxxxxx Trust, the "Trusts"), the Stockholders' Representative and, only
for the purpose of Article VII, Section 2.6 and Section 2.7 of this Agreement,
each of Xxx X. Xxxxxxxx, Xxxxx Xxxxx, Xxxx Xxxxxxxx and Xxxxxx X. Xxxxxx (each,
a "Principal" and collectively, the "Principals"). The Trusts together with
Xxxxxxxx are referred to herein collectively as the "Stockholders" and
individually as a "Stockholder." Certain terms used in this Agreement are
defined in Section 10.13(b).
RECITALS
WHEREAS, the Stockholders of Apex Therapeutic Care, Inc., a California
corporation (the "Company"), are the beneficial and record holders of the issued
and outstanding shares of common stock, no par value, of the Company (each a
"Share" or, collectively, the "Shares") set forth opposite their respective
names on Schedule A hereto; and
WHEREAS, the Shares owned and held by the Stockholders represent 100% of the
outstanding securities of the Company; and
WHEREAS, each Stockholder hereby wishes to sell the Shares owned by each such
Stockholder, and Buyer wishes to purchase the Shares, upon the terms and
conditions of this Agreement; and
WHEREAS, the consummation of the transaction contemplated herein will result in
significant economic benefit to each Principal.
NOW, THEREFORE, in consideration of the premises, and of the representations,
warranties, covenants and agreements contained herein, the parties hereto agree
as follows:
contained herein, the parties hereto agree as follows:
ARTICLE I.
SALE AND PURCHASE OF SHARES
Section 1.1 Sale of Shares.
At the Closing, (a) the Stockholders shall sell the Shares owned by each to
Buyer, and shall deliver to Buyer stock certificates representing such Shares,
duly endorsed in blank or with duly executed stock powers attached, in proper
form for transfer, free and clear of any Lien or other encumbrance; and (b)
Buyer shall purchase the Shares for the Purchase Price (such transaction being
referred to herein as the "Sale").
Section 1.2 Purchase Price and Payment for the Shares.
(a) The aggregate purchase price for all of the Shares (the "Purchase
Price") shall be equal to (i) the Stock Consideration, plus (ii) the Cash
Consideration, plus (iii) the Note Consideration. The Purchase Price shall be
allocated among the Stockholders in accordance with the proportional share set
forth opposite each Stockholder's name on Schedule A attached hereto.
(b) "Stock Consideration" means a number of shares of unregistered common
stock, $0.01 par value per share, of Buyer ("Buyer Common Stock") equal to
$39,000,000 divided by the Buyer Stock Price. The term "Buyer Stock Price" shall
mean the average of the closing price per share of Buyer Common Stock, as
reported by the Nasdaq National Market, for the ten-consecutive trading day
period ending on and including the third trading day prior to the Closing Date,
provided, however, that:
(i) if the Buyer Stock Price is less than $7.07, the Buyer Stock Price
shall be deemed to be $7.07; or
(ii) if the Buyer Stock Price is greater than $31.07, the Buyer Stock
Price shall be deemed to be $31.07.
(c) "Note Consideration" means one or more promissory notes in the
aggregate principal amount of $5,000,000 substantially in the form of Exhibit A
attached hereto (the "Notes").
(d) "Cash Consideration" means an amount in cash, without interest, equal
to $16,000,000, minus each of the following: (i) all Transaction Costs, as set
forth on Section 3.37 of the Disclosure Letter, which letter shall be updated by
the Stockholders two days prior to the Closing Date, (ii) any change in control
payments paid or payable by the Company in connection with the transactions
contemplated by this Agreement, (iii) any payments paid or payable by the
Company under the Apex Therapeutic Care, Inc, Stock Appreciation Rights Plan in
connection with the transactions contemplated by this Agreement, and (iv) any
withholding obligation or other Taxes paid or payable by the Company in
connection with (ii) and (iii) above.
(e) Substitution of Cash for Stock. Buyer, in its sole discretion, may pay
all or any portion of the Stock Consideration by making a cash payment to the
Stockholders in place of the Stock Consideration to which the Stockholders would
otherwise be entitled hereunder. Any such cash payment shall be equal to (i) the
number of shares of Buyer Common Stock by which the Stock Consideration is
reduced, multiplied by (ii) the Buyer Common Stock Price. In the event that
Buyer intends to make a payment of any portion of the Stock Consideration in the
form of
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cash, it shall provide the Stockholders' Representative with notice of such
intention, not less than 5 days prior to the Closing Date; provided, however,
that Buyer may revoke such notice of intention at any time prior to the Closing
Date by delivering notice to the Stockholders' Representative.
(f) The Purchase Price shall be payable as follows:
(i) $5,333,333 of the Stock Consideration (which amount collectively,
as reduced from time to time through distributions in accordance with the
Escrow Agreement, is hereinafter referred to as the "Escrow Fund"), shall
be deposited in an escrow account to secure the Stockholders
indemnification obligations hereunder. The Escrow Fund shall be payable
pursuant to the terms of, and subject to the satisfaction of certain
conditions set forth in, an escrow agreement in substantially the form
annexed hereto as Exhibit B (the "Escrow Agreement") to be executed and
delivered at the Closing.
(ii) an amount in cash, without interest, equal to the Cash
Consideration shall be paid to the Stockholders by federal funds wire
transfer at the Closing.
(iii) $5,000,000 of the Note Consideration shall be delivered at
Closing, $666,667 of which will be subject to setoff as described in
Section 9.5.
(iv) $33,666,667 of the Stock Consideration shall be delivered at
Closing in accordance with Section 1.4.
Section 1.3 Closing.
The closing of the Sale (the "Closing") shall take place (a) at the offices of
Xxxxxx & Xxxxxxx LLP, 00 Xxxxx Xxxxx Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxx, 00000 at
9:00 A.M. on the first business day after the day on which the last to be
fulfilled or waived of the conditions set forth in Article VI (other than those
conditions that by their nature are to be satisfied at the Closing, but subject
to the fulfillment or waiver of those conditions) shall be satisfied or waived
in accordance with this Agreement or (b) at such other place and time and/or on
such other date as the Stockholders and Buyer may agree in writing (the "Closing
Date").
If the Closing has not been consummated within 90 days of the date hereof, the
parties hereto agree that, notwithstanding any other provision of this
Agreement, the Company may make a cash distribution to the Stockholders of up to
$500,000.
Section 1.4 Delivery of Buyer Common Stock.
(a) Each Stockholder acknowledges that (i) such Stockholder must bear the
economic risk of holding any Buyer Common Stock issued in connection with this
Agreement (the "Restricted Stock") for an indefinite period of time because the
Restricted Stock has not been registered under the Securities Act or applicable
state securities laws, and therefore cannot be sold unless subsequently
registered under the Securities Act and applicable state securities laws or
unless exemptions from such registrations are available, (ii) the
transferability of the
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Restricted Stock is restricted and (iii) legends substantially in the following
form will be placed on the certificate(s) representing the Restricted Stock:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THESE SECURITIES MAY NOT BE
OFFERED, SOLD, PLEDGED OR TRANSFERRED UNLESS (1) A REGISTRATION STATEMENT UNDER
THE ACT (AND A CURRENT PROSPECTUS) IS IN EFFECT AS TO THE SECURITIES, (2) AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT IS AVAILABLE OR (3) THE
SECURITIES ARE SOLD PURSUANT TO RULE 144 ADOPTED PURSUANT TO THE ACT. IF A
REGISTRATION STATEMENT UNDER THE ACT IS NOT IN EFFECT AS TO THE SECURITIES
REPRESENTED BY THIS CERTIFICATE, THE SECURITIES MAY NOT BE DISPOSED OF OR
TRANSFERRED WITHOUT FIRST OBTAINING AN OPINION OF COUNSEL, REASONABLY ACCEPTABLE
TO THE ISSUER OF THESE SECURITIES, THAT SUCH DISPOSITION OR TRANSFER CAN
LAWFULLY BE MADE WITHOUT REGISTRATION PURSUANT TO THE ACT.
PLEDGE, SALE, ASSIGNMENT, TRANSFER OR DISPOSITION OF THE SECURITIES REPRESENTED
BY THIS CERTIFICATE IS SUBJECT TO RESTRICTIONS CONTAINED IN THE REGISTRATION
RIGHTS AND LOCKUP AGREEMENT AND/OR PLEDGE AGREEMENT AS THE CASE MAY BE, BETWEEN
THE ISSUER OF THESE SECURITIES AND THE HOLDER OF THIS CERTIFICATE, A COPY OF
WHICH AGREEMENT IS ON FILE IN THE OFFICE OF THE SECRETARY OF THE ISSUER.
(b) No fraction of a share of Buyer Common Stock will be issued, but in
lieu thereof any payment of Buyer Common Stock will be rounded to the nearest
whole share.
Section 1.5 Stockholders' Representative.
(a) In order to efficiently administer the transactions contemplated
hereby, the Stockholders hereby desire to designate Xxx X. Xxxxxxxx, as their
representative (in such capacity, the "Stockholders' Representative"). By
execution of this Agreement, Xxx X. Xxxxxxxx agrees to act as the Stockholders'
Representative.
(b) In the event that Xxx X. Xxxxxxxx, or his substitute as the
Stockholders' Representative, dies, becomes unable to perform his
responsibilities hereunder or resigns from such position, the Stockholders
holding, immediately prior to the Closing, a majority of the outstanding Shares
shall select another representative to fill such vacancy and, upon written
notice to Buyer, such substituted representative shall be deemed to be a
Stockholders' Representative for all purposes of this Agreement and the
documents delivered pursuant hereto.
(c) By virtue of the execution of this Agreement each Stockholder hereby
agrees that:
(i) Xxx X. Xxxxxxxx is hereby designated as the Stockholders'
Representative, and any substitute Stockholders' Representative shall be
elected as set forth in Section 1.5(b);
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(ii) the Stockholders hereby authorize the Stockholders'
Representative, (A) to take all action necessary against Buyer in
connection with breaches of obligations by Buyer under this Agreement, the
Notes or any of the Related Documents, (B) to determine the Stockholders to
whom consideration from Buyer shall be distributed and the amount of
consideration to be so distributed, (C) to give and receive all notices
required to be given under this Agreement, the Notes or any of the Related
Documents after the Closing Date, (D) to take any and all additional action
as is contemplated to be taken by or on behalf of the Stockholders after
the Closing Date by the terms of this Agreement, including but not limited
to any action under Article IX hereof, the Notes or any of the Related
Documents, and (E) to take any further action which the Stockholders'
Representative shall consider necessary or desirable in connection with
this Agreement, the Notes, any of the Related Documents and the
transactions contemplated hereby and thereby, including, without
limitation, the execution, delivery and performance of the Escrow
Agreement, hereby giving the Stockholders' Representative full power and
authority to do and perform each and every act and thing whatsoever
requisite and necessary to be done in and about the foregoing as fully as
such Stockholder might or could do if personally present, and has ratified
and confirmed all that the Stockholders' Representative shall lawfully do
or cause to be done by virtue thereof;
(iii) all decisions and actions by the Stockholders' Representative
shall be binding upon all of the Stockholders and no Stockholder shall have
the right to object, dissent, protest or otherwise contest the same;
(iv) Buyer shall be able to rely conclusively on the instructions and
decisions of the Stockholders' Representative as to any actions required or
permitted to be taken by the Stockholders' Representative hereunder, and no
party shall have any cause of action against Buyer to the extent Buyer has
relied upon the instructions or decisions of the Stockholders'
Representative;
(v) all actions, decisions and instructions of the Stockholders'
Representative shall be conclusive and binding upon all of the
Stockholders;
(vi) the provisions of this Section 1.5 are independent and severable,
are irrevocable and coupled with an interest and shall be enforceable
notwithstanding any rights or remedies that any Stockholder may have in
connection with the transactions contemplated by this Agreement;
(vii) remedies available at law for any breach of the provisions of
this Section 1.5 are inadequate; therefore, Buyer shall be entitled to
temporary and permanent injunctive relief without the necessity of proving
damages if Buyer brings an action to enforce the provisions of this Section
1.5; and
(viii) the provisions of this Section 1.5 shall be binding upon the
executors, heirs, legal representatives, personal representatives,
successor trustees, and successors of each Stockholder, and any references
in this Agreement to a Stockholder or the Stockholders shall mean and
include the successors to the Stockholder's rights hereunder,
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whether pursuant to testamentary disposition, the laws of descent and
distribution or otherwise.
(d) All reasonable, documented fees and expenses incurred by the
Stockholders' Representative from and after the Closing Date shall be paid by
the Stockholders in accordance with their pro rata share set forth on Schedule
A.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
Each of the Stockholders and, with respect to Sections 2.6 and 2.7, each of the
Principals, with respect to himself or itself only, hereby represents and
warrants to Buyer, except as set forth on the disclosure letter (the
"Stockholder Disclosure Letter"), which identifies exceptions by specific
section references, as follows:
Section 2.1 Stockholders' Residency, Status and Investment Intent.
The Stockholder is a resident of the State of California. The Stockholder, if a
Trust, was validly organized under the laws of the State of California. Except
as set forth in the Stockholder Disclosure Letter, the Stockholder is an
"accredited investor" as that term is defined by Rule 501 under the Securities
Act of 1933, as Amended (the "Securities Act"). The Stockholder has been advised
that the Restricted Stock is not registered under the Securities Act or under
certain applicable state securities laws. The Restricted Stock is being acquired
for the Stockholder's own account and for investment purposes and not with a
view to, or for resale in connection with, any distribution or public offering
thereof, within the meaning of the Securities Act. Except as otherwise
contemplated in this Agreement or the Registration Rights Agreement, the
Stockholder has made no agreement with others regarding any of the Restricted
Stock and the Stockholder's financial condition is such that it is not likely
that it will be necessary to dispose of any of the Restricted Stock in the
foreseeable future.
Section 2.2 Power of the Stockholders.
(a) The Stockholder has the full power, legal capacity and authority to
execute and deliver this Agreement and each of the other Related Documents to
which the Stockholder is a party and to perform the Stockholder's obligations
pursuant to this Agreement and each of the other Related Documents. The
execution, delivery and performance by the Stockholder of this Agreement and the
Related Documents to which the Stockholder is a party, and the consummation by
the Stockholder of the transactions contemplated hereby and thereby have been
duly and validly authorized by all requisite action by the Stockholder, and no
other proceedings on the part of the Stockholder is necessary to authorize the
execution, delivery and performance by the Stockholder of this Agreement or the
Related Documents. Each of this Agreement and the other Related Documents
constitutes and, when executed and delivered by or on behalf of the Stockholder,
will constitute, the legal, valid and binding obligation of the Stockholder,
enforceable against the Stockholder in accordance with its terms, except as that
enforceability may be (a) limited by any applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and (b)
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subject to general principles of equity (regardless of whether that
enforceability is considered in a proceeding in equity or at law).
(b) Xxx X. Xxxxxxxx and Xxxxx X. Xxxxxxxx are the duly appointed and acting
trustees of the Tamiyasu Trust. Xxxxx Xxxxxxxxx is the duly appointed and acting
trustee of the Tamiyasu Irrevocable Trust. Xxxxx Xxxxx and Xxxxxxx Xxxxx are the
duly appointed and acting trustees of the Xxxxx Trust. Xxxxx Xxxxxx is the duly
appointed and acting trustee of the Xxxxx Irrevocable Trust. Xxxx Xxxxxxxx and
Xxxx Xxxxxxxx are the duly appointed and acting trustees of the Xxxxxxxx Trust.
Xxxxxx X. Xxxxxx and Xxxxxx X. Xxxxxx are the duly appointed and acting trustees
of the Xxxxxx Trust. Each Stockholder that is a trust represents and warrants
that the trust instrument governing the administration of its Trust and its
Trust validly exists under and is governed by the laws of the State of
California. Each Stockholder that is a Trust represents and warrants that the
trustees of its Trust have the full and sole power and authority necessary to
(i) own the shares of capital stock of the Company owned by such Trust, (ii)
execute and deliver this Agreement and the Related Document and all other
documents required to be executed and delivered by the trustees of such Trust
pursuant to this Agreement and the Related Documents and (iii) perform the
obligations on the part of such Trust contemplated by this Agreement and the
Related Documents. Each Stockholder that is a trust represents and warrants that
the execution and delivery of this Agreement and the Related Documents and all
other such documents by the trustees of such Trust and the performance by the
trustees of such Trust of the obligations on the part of such Trust contemplated
by the Agreement, the Related Documents and all such other documents do not, and
will not, violate any provision of the trust instrument governing the
administration of such Trust, violate any federal law, any law of the State of
California or any other law applicable to the administration of such Trust.
Section 2.2 of the Stockholder Disclosure Letter sets forth the beneficiaries of
each Trust and indicates which beneficiaries have attained the age of majority.
Section 2.3 Ownership and Status of Company Capital Shares.
The Stockholder is the record and beneficial owner of all of the issued and
outstanding Shares set forth next to his or its name in Schedule A, in each case
free and clear of all Liens, other than restrictions under the Securities Act
and state securities laws and the Liens set forth in Section 2.3 of the
Stockholder Disclosure Letter. At the Closing, the Stockholder shall pass good
and marketable title to his or its Shares to Buyer, free and clear of all Liens
including without limitation all Liens set forth in Section 2.3 of the
Stockholder Disclosure Letter (other than restrictions under the Securities Act
and state securities laws). Except as set forth in Section 2.3 of the
Stockholder Disclosure Letter, neither the Stockholder, nor to the Stockholder's
actual knowledge any other person, owns any other securities of the Company, and
there are no agreements or other rights or arrangements existing which provide
for the sale, purchase, exchange or other transfer by any such Stockholder of
any of the Shares or any other security of the Company.
