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EXHIBIT 2
STOCK PURCHASE AGREEMENT
AMONG
ACCREDO HEALTH, INCORPORATED
XXXXXXX XXXXX
XXXXXX XXXX
PHARMACARE RESOURCES, INC.
AND
NCL MANAGEMENT, INC.
DATED AS OF MAY 31, 2001
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STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as of May 31, 2001 among XXXXXXX XXXXX
("Yamin"), XXXXXX XXXX ("Xxxx"), ACCREDO HEALTH, INCORPORATED, a Delaware
Corporation (referred to as the "Company" or "Buyer"), PHARMACARE RESOURCES,
INC. ("PRI"), and NCL MANAGEMENT, INC. ("NCL"). Yamin and Xxxx are sometimes
referred to herein individually as "Seller" or "Owner" and collectively as
"Sellers" or "Owners".
WHEREAS, Sellers collectively as of the Closing Date (as hereafter
defined) will own all of the issued and outstanding capital stock of PRI and
NCL; and
WHEREAS, Sellers wish to sell to the Company, and the Company wishes to
purchase from Sellers, all of the shares of capital stock of PRI and NCL owned
by Sellers for cash on the terms and conditions hereinafter set forth
("Acquisition").
NOW THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
ARTICLE I.
PURCHASE OF SHARES BY THE COMPANY FROM SELLERS;
ADJUSTMENT TO PURCHASE PRICE;
CLOSING DATE
1.1 Purchase and Sale of Shares. Subject to the terms and
conditions hereinafter set forth, on the Closing Date, Sellers agree to sell to
the Company, or it's designee, and the Company, or it's designee, agrees to
purchase from Sellers, all of the issued and outstanding shares (consisting of
20 shares of No Par Common Stock of PRI and 100 shares of No Par Common Stock of
NCL), of PRI and NCL (the "Shares"), for an aggregate price of Twenty Three
Million Five Hundred Thousand ($23,500,000.00) Dollars, plus the amounts
determined pursuant to Section 1.5 hereof (the "Earnout Amount") (the
"Consideration" or "Purchase Price"), such price being subject to increase as
provided in Section 1.3. As payment in full for the Shares, the Company shall,
against delivery of a certificate or certificates evidencing the Shares from
Yamin and Xxxx registered in the Company's name, pay an amount equal to the
aggregate Purchase Price for the Shares as follows:
(a) Two Million ($2,000,000.00) Dollars shall be placed in escrow
to be disbursed pursuant to the Escrow Agreement which is attached hereto as
Exhibit 1.1(a) and made a part hereof.
(b) A cash payment by wire transfer of immediately available funds
to such account or accounts as Sellers shall designate in the aggregate amount
of Twenty One Million Five Hundred Thousand ($21,500,000.00) Dollars.
(c) The Earnout Amount will be calculated and payable in the
manner provided in Section 1.5.
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1.2 Allocation. Buyer and Sellers agree that one half of the
Purchase Price is being paid for the shares in PRI and that the remaining one
half of the Purchase Price is being paid for the shares in NCL. Buyer and
Sellers shall allocate the Consideration among Class I, Class II and Class III
assets as defined in the instructions to IRS Form 8023 in accordance with the
book value shown on the Closing Balance sheet attached as Schedule 1.3, and the
parties agree to report the transaction contemplated herein for federal income
tax purposes in accordance with such allocation. In furtherance of the
foregoing, the parties hereto agree to execute and deliver Internal Revenue
Service Form 8594 reflecting such allocation. The allocation shall be used for
purposes of determining the modified aggregate deemed sales price under the
applicable Treasury Regulations and in reporting the deemed sale of assets of
PRI and NCL in connection with the 338(h)(10) Election. Buyer shall prepare a
complete set of IRS forms 8023-A (and any comparable forms required to be filed
under state, local or foreign tax law) and any additional data or materials
required to be attached to IRS Form 8023-A.