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Section 2.4 No Conflicts or Litigation.
Except as set forth in Section 2.4 of the Stockholder Disclosure Letter and
subject to compliance with applicable filing and reporting requirements under
the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), the execution, delivery and performance in accordance with their
respective terms by the Stockholder of this Agreement and the Related Documents
to which the Stockholder is a party contemplated hereby does not and will not
(a) violate or conflict with any Laws or give any governmental entity or other
Person the right to challenge any of the transactions contemplated hereunder,
(b) require any filings, authorizations, consents, approvals or notices with or
by any court, administrative agency, commission, government or regulatory
authority, domestic or foreign, (c) breach or constitute a default under any
agreement or instrument to which the Stockholder is a party or by which the
Stockholder or any of the Shares owned by the Stockholder is bound, or with
respect to each Trust, breach any of the provisions of, result in a violation
of, or require any authorization or approval under, the trust agreements under
which such trust was formed, (d) result in the creation or imposition of, or
afford any Person the right to obtain, any Lien upon any of Shares owned by the
Stockholder (or upon any revenues, income or profits of the Stockholder
therefrom, or the assets of the Company). There are no civil, criminal or
administrative actions, suits, claims, hearings, investigations or proceedings
pending or, to the Knowledge of the Stockholder, threatened to which the
Stockholder is or may become a party which (x) questions or involves the
validity or enforceability of any of the Stockholder's obligations under this
Agreement or (y) seeks (or reasonably may be expected to seek) (i) to prevent or
delay the consummation by the Stockholder of the transactions contemplated by
this Agreement to be consummated or (ii) Losses in connection with any
consummation by the Stockholder of the transactions contemplated by this
Agreement.
Section 2.5 Stockholders' Agreements.
Except as set forth in Section 2.5 of the Stockholder Disclosure Letter, the
Stockholder is not a party to any stockholders' agreements, pooling agreements,
voting trusts or other similar agreements with respect to the ownership or
voting of any of the Shares.
Section 2.6 No Disclosure of Confidential Information.
Except as set forth in Section 2.6 of the Stockholder Disclosure Letter, the
Stockholder or the Principal, as the case may be, has not disclosed any
proprietary confidential information of the Company to any Person other than
Buyer and authorized representatives of Buyer, other than pursuant to
confidentiality agreements prohibiting the use or further disclosure of such
information, all of which agreements are in full force and effect and set forth
in Section 2.6 of the Stockholder Disclosure Letter.
Section 2.7 Representation by Counsel.
The Stockholder or the Principal, as the case may be, represents and agrees that
it or he: (a) has been represented by independent counsel (or has had the
opportunity to consult with independent
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counsel and has declined to do so); (b) has had the full right and opportunity
to consult with such Stockholder's attorney and other advisors and has availed
itself of this right and opportunity; (c) has carefully read and fully
understands this Agreement in its entirety and has had it fully explained to it
by such counsel; (d) is fully aware of the contents hereof and the meaning,
intent and legal effect thereof; and (e) is competent to execute this Agreement
and has executed this Agreement free from coercion, duress or undue influence.
Any rule of law or any legal decision that would require interpretation of any
ambiguities in this Agreement against the party that drafted it is of no
application and is hereby expressly waived.
Section 2.8 Disclosure.
Each of the representations and warranties set forth in this Article II shall be
deemed made at and as of the date of this Agreement and again at and as of the
Closing Date, as if made at such time and substituting the Closing Date for the
date of this Agreement throughout Article II, except to the extent such
representations and warranties specifically refer to a date other than the date
of this Agreement. No representation or warranty contained in this Agreement or
in the Stockholder Disclosure Letter, or in any other agreement, instrument,
certificate or other document delivered by the Stockholders in connection with
this Agreement, the Sale or any of the other transactions contemplated hereby,
contains or will, at the Closing, contain any untrue statement of a material
fact or omits or will, at the Closing, omit to state a material fact necessary
to make the statements therein, in light of the circumstances under which they
were or will be made, not misleading. Copies of all documents which have been
delivered or made available by the Stockholder to Buyer are true, correct and
complete copies thereof, and include all amendments, supplements or
modifications thereto or waivers thereunder.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS RELATING TO THE COMPANY
The Stockholders, jointly and severally, hereby represent and warrant to Buyer,
except as set forth on the disclosure letter (the "Disclosure Letter"), which
identifies exceptions by specific section references, as follows:
Section 3.1 Organization, Good Standing and Qualification.
The Company is a corporation duly organized, validly existing and in good
standing under the laws of the State of California. The Company has all
requisite corporate or similar power and authority to own and operate its
properties and assets and to carry on its business as presently conducted and is
qualified to do business and is in good standing in each jurisdiction where the
ownership or operation of its properties or conduct of its business requires
such qualification. Section 3.1 of the Disclosure Letter sets forth those
jurisdictions in which the Company is qualified to do business. The Company has
made available to Buyer a complete and correct copy of the Company's articles of
incorporation and bylaws or other organizational documents, each as amended to
and as in effect as of the date hereof.
9
Section 3.2 Capitalization.
The authorized capital stock of the Company consists of 1,000,000 shares of
common stock, no par value, of which 120,000 shares were outstanding as of the
close of business on the date hereof. All of the outstanding Shares have been
duly authorized and are validly issued, fully paid and nonassessable. The
Company has no commitments to issue or deliver Shares. Except as set forth on
Section 3.2 of the Disclosure Letter, there are no preemptive or other
outstanding rights, options, warrants, conversion rights, stock appreciation
rights, redemption rights, repurchase rights, agreements, arrangements or
commitments to issue or sell any shares of capital stock or other securities of
the Company or any securities or obligations convertible or exchangeable into or
exercisable for, or giving any Person a right to subscribe for or acquire, any
securities of the Company, and no securities or obligations evidencing such
rights are authorized, issued or outstanding. The Company does not have
outstanding any bonds, debentures, notes or other obligations the holders of
which have the right to vote (or, except as referred to in this Section 3.2,
convertible into or exercisable for securities having the right to vote) with
the Stockholders on any matter.
Section 3.3 Company Subsidiaries.
The Company does not directly or indirectly own any equity or similar interest
in, or any interest convertible into or exchangeable or exercisable for any
equity or similar interest in, any corporation, partnership, joint venture or
other business association or entity. Since its incorporation, the Company has
not acquired the business of any other Person whether by merger, stock purchase,
asset purchase or other transaction structure.
Section 3.4 Governmental Filings; No Violations.
(a) Except as set forth on Section 3.4(a) of the Disclosure Letter and
subject to compliance with the HSR Act, no filing or registration with, or
notification to, and no permit, authorization, consent, approval or exemption
of, or other action by, any court, arbitrator or other foreign, federal, state
or local governmental, regulatory or other administrative body, authority,
department, commission, board, bureau, agency or instrumentality (collectively,
a "Governmental Entity") or any other Person is required to be obtained, made or
given by the Company, or any Stockholder, in connection with its execution,
delivery and performance of this Agreement, the other Related Documents or the
transactions contemplated hereby or thereby.
(b) Subject to compliance with the HSR Act and to obtaining Private
Consents applicable to the Company, the execution, delivery and performance of
this Agreement by the Company does not, and the consummation by the Company of
the Sale and the other transactions contemplated hereby will not, constitute or
result in (i) a breach or violation of, or a default under, the articles of
incorporation or bylaws of the Company, (ii) a breach or violation of, or a
default under, or the acceleration of any obligations or the creation of a Lien,
on the assets of the Company (with or without notice, lapse of time or both)
pursuant to, any written or oral agreement, lease, contract, note, mortgage,
indenture, plan, policy, license, arrangement or other obligation to which the
Company is a party or by which any of its assets or properties are bound or
affected (collectively, the "Contracts"), (iii) any change in the rights or
obligations of any party under any of those Contracts, or (iv) the impairment of
the Company's business or an adverse effect on any Licenses or approvals
necessary to enable the Company to carry on its
10
business as presently conducted. Section 3.4(b) of the Disclosure Letter sets
forth a list of third-party consents or waivers (the "Private Consents") that
are or may be required prior to consummation of the transactions contemplated by
this Agreement.
Section 3.5 Company Financial Statements.
Section 3.5 of the Disclosure Letter sets forth true and complete copies of the
balance sheets as of September 30, 2001, 2000, 1999 (audited) and December 31,
2001 (unaudited), the statement of operations and retained earnings for the
years ended September 30, 2001, 2000, 1999 (audited) and the three months ending
December 31, 2001 (unaudited), the statement of cash flow for each of the years
ended September 30, 2001, 2000, 1999 (audited) and the three months ending
December 31, 2001 (unaudited), and an aging schedule of the accounts payable of
the Company as of December 31, 2001 (collectively, the "Company Financial
Statements"). Each of the balance sheets included in the Company Financial
Statements (including the related notes and schedules) fairly and accurately
presents in all material respects the financial position of the Company as of
its date and each of the statements of income and statements of cash flows
included in the Company Financial Statements (including any related notes and
schedules) fairly and accurately presents in all material respects the results
of operations, retained earnings and cash flows, as the case may be, of the
Company for the periods set forth therein (subject, in the case of unaudited
statements, to the absence of notes and normal year-end audit adjustments that
will not be material in amount or effect), in each case in accordance with
generally accepted accounting principles ("GAAP") consistently applied during
the periods involved, except as may be noted set forth on Section 3.5 of the
Disclosure Letter.
Section 3.6 Absence of Undisclosed Liabilities.
Except as reflected in the Company's balance sheet as of December 31, 2001 (the
"Company Review Date"), or as set forth on Section 3.6 of the Disclosure Letter,
the Company has no liabilities (whether accrued, absolute, contingent,
unliquidated or otherwise, whether due or to become due, whether known or
unknown, and regardless of when asserted) arising out of transactions or events
heretofore entered into, or any action or inaction, or any state of facts
existing, with respect to or based upon transactions or events heretofore
occurring, except liabilities which have arisen after the Company Review Date in
the Ordinary Course of Business (none of which is a material uninsured liability
for breach of contract, breach of warranty, tort, infringement, claim or
lawsuit).
Section 3.7 No Material Adverse Changes.
Except as set forth on Section 3.7 of the Disclosure Letter, since the Company
Review Date, there has been no material adverse change in the assets, financial
condition, operating results, customer, employee or supplier relations, business
condition or prospects of the Company.
Section 3.8 Certain Payments.
Except as set forth on Section 3.8 of the Disclosure Letter, neither the Company
nor any director, officer, agent or employee of the Company or any other Person
acting for or on behalf of the Company, has directly or indirectly in violation
of any legal requirement in connection with the
11
business of the Company (a) made any contribution, gift, bribe, rebate, payoff,
influence payment, kickback or other payment to any Person, regardless of form,
whether in money, property or services (i) to obtain favorable treatment in
securing business, (ii) to pay for favorable treatment for business secured, or
(iii) to obtain special concessions or for special concessions already obtained,
for or in respect of the Company or any Affiliate thereof, or (b) established or
maintained any fund or asset that has not been recorded in the books and records
of the Company.
Section 3.9 Absence of Certain Changes.
Except as disclosed on Section 3.9 of the Disclosure Letter and except as
otherwise provided in or contemplated by this Agreement, since the Company
Review Date, the Company has conducted its business only in, and has not engaged
in any material transaction other than according to the Ordinary Course of
Business and has not: (a) changed or amended its articles of incorporation or
bylaws; (b) borrowed any amount or incurred any obligation or liability
(absolute or contingent), except current liabilities incurred, and liabilities
under contracts entered into, in the Ordinary Course of Business; (c) discharged
or satisfied any Lien, security interest, charge or other encumbrance or
incurred or paid any obligation or liability (absolute or contingent), other
than current liabilities shown on the Company Financial Statements or current
liabilities incurred since that date in the Ordinary Course of Business; (d)
mortgaged, pledged or subjected to any lien, security interest, charge or other
encumbrance, except Permitted Liens, any of its assets or properties; (e) sold,
transferred, assigned, leased or otherwise disposed of any of its assets or
properties, except for fair consideration in the Ordinary Course of Business or
acquired any assets or properties, except in the Ordinary Course of Business;
(f) declared, set aside or paid any distribution (whether in cash, stock or
property or any combination thereof) in respect of its capital stock or redeemed
or otherwise acquired any of its capital stock or split, combined or otherwise
similarly changed its capital stock or authorized the creation or issuance of or
issued or sold any capital stock or any securities or obligations convertible
into or exchangeable therefor, or given any person any right to acquire any
capital stock, or agreed to take any such action; (g) made any other
distribution other than in the Ordinary Course of Business (whether in cash or
property or any combination thereof and whether in redemption or liquidation of
an interest or otherwise) to any Person; (h) made any investment of a capital
nature, whether by purchase of stock or securities, contributions to capital,
property transfers or otherwise, in any partnership, limited liability company,
corporation or other entity; or (i) purchased any property or assets other than
in the Ordinary Course of Business; (j) [intentionally omitted] (k) canceled or
compromised any debt or claim other than in the Ordinary Course of Business; (l)
intentionally or knowingly waived or released any rights, including without
limitation, any intangible rights; (m) made or granted any wage, salary or
benefit increase applicable to any group or classification of employees
generally, entered into any employment contract with, made any loan to, or
entered into any transaction of any other nature with, any officer or employee
of the Company or related party of the Company; (n) suffered any casualty loss
or damage (whether or not such loss or damage shall have been covered by
insurance) which affects in any respect its ability to conduct its business; (o)
suffered any losses, whether or not in the Ordinary Course of Business; (p)
received notification of cancellation or threatened cancellation of, or
cancelled, amended or intentionally or knowingly waived any rights which,
individually or in the aggregate, would have a material adverse effect on the
Company; (q) made
12
any change in any method of accounting or accounting practice; (r) hired,
committed to hire or terminated any employee other than in the Ordinary Course
of Business; (s) received notice or communication from any customer or client of
intent to discontinue or reduce prior levels of business that, in the aggregate,
are outside the Ordinary Course of Business; (t) entered into any transaction
except in the Ordinary Course of Business; (u) conducted the business of the
Company in any manner other than in the Ordinary Course of Business consistent
with past practices, including, without limitation, maintenance of inventory
levels, collection of third party accounts receivable and payments of accounts
payable; (v) suffered any other change, event, or condition which, in any case
or in the aggregate, has had or is reasonably expected to have a material
adverse effect on its condition (financial or otherwise), properties, assets,
liabilities, operations, business or prospects; or (w) agreed, whether in
writing or otherwise, to take any action described in this Section 3.9.
Section 3.10 Litigation.
Except as set forth on Section 3.10 of the Disclosure Letter, there are no
civil, criminal or administrative actions, suits, claims, hearings,
investigations, proceedings, judgments, decrees, orders or injunctions
outstanding, pending or, to the Knowledge of the Company, threatened against the
Company and, to the Knowledge of the Company, no event has occurred or
circumstances exist that may give rise to or serve as a basis for the
commencement of any such actions, suits, claims, hearings, investigations or
proceedings.
Section 3.11 Employee Benefits.
(a) Except as described in Section 3.11 of the Disclosure Letter, the
Company does not now maintain or contribute to any pension, profit-sharing,
deferred compensation, bonus, stock option, share appreciation right, severance,
group or individual health, dental, medical, life insurance, survivor benefit,
or similar plan, policy, or arrangement, whether formal or informal, for the
benefit of any director, officer, consultant or employee, whether active or
terminated, of the Company. Each of the arrangements set forth in Section 3.11
of the Disclosure Letter is hereinafter referred to as an "Employee Benefit
Plan." No Employee Benefit Plan is a defined benefit plan or a multi-employer
plan, and the Company and its ERISA affiliates have never maintained or
contributed to a defined benefit plan or a multi-employer plan.
(b) The Company has delivered to Buyer true, correct and complete copies of
each Employee Benefit Plan, and with respect to each such plan (i) any
associated trust, custodial, insurance or service agreements, (ii) any annual
report, actuarial report or disclosure materials (including specifically any
summary plan descriptions) submitted to any governmental agency or distributed
to participants or beneficiaries thereunder in the current calendar year, and
(iii) the most recently received Internal Revenue Service ("IRS") determination
letters and any governmental advisory opinions or rulings relating to the
tax-qualified status of the plan.
(c) Each Employee Benefit Plan is and has heretofore been maintained and
operated in material compliance with the terms of such plan and with the
requirements prescribed by any and all statutes, governmental or court orders,
and governmental rules or regulations in effect from time to time, including,
but not limited to, the Employee Retirement Income Security Act
13
of 1974, as amended ("ERISA"), and the Code, and applicable to such plan. Each
Employee Benefit Plan that is intended to qualify under Section 401(a) of the
Code and each trust forming part of an Employee Benefit Plan which is intended
to qualify under Section 501(c)(9) of the Code is specifically so identified in
Section 3.11 of the Disclosure Letter and has been determined by the IRS to be
so qualified, and nothing has occurred since the date of the last such
determination as to each such plan or trust that has resulted or is likely to
result in the revocation of such determination as to such plan or trust.
(d)
(i) There is no pending or, to the Knowledge of the Company,
threatened, legal action, proceeding or investigation, other than routine
claims for benefits or relating to qualified domestic relations orders,
concerning any Employee Benefit Plan, or any fiduciary or service provider
thereof, and there is no reasonable basis for any such legal action,
proceeding or investigation.
(ii) No Employee Benefit Plan or any party in interest with respect
thereto, has engaged in a prohibited transaction that could subject the
Company directly or indirectly to liability under Section 409 or 502(i) of
ERISA or Section 4975 of the Code.
(iii) No summary plan description or summary of material modifications
has been distributed to participants and beneficiaries that, at the time
made, did not reflect accurately in all material respects the terms and
operations of the relevant Employee Benefit Plan.
(iv) Neither the Company nor any ERISA Affiliate has any actual
unsatisfied liabilities, or is reasonably expected to incur any material
liabilities that would reasonably be expected to become a liability of
Buyer, with respect to death or medical benefits after such employee's
separation from employment, other than (x) benefits after separation set
forth in the Disclosure Letter and (y) health care continuation benefits
described in Section 4980B of the Code or required under applicable law or
group life insurance continuation benefits under applicable state law.
(v) No benefits due under any Employee Benefit Plan have been
forfeited subject to the possibility of reinstatement (which possibility
would still exist at or after the Closing) except as permitted by
applicable law.
(vi) The Company has not undertaken to maintain any Employee Benefit
Plan for any period of time and each such plan is terminable at the sole
discretion of the Company, subject only to such constraints as may be
imposed by applicable law.
(e) All costs of administering and contributions required to be made to
each Employee Benefit Plan under the terms of that Employee Benefit Plan, ERISA,
the Code, or any other applicable law have been timely made. All other amounts
that should be accrued to date as liabilities of the Company under or with
respect to each Employee Benefit Plan for the current plan year of the plan have
been recorded on the books of the Company.
14
(f) Except as set forth on Section 3.11(f) of the Disclosure Letter, the
execution of this Agreement and the consummation of the transactions
contemplated hereby will not result in any material payment (whether of
severance pay or otherwise) becoming due from any Employee Benefit Plan to any
current or former director, officer, consultant, or employee of the Company or
result in the vesting, acceleration of payment, or increases in the amount of
any material benefit payable to or in respect of any such current or former
director, officer, consultant, or employee.
Section 3.12 Compliance with Laws; Permits.
(a) Licenses, Authorizations and Provider Programs. Set forth on Section
3.12(a) of the Disclosure Letter is a correct and complete list of such
licenses, accreditations, permits and other authorizations (including the name
of the issuing agency and the expiration date) under any applicable law,
ordinance, regulation or ruling of any governmental regulatory authority
(collectively, "Laws"), complete and correct copies of which have been made
available for inspection and copying by Buyer.
(b) Except as disclosed on Section 3.12(b) of the Disclosure Letter, no
violation, default, order or legal or administrative proceeding exists with
respect to any of the items listed on Section 3.12(a) of the Disclosure Letter.
The Company has not received any notice of any action pending or recommended by
any state or federal agencies having jurisdiction over the items listed on
Section 3.12(a) of the Disclosure Letter, to revoke, withdraw or suspend any
license, right or authorization. No event has occurred which, with the giving of
notice, the passage of time, or both, would constitute grounds for a material
violation, order or deficiency with respect to any of the items listed on
Section 3.12(a) of the Disclosure Letter or to revoke, withdraw or suspend any
such license, right or authorization. There has been no decision not to renew
any third-party payor agreement of the Company. Except as listed on Section
3.12(b) of the Disclosure Letter, no consent or approval of, prior filing with
or notice to, or any action by, any governmental body or agency or any other
third party is required in connection with any license, right or authorization
of the Company, by reason of the Sale, and the continued operation of the
Company's business thereafter on a basis consistent with past practices.
(c) All activities of the Company, and its officers, directors, agents and
employees undertaken on behalf of the Company, have been, and are currently
being, conducted in compliance in all respects with all applicable Laws,
permits, licenses, certificates, governmental requirements, government program
manuals and guidance, orders and other similar items of any Governmental Entity
including, without limitation, all Laws pertaining to confidentiality of patient
information, equal employment opportunity, employee retirement, affirmative
action and other hiring practices, occupational safety and health, workers'
compensation, unemployment, building and zoning codes (collectively,
"Regulations"). The Company has not violated or become liable for, or received a
notice or charge asserting any such violation or liability with respect to, any
Regulation, nor is there any facts or circumstances that could form the basis
for any such violation or liability. The Company is not relying on any exemption
from or deferral of any Regulation that would not be available to the Company
after Buyer acquires the Shares.
15
Section 3.13 Taxes.
Except as set forth on Section 3.13 of the Disclosure Letter:
(a) [intentionally omitted]
(b) all Tax Returns required to be filed with respect to the Company are
true, correct, and complete in all material respects and have been timely filed
(including extensions). No extension of time within which to file any such Tax
Return has been requested and is currently in effect;
(c) all Taxes shown on such Tax Returns have been timely paid;
(d) all Taxes of the Company which will be due and payable, whether now or
hereafter, for any period ending on, ending on and including, or ending before
the last day of the month that immediately precedes the month in which the
Closing occurs, shall have been paid by or on behalf of the Company or shall be
reflected on the Company's books as an accrued Tax liability, either current or
deferred, the amount of which as of the last day of the month that immediately
precedes the month in which the Closing occurs is set forth in Section 3.13 of
the Disclosure Letter;
(e) no adjustment relating to any of such Tax Returns has been proposed in
writing by any Tax Authority, except proposed adjustments that have been
resolved prior to the date hereof;
(f) there are no outstanding subpoenas or requests for information with
respect to any Tax Returns of the Company or the Taxes reflected on such Tax
Returns;
(g) there is no material difference on the net books of the Company between
the amounts of the book basis and the tax basis of assets (net of liabilities)
that is not accounted for by an accrual on the books for federal income tax
purposes;
(h) all Taxes which the Company is required by law to withhold and collect
have been duly withheld and collected, and have been paid over, in a timely
manner, to the proper Taxing Authorities (as hereinafter defined) to the extent
due and payable;
(i) there are no Liens for Taxes with respect to any of the assets or
properties of the Company, except for statutory Liens for Taxes not yet due or
payable;
(j) all Tax Returns have been examined by the relevant taxing authorities,
or closed without audit by applicable statutes, and all deficiencies proposed as
a result of such examinations have been paid or settled, for all taxable years
prior to and including the taxable year ended September 30, 1998;
(k) there is no deficiency or refund litigation or any audit or examination
pending with respect to any Taxes and during the past three years no Taxing
Authority has given written notice of the commencement of any deficiency or
refund litigation or any audit or examination, with respect to any Taxes;
16
(l) the Company does not have outstanding any agreements or waivers
extending the statute of limitations with respect to the assessment or
collection of any Tax;
(m) the Company is not party to or bound by and does not owe any amount
pursuant to any tax-sharing agreement, tax indemnity obligation or similar
agreement, arrangement or practice with respect to Taxes (including any advance
pricing agreement, closing agreement or other agreement relating to Taxes with
any Taxing Authority);
(n) the Company has not been, nor will it be, required to include any
material adjustment in taxable income for any period (or portion thereof)
pursuant to Sections 481 or 263A of the Code or any comparable provision under
state or foreign Tax laws as a result of transactions, events or accounting
methods employed prior to the Closing Date;
(o) neither the Company, nor any of its Affiliates, has made with respect
to the Company any consent under Section 341 of the Code;
(p) the Company is not a party to any agreement, contract, or arrangement
that would result, separately or in the aggregate, in (i) the payment of any
"excess parachute payments" within the meaning of Section 280G of the Code by
reason of the Sale or (ii) the payment of any form of compensation or
reimbursement for any Tax incurred by any Person arising under Section 280G of
the Code;
(q) neither the Company nor any of its Affiliates has been a United States
real property holding corporation within the meaning of Section 897(c)(2) of the
Code during the applicable period specified in Section 897(c)(1)(A)(ii) of the
Code;
(r) each of the Company and its Affiliates has reported in a manner for
which there is substantial authority or has adequately disclosed on its federal
income Tax Returns all positions taken therein that could give rise to a
substantial underpayment of federal income Tax within the meaning of Section
6662 of the Code (or, with respect to Tax Returns filed after the date of this
Agreement and before the Closing Date, will report such positions in such a
manner or will adequately disclose them);
(s) neither the Company nor any of its Affiliates has been a member of an
affiliated group filing a consolidated federal income Tax Return or has any
liability for the Taxes of any person (other than any of the Company and its
Affiliates) under Treasury Regulation Section 1.1502-6 (or any similar provision
of state, local, or foreign law), as a transferee or successor, by contract, or
otherwise;
(t) the Company has not been at any time a member of any partnership or
joint venture or the holder of a beneficial interest in any trust for any period
for which the statute of limitations for any Tax potentially applicable as a
result of such membership or holding has not expired; and
(u) no power of attorney with respect to any Taxes has been executed or
filed with any Taxing Authority by or on behalf of the Company.
17
Section 3.14 Labor Matters.
(a) No charges with respect to or relating to the business of the Company
are pending before the Equal Employment Opportunity Commission, or any state or
local agency responsible for the prevention of unlawful employment practices,
and, to the Knowledge of the Company, no such action has been threatened against
the Company. Neither the Company, nor the Stockholders, have any information
indicating that any management or key employee of the Company, as agreed upon by
the parties, intends to terminate his or her employment with the Company.
(b) Section 3.14 of the Disclosure Letter contains a complete and correct
list of (i) name, job title, current compensation paid or payable, vacation
accrued and services credited for purposes of vested and eligibility to
participate under any employee benefit plan, for each employee or consultant of
the Company, and (ii) all current employment, management or other consulting
agreements (whether written or oral) with any Persons employed or retained by
the Company and which are not terminable at will. True, complete and correct
copies of all such written agreements or written summaries of all oral
agreements have been delivered to Buyer.
Section 3.15 Intellectual Property.
(a) Except as set forth in Section 3.15(a) of the Disclosure Letter and
except as would not reasonably be likely, individually or in the aggregate, to
have a material adverse effect on the Company, the Company has the right to use
all Intellectual Property currently used by the Company in connection with the
Company's businesses as currently conducted.
(b) Except as set forth in Section 3.15(b) of the Disclosure Letter, the
Company has not received any written notice that, and to the Knowledge of the
Company, there is no reasonable basis to conclude that, the Company's business
as currently conducted infringes on or otherwise violates the Intellectual
Property of any Person.
(c) Except as set forth on Section 3.15(c) of the Disclosure Letter, the
consummation of the transactions contemplated by this Agreement will neither
violate nor result in the breach, modification, cancellation, termination or
suspension of any Contract relating to the Company's Intellectual Property.
(d) To the Knowledge of the Company, no officer, director, employee, or
consultant of the Company has disclosed trade secrets to any third party or is
obligated under or bound by any agreement or instrument, or any judgment,
decree, or order of any court of administrative agency, that (i) conflicts or
may conflict with his or her agreements and obligations to use his or her best
efforts to promote the interest of the Company, (ii) conflicts or may conflict
with the business or operations of the Company, or (iii) restricts or may
restrict the use or disclosure of any information that may be useful to the
Company.
Section 3.16 Certain Environment Matters; Medical Waste.
Except as disclosed in Section 3.16 of the Disclosure Letter:
18
(a) the Company possesses, and is in compliance in all respects with, all
Licenses and government authorizations related to, and has filed all notices
that are required under, local, state, province and federal laws and regulations
relating to protection of the environment, pollution control, product
registration and Hazardous Substances, and the Company is in compliance in all
respects with all applicable Environmental Laws;
(b) the Company has not received notice of actual or threatened liability
under Environmental Laws and, to the Knowledge of the Company, there are no
facts or circumstances which could form the basis for the assertion of any claim
against the Company under any Environmental Laws or any similar local, state or
foreign law with respect to any on-site or off-site location;
(c) the Company has not entered into or agreed to, nor does the Company
intend to enter into or agree to, any consent decree or order, and the Company
is not subject to any judgment, decree or judicial or administrative order
relating to compliance with, or the cleanup of Hazardous Substances under, any
applicable Environmental Laws;
(d) the Company has not been subject to any administrative or judicial
proceeding under any applicable Environmental Laws either now or any time during
the past five years;
(e) the Company is not subject to any claim, obligation, liability, loss,
damage or expense of whatever kind or nature, contingent or otherwise, incurred
or imposed or based upon any provision of any Environmental Law and arising out
of any act or omission of the Company, its employees, agents or representatives
or arising out of the ownership, use, control or operation by the Company of any
plant, facility, site, area or property (including, without limitation, any
plant facility, site, area or property currently or previously owned or leased
by the Company) from which any Hazardous Substances were released into the
environment (the term "release" meaning any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping or
disposing into the environment, by the Company, and the term "environment"
meaning any surface or ground water, drinking water supply, soil, surface or
subsurface strata or medium, or the ambient air);
(f) the Company has heretofore provided Buyer with true, correct and
complete copies of all files of the Company relating to environmental matters
(or an opportunity to review such files), which files are true, correct and
complete in all material respects, and Section 3.16 of the Disclosure Letter
sets forth the amount of all fines, penalties or assessments paid within the
last five years by the Company with respect to environmental matters, including
the date of payment and the basis for the assertions of liability;
(g) to the Knowledge of the Company, none of the real properties leased by
the Company, nor any of the improvements or equipment thereon, contain any
asbestos, PCBs or underground storage tanks; and
(h) the Company is not in violation of, or the subject of, any enforcement
action by any governmental authority under the Medical Waste Tracking Act, 42
U.S.C. ss. 6992 et seq., or any applicable state or local governmental statue,
ordinance or regulation dealing with the disposal of medical wastes ("Medical
Waste Laws"). The Company has not received any written
19
or oral notice of any investigation or inquiry by any governmental authority
under the Medical Waste Laws. The Company has obtained and is in compliance with
any permits related to medical waste disposal required by the Medical Waste
Laws, and has taken commercially reasonable steps to determine, and has
determined, that all disposal of medical waste by it has been in compliance with
the Medical Waste Laws.
Section 3.17 Title to Property.
Except as set forth on Section 3.17 of the Disclosure Letter, the Company had
good title to all of its properties and assets as set forth on the balance sheet
as of the Company Review Date, free and clear of all Liens, except Permitted
Liens. Section 3.17 of the Disclosure Letter sets forth a true and correct list
of all leases, subleases or other agreements under which the Company is lessee
or lessor of any real property or has any interest in real property and, except
as set forth in Section 3.17 of the Disclosure Letter, there are no rights or
options held by the Company, or any contractual obligations on its part, to
purchase or otherwise acquire (including by way of lease or sublease) any
interest in or use of any real property, nor any rights or options granted by
the Company, or any contractual obligations entered into by it, to sell or
otherwise dispose of (including by way of lease or sublease) any interest in or
use of any real property. All such leases, subleases and other agreements are in
full force and effect and constitute legal, valid and binding obligations of the
respective parties thereto, with no existing or claimed default or event of
default, or event which with notice or lapse of time or both would constitute a
default or event of default, by the Company, or, to the Knowledge of the
Company, by any other party thereto.
Section 3.18 Contracts.
(a) Section 3.18 of the Disclosure Letter accurately lists all of the
following Contracts of the Company: (i) Contracts with pharmacies, (ii)
Contracts with suppliers/distributors, (iii) Contracts with consultants, (iv)
Contracts with vendors for services relating to billing and reimbursement, (v)
any Contract containing non-compete provisions or which otherwise restricts the
Company's ability to freely conduct its business, and (vi) any agreement
involving payments in excess of $1,000 per month. The Stockholders have not set
forth on Section 3.18 of the Disclosure Letter those Contracts of the Company
where all parties to the Contract have completed their performance and there is
no possibility of any further obligation or liability of the Company under such
Contract.
True, correct and complete copies of the written Contracts listed on Section
3.18 of the Disclosure Letter have been made available to Buyer. Written
summaries of all oral Contracts have been provided to Buyer. The Company is in
compliance in all material respects with all terms and provisions of all
Contracts and all such Contracts are valid and binding in accordance with their
terms and in full force and effect with respect to the Company and, to the
Knowledge of the Company, with respect to the other parties thereto, and no
breach or default by the Company or event which, with notice or lapse of time or
both, could constitute a breach or default by the Company, exists with respect
thereto and no party thereto has given notice or asserted to the Company or any
agent thereof, that the Company is in default thereunder and, to the Knowledge
of the Company, no other party thereto is in breach or default thereunder.
20
(b) Section 3.18(b) of the Disclosure Letter contains a complete and
accurate list, (setting forth in each case the relevant factor type, price,
quantity and date of purchase) of all factors purchased by the Company in
calendar 2001.
Section 3.19 Insurance Matters.
The Company has heretofore provided Buyer with true, complete and correct copies
of all material fire and casualty, general liability, business interruption,
product liability and other insurance policies maintained by the Company. All
such policies are in full force and effect and no event has occurred that would
give any insurance carrier a right to terminate any such policy. Except as set
forth on Section 3.19 of the Disclosure Letter, since January 1, 2000, the
Company has not been denied or had any policy of insurance revoked or rescinded.
Section 3.20 Affiliated Transactions.
Except as disclosed in Section 3.20 of the Disclosure Letter, no Affiliate of
the Company has, or, since January 1, 2001, has had, any interest in any
property (whether real, personal, or mixed and whether tangible or intangible),
used in or pertaining to the business of the Company. Neither the Company nor
any Affiliate of the Company owns, or, since January 1, 1997, has owned, of
record or as a beneficial owner, an equity interest (except for the ownership of
publicly-traded securities constituting no more than five percent (5%) of the
outstanding securities of the issuer thereof) or any other financial or profit
interest in any person that has (a) had business dealings or a financial
interest in any transaction with the Company other than business dealings or
transactions disclosed in Section 3.20 of the Disclosure Letter, each of which
has been conducted in the Ordinary Course of Business with the Company at
substantially prevailing market prices and on substantially prevailing market
terms, or (b) engaged in competition with the Company with respect to any line
of products or services of the Company in any market presently served by the
Company. Except as set forth in Section 3.20 of the Disclosure Letter, no
Affiliate of the Company is a party to any Contract with, or has any claim or
right against, the Company in connection with the business of the Company.