1.3 Adjustment to Purchase Price.
(a) The April 30, 2001 balance sheet of PRI/NCL (the
"Closing Balance Sheet") is attached as Schedule 1.3. The Closing Balance Sheet
was prepared jointly by Buyer and Sellers, based on good faith estimates, in
accordance with generally accepted accounting principles consistently applied
with those used in the preparation of the audited financial statements for NCL
for the year ended December 31, 2000.
(b) To the extent that the Closing Balance Sheet shows
Equity greater than One Million One Hundred Seventeen Thousand Six Hundred
($1,117,600.00) Dollars, then on the Closing Date the Purchase Price shall be
adjusted by increasing the Purchase Price dollar for dollar for each dollar that
Equity exceeds One Million One Hundred Seventeen Thousand Six Hundred
($1,117,600) Dollars. The amount of such increase shall be paid to Sellers in
addition to the payment to be made to them under Section 1.1(b).
1.4 Closing Date. The closing (the "Closing") will take place on a
date not later than two business days following the satisfaction of the
conditions set forth in Articles 5 and 6 hereof (the "Closing Date") effective
12.01 a.m. Eastern Daylight Savings Time on May 1, 2001 ("Effective Date"). The
place of Closing shall be at the offices of Ackerman, Levine, Cullen & Xxxxxxxx,
LLP, 000 Xxxxx Xxxx Xxxx, Xxxxx Xxxx, Xxx Xxxx 00000, or such other place as may
be mutually agreed upon by the Parties.
1.5 Contingent Purchase Price Payment.
(a) The Earnout Amounts shall be payable as specified
below by wire transfer of immediately available funds to such account or
accounts as Sellers shall specify. Payment of the Earnout Amounts shall be
subject to setoff and reduction for any claims that Buyer or its Affiliates may
have against Sellers under the indemnification provisions of Article VIII hereof
or arising after the date hereof and not under this Agreement.
The Earnout Amount shall equal the product of (a)
$5,000,000.00 multiplied by (b) 100% minus the "Target Income Percentage
Deficiency," if any. The Target Income Percentage Deficiency shall be the
percentage determined from the product of (a) 5 times (b) the positive
difference, if any, of (i) 100% minus (ii) the "Actual EBITDA" divided by
$5,061,156.00. The Actual EBITDA shall equal the EBITDA of the Business achieved
during the twelve months beginning January 1, 2001 and ending December 31, 2001.
An example calculation is attached as Exhibit 1.5.
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(b) For purposes of the foregoing, Actual EBITDA shall be
determined based upon the books and records of PRI and NCL in accordance with
GAAP with (i) no allocation of corporate overhead expenses to PRI or NCL that
exceed the cost of those same services (i.e. legal, accounting or other
services) currently being paid by PRI or NCL, and (ii) disregarding any
amortization and similar expenses associated with intangible assets resulting
from the acquisition referenced herein. All direct expenses of PRI or NCL will
be accrued to PRI or NCL (for example, all bonuses, COBRA benefits, salary and
benefits, including salary and benefits to Sellers), except that for purposes of
determining Actual EBITDA hereunder, the bonuses payable (x) under Section 4(c)
of the Employment Agreements between Company and Yamin and Company and Xxxx and
(y) to sales representatives of PRI and NCL under that letter of Buyer of even
date to Sellers, referencing this Section 1.5(b), shall not be deemed expenses
of PRI or NCL. Unless otherwise agreed by Sellers, the calculation of Actual
EBITDA shall exclude (i) telephone, facsimile, electronic mail and similar
communication expense and data processing expenses in excess of the average of
such charges for the six month period preceding the Effective Date, unless such
increases are necessary due to increased volume; and (ii) any compensation of
additional personnel hired by Buyer without consent of Sellers, such consent not
to be unreasonably withheld and unless such personnel are hired due to increased
volume.