Section 3.21 Changes in Suppliers and Third-Party Payors.
None of the material suppliers supplying products, materials or drugs to the
Company has provided any notice (written or oral) to the Company that it intends
to cease selling such products, materials or drugs to the Company or to limit or
reduce such sales of the products to the Company and there is no reasonable
basis to believe, that any of the major third-party payors to the Company or the
pharmacies serving the Company's customers intends to terminate, limit or reduce
its business relations with the Company or the pharmacies serving the Company's
customers (with respect to the Company's customers).
Section 3.22 Indebtedness.
At the date hereof, the Company has no Indebtedness outstanding except as set
forth in Section 3.22 of the Disclosure Letter. Except as set forth on Section
3.22 of the Disclosure Letter, the Company is not in default with respect to any
outstanding Indebtedness or any agreement, instrument or other obligation
relating thereto and no such Indebtedness or any agreement,
21
instrument or other obligation relating thereto purports to limit the issuance
of any securities by the Company, or the operation of its businesses. Complete
and correct copies of all agreements, instruments and other obligations
(including all amendments, supplements, waivers and consents) relating to any
Indebtedness of the Company have been furnished to Buyer.
Section 3.23 Inspections and Investigations.
Except as set forth and described in Section 3.23 of the Disclosure Letter: (a)
neither the Company's right nor, to the Knowledge of the Company, the right of
any licensed professional or other individual affiliated with the Company to
receive reimbursements pursuant to any government program or private program has
been terminated or otherwise adversely affected as a result of any investigation
or action whether by any federal or state governmental regulatory authority or
other third party; (b) neither the Company, nor, to the Knowledge of the
Company, any licensed professional or other individual who is a party to a
Contract, has, during the past three years, been the subject of any inspection,
investigation, survey, audit, monitoring or other form of review by any
governmental regulatory entity, trade association, professional review
organization, accrediting organization or certifying agency based upon any
alleged improper activity on the part of such individual, nor has the Company
received any notice of deficiency during the past three years in connection with
the operations of its business; (c) there are not presently, and at the Closing
Date there will not be, any outstanding deficiencies or work orders of any
governmental authority having jurisdiction over the Company, or requiring
conformity to any applicable agreement, statute, regulation, ordinance or bylaw;
and (d) there is not any notice of any claim, requirement or demand of any
licensing or certifying agency or other third party supervising or having
authority over the Company to rework or redesign any part thereof or to provide
additional furniture, fixtures, equipment, appliances or inventory so as to
conform to or comply with any existing law, code, rule, regulation or standard.
Attached as part of Section 3.23 of the Disclosure Letter are copies of all
reports, correspondence, notices and other documents relating to any matter
described or referenced therein.
Section 3.24 Certain Relationships.
Except as set forth on Section 3.24 of the Disclosure Letter, the Company
has not:
(a) offered, paid, solicited or received anything of value, paid directly
or indirectly, overtly or covertly, in cash or in kind ("Remuneration") to or
from any physician, family member of a physician, or entity in which a physician
or physician family member has an ownership or investment interest (other than
the ownership of publicly-traded securities of such entity), including, but not
limited to:
(i) payments for personal or management services pursuant to a medical
director agreement, consulting agreement, management contract, personal
services agreement or otherwise;
(ii) payments for the use of premises leased to or from a physician, a
family member of a physician or an entity in which a physician or family
member has an ownership or investment interest;
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(iii) payments for the acquisition or lease of equipment, goods or
supplies from a physician, a family member of a physician or an entity in
which a physician or family member has an ownership or investment interest;
or
(b) offered, paid, solicited or received any Remuneration (excluding fair
market value payments for equipment, supplies or services) to or from any
healthcare provider, pharmacy, drug or equipment supplier, distributor or
manufacturer, including, but not limited to:
(i) payments or exchanges of anything of value under a warranty
provided by a manufacturer or supplier of an item to the Company; or
(ii) discounts, rebates or other reductions in price on a good or
service received by the Company;
(c) offered, paid, solicited or received any Remuneration to or from any
person or entity in order to induce business, including, but not limited to,
payments intended not only to induce referrals of patients, but also to induce
the purchasing, leasing, ordering or arrangement for any good, facility, service
or item;
(d) entered into any joint venture, partnership, co-ownership or other
arrangement involving any ownership or investment interest by any physician,
family member of a physician, or entity in which physician or physician family
member has an ownership or investment interest, directly or indirectly, through
equity, debt or other means, including, but not limited to, an interest in an
entity providing goods or services to the Company;
(e) entered into any joint venture, partnership, co-ownership or other
arrangement involving any ownership or investment interest by any person or
entity including, but not limited to, a hospital, pharmacy, drug or equipment
supplier, distributor or manufacturer, that is or was in a position to make or
influence referrals, furnish items or services to, or otherwise generate
business for, the Company; or
(f) entered into any agreement providing for the referral of any patient
for the provision of goods or services by the Company or providing for payments
by the Company as a result of any referrals of patients to the Company, other
than commission payments to employees and agents in the Ordinary Course of
Business.
Section 3.25 Xxxxx; Fraud and Abuse; False Claims.
Except as set forth on Section 3.25 of the Disclosure Letter, neither the
Company nor persons and entities providing professional services in connection
with the Company's business have engaged in any activities which are prohibited
under 42 U.S.C. ss. 1320a-7, 1320a-71, 1320a-7b, 42 U.S.C. ss. 1395nn or 31
U.S.C. ss. 3729-3733 (or other federal or state statutes related to false or
fraudulent claims) or the regulations promulgated thereunder pursuant to such
statutes, or related state or local statutes or regulations, or which are
prohibited by rules of professional conduct, including but not limited to the
following: (a) knowingly and willfully making or causing to be made a false
statement or representation of a fact in any application for any benefit or
payment; (b) knowingly and willfully making or causing to be made any false
statement or
23
representation of a fact for use in determining rights to any benefit or
payment; (c) failing to disclose knowledge by a claimant of the occurrence of
any event affecting the initial or continued right to any benefit or payment on
its own behalf or on behalf of another, with intent to fraudulently secure such
benefit or payment; and (d) knowingly and willfully soliciting or receiving any
remuneration (including any kickback, bribe or rebate), directly or indirectly,
overtly or covertly, in cash or in kind or offering to pay or receive such
remuneration (i) in return for referring an individual to a person for the
furnishing or arranging for the furnishing of any item or service for which
payment may be made in whole or in part by Medicare or Medicaid, or (ii) in
return for purchasing, leasing, or ordering or arranging for or recommending
purchasing, leasing, or ordering any good, facility, service or item for which
payment may be made in whole or in part by Medicare or Medicaid.
Section 3.26 Rates and Reimbursement Policies.
The Company does not have any reimbursement or payment rate appeals currently
pending before any governmental authority or any administrator of any private
non-governmental programs, including without limitation, any private insurance
program.
Section 3.27 Customers and Orders.
The Company has made available to Buyer a list of all current and former
(indicating which are current) customers served by the Company during the last
12 months and a list of all open customer orders from such customers as of the
date hereof.
Section 3.28 Inventories.
All items of the Company's inventory will, on the Closing Date, consist of items
of a quality and quantity usable and saleable in the Ordinary Course of Business
and conform to generally accepted quality standards in the industry. Except as
set forth on Section 3.28 of the Disclosure Letter, none of the items in the
Company's inventory have an expiration date that is prior to the six-month
anniversary of the Closing Date.
Section 3.29 Places of Business.
Since its formation, the Company has done business only as Apex Therapeutic
Care, Inc. (including all predecessor or merged entities and all trade and
assumed names). Since its formation, the Company has conducted its business only
at those offices and warehouses identified on Section 3.29 of the Disclosure
Letter, and maintains inventory only at those locations identified on Section
3.29 of the Disclosure Letter.
Section 3.30 Changes in Laws.
To the actual knowledge of the Company, there are no pending changes in
applicable law or regulations would prevent the Company from conducting its
business in substantially the same manner as the business is currently
conducted.
24
Section 3.31 Controlled Substances.
Except as set forth on Section 3.31 of the Disclosure Letter, the Company and
its officers, directors and, to the Knowledge of the Company, its employees and
persons who provide professional services under agreements (whether oral or
written) with the Company have not, in connection with their activities directly
or indirectly related to the Company, engaged in any activities which are
prohibited under the Federal Controlled Substances Act, 21 U.S.C. ss. 801 et
seq. or the regulations promulgated pursuant to such statute or any related
state or local statutes or regulations concerning the dispensing and sale of
controlled substances.
Section 3.32 Disclosure of Certain Financial Relationships.
Section 3.32 of the Disclosure Letter lists all financial relationships (whether
or not memorialized in a writing) that the Company has had with any person known
by the Company to be a physician or an immediate family member of a physician
since the Company's formation. For purposes of this Section 3.32, the term
"financial relationship" has the meaning set forth in 42 USC ss. 1395nn. The
operation of the Company is in compliance with and does not otherwise violate
the federal Medicare and Medicaid statutes regarding health professional
self-referrals, 42 U.S.C. ss. 1395nn and 42 U.S.C. ss. 1396b, or the regulations
promulgated pursuant to such statute, or similar state or local statutes or
regulations.
Section 3.33 Guarantees, Warranties and Discounts.
Except as described in Section 3.33 of the Disclosure Letter: (a) the Company is
not a party to or bound by any agreement of guarantee, indemnification,
assumption or endorsement or any other like commitment of the obligations,
liabilities (contingent or otherwise) or indebtedness of any person; (b) the
Company has not given any guarantee or warranty in respect of any of the
products sold or the services provided by it; and (c) the Company is not
required to provide any letters of credit, bonds or other financial security
arrangements in connection with any transactions with its suppliers or
customers.
Section 3.34 Accounts Receivable.
Section 3.34 of the Disclosure Letter sets forth all accounts receivable of the
Company outstanding as of December 31, 2001 (which shall be updated as of two
business days prior to the Closing Date), with the name of each account debtor,
the amount owed, the aging of each receivable owed by such debtor and the nature
of each account debtor (government program or private program) being set forth
on Section 3.34 of the Disclosure Letter. All receivables set forth on Section
3.34 of the Disclosure Letter have arisen in the Ordinary Course of Business,
are owned free and clear of any security interest or other encumbrances, other
than Permitted Liens, are not subject to any valid counterclaim, set-off or
defense except as disclosed on Section 3.34 of the Disclosure Letter and have
been accurately and fairly reflected in Section 3.34 of the Disclosure Letter.
To the Knowledge of the Stockholders or the Company, all accounts receivables
set forth in Section 3.34 of the Disclosure Letter will be collected (net of any
allowances for doubtful accounts shown on Section 3.34 of the Disclosure Letter,
and mutually agreed upon by the Company and Buyer). To the Knowledge of the
Stockholders or the Company, the Company has not altered its credit policies or
practices since September 30, 2000 except as described in Section 3.34 of the
Disclosure Letter.
25
Section 3.35 Bank Accounts; Signing Authority; Powers Of Attorney.
Section 3.35 of the Disclosure Letter sets forth a complete and accurate list of
all bank, brokerage, and other accounts, and all safe-deposit boxes, of the
Company and the persons with signing or other authority to act with respect
thereto. Except as so listed, the Company does not have any account or safe
deposit box in any bank, and no person has any power, whether singly or jointly,
to sign any checks on behalf of the Company, to withdraw any money or other
property from any bank, brokerage, or other account of the Company, or to act
under any agency or power of attorney granted by the Company at any time for any
purpose. Section 3.35 of the Disclosure Letter also sets forth the names of all
persons authorized to borrow money or sign notes on behalf of the Company.
Section 3.36 Brokers and Finders.
Neither the Company nor any of its Stockholders, executive officers, directors
or employees has employed any broker or finder or incurred any liability for any
brokerage fees, commissions or finders fees in connection with the Sale or the
other transactions contemplated in this Agreement except that the Company has
retained Xxxxxx Capital Group, LLC as its financial advisor, the arrangements
with respect to which are set forth on Section 3.36 of the Disclosure Letter.
Section 3.37 Transaction Costs.
Section 3.37 of the Disclosure Letter is a complete and accurate listing of all
Transaction Costs incurred or to be incurred by or on behalf of the Company.
There is no agreement, commitment, understanding or basis for any Transaction
Costs other than those set forth on Section 3.37 of the Disclosure Letter. Any
Transaction Costs not set forth on Section 3.37 of the Disclosure Letter are the
sole responsibility of the Stockholders and will be promptly paid by the
Stockholders (and not the Company or Buyer) in full when due. Section 3.37 of
the Disclosure Letter shall be updated by the Stockholders within two days of
the Closing Date.
Section 3.38 Disclosure.
Each of the representations and warranties set forth in this Article III shall
be deemed made at and as of the date of this Agreement and again at and as of
the Closing Date, as if made at such time and substituting the Closing Date for
the date of this Agreement throughout this Article III, except to the extent
such representations and warranties specifically refer to a date other than the
date of this Agreement. No representation or warranty contained in this
Agreement or in the Disclosure Letter, or in any other agreement, instrument,
certificate or other document delivered by the Stockholders in connection with
this Agreement, the Sale or any of the other transactions contemplated hereby,
contains or will, at the Closing, contain any untrue statement of a material
fact or omits or will, at the Closing, omit to state a material fact necessary
to make the statements therein, in light of the circumstances under which they
were or will be made, not misleading. Copies of all documents which have been
delivered or made available to Buyer by the Company or by its agents are true,
correct and complete copies thereof, and include all amendments, supplements or
modifications thereto or waivers thereunder.
26
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES
OF BUYER
Buyer hereby represents and warrants to the Stockholders, except as set forth on
the disclosure schedules attached to this Agreement (the "Buyer Disclosure
Letter"), which identifies exceptions by specific section references, as
follows:
Section 4.1 Organization, Good Standing and Qualification.
Buyer is a corporation duly incorporated and validly existing under the laws of
the State of Minnesota, and each of its subsidiaries is a corporation or other
entity duly incorporated and validly existing under the laws of its respective
jurisdiction of organization. Buyer and each of its subsidiaries have all
requisite corporate or similar power and authority to own and operate their
properties and assets and to carry on their business as presently conducted.
Section 4.2 Corporate Authority and Approval.
(a) Subject to obtaining shareholder approval, Buyer has all requisite
corporate power and authority and has taken all corporate action necessary in
order to execute, deliver and perform its obligations under this Agreement and
the Related Documents and to consummate the Sale. This Agreement and the Related
Documents are valid and binding obligations of Buyer, enforceable against Buyer
in accordance with their terms, except as that enforceability may be (i) limited
by any applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting the enforcement of creditors' rights generally and (ii) subject
to general principles of equity (regardless of whether that enforceability is
considered in a proceeding in equity or at law).
(b) The Board of Directors of Buyer has approved this Agreement, the
Related Documents, the Sale and the other transactions contemplated hereby and
thereby.
Section 4.3 Brokers and Finders.
Neither Buyer nor any of its executive officers, directors or employees has
employed any broker or finder or has incurred any liability for any brokerage
fees, commissions or finders fees in connection with the Sale or the other
transactions contemplated by this Agreement except that Buyer has retained U.S.
Bancorp Xxxxx Xxxxxxx as its financial advisor.
Section 4.4 SEC Filings; Financial Statements.
(a) Buyer has previously furnished or made available to the Stockholders
complete and accurate copies, as amended or supplemented, of all of its reports,
registration statements, definitive proxy statements and other documents filed
by Buyer from December 31, 2000 to the date hereof (the "SEC Reports"). The SEC
Reports constitute all of the documents required to be filed by Buyer with the
Securities and Exchange Commission (the "SEC"). The SEC Reports (i) were
prepared and filed in all material respects in compliance with all applicable
requirements
27
of the Securities Act, and the rules and regulations promulgated thereunder, and
the Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder (the "Exchange Act"), as the case may be and (ii) did not
at the time they were filed contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. All of the SEC Reports were timely filed, unless
a filing under Rule 12b-25 of the Exchange Act was timely filed, in which case
the applicable filing was made within the time period prescribed in Rule 12b-25.
The representation in clause (ii) of the preceding sentence does not apply to
any misstatement or omission in any SEC Report filed prior to the date of this
Agreement which was superseded by a subsequent SEC Report filed prior to the
date of this Agreement.
(b) The audited consolidated financial statements and unaudited consolidated
interim financial statements of Buyer and its subsidiaries included or
incorporated by reference in such SEC Reports have been prepared in accordance
with all applicable rules of the SEC and GAAP, consistently applied during the
periods involved (except as may otherwise be indicated in the notes thereto) in
accordance with Buyer's historical practices insofar as such practices are
consistent with GAAP, and present fairly, in all material respects, the
financial position and results of operations and cash flows of Buyer and its
subsidiaries on a consolidated basis at the respective dates and for the
respective periods indicated (except, in the case of all such financial
statements that are interim financial statements, for normal year-end
adjustments). Since the date of the filing with the SEC of Buyer's most recent
Form 10-Q, there has been no material adverse change in the financial condition
or operation of Buyer.
Section 4.5 Buyer Shares.
(a) The shares of Buyer Common Stock to be issued to the Stockholders
pursuant to this Agreement will, when issued, be duly authorized, validly
issued, fully paid and non-assessable and will not be subject to preemptive
rights.
(b) Buyer is solvent and shall not be rendered insolvent as a result of the
Sale. Buyer has sufficient cash funds available to pay the Cash Consideration.
Section 4.6 Litigation.
Other than as set forth in the SEC Reports, there are no actions, suits,
proceedings, orders or investigations pending or, to Buyer's knowledge,
threatened against Buyer that would be required to be disclosed pursuant to
Regulation S-K promulgated under the Securities Act.
Section 4.7 Government Filings; No Violations.
(a) Except as set forth on Section 4.7(a) of the Buyer Disclosure Letter
and subject to compliance with the HSR Act, no filing or registration with, or
notification to, and no permit, authorization, consent, approval or exemption
of, or other action by, any Governmental Entity or any other Person is required
to be obtained, made or given by Buyer in connection with Buyer's execution,
delivery and performance of this Agreement, the other Related Documents or the
transactions contemplated hereby or thereby.
28
(b) Subject to compliance with the HSR Act and to obtaining Private
Consents applicable to Buyer, the execution, delivery and performance of this
Agreement by Buyer does not, and the consummation by Buyer of the Sale and the
other transactions contemplated hereby will not, constitute or result in (i) a
breach or violation of, or a default under, the articles of incorporation or
bylaws of Buyer, (ii) a breach or violation of, or a default under, or the
acceleration of any obligations or the creation of a Lien, on the assets of
Buyer (with or without notice, lapse of time or both) pursuant to, any written
or oral agreement, lease, contract, note, mortgage, indenture, plan, policy,
license, arrangement or other obligation to which Buyer is a party or by which
any of its assets or properties are bound or affected, (iii) any change in the
rights or obligations of any party under any such agreement, lease, contract,
note, mortgage, indenture, plan, policy, license, arrangement or other
obligation, or (iv) the impairment of Buyer's business or an adverse effect on
any Licenses or approvals necessary to enable Buyer to carry on its business as
presently conducted. Section 4.7(b) of the Buyer Disclosure Letter sets forth a
list of the Private Consents that are or may be required prior to consummation
of the transactions contemplated by this Agreement.
Section 4.8 Compliance with Laws; Permits.
Except as disclosed in Section 4.8 of the Buyer Disclosure Letter, Buyer holds
all valid licenses and other rights, accreditations, permits and authorizations
required by the Laws necessary to operate its existing business, except where
the failure to comply would not cause a material adverse effect in the business
condition of Buyer. Neither Buyer nor any of its subsidiaries have received any
written notice of any action pending or recommended by any federal or state
agencies having jurisdiction over the Licenses held by Buyer and its
subsidiaries. To the Knowledge of Buyer, Buyer and its subsidiaries have
complied with all applicable laws of federal, state and local governments (and
all agencies thereof), except where the failure to comply would not cause a
material adverse effect in the business condition of Buyer.
Section 4.9 Disclosure.
Each of the representations and warranties set forth in this Article IV shall be
deemed made at and as of the date of this Agreement and again at and as of the
Closing Date, as if made at such time and substituting the Closing Date for the
date of this Agreement throughout this Article IV, except to the extent such
representations and warranties specifically refer to a date other than the date
of this Agreement. No representation or warranty contained in this Agreement or
in the Buyer Disclosure Letter, or in any other agreement, instrument,
certificate or other document delivered by Buyer in connection with this
Agreement, the Sale or any of the other transactions contemplated hereby,
contains or will, at the Closing, contain any untrue statement of a material
fact or omits or will, at the Closing, omit to state a material fact necessary
to make the statements therein, in light of the circumstances under which they
were or will be made, not misleading. Copies of all documents which have been
delivered or made available to the Stockholders are true, correct and complete
copies thereof, and include all amendments, supplements or modifications thereto
or waivers thereunder.
29
ARTICLE V.
COVENANTS
Section 5.1 Interim Operations of the Company.
The Stockholders covenant and agree that after the date hereof and prior to the
Closing Date (except as otherwise expressly contemplated by this Agreement),
without the prior written consent of Buyer, which consent will not be
unreasonably withheld or delayed:
(a) the business of the Company will be conducted only in the Ordinary
Course of Business and in compliance with applicable laws, regulations, and
contractual obligations;
(b) no change will be made in the articles of incorporation or the bylaws
of the Company;
(c) no change will be made in the authorized, issued or outstanding capital
stock of the Company, no additional securities of the Company will be issued and
no subscriptions, options or other convertible securities, commitments or
agreements relating to any of the securities of the Company will be issued,
granted, created or entered into;
(d) no dividend or other distribution or payment will be declared, set
aside, paid or made in respect of any securities of the Company or otherwise,
nor will the Company, directly or indirectly, repurchase, retire, redeem or
otherwise acquire any securities of the Company or otherwise distribute any
profits of the Company;
(e) the Company will not merge, amalgamate or consolidate with any
corporation, or acquire all or substantially all of the business or assets of
any other Person, business organization, entity or enterprise, or acquire
ownership or control of any capital stock, bonds, or other securities of, or any
property interest in, any business organization, entity or enterprise or acquire
control of the management or policies thereof;
(f) except as set forth on Section 5.1 of the Disclosure Letter, the
Stockholders shall cause the Company not to:
(i) enter into, create or assume (or in the case of clause (C) permit
to exist): (A) any obligation or obligations for borrowed money or the
deferred purchase price of any property (including under leases required to
be capitalized under GAAP) other than in the Ordinary Course of Business or
in an aggregate amount less than $25,000 (it being understood that the
Company's maintaining a balance of less than $2,000,000 under its line of
credit shall not be deemed to be a violation of this covenant); (B) any
security agreement, mortgage, deed of trust, pledge, conditional sale or
other title retention agreement other than in the Ordinary Course of
Business as heretofore conducted; or (C) any Lien, other than Permitted
Liens, upon any of its properties or assets whether now owned or hereafter
acquired (other than, with respect to tangible property and assets, in the
Ordinary Course of Business as heretofore conducted);
30
(ii) other than in the Ordinary Course of Business, assume, guarantee,
endorse or otherwise become liable with respect to the obligations of any
Person, business organization, entity or enterprise, except for
endorsements for collection of negotiable instruments in the Ordinary
Course of Business as heretofore conducted;
(iii) make any loan or advance to, or assume, guarantee, endorse or
otherwise become liable with respect to the capital stock or dividends of,
any Person, business organization, entity or enterprise except in the
Ordinary Course of Business as heretofore conducted;
(iv) enter into any transaction with or create or assume any
obligation or liability to, any Stockholder or any Affiliate, agent or
relative of any Stockholder of the Company except in the Ordinary Course of
Business;
(v) effect any increase or any other change in wages, salaries (out of
the ordinary course), commissions, compensation, bonuses, incentives,
pension or other benefits payable, or create, enter into or announce any
new agreement, plan, program, policy or arrangement to pay pensions,
retirement allowances or other employee benefits to any director or
employee, whether past or present;
(vi) cancel or compromise any debt or claim, except in the Ordinary
Course of Business as heretofore conducted, or waive any rights of
substantial value;
(vii) change any of its banking arrangements or grant any powers of
attorney;
(viii) make any Tax election or settle or compromise any Tax
liability;
(ix) make any capital expenditures, except those made in the Ordinary
Course of Business consistent with past practice which do not exceed
$35,000 in the aggregate;
(x) other than in the Ordinary Course of Business as heretofore
conducted, sell, lease, abandon, assign, transfer, license or otherwise
dispose of or encumber any property, including Intellectual Property or any
other intangible assets or any machinery, equipment or other operating
property or tangible assets;
(xi) enter into or assume any contract, agreement or commitment which,
by reason of its size, term or other factor, is not in the Ordinary Course
of Business as heretofore conducted;
(xii) delay the payment of its accounts payable except in the Ordinary
Course of Business; or
(xiii) take any action, or omit to take any action, which would have,
or could reasonably be expected to have, a material adverse effect on the
Company.
(g) the Stockholders shall cause the Company to use its commercially
reasonable efforts in a manner consistent with past practice to preserve the
business organization of the
31
Company intact and to keep available the services of the present employees and
agents of the Company and to preserve the good will of customers, referral
sources, suppliers, employees, agents, third-party payors and others having
business relations with the Company;
(h) the Stockholders shall cause the Company to use its commercially
reasonable efforts to maintain all assets owned, leased or regularly used by it
in good operating condition and repair, ordinary wear and tear excepted, and
will maintain existing insurance coverage on such assets as well as other
existing insurance coverage;
(i) the Stockholders shall cause the Company to maintain its books,
accounts and records in the usual and ordinary manner, on a basis consistent
with prior years; and
(j) the Stockholders shall cause the Company to pay all registration,
maintenance and renewal fees that are due or past due in connection with each
item of the Company's Intellectual Property.
Section 5.2 Acquisition Proposals.
From the date hereof until the termination of this Agreement in accordance with
Article VIII the Stockholders shall not, and the Stockholders shall not
authorize or permit any officer, director or employee of, or any financial
advisor, attorney, accountant or other advisor or representative retained by,
the Company or the Stockholders to solicit offers for, respond to inquiries,
initiate, encourage (including by way of furnishing information), endorse, enter
into or conduct discussions with any party or enter into any agreement with
respect to, or take any other action to knowingly facilitate, any inquiries or
the making of any proposal that constitutes, or may reasonably be expected to
lead to, any Acquisition Proposal. The Stockholders' Representative shall
immediately advise Buyer of any Acquisition Proposal or any offers, inquiries,
indications of interest or discussions with respect thereto, including the name
of the proposed acquirer and the material terms of the Acquisition Proposal. As
used in this Agreement, "Acquisition Proposal" means any tender or exchange
offer, or proposal, other than the proposal contemplated herein, for a merger,
share exchange, or other business combination or any proposal or offer to
acquire in any manner a substantial equity interest in or a substantial portion
of the assets of the Company.
Section 5.3 Consents.
The Stockholders shall cause the Company to use its reasonable best efforts to
obtain the Private Consents and the Governmental Consents prior to the Closing
Date.
Section 5.4 Access.
(a) Subject to the terms and conditions of the Nondisclosure Agreement,
between the date hereof and the Closing Date, the Stockholders shall cause the
Company to afford to Buyer and its authorized representatives full access, at
Buyer's expense and at all reasonable times and upon reasonable notice, and in a
manner so as not to interfere with the normal business operations of the
Company, to the offices, properties, books, records, officers, employees and
other items of the Company, and the work papers of their independent
accountants, relating to
32
work done by such accountants with respect to the Company, and otherwise provide
such assistance as is reasonably requested by Buyer in order that Buyer may have
a full opportunity to make such investigation and evaluation as it shall
reasonably desire to make of the business and affairs of the Company. All
requests for information made pursuant to this Section 5.4(a) shall be directed
to such Person as may be designated by the Stockholders' Representative.
(b) Subject to the terms and conditions of the Nondisclosure Agreement,
between the date hereof and the Closing Date, Buyer shall afford to the
Stockholders and their authorized representatives full access, at the
Stockholders' expense and at all reasonable times and upon reasonable notice,
and in a manner so as not to interfere with the normal business operations of
Buyer, to the offices, properties, books, records, officers, employees and other
items of Buyer, and the work papers of their independent accountants, relating
to work done by such accountants with respect to Buyer, and otherwise provide
such assistance as is reasonably requested by the Stockholders in order that the
Stockholders may have a full opportunity to make such investigation and
evaluation as they shall reasonably desire to make of the business and affairs
of Buyer.
(c) Between the date hereof and the Closing Date, the Company shall deliver
to Buyer monthly unaudited balance sheets and statements of earnings of the
Company, prepared in a manner consistent with prior periods.
Section 5.5 Supplemental Information.
The Stockholders and Buyer agree that with respect to the representations and
warranties contained in this Agreement, the Stockholders and Buyer will each
have the continuing obligation until the Closing Date to provide the other party
promptly with such additional supplemental information (collectively, the
"Supplemental Information"), in the form of (a) amendments to the then-existing
sections of the appropriate disclosure letters and (b) additional sections of
the appropriate disclosure letters, which Supplemental Information shall be
comprised of information that is required to be provided to Buyer or the
Shareholders, as the case may be, on the date hereof which has not been provided
as of the date hereof and as would be necessary, in the light of the
circumstances, conditions, events and states of facts then known to the
Stockholders, or Buyer, as the case may be, to make each of those
representations and warranties true and correct as of the Closing Date. In
addition, the Stockholders and Buyer will each have the continuing obligation
until the Closing Date to notify the other party in writing of the failure of
the Stockholders or Buyer, as the case may be, to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by them
pursuant to this Agreement which would be likely to result in any condition to
the obligations of any party hereto to effect the transactions contemplated
hereby not to be satisfied. The delivery of any Supplemental Information or
notice pursuant to this Section 5.6 shall not cure any breach of any
representation or warranty, nor relieve a party from its indemnification
obligation with respect to such breach, if such Supplemental Information relates
to any facts, circumstances, events or information existing as of the date of
this Agreement requiring disclosure of such matter prior to the date of this
Agreement.
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Section 5.6 Reasonable Best Efforts.
Except as otherwise provided herein, between the date of this Agreement and the
Closing Date, the parties hereto will use their reasonable best efforts to cause
the conditions in Article VI to be satisfied.
Section 5.7 Shareholders' Meeting.
If the board of directors or an authorized officer of Buyer determines to call a
special meeting of the shareholders of Buyer for the purpose of considering and
voting on a proposal to approve the transactions contemplated hereby
commercially reasonable efforts will be used to hold such meeting as promptly as
practicable, in accordance with applicable Laws.
Section 5.8 Transaction Costs.
After the Closing, the Buyer shall cause the Company to promptly pay when due
(i) all previously disclosed Transaction Costs that have been deducted from the
Purchase Price that were not paid prior to the Closing Date, and (ii) and any
Transaction Cost that was not deducted from the Purchase Price but for which
Buyer has received payment pursuant to Article IX.
ARTICLE VI.
CONDITIONS
Section 6.1 Conditions to Obligations of Buyer.
The obligation of Buyer to effect the Sale is subject to the satisfaction or
waiver by Buyer at or prior to the Closing of the following conditions:
(a) Representations and Warranties. The representations and warranties of
the Stockholders set forth in this Agreement shall be true and correct in all
material respects on and as of the Closing Date as though then made and as
though the Closing Date had been substituted for the date of this Agreement
throughout such representations and warranties, except for any representations
and warranties made as of a specified date (other than the date hereof), which
representations and warranties shall only need to have been true and correct on
and as of such date.
(b) Performance of Obligations of the Company. The Stockholders shall have
performed in all material respects all obligations required to be performed by
them under this Agreement at or prior to the Closing Date.
(c) No Company Material Adverse Effect. There shall have been no changes
that have had or are reasonably likely to have a material adverse effect on the
Company since the date of this Agreement.
(d) Consents. The Stockholders shall have caused the Company to obtain all
Private Consents referred to in Section 3.4(b).
34
(e) Regulatory Consents. All notices, reports and other filings required to
be made prior to the Closing Date by the Stockholders on behalf of the Company
and its Affiliates, or Buyer, and all consents, registrations, approvals,
permits and authorizations required to be obtained prior to the Closing Date by
the Stockholders on behalf of the Company and its Affiliates, or Buyer, from any
governmental entity (collectively, "Governmental Consents"), in connection with
the execution and delivery of this Agreement and the consummation of the Sale
and the other transactions contemplated by this Agreement shall have been made
or obtained, except where the failure to make any such filings or obtain any
such Governmental Consents would not have a material adverse effect on Buyer,
its Affiliates or the Company.
(f) HSR Act Waiting Period. The waiting period applicable to the
consummation of the Sale under the HSR Act shall have expired or been
terminated.
(g) Government Action. There shall not be threatened, instituted or pending
any order, action or proceeding by, or any decree, statute, law ordinance, rule
or regulation entered, enacted, promulgated, enforced or issued before, any
Governmental Entity (i) challenging or seeking to make illegal, or to delay or
otherwise directly or indirectly restrain or prohibit, the consummation of the
transactions contemplated hereby or seeking to obtain material damages in
connection with such transactions; (ii) imposing or seeking to impose material
limitations on the ability of Buyer or any of its Affiliates to acquire or hold
or to exercise full rights of ownership of any securities of the Company; (iii)
imposing or seeking to impose material limitations on the ability of Buyer or
its Affiliates to combine and operate the business and assets of the Company;
(iv) seeking to prohibit direct or indirect ownership or operation by Buyer or
any of its Affiliates of all or a material portion of the business or assets of
the Company, or to compel Buyer or any of its Affiliates or the Company to
dispose of or to hold separately all or a material portion of the business or
assets of Buyer and its Affiliates or of the Company, as a result of the
transactions contemplated hereby; (v) seeking to invalidate or render
unenforceable any material provision of this Agreement or any of the Related
Documents; (vi) requiring or seeking to require divestiture by Buyer of any
portion of the business, assets or property of the Company or of Buyer; or (vii)
otherwise relating to and materially adversely affecting the transactions
contemplated hereby.
(h) Prohibitions. There shall not be any action taken, or any Law enacted,
entered, enforced, promulgated, issued or deemed applicable to the transactions
contemplated hereby by any governmental entity which would reasonably be
expected to result, directly or indirectly, in any of the consequences referred
to in Section 6.1(g);
(i) Opinion. Buyer shall have received the opinion of Nevers, Palazzo,
Xxxxxx & Packard, plc, counsel to the Stockholders, dated the Closing Date to
the effect that (i) the Company is duly organized, validly existing and in good
standing under the laws of the State of California, (ii) the authorized capital
of the Company is 1,000,000 shares of common stock, no par value per share, of
which 120,000 are issued and outstanding immediately prior to the Closing and
all of which have been duly authorized, validly issued and are fully paid and
non-assessable and are subject to purchase hereunder, (iii) the Agreement, the
Escrow Agreement, the other agreements to be delivered by the Stockholders
hereunder, and the Sale have been duly authorized by all requisite action with
respect to the Stockholders; (iv) the Agreement, the Escrow Agreement and, where
applicable, the other agreements to be delivered by the Stockholders hereunder,
have been duly executed and delivered by the
35
Stockholders, (v) the Agreement, the Escrow Agreement and the other agreements
to be delivered by the Stockholders hereunder are the legal, valid and binding
obligations of the Stockholders enforceable in accordance with their respective
terms, except as enforceability may be limited or affected by bankruptcy and
other similar laws and principles of equity, and (vi) the execution and delivery
of the Agreement, the Escrow Agreement and, where applicable, the other
agreements to be delivered by the Stockholders hereunder will not violate or
conflict with the articles of incorporation or bylaws of the Company or conflict
in any material respect with any agreement or instrument to which the Company or
any of the Stockholders is a party.