(c) Within 60 days after December 31, 2001, Buyer shall
submit to Sellers a calculation, with reasonable detail, of the Earnout Amount,
and Buyer shall remit any Earnout Amount shown to be due to Sellers. Sellers
shall have 60 days to dispute such calculation by written notice to Buyer. Buyer
shall make the books and records of account, budgets, forecasts and capital
expense forecasts of PRI and NCL reasonably available to Sellers during the
period of the Earnout and the determination thereof solely for use in verifying
and calculating the Earnout Amount. Failure to provide Buyer written notice of
such dispute within such 60 days shall be deemed acceptance by Sellers of
Buyer's calculation. If Sellers dispute the calculation by written notice to
Buyer within such 60 days, then Buyer and Sellers shall have 30 days to
negotiate in good faith to resolve the dispute. If such parties do not reach a
mutual resolution from such negotiations, then the dispute shall be submitted to
a nationally recognized public accounting firm agreeable to each such party and
with whom neither such party (or any of its Affiliates) has had a relationship
within the past 24 months. Such accounting firm and Sellers shall be given
reasonable access to all relevant records to calculate the Earnout Amount, which
calculation shall be submitted by the accounting firm to Buyer and Sellers
within 30 days. Each of Buyer and Sellers shall have 20 days thereafter to
submit to each other and the independent accountant written comments on such
calculation and an additional 15 days to similarly submit to each other and the
independent accountant written rebuttal comments to each other's initial
comments. Within 15 days after the rebuttal comment period, the independent
accountant shall submit its final calculation to each of Buyer and Sellers,
which shall be final and binding on the parties hereto, and after which Buyer
shall promptly remit to Sellers any unpaid portion of the Earnout Amount as so
calculated. Buyer and Sellers shall share equally the fees and expenses of such
accounting firm, provided if the amount of the Earnout Amount shown to be due by
such accounting firm is more than 25% of the amount calculated by Buyer, all of
such fees and expenses shall be paid by Buyer. Interest shall accrue on any
unpaid portion of the Earnout Amount commencing on March 1, 2002, provided,
however, that Buyer shall remit such amount as Buyer deems not in dispute and
interest shall thereupon accrue only on the difference, if any, ultimately
determined in accordance with this Section 1.5. The rate of interest shall be
that rate of interest then published by Bank of America, New York, New York, as
its "prime" lending rate for commercial borrowers until the Earnout Amount is
ultimately determined by the accounting firm. Any Earnout Amount not paid within
10 days after such determination shall bear interest at 12% per annum from the
date of determination until paid.
(d) Buyer agrees to operate PRI and NCL in good faith and in
the normal course of its and its Affiliates' operation of similar businesses on
a basis consistent with its and its Affiliates' prior
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practices and will use reasonable efforts to achieve profitability of PRI and
NCL. From the Closing Date until December 31, 2001, Buyer shall (i) permit
Sellers to take such actions as Buyer reasonably deems beneficial to the
business and operations of PRI and NCL during such period, (ii) refrain from
causing or requiring PRI and NCL to enter into material transactions with Buyer
or affiliates of the Buyer unless such transactions are on terms and conditions
no less favorable (when all aspects of the transactions are considered) to PRI
and NCL than could be obtained from non-related parties, (iii) dispose of or
acquire any assets of PRI and NCL only on commercially reasonable economic
terms, and (iv) refrain from intentionally taking any action to avoid or
diminish any payment owing or to become owing under this Section 1.5.