(j) Stockholder Approval. This Agreement, the Sale and all transactions
contemplated herein and thereby shall have received all requisite approval from
Buyer's stockholders at a special meeting of Buyer's stockholders called for the
purpose of granting such approvals.
(k) Employment Agreements. None of Xxx X. Xxxxxxxx, Xxxxxx X. Xxxxxx or Xxx
Xxxxxxxx shall have repudiated, cancelled or terminated, and none shall have
given notice, in any form, of any intent to do any of the foregoing, the
Employment Agreement or consulting agreement between the Company and each such
individual executed concurrently herewith.
(l) At the Closing Date, the Stockholders shall deliver to Buyer all of the
following:
(i) one or more stock certificates representing the Shares, duly
endorsed in blank or with duly executed stock powers attached, in proper
form for transfer;
(ii) a certificate executed by each of the Stockholders stating that
the conditions precedent set forth in subsections (a), (b) and (c) above
have been satisfied;
(iii) copies of the Private Consents and the Governmental Consents
referred to in subsections (d) and (e) above;
(iv) the minute books, stock transfer records, corporate seal and
other materials related to the corporate administration of the Company
(including, without limitation, certificates representing all outstanding
shares of capital stock of the Company);
(v) executed resignations (effective as of the Closing Date) from each
of the officers and directors of the Company;
(vi) copies of (A) the articles of incorporation, or similar governing
document of the Company, certified by the Secretary of State of the state
of incorporation of the Company, and (B) Certificates of Good Standing from
the Secretary of State of each state in which the Company is incorporated
or required to be qualified to do business, evidencing the good standing of
the Company in each such jurisdiction;
(vii) the registration rights and lock-up agreement, in the form
attached hereto as Exhibit C (the "Registration Rights Agreement"),
executed by each of the Stockholders;
36
(viii) a copy of the community service employment agreement, in the
form attached hereto as Exhibit D (the "Community Service Employment
Agreement") executed by each community service representative or consumer
advocate set forth on Section 6.1 of the Disclosure Letter;
(ix) a copy of the pledge agreement, in the form attached hereto as
Exhibit E (the "Xxxxxxxx Pledge Agreement"), executed by Xxx Xxxxxxxx;
(x) a promissory note, in the form attached hereto as Exhibit F (the
"Xxxxxxxx Promissory Note"), executed by Xxx Xxxxxxxx;
(xi) a copy of the pledge agreement, in the form attached hereto as
Exhibit G (the "Stockholder Pledge Agreement"), executed by each of the
Stockholders other than Xxx Xxxxxxxx;
(xii) a copy of the Escrow Agreement executed by the Stockholders'
Representative on behalf of each of the Stockholders;
(xiii) an executed certificate of trust, in the form attached hereto
as Exhibit H, from each of the Trusts;
(xiv) evidence that the Company has been released from any further
obligation or liability to Xxxxxx Capital Group, LLC other than fees earned
in connection with the Sale;
(xv) evidence that the Company's Board of Directors has adopted
resolutions approving the termination of the Company's 401(k) plan; and
(xvi) such other certificates, documents and instruments as Buyer
reasonably requests in connection with or related to the transactions
contemplated hereby.
Section 6.2 Conditions to Obligation of the Stockholders.
The obligation of the Stockholders to effect the Sale is subject to the
satisfaction or waiver by the Stockholders' Representative at or prior to the
Closing Date of the following conditions:
(a) Representations and Warranties. The representations and warranties of
Buyer set forth in this Agreement shall be true and correct in all material
respects on and as of the Closing Date as though then made and as though the
Closing Date had been substituted for the date of this Agreement throughout such
representations and warranties, except for any representations and warranties
made as of a specified date (other than the date hereof), which representations
and warranties shall only need to have been true and correct on and as of such
date.
(b) Performance of Obligations of Buyer. Buyer shall have performed in all
material respects all obligations required to be performed by it under this
Agreement at or prior to the Closing Date.
37
(c) HSR Act Waiting Period. The waiting period applicable to the
consummation of the Sale under the HSR Act shall have expired or been
terminated.
(d) Government Action. There shall not be threatened, instituted or pending
any order, action or proceeding by, or any decree, statute, law ordinance, rule
or regulation entered, enacted, promulgated, enforced or issued before, any
Governmental Entity (i) challenging or seeking to make illegal, or to delay or
otherwise directly or indirectly restrain or prohibit, the consummation of the
transactions contemplated hereby or seeking to obtain material damages in
connection with such transactions; (ii) seeking to invalidate or render
unenforceable any material provision of this Agreement or any of the Related
Documents; (iii) otherwise relating to and materially adversely affecting the
transactions contemplated hereby.
(e) Prohibition. There shall not be any action taken, or any Law enacted,
entered, enforced, promulgated, issued or deemed applicable to the transactions
contemplated hereby by any governmental entity which would reasonably be
expected to result, directly or indirectly, in any of the consequences referred
to in Section 6.2(d).
(f) Stockholder Approval. This Agreement, the Sale and all transactions
contemplated herein and thereby shall have received all requisite approval, if
any, from the Company's stockholders.
(g) Employment Agreements. The Company shall not have repudiated, cancelled
or terminated, and shall not have given notice, in any form, of any intent to do
any of the foregoing, the Employment Agreement or consulting agreement between
the Company and each of Xxx X. Xxxxxxxx, Xxxxxx X. Xxxxxx and Xxx Xxxxxxxx
executed concurrently herewith;
(h) Release of Guarantors. The Buyer shall have caused all guarantors of
the Company's line of credit to be released from their guarantees.
(i) At the Closing Date, Buyer shall deliver to the Stockholders all of the
following:
(i) an irrevocable letter of instruction to Buyer's transfer agent to
issue the Stock Consideration (net of any amounts to be deposited in the
Escrow Fund);
(ii) the Note Consideration;
(iii) the Cash Consideration;
(iv) a certificate of an appropriate officer of the Company stating
that the conditions precedent set forth in subsections (a) and (b) above
have been satisfied;
(v) the Registration Rights and Lock-Up Agreement, executed by Buyer;
(vi) a copy of the articles of incorporation, or similar governing
document of Buyer, certified by the Secretary of State of the state of
incorporation of the Buyer, evidencing the good standing of Buyer in such
jurisdiction;
38
(vii) the Escrow Agreement, executed by Buyer and the escrow agent;
(viii) the delivery of the Escrow Funds into the escrow established
pursuant to the terms of the Escrow Agreement; and
(ix) such other certificates, documents and instruments as the
Stockholders reasonably request related to the transactions contemplated
hereby.
ARTICLE VII.
LIMITATIONS ON COMPETITION
Section 7.1 Definitions.
For the purposes of this Article VII, the following definitions shall apply:
(a) "Competitive Activities" means (i) the business of wholesale and retail
pharmacy operations of drugs and services relating thereto for the treatment of
chronic conditions, including, but not limited to, hemophilia and blood diseases
("Specialty Pharmacy Operations"), (ii) clinical services, reimbursement
services and delivery services in connection with Specialty Pharmacy Operations
and (iii) any business conducted by Buyer or its Affiliates, including the
Company.
(b) "Customer" means actual customers or third-party payors of the Company
and its Affiliates, including the Company.
(c) "Non-Compete Period" means the period beginning on the date hereof and
ending on the fourth anniversary of the Closing Date. Solely with respect to
Xxxx Xxxxxxxx, "Non-Compete Period" for the purposes of 7.3 only shall mean the
period beginning on the date hereof and ending on the second anniversary of the
Closing Date.
(d) "Non-Public Information" means any confidential, proprietary business
information or data belonging to or pertaining to the Company or Buyer that does
not constitute a Trade Secret (as hereinafter defined) and that is not generally
known by or available through legal means to the public, including, but not
limited to, information regarding the Company's or Buyer's customers or
prospective customers, acquisition targets, suppliers, manufacturers and
distributors gained by a Stockholder as a result of his or her employment with
the Company.
(e) "Stockholder" means, solely for purposes of this Article VII, (i) the
"Stockholders," as such term is defined in the Recitals to this Agreement and
(ii) the Principals.
(f) "Territory" means the United States of America and Puerto Rico.
(g) "Trade Secrets" means information or data of or about Buyer or its
Affiliates, including the Company, including but not limited to technical or
non-technical data, formulas, patterns, compilations, programs, devices,
methods, business forms, techniques, drawings, processes, pricing information,
financial data, financial plans, products plans, or lists of actual or
39
potential customers, clients, distributees or licensees, referral sources,
information of Buyer and its Affiliates, including the Company, concerning
finances, services, staff, contemplated acquisitions, marketing investigations
and surveys, that are not generally known to, and/or are not readily
ascertainable by proper means by, other persons.
Section 7.2 Trade Name and Non-Public Information.
Each Stockholder hereby agrees that with regard to each item constituting all or
any portion of the Trade Secrets and Non-Public Information, at all times during
which such item continues to constitute a Trade Secret or Non-Public
Information, respectively:
(a) such Stockholder shall not, directly or by assisting others, own,
manage, operate, join, control or participate in the ownership, management,
operation or control of, or be connected in any manner with, any business
conducted under any corporate or trade name of the Buyer or its Affiliates,
including the Company, or name similar thereto, without the prior written
consent of Buyer, provided, that upon reasonable request by a Stockholder, Buyer
shall provide a list of corporate or trade names subject to this Section 7.2(a);
(b) such Stockholder shall hold in confidence all Trade Secrets and all
Non-Public Information and will not, either directly or indirectly, use, sell,
lend, lease, distribute, license, give, transfer, assign, show, disclose,
disseminate, reproduce, copy, appropriate or otherwise communicate any Trade
Secrets or Non-Public Information, without the prior written consent of Buyer,
unless the furnishing of such information is required by law; and
(c) such Stockholder shall immediately notify the Company of any
unauthorized disclosure or use of any Trade Secrets or Non-Public Information of
which any Stockholder becomes aware. Each Stockholder shall assist the Company,
at the Company's cost and expense, to the extent necessary, in the procurement
or any protection of the Company's rights to or in any of the Trade Secrets or
Non-Public Information.
Section 7.3 Non-competition.
(a) Each Stockholder agrees that during the Non-Compete Period, such
Stockholder shall not, directly or indirectly, through an affiliate or
otherwise, either for such Stockholder's own benefit or for the benefit of any
other Person, without the prior written consent of Buyer (with the approval of
its Board of Directors) which consent may be withheld by Buyer in its sole
discretion, engage in any Competitive Activity in any manner or capacity (e.g.
through any form of ownership or as an advisor, principal, agent, partner,
officer, director, employee, employer, consultant, member of an association or
otherwise) except in performing the Stockholder's duties as an employee or
consultant of Buyer or its Affiliates.
(b) The parties hereto acknowledge that the Company is conducting
Competitive Activities throughout the Territory. Each Stockholder acknowledges
that to protect adequately the interest of Buyer it is essential that any
non-compete covenant with respect thereto cover all Competitive Activities and
the entire Territory.
40
(c) Ownership by a Stockholder, as a passive investment, in the aggregate
of less than 5% of the outstanding shares of capital stock of any corporation
listed on a national securities exchange or publicly traded on any nationally
recognized over-the-counter market shall not constitute a breach of Section 7.3.
(d) Notwithstanding the other provisions of this Article VII, the
Stockholders may engage in the activities set forth in Section 7.3 of the
Disclosure Letter.
Section 7.4 Non-Solicitation.
Each Stockholder hereby agrees that such Stockholder will not, during the
Non-Compete Period, either directly or indirectly, alone or in conjunction with
any other party:
(a) solicit, divert or appropriate or attempt to solicit, divert or
appropriate, any Customer for the purpose of providing the Customer with
services or products competitive with those offered by Buyer or any of its
Affiliates, including the Company, during the Non-Compete Period, or
(b) solicit, or attempt to solicit any officer, director, employee,
consultant, contractor, agent, lessor, lessee, licensor, licensee, supplier of
Buyer or any of its Affiliates, including the Company, to terminate, alter or
lessen that party's affiliation with Buyer or any of its affiliates or
subsidiaries (including the Company), or to violate the terms of any agreement
or understanding between such employee, consultant, contractor or other person
and Buyer or any of its affiliates or subsidiaries (including the Company).
Section 7.5 Damages.
Because of the difficulty of measuring economic losses to Buyer as a result of
any breach by a Stockholder of his or her covenants in this Article VII, and
because of the immediate and irreparable damage that could be caused to Buyer
for which it would have no other adequate remedy, each Stockholder agrees that
Buyer may enforce the provisions of Sections 7.1 through 7.4 by injunctions and
restraining orders against that Stockholder if such stockholder breaches any of
those provisions.
Section 7.6 Reasonable Restraint.
The parties hereto each agree that Sections 7.1 through 7.5 impose a reasonable
restraint on each Stockholder in light of the activities and business of Buyer,
its Affiliates and the Company on the date hereof, the current business plans of
Buyer, its Affiliates and the Company and the economic benefit received by each
Stockholder as a result of the Agreement.
Section 7.7 Severability; Reformation.
The covenants in this Article VII are severable and separate, and the
unenforceability of any specific covenant in this Article VII is not intended by
any party hereto to, and shall not, affect the provisions of any other covenant
in this Article VII. If any court of competent jurisdiction shall determine that
the scope, time or territorial restrictions set forth in Sections 7.1 through
7.4
41
are unreasonable as applied to any Stockholder, the parties hereto, including
that Stockholder, acknowledge their mutual intention and agreement that those
restrictions be enforced to the fullest extent the court deems reasonable, and
thereby shall be reformed to that extent as applied to that Stockholder and any
other Stockholder similarly situated.
Section 7.8 Independent Covenant.
All the covenants in this Article VII are intended by each party hereto to, and
shall, be construed as an agreement independent of any other provision in this
Agreement, and the existence of any claim or cause of action of any Stockholder
against Buyer, whether predicated on this Agreement or otherwise, shall not
constitute a defense to the enforcement by Buyer of any covenant in this Article
VII. It is specifically agreed that the period specified in Section 7.1 shall be
computed in the case of each Stockholder by excluding from that computation any
time during which that Stockholder is in violation of any provisions of Sections
7.1 through 7.4. The covenants contained in this Article VII shall not be
affected by any breach of any other provision hereof by any party hereto.
Section 7.9 Materiality.
Each Stockholder, severally and not jointly with any other Person, hereby agrees
that this Article VII is a material and substantial part of the transactions
contemplated hereby.
ARTICLE VIII.
TERMINATION
Section 8.1 Method of Termination.
This Agreement may be terminated and the transactions contemplated by this
Agreement may be abandoned only as follows:
(a) By the mutual written consent of the Stockholders' Representative and
Buyer;
(b) By the Stockholders' Representative on the one hand or Buyer on the
other hand if the other party or parties shall have failed to comply in any
material respect with any of its or their covenants or agreements contained in
this Agreement required to be complied with prior to the date of such
termination, which failure to comply has not been cured within 30 calendar days
following receipt by such party of written notice from the non-breaching party
or parties of such failure to comply;
(c) By the Stockholders' Representative on the one hand or Buyer on the
other hand if there has been (i) a breach by the other party or parties of any
representation or warranty that is not qualified by materiality which has the
effect of making such representation or warranty not true and correct in all
material respects or (ii) a breach by the other party of any representation or
warranty that is qualified as to materiality, in each case which breach has not
been cured within 30 calendar days following receipt by the breaching party or
parties from the non-breaching party or parties of written notice of the breach;
42
(d) By the Stockholders' Representative after June 30, 2002, if any of the
conditions set forth in Article VI hereof, to which the Stockholders'
obligations are subject, have not been fulfilled or waived, unless such
fulfillment has been frustrated or made impossible by any act or failure to act
of the Stockholders;
(e) By Buyer after June 30, 2002, if any of the conditions set forth in
Article VI hereof, to which Buyer's obligation is subject, have not been
fulfilled or waived, unless such fulfillment has been frustrated or made
impossible by any act or failure to act of Buyer;
(f) By Buyer or the Stockholders' Representative, if Buyer's shareholders
vote against a proposal to approve the transactions contemplated hereby;
(g) By Buyer, if there has been any breach of Section 5.2 of this
Agreement; or
(h) By the Stockholders' Representative or Buyer if a court or governmental
entity of competent jurisdiction institutes an order prohibiting the
consummation of the transactions contemplated by this Agreement, provided that
the order is not the result of an action or proceeding instituted by the
terminating party.
Section 8.2 Effect of Termination.
In the event of a termination of this Agreement pursuant to Section 8.1.
hereof, each party shall pay the costs and expenses incurred by such party in
connection with this Agreement, and no party (or any of its officers, directors,
employees, agents, representatives or stockholders) shall be liable to any other
party for any costs, expenses, damage or loss of anticipated profits hereunder.
In the event of any termination of this Agreement, all provisions of this
Agreement except for Article X and this Section 8.2 shall forthwith become void
and have no effect, without any liability hereunder on the part of any party or
its directors, officers or stockholders. In the event of any termination of this
Agreement, the Nondisclosure Agreement shall survive such termination.
ARTICLE IX.
SURVIVAL; INDEMNIFICATION
Section 9.1 Survival.
(a) Notwithstanding any investigation made by or on behalf of any of the
parties hereto or the results of any such investigation and notwithstanding the
participation of such party in the Closing, the representations and warranties
contained in this Agreement, and the indemnification obligations of the parties
with respect thereto, shall survive the Closing until the 18-month anniversary
of the Closing Date; provided, however, that (a) the representations and
warranties contained in Sections 2.2, 2.3, 2.4, 3.1, 3.2, 4.1, 4.2 and 4.5 and
the indemnification obligations of the parties with respect thereto, shall
survive indefinitely, and (b) the representations and warranties contained in
Section 3.13 and the indemnification obligations of the Stockholders with
respect thereto, shall survive until the expiration of all statutes of
limitations governing the respective matters set forth therein. Notwithstanding
the foregoing,
43
any representation or warranty, and the indemnification obligations with respect
thereto, that would otherwise terminate in accordance with this Section 9.1
shall continue to survive as to a claim, if notice of such claim shall have been
timely given under Section 9.7 on or prior to such termination date, until such
claim has been satisfied or otherwise resolved as provided in this Article IX.
(b) Except as otherwise expressly set forth herein, each of the covenants
set forth in this Agreement, and the indemnification obligations of the parties
with respect thereto, shall survive the Closing indefinitely.
Section 9.2 Indemnification by the Stockholders.
(a) The Stockholders hereby jointly and severally agree to indemnify Buyer
and its respective successors, affiliates, officers, directors, employees,
agents and shareholders (collectively, the "Buyer Indemnified Parties"), and
hold them harmless against any fine, penalty, claim, loss, liability,
deficiency, damage, amount paid in settlement, expense or cost (including all
costs of investigation, defense, legal fees and expenses), whether or not
actually incurred or paid prior to the expiration of the indemnification
obligation of the Stockholders hereunder (collectively, "Losses"), which any of
the Buyer Indemnified Parties may suffer, sustain or become subject to, as a
result of:
(i) any misrepresentation in any of the representations or any breach
of the warranties contained in Article III of this Agreement or in the
Disclosure Letter, schedules or certificates delivered or to be delivered
by or on behalf of the Stockholders pursuant to the terms of this
Agreement, without giving effect to any qualifications as to materiality
contained in such representations and warranties;
(ii) any breach of, or failure to perform, any agreement or covenant
of the Stockholders contained in this Agreement (other than a breach by a
Stockholder of any provision contained in Article VII);
(iii) any Transaction Costs not set forth on Section 3.37 of the
Disclosure Letter; or
(iv) any transfer, documentary, sales, use, stamp, registration and
other such Taxes and fees (including any penalties and interest) incurred
in connection with this Agreement and the Escrow Agreement and the
transactions contemplated hereby and thereby that are required to be paid
by the Stockholders ((i) - (iv) collectively, "Buyer Losses").
(b) Once the occurrence of a breach of any representations or warranties
has been established, Losses shall be calculated without regard to whether such
breach caused a material adverse effect on the Company.
44
Section 9.3 Indemnification by Stockholders.
Each Stockholder, with respect to himself or itself only, agrees to indemnify in
full the Buyer Indemnified Parties and to hold the Buyer Indemnified Parties
harmless against any Losses which any of the Buyer Indemnified Parties suffer,
sustain or become subject to as a result of (i) any misrepresentation in any of
the representations or any breach of the warranties contained in Article II of
this Agreement or in any applicable Stockholder Disclosure Letters, schedules or
certificates delivered or to be delivered by or on behalf of such Stockholder
pursuant to the terms of this Agreement, without giving effect to any
qualifications as to materiality contained in such representations and
warranties, or (ii) any breach of, or failure to perform, any of the covenants
set forth in Article VII by such Stockholder.
Section 9.4 Indemnification by Buyer.
Buyer agrees to indemnify in full the Stockholders and hold them harmless
against any Losses which any Stockholder may suffer, sustain or become subject
to as a result of (a) any misrepresentation in any of the representations or any
breach of the warranties contained in Article IV of this Agreement or in the
Buyer Disclosure Letter, schedules or certificates delivered by or on behalf of
Buyer, without giving effect to any qualifications as to materiality contained
in such representations and warranties, or (b) any breach of, or failure to
perform, any agreement or covenant of Buyer contained in this Agreement
(collectively, "Stockholder Losses").
Section 9.5 Security for Indemnity.
As security for the indemnification by the Stockholders, the parties have
established the Escrow Fund pursuant to the Escrow Agreement. Buyer shall also
have the right to offset up to an aggregate of $666,667 (the "Aggregate Offset
Amount") against amounts payable under the Notes. Subject to the limitations set
forth in Section 9.6 below, and the procedures set forth in Section 9.7 below,
any indemnity obligation of the Stockholders pursuant to Section 9.2 shall be
allocated (i) proportionally between the Escrow Fund and the Aggregate Offset
Amount and (ii) among the Stockholders based upon each Stockholder's
proportionate interest in the Aggregate Offset Amount and the Escrow Fund;
provided, however, that the Stockholders shall be jointly and severally liable
for any indemnification obligations that exceed the Escrow Fund and Aggregate
Offset Amount. Subject to the limitations set forth in Section 9.6 below, and
the procedures set forth in Section 9.7 below, any indemnity obligation of a
Stockholder pursuant to Section 9.3 shall be satisfied initially from such
Stockholder's proportionate interest in the Aggregate Offset Amount and the
Escrow Fund; provided, however, that such Stockholder shall be personally liable
for any indemnification obligations that exceeds his or its proportionate
interest in the Escrow Fund and Aggregate Offset Amount.
Section 9.6 Limitations on Indemnification.
(a) Notwithstanding the provisions of Sections 9.2 and 9.3, the
Stockholders shall not be required to indemnify or hold harmless any of the
Buyer Indemnified Parties on account of any Buyer Losses under:
(i) Section 9.2(a)(i); or
45
(ii) resulting from breaches of the covenants set forth in Section
5.1(a) and 5.1(f) through (j) which breaches do not involve a payment,
distribution or conferring of a benefit to any Stockholder, Principal or
Affiliate of the Company; or
(iii) Section 9.3(i)
unless the aggregate liability of the Stockholders in respect of all Buyer
Losses exceeds $425,000 (the "Threshold Amount"). Once the Threshold Amount has
been exceeded, Buyer Losses shall be calculated based on the full amount of the
Buyer Losses, including the Threshold Amount.
(b) Notwithstanding the provisions of Section 9.4, Buyer shall not be
required to indemnify or hold harmless any of the Stockholders on account of any
Stockholder Losses under Section 9.4(a) unless the aggregate liability of Buyer
in respect of all Stockholder Losses exceeds the Threshold Amount. Once the
Threshold Amount has been exceeded, Losses shall be calculated based on the full
amount of the Losses, including the Threshold Amount.
(c) Notwithstanding any provision herein to the contrary, the limitations
set forth in clauses (a) and (b) of this Section 9.6 shall not apply to (i)
breaches or inaccuracies of the representations and warranties contained in
Sections 2.2, 2.3, 2.4, 3.1, 3.2, 4.1, 4.2 and 4.5 (ii) Losses by reason of any
claims brought on the basis of fraud by a party hereto in connection with this
Agreement, and (iii) any indemnity obligations set forth in Sections 9.2(a)(ii)
(except as described in Section 9.6(a)(ii)), 9.3(ii) and/or 9.4(b).
(d) The aggregate liability of the Stockholders on the one hand, and the
Buyer on the other hand, for the matters described in this Article IX shall not
exceed 10% of the Purchase Price except with respect to the matters described in
9.6(c)(i), 9.6(c)(ii) and 9.3(ii).
(e) After the Closing, the rights and remedies set forth in this Article IX
and in the Escrow Agreement shall be the exclusive rights or remedies of any
party hereto for misrepresentations or breaches of warranties and/or covenants
contained in this Agreement, other than (i) claims brought on the basis of fraud
by a party hereto in connection with this Agreement, or (ii) Buyer's right to
seek injunctive relief or any other remedies for any breaches of Article VII.
Section 9.7 Method of Asserting Claims.
As used herein, an "Indemnified Party" shall refer to a "Buyer Indemnified
Party," or a "Stockholder," as applicable, the "Notifying Party" shall refer to
the party hereto whose Indemnified Parties are entitled to indemnification
hereunder, and the "Indemnifying Party" shall refer to the party hereto
obligated to indemnify such Notifying Party's Indemnified Parties.
(a) In the event that any of the Indemnified Parties is made a defendant in
or party to any investigation, audit, action or proceeding, judicial or
administrative, instituted by any third party for the liability or the costs or
expenses of which are Losses, the Notifying Party shall give the Indemnifying
Party prompt notice thereof. The failure to give such notice shall not affect
any Indemnified Party's ability to seek reimbursement unless, and only to the
extent that, such
46
failure has materially and adversely affected the Indemnifying Party's ability
to defend successfully a Claim. The Indemnifying Party shall be entitled to
contest and defend such Claim; provided, that the Indemnifying Party (i) has a
reasonable basis for concluding that such defense may be successful and (ii)
diligently contests and defends such Claim. Notice of the intention to so
contest and defend shall be given by the Indemnifying Party to the Notifying
Party within 15 business days after the Notifying Party's notice of such Claim
(but, in all events, at least five business days prior to the date that an
answer to such Claim is due to be filed). Failure by the Indemnifying Party to
give such notice within such period shall be deemed to be a decision by the
Indemnifying Party not to contest and defend. Such contest and defense shall be
conducted by reputable attorneys, reasonably acceptable to the Indemnified
Party, engaged by the Indemnifying Party. The Notifying Party shall be entitled
at any time, at its own cost and expense (which expense shall not constitute a
Loss unless the Notifying Party reasonably determines that the Indemnifying
Party is not adequately representing or, because of a conflict of interest, may
not adequately represent, any interests of the Indemnified Parties, and only to
the extent that such expenses are reasonable), to participate in such contest
and defense and to be represented by attorneys of its or their own choosing. If
the Notifying Party elects to participate in such defense, the Notifying Party
will cooperate with the Indemnifying Party in the conduct of such defense.
Neither the Notifying Party nor the Indemnifying Party may concede, settle or
compromise any Claim without the consent of the other party, which consents will
not be unreasonably withheld. Notwithstanding the foregoing, (i) if a Claim
seeks relief other than the payment of monetary damages, (ii) if the subject
matter of a Claim relates to the ongoing business of any of the Indemnified
Parties, which Claim, if decided against any of the Indemnified Parties, would
materially adversely affect the ongoing business or reputation of any of the
Indemnified Parties, or (iii) the Indemnified Parties would not be fully
indemnified with respect to such Claim, then, in each such case, the Indemnified
Parties alone shall be entitled to contest, defend and settle such Claim in the
first instance and, if the Indemnified Parties do not contest, defend or settle
such Claim, the Indemnifying Party shall then have the right to contest and
defend (but not settle) such Claim.
(b) In the event any Indemnified Party should have a claim against any
Indemnifying Party that does not involve a Claim, the Notifying Party shall
deliver a notice of such claim, and an estimate of the amount of the applicable
Loss (if reasonably practicable) with reasonable promptness to the Indemnifying
Party. If the Indemnifying Party notifies the Notifying Party that it does not
dispute the claim described in such notice or fails to notify the Notifying
Party within 20 days after delivery of such notice by the Notifying Party
whether the Indemnifying Party disputes the claim described in such notice, the
Loss in the amount specified in the Notifying Party's notice will be
conclusively deemed a liability of the Indemnifying Party and the Indemnifying
Party shall pay the amount of such Loss to the Indemnified Party on demand. If
the Indemnifying Party has timely disputed its liability with respect to such
claim, the Indemnifying Party and the Notifying Party will proceed in good faith
to negotiate a resolution of such dispute, and if not resolved through such
negotiations within 30 days after the delivery of the Notifying Party's notice
of such claim, such dispute shall be resolved fully and finally in Minneapolis,
Minnesota by an arbitrator selected pursuant to, and an arbitration governed by,
the Commercial Arbitration Rules of the American Arbitration Association. The
arbitrator shall resolve the dispute within 30 days after selection and judgment
upon the award rendered by such arbitrator may be entered in any court of
competent jurisdiction.
47
(c) The Stockholders' Representative shall act on behalf of the
Stockholders with respect to any notices or consents required to be given or
received under this Article IX.
ARTICLE X.
MISCELLANEOUS AND GENERAL
Section 10.1 Modification or Amendment.
Subject to the provisions of applicable law, the parties hereto may modify or
amend this Agreement, only by written agreement executed and delivered by the
Stockholders' Representative, on behalf of all Stockholders, and a duly
authorized officer of the Buyer.
Section 10.2 Waiver.
The conditions to each of the parties' obligations to consummate the
transactions contemplated hereby are for the sole benefit of such party and may
be waived by such party in whole or in part to the extent permitted by
applicable law. No course of dealing between or among any persons having any
interest in this Agreement will be deemed effective to modify or amend any part
of this Agreement or any rights or obligations of any person under or by reason
of this Agreement.
Section 10.3 Counterparts.
This Agreement may be executed in any number of original or facsimile
counterparts, each such counterpart being deemed to be an original instrument,
and all such counterparts shall together constitute the same agreement.
Section 10.4 Governing Law; Waiver of Jury Trial.
(a) THIS AGREEMENT SHALL BE DEEMED TO BE MADE IN AND IN ALL RESPECTS SHALL
BE INTERPRETED, CONSTRUED AND GOVERNED BY AND IN ACCORDANCE WITH THE LAW OF THE
STATE OF MINNESOTA WITHOUT REGARD TO THE CONFLICT OF LAW PRINCIPLES THEREOF.
(b) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE
UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND
THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY
RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND
ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH PARTY
UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii) EACH PARTY
MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH PARTY HAS
48
BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION 10.4.
(c) EACH PARTY (i) CONSENTS TO SUBMIT ITSELF TO THE PERSONAL JURISDICTION
OF ANY FEDERAL COURT LOCATED IN THE STATE OF MINNESOTA, OR ANY MINNESOTA STATE
COURT LOCATED IN HENNEPIN COUNTY, IF ANY DISPUTE ARISES OUT OF THIS AGREEMENT,
(ii) AGREES THAT IT WILL NOT ATTEMPT TO DENY OR DEFEAT SUCH PERSONAL
JURISDICTION BY MOTION OR OTHER REQUEST FOR LEAVE FROM ANY SUCH COURT AND (iii)
AGREES THAT IT WILL NOT BRING ANY ACTION RELATING TO THIS AGREEMENT IN ANY COURT
OTHER THAN SUCH A FEDERAL OR STATE COURT SITTING IN THE STATE OF MINNESOTA OR IN
HENNEPIN COUNTY.
Section 10.5 Notices.
All notices, demands and other communications to be given or delivered under or
by reason of the provisions of this Agreement will be in writing and will be
deemed to have been given (a) when personally delivered, (b) when receipt is
acknowledged, if sent by facsimile, telecopy or other electronic transmission
device; provided, however, that if receipt is acknowledged after normal business
hours of the recipient, notice shall be deemed to have been given on the next
business day, (c) one day after deposit with a nationally recognized overnight
courier, specifying next day delivery or (d) three days after being sent by
registered or certified mail. Notices, demands and communications to parties
will, unless another address is specified in writing, be sent to the address
indicated:
if to Buyer:
Curative Health Services, Inc.
0000 Xxxxxxx 0
Xx. Xxxxx Xxxx, Xxxxxxxxx 00000
Phone: (952) 922-0201 ext. 11
Fax: (000) 000-0000
Attention: Xxxx Xxxxxxxxx, Chief Executive Officer
copy to:
Curative Health Services, Inc.
000 Xxxxx Xxxxxxx
Xxxxxxxxx, Xxx Xxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attention: Xxxxx Xxxxx, General Counsel
49
if to the Stockholders:
Xxx X. Xxxxxxxx, Stockholders' Representative
c/o ActSys Medical, Inc.
31336 Xxx Xxxxxxx
Xxxxx 000
Xxxxxxxx Xxxxxxx, Xxxxxxxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
copy to:
Xxxxxx X. Xxxxxxx, Esq.
Nevers, Palazzo, Xxxxxx & Packard, plc
00000 Xxx Xxxxx Xxxxx, Xxxxx 000
Xxxxxxxx Xxxxxxx, Xxxxxxxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Xxxxx Xxxxxxxxx, Esq.
Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP
00000 Xx Xxxxxx Xxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
courtesy copy (which shall not be required in order to satisfy
the notice requirements under this Section 10.5) to:
Xxx Xxxxxxxx
000 Xxxxxxx Xxxx
Xxxxxx, Xxxxxxxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Xxxxxx X. Xxxxxx, at an address to be provided by the
Stockholder's Representative.
Xxxx Xxxxxxxx
00 Xxx Xxxxxx Xxxxxx
Xxxxxx Xxxxxxx, Xxxxxxxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Xxxxx Xxxxx
00000 Xxxxxx Xxxx Xxxxx
Xxxxxx, Xxxxxxxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
50
Section 10.6 Entire Agreement.
This Agreement (including any exhibits hereto), the agreements referred to
herein, the disclosure letters of the parties, the Nondisclosure Agreement and
the agreements disclosed on Section 10.6 of the Disclosure Letter, constitute
the entire agreement among the parties, and supersede all other prior agreements
and understandings, both written and oral, among the parties, with respect to
the subject matter hereof.
Section 10.7 No Third Party Beneficiaries.
Except as provided in Article IX, this Agreement is not intended to confer upon
any Person other than the parties hereto any rights or remedies hereunder other
than the Parties hereto and the Stockholders' Representative.