In order to protect Sellers' ability to realize the
full amount of the Earnout Payments provided for herein:
(i) Buyer agrees to provide PRI and NCL with
such working capital and permit PRI and NCL
to engage and retain such personnel prior to
December 31, 2001, as are reasonably
necessary to support their business during
such period, subject to reasonable
adjustments for changing business volume,
industry and economic conditions;
(ii) During such period, neither Buyer nor any of
its affiliates will charge PRI or NCL with
any of their respective corporate overhead
(except for charges for services actually
rendered at amounts no greater than the
charges therefor actually incurred by PRI or
NCL prior to the Effective Date) or require
PRI or NCL to pay any dividend, redeem any
stock, or make any loan to Buyer or any of
its affiliates as would reduce PRI or NCL's
working capital below a level reasonably
required for the conduct of the business of
PRI and NCL; and
(iii) During such period, Buyer will not take any
action or suffer any inaction, whether
related to budgeting, access to working
capital or otherwise, which is intended to
or which could unreasonably be expected to
impair Sellers' ability to earn the maximum
payments they may be entitled to earn under
this Section 1.5.
(iv) Sellers agree that Buyer may merge PRI and
NCL after the closing into a single entity
and that PRI and NCL will convert to Buyers
employee benefits and plans.
(e) The failure to generate an Earnout Amount shall not
affect the remainder of the Purchase Price.
(f) If the Actual EBITDA
equals or exceeds Four Million Five Hundred Thousand
($4,500,000.00) Dollars, Sellers will, in addition to
the amount calculated in subsection 1.5(a) above,
receive from Buyer, and Buyer shall pay to Sellers,
as an additional Earnout Amount the sum of One
Million Two Hundred Fifty Thousand ($1,250,000.00)
Dollars. This amount will be paid in the same time
and manner as the first Earnout Amount due to Sellers
under subsection 1.5(a)
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1.6 Deliveries. All deliveries, payments and other transactions
and documents relating to the Closing (i) shall be independent and none shall be
effective unless and until all are effective (except to the extent that the
party entitled to the benefit thereof has waived satisfaction or performance
thereof as a condition precedent to Closing), and (ii) shall be deemed to be
consummated simultaneously.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF SELLERS
The Sellers jointly and severally represent and warrant to Buyer that
on and as of the Effective Date and the Closing Date the statements in the
following sections are true, accurate and complete:
2.1 Organization, Authority and Capacity; Subsidiaries.
(a) PRI and NCL is each a corporation duly organized,
validly existing and in good standing under the laws of New York, and has the
full power and authority necessary to (i) execute, deliver and perform its
obligations under the Acquisition Documents and (ii) carry on its business as it
has been and is now being conducted and to own and lease the properties and
assets which it now owns or leases. PRI and NCL is each duly qualified to do
business and is in good standing in every jurisdiction in which the failure to
be so qualified or in good standing would have a material adverse effect on (i)
its ability to perform its obligations under the Acquisition Documents or (ii)
the assets, financial position, or results of operations of PRI and NCL. Set
forth on the Seller Disclosure Schedule is a list of all jurisdictions in which
PRI or NCL are required to be qualified as a foreign corporation.
(b) Yamin is a resident of Pleasantville, New York, and
Xxxx is a resident of New York, New York, and each has the power and authority
to own the Shares and to execute, deliver and perform the Acquisition Documents
to which she is a party and to consummate the transactions contemplated hereby
and thereby.
(c) Except as set forth on the Seller Disclosure Schedule
neither PRI nor NCL owns any shares of any corporation or other equity interest,
either of record, beneficially or equitably, in any association, partnership,
limited liability company, joint venture or other legal entity, or have any
commitment to acquire any such interest or to make any loans or capital
contributions to any such entity.
2.2 Authorization and Validity. The execution, delivery and
performance of the Acquisition Documents by Sellers, PRI and NCL have been duly
authorized by all necessary corporate shareholder or other entity action on the
part of each. The Acquisition Documents to be executed and delivered by the
Sellers or PRI or NCL have been or will be at Closing, as the case may be, duly
executed and delivered by the Sellers, PRI and NCL and constitute or will
constitute at Closing the legal, valid and binding obligations of the Sellers,
PRI and NCL, enforceable in accordance with their respective terms, except as
may be limited by bankruptcy, insolvency, or other laws affecting creditors'
rights generally, or as may be modified by a court of equity.