Section 10.8 Severability.
The provisions of this Agreement shall be deemed severable and the invalidity or
unenforceability of any provision shall not affect the validity or
enforceability or the other provisions hereof. If any provision of this
Agreement, or the application thereof to any Person or any circumstance, is
invalid or unenforceable, (a) a suitable and equitable provision shall be
substituted therefore in order to carry out, so far as may be valid and
enforceable, the intent and purpose of such invalid or unenforceable provision
and (b) the remainder of this Agreement and the application of such provision to
other Persons or circumstances shall not be affected by such invalidity or
unenforceability, nor shall such invalidity or unenforceability affect the
validity or enforceability of such provision, or the application thereof, in any
other jurisdiction.
Section 10.9 Interpretation.
The table of contents and headings herein are for convenience of reference only,
do not constitute part of this Agreement and shall not be deemed to limit or
otherwise affect any of the provisions hereof. Where a reference in this
Agreement is made to a Section, Schedule or Exhibit, such reference shall be to
a Section of, or Schedule or Exhibit to, this Agreement unless otherwise
indicated. Whenever the words "include," "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation."
Section 10.10 Assignment.
This Agreement and all of the provisions hereof will be binding upon and inure
to the benefit of the parties hereto and their respective successors and
permitted assigns. Buyer shall have the right, without the Stockholders'
consent, to assign all or any portion of its rights, duties and obligations
under this Agreement to any Affiliate of Buyer, so long as Buyer guaranties the
performance of such Affiliate hereunder. Except as provided in the preceding
sentence, neither this Agreement nor any of the rights, interests or obligations
hereunder may be assigned by any party hereto without the prior written consent
of the other parties hereto.
51
Section 10.11 Schedules.
The Stockholder Disclosure Letter, the Disclosure Letter and the Buyer
Disclosure Letter contain a series of sections corresponding to the sections
contained in Articles II, III and IV of this Agreement. The mere listing (or
inclusion of a copy) of a document or other item is not deemed adequate to
disclose an exception to a representation or warranty unless the representation
or warranty relates solely to the existence of the document or other item
itself. The sections in the aforementioned letters relate only to the
representations and warranties in the section of this Agreement to which they
correspond and not to any other representation or warranty in this Agreement. In
the event of any inconsistency between the statements in this Agreement and
statements in the aforementioned letters, the statements in this Agreement will
control and the statements in such letters will be disregarded.
Section 10.12 Press Releases and Announcements.
Except as otherwise required by applicable Law, neither the Stockholders nor the
Company will, nor will either permit any of its respective affiliates,
representatives or advisors to, at any time, issue or cause the publication of
any press release or make any other public announcement, including, without
limitation, any tombstone advertisements, with respect to the transactions
contemplated by this Agreement. Buyer may issue or make such press releases or
public announcements, with respect to the transactions contemplated by this
Agreement, as Buyer, in its sole discretion, deems necessary or useful;
provided, however, that the Stockholders and the Company shall have the right to
review any such press release or public announcement prior to its publication.
52
Section 10.13 Definitions.
(a) Location of Certain Definitions.
Term Section
---- -------
Acquisition Proposal 5.2
Agreement.................................................... Preamble
Buyer........................................................ Preamble
Buyer Common Stock........................................... 1.2(b)
Article VII
Buyer Disclosure Letter...................................... Preamble
Buyer Indemnified Parties.................................... 9.2(a)
Buyer Losses................................................. 9.2(a)(iv)
Buyer Stock Price............................................ 1.2(b)
Cash Consideration........................................... 1.2(d)
Closing...................................................... 1.3
Closing Date................................................. 1.3
Company...................................................... Recitals
Company Financial Statements................................. 3.5
Company Review Date.......................................... 3.6
Competitive Activities ...................................... 7.1(a)
Contracts.................................................... 3.4(b)
Customer .................................................... 7.1(b)
Article III
Disclosure Letter............................................ Preamble
Employee Benefit Plan........................................ 3.11(a)
ERISA........................................................ 3.11(c)
ERISA Affiliate.............................................. 3.11(h)
Escrow Agreement............................................. 1.2(f)(i)
Escrow Fund.................................................. 1.2(f)(i)
Exchange Act................................................. 4.4(a)
GAAP......................................................... 3.5
Governmental Consents........................................ 6.1(e)
Governmental Entity.......................................... 3.4(a)
HSR Act ..................................................... 2.4
Indemnified Party............................................ 9.7
Indemnifying Party........................................... 9.7
IRS.......................................................... 3.11(b)
Laws......................................................... 3.12(a)
Losses....................................................... 9.2(a)
Medical Waste Laws........................................... 3.16(h)
Non-Compete Period .......................................... 7.1(c)
Non-Public Information ...................................... 7.1(d)
Note Consideration........................................... 1.2(c)
53
Term Section
---- -------
Notifying Party.............................................. 9.7
PBGC......................................................... 3.11(d)(ii)
Private Consents............................................. 3.4(b)
Purchase Price............................................... 1.2(a)
Regulations.................................................. 3.12(c)
Remuneration................................................. 3.24(a)
Restricted Stock............................................. 1.4(a)
Sale......................................................... 1.1
SEC ......................................................... 4.4(a)
SEC Reports ................................................. 4.4(a)
Securities Act............................................... 2.1
Share or Shares.............................................. Recitals
Stock Consideration.......................................... 1.2(b)
Article II
Stockholder Disclosure Letter................................ Preamble
Stockholder Losses........................................... 9.4
Stockholders................................................. Preamble
Stockholders' Representative................................. 1.5(a)
Supplemental Information..................................... 5.5
Territory ................................................... 7.1(f)
Threshold Amount............................................. 9.6(a)
Trade Secrets ............................................... 7.1(g)
Trusts....................................................... Preamble
Xxxxxxxx..................................................... Preamble
(d) Certain Other Definitions.
"Affiliate" of a Person means a Person that directly or indirectly through
one or more intermediaries, controls, is controlled by, or is under common
control with, the first Person. "Control" (including the terms "controlled by"
and "under common control with") means the possession, directly or indirectly,
of the power to direct or cause the direction of the management policies of a
Person, whether through the ownership of voting securities, by contract, as
trustee or executor, or otherwise.
"Claim" means any third party action, audit, proceeding, claim,
investigation, subpoena or document request.
"Environmental Law" means any federal, state, local or foreign law,
statute, ordinance, regulation, judgment, order, decree, arbitration award,
agency requirement, license, permit, authorization or opinion, relating to: (a)
the protection, investigation or restoration of the environment, health and
safety, or natural resources, (b) the handling, use, presence, disposal, release
or threatened release of any Hazardous Substance or (c) noise, odor, wetlands,
pollution, contamination or any injury or threat of injury to persons or
property, including but not limited to the Comprehensive Environmental Response,
Compensation, and Liability Act, 42 USC Section 9601 et. sec.
54
"Hazardous Substance" means any substance or waste that is: (a) listed,
classified or regulated pursuant to any Environmental Law; (b) any petroleum
product or by-product, asbestos-containing material, lead-containing paint or
plumbing, polychlorinated biphenyls, radioactive materials or radon; or (c) any
other substance or waste which may be the subject of regulatory action by any
government authority pursuant to any Environmental Law.
"Indebtedness" means (a) any liability of the Company (i) for borrowed
money or arising out of any extension of credit to or for the account of the
Company (including reimbursement or payment obligations with respect to surety
bonds, letters of credit, banker's acceptances and similar instruments), for the
deferred purchase price of property or services or arising under conditional
sale or other title retention agreements, other than trade payables arising in
the Ordinary Course of Business, (ii) evidenced by notes, bonds, debentures or
similar instruments, (iii) in respect of capital leases or (iv) in respect of an
interest rate swap, cap or collar agreement or similar arrangement, (b) any
liability secured by any Lien, except Permitted Liens, upon any property or
assets of the Company (or upon any revenues, income or profits of the Company
therefrom), whether or not the Company has assumed that liability or otherwise
become liable for the payment thereof other than trade payables arising in the
Ordinary Course of Business, or (c) any liability of others of the type
described in the preceding clause (a) or (b) in respect of which the Company has
incurred, assumed or acquired a liability by means of a guaranty.
"Intellectual Property" means any or all of the following and all rights
in, arising out of, or associated therewith: (a) all United States,
international and foreign patents and applications thereof and all reissues,
divisions, renewals, extensions, provisions, continuations and
continuations-in-part thereof; (b) all inventions (whether patentable or not),
invention disclosures, improvements, drug candidates, trade secrets, proprietary
information, know how, technology, technical data and customer lists, and all
documentation relating to any of the foregoing; (c) all copyrights, copyright
registrations and applications therefore, and all other rights corresponding
thereto throughout the world; (d) all industrial designs and any registration
and applications therefor throughout the world; (e) all trade names, logos,
common law trademarks and service marks, trademark and service xxxx registration
and applications therefor throughout the world; (f) all databases and data
collections and all rights therein throughout the world; and (g) any similar or
equivalent rights to any of the foregoing anywhere in the world.
"Knowledge" means the following:
The Company will be deemed to have "Knowledge" of a particular fact or
other matter if any individual who is serving as a director, officer,
shareholder, partner, executor or trustee of the Company (or in any similar
capacity) is (i) actually aware of such fact or (ii) such director, officer,
shareholder, partner, executor or trustee (or other person serving in any
similar capacity) of the Company could be expected to discover or otherwise
become aware of such fact or other matter in the course of conducting a
reasonably comprehensive investigation regarding the accuracy of any
representations or warranties contained in this Agreement.
"Licenses" means all permits, licenses, exemptions, variances and other
approvals and authorizations which are necessary to conduct the business of the
Company.
55
"Lien" means a mortgage, pledge, hypothecation, lien (statutory or
otherwise), preference, priority, security interest, security agreement,
easement, covenant, restriction, charge, claim, option, voting trust,
stockholder agreement, proxy or other encumbrance of any kind or nature
whatsoever (including any conditional sale or other title retention agreement
and any lease having substantially the same effect as any of the foregoing and
any assignment or deposit arrangement in the nature of a security device).
"Nondisclosure Agreement" means that certain Nondisclosure Letter Agreement
between the Company and Buyer, dated October 16, 2001, as amended or
supplemented.
"Ordinary Course of Business" means an action taken by the Company that:
(a) is consistent in nature, scope and magnitude with the past
practices of the Company and is taken in the ordinary course of the normal
day-to-day operations of the Company; and
(b) does not require authorization by the board of directors or
stockholders of the Company (or by any Person or group of Persons
exercising similar authority) and does not require any other separate or
special authorization of any nature.
"Permitted Lien" means any Lien for taxes not yet due or delinquent or
being contested in good faith by appropriate proceedings for which adequate
reserves have been established in accordance with GAAP, any minor imperfection
of title or similar Lien which individually or in the aggregate with other such
Lien does not materially impair the value of the property subject to such Lien
materially impair the use of such property in the conduct of the business of the
Company, or all accounts payable incurred in the Ordinary Course of Business and
reflected in the Company Financial Statements.
"Person" means any individual, corporation (including not-for-profit),
general or limited partnership, limited liability company, limited liability
partnership, joint venture, estate, trust, association, organization,
governmental entity or other entity of any kind or nature.
"Principals" means Xxx X. Xxxxxxxx, Xxxxx Xxxxx, Xxxxxx X. Xxxxxx and Xxxx
Xxxxxxxx.
"Proxy Statement" means: (a) the letter to the shareholders of Buyer in
connection with the Meeting; (b) the notice of the Meeting; and (c) the form of
proxy to be distributed to the stockholders of Buyer in connection with the
Meeting.
"PTO" means the United States Patent and Trademark Office.
"Related Documents" means the Registration Rights and Lock-Up Agreement,
the Escrow Agreement, the Notes, the Xxxxxxxx Promissory Note, the Xxxxxxxx
Pledge Agreement, the Employment Agreements any exhibit, schedule, certificate
or other agreement delivered in connection with this Agreement.
56
"Tax" (including, with correlative meaning, the terms "Taxes" and
"Taxable") means (i) any net income, alternative or add-on minimum tax, gross
income, gross receipts, sales, use, ad valorem, transfer, franchise, profits,
license, withholding, payroll, employment, excise, severance, stamp, occupation,
premium, property, environmental or windfall profit tax, custom duty or other
tax, governmental fee or other like assessment or charge of any kind whatsoever,
together with any interest or any penalty, addition to tax or additional amount
imposed by any Taxing Authority, (ii) any liability for the payment of any
amounts of the type described in (i) as a result of being a member of an
affiliated, consolidated, combined, unitary or aggregate group for any Taxable
period, and (iii) any liability for the payment of any amounts of the type
described in (i) or (ii) as a result of being a transferee of or successor to
any person or as a result of any express or implied obligation to indemnify any
other person.
"Tax Return(s)" mean all returns, consolidated or otherwise (including
without limitation informational returns), required to be filed with any Taxing
Authority.
"Taxing Authority" means any authority responsible for the imposition or
collection of any Tax.
"Transaction Costs" means the aggregate amount of any and all costs and
expenses (regardless of whether such costs and expenses have been paid prior to
the date hereof) incurred by or on behalf of the Company in connection with this
Agreement, the Sale and the other transactions contemplated hereby including,
without limitation, those fees and expenses relating to any investment banker,
broker, lawyer or accountant, including, without limitation, those fees and
expenses relating to the retention of Xxxxxx Capital Group, LLC, less expenses
specifically identified on Schedule 3.37 as being excluded from the definition
of Transaction Costs.
57
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by the
parties hereto as of the date first written above.
CURATIVE HEALTH SERVICES, INC.
By: /s/ Xxxx X. Xxxxxxxxx
------------------------------------
Xxxx X. Xxxxxxxxx
Chief Executive Officer
STOCKHOLDERS:
/s/ Xxx Xxxxxxxx
----------------------------------------
Xxx Xxxxxxxx
TAMIYASU TRUST, dated December 16, 1997
By: /s/ Xxx X. Xxxxxxxx
------------------------------------
Xxx X. Xxxxxxxx, as trustee
By: /s/ Xxxxx X. Xxxxxxxx
------------------------------------
Xxxxx X. Xxxxxxxx, as trustee
XXX AND XXXXX XXXXXXXX
IRREVOCABLE TRUST NO. 1
By: /s/ Xxxxx Xxxxxxxxx
------------------------------------
Xxxxx Xxxxxxxxx, as trustee
XXXXX AND XXXXXXX XXXXX FAMILY
TRUST, dated December 15, 1997
By: /s/ Xxxxx Xxxxx
------------------------------------
Xxxxx Xxxxx, as trustee
By: /s/ Xxxxxxx Xxxxx
------------------------------------
Xxxxxxx Xxxxx, as trustee
[Signature page to Stock Purchase Agreement]
XXXXX AND XXXXXXX XXXXX
IRREVOCABLE TRUST NO. 1
By: /s/ Xxxxx Xxxxxx
------------------------------------
Xxxxx Xxxxxx, as trustee
XXXX AND XXXX XXXXXXXX FAMILY
TRUST, dated August 4, 1999
By: /s/ Xxxx Xxxxxxxx
------------------------------------
Xxxx Xxxxxxxx, as trustee
By: /s/ Xxxx Xxxxxxxx
------------------------------------
Xxxx Xxxxxxxx, as trustee
XXXXXX AND XXXXXX XXXXXX FAMILY
TRUST, dated April 10, 1987
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------
Xxxxxx X. Xxxxxx, as trustee
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------
Xxxxxx X. Xxxxxx, as trustee
STOCKHOLDERS' REPRESENTATIVE
By: /s/ Xxx X. Xxxxxxxx
------------------------------------
Xxx X. Xxxxxxxx
[Signature page to Stock Purchase Agreement]
PRINCIPALS:
/s/ Xxx X. Xxxxxxxx
----------------------------------------
Xxx X. Xxxxxxxx,
/s/ Xxxxx Xxxxx
----------------------------------------
Xxxxx Xxxxx
/s/ Xxxx Xxxxxxxx
----------------------------------------
Xxxx Xxxxxxxx
/s/ Xxxxxx X. Xxxxxx
----------------------------------------
Xxxxxx X. Xxxxxx
[Signature page to Stock Purchase Agreement]
SCHEDULE A
Number of
Stockholder Shares Owned Pro-Rata Share
----------- ------------ --------------
Xxx Xxxxxxxx 20,000 16.67%
Tamiyasu Trust, dated December 16, 1997 36,000 30.00%
Tamiyasu Irrevocable Trust No. 1 4,000 3.33%
Xxxxx and Xxxxxxx Xxxxx Family Trust,
dated December 15, 1997 16,000 13.33%
Xxxxx and Xxxxxxx Xxxxx Irrevocable
Trust No. 1 4,000 3.33%
Xxxx and Xxxx Xxxxxxxx Family Trust,
dated August 4, 1999 20,000 16.67%
Xxxxxx and Xxxxxx Xxxxxx Family Trust, dated 20,000 16.67%
April 10, 1987
The following exhibits and schedules to the Stock Purchase Agreement have been
omitted. Curative Healthcare Services, Inc. will furnish any such exhibits or
schedules to the Commission as supplemental information upon request:
Exhibits
--------
Exhibit A Form of Note
Exhibit B Form of Escrow Agreement
Exhibit C Form of Registration Rights Agreement
Exhibit D Form of Community Service Employment Agreement
Exhibit E Form of Xxxxxxxx Pledge Agreement
Exhibit F Form of Xxxxxxxx Promissory Note
Exhibit G Form of Shareholder Pledge Agreement
Exhibit H Form of Certificate of Trust
Schedules
---------
Stockholder Disclosure Letter
Disclosure Letter
Buyer Disclosure Letter