2.3 Absence of Conflicting Agreements or Required Consents. Except
as set forth on the Seller Disclosure Schedule, the execution, delivery and
performance by the Sellers, PRI and NCL of the Acquisition Documents to be
executed and delivered by the Sellers, PRI or NCL: (i) does not require the
consent of or notice to any governmental or regulatory authority or any other
third party; (ii) will not conflict with any provision of organizational
documents (including certificate or articles of incorporation and bylaws) of PRI
or NCL; (iii) will not conflict with or result in a violation of any law,
ordinance, regulation, ruling, judgment, order or injunction of any court or
governmental instrumentality to which any Seller, PRI or NCL is subject or by
which Sellers, PRI or NCL or any of their assets or properties are bound; (iv)
will not conflict with, constitute grounds for termination of, result in a
breach of, constitute a default under, require any notice under, or accelerate
or permit the acceleration of any performance required by the terms of any
agreement, instrument, license or permit to which any Seller, PRI or NCL
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is a party or by which any Seller, PRI or NCL or any of their respective
properties are bound; and (v) will not create any Encumbrances upon the assets
or properties of any Seller, PRI or NCL.
2.4 Governing Documents. True and correct copies of the
certificate or articles of incorporation and all amendments thereto and bylaws
of PRI and NCL have been provided to Buyer. Buyer has previously been provided
with access to PRI's and NCL's books and records and minutes, and such minutes
accurately reflect in all material respects the proceedings of the board of
directors (and all committees thereof) and shareholders of PRI and NCL.
2.5 Capitalization; Ownership of Capital Stock.
(a) As of the Closing Date, the authorized capital stock
of PRI consists of two hundred (200) shares of no par value stock of which
twenty (20) shares of stock have been duly and validly issued and are
outstanding and fully paid and non-assessable at closing.
(b) As of the Closing Date, the authorized capital stock
of NCL consists of two hundred (200) shares of no par value stock of which one
hundred (100) shares of stock have been duly and validly issued and are
outstanding and fully paid and non-assessable at closing.
(c) Except as set forth in the Seller Disclosure
Schedule, the Shares are owned by Sellers free and clear of all liens, charges,
security interests or other encumbrances of any nature whatsoever
("Encumbrances"). All right, title and interest in and to the Shares is being
sold, assigned, transferred and delivered to the Buyer, and the Buyer will
receive valid title thereto, free and clear of any and all Encumbrances.
(d) Except as otherwise set forth in the Seller
Disclosure Schedule hereto (i) no subscription, warrant, option, convertible
security or other right (contingent or other) to purchase or acquire any shares
of any class of capital stock of PRI or NCL is authorized or outstanding, (ii)
there is not any commitment of PRI or NCL to issue any shares, warrants, options
or other such rights or to distribute to holders of any class of their capital
stock any evidences of indebtedness or assets, and (iii) neither PRI or NCL have
an obligation (contingent or other) to purchase, redeem or otherwise acquire any
shares of its capital stock or any interest therein or to pay any dividend or
make any other distribution in respect thereof.
2.6 Financial Statements.
(a) Attached hereto as Schedule 2.6(a) are the audited
financial statements of PRI and NCL for the year ended December 31, 2000 and
unaudited interim financial statements for the four month period ending April
30, 2001, which reflect the results of operations and financial condition of PRI
and NCL for such periods and at such dates (collectively, the "Financial
Statements"). The Financial Statements have been prepared in accordance with
generally accepted accounting principles consistently applied ("GAAP"), except
with respect to the interim financial statements as of and for the four month
period ending April 30, 2001 for (i) the omission of notes to unaudited
Financial Statements, (ii) the fact that interim financial statement is subject
to normal and customary year-end adjustments which will not, in the aggregate,
be material and (iii) any exceptions that may be indicated in the notes to such
Financial Statements. The Financial Statements present fairly in all material
respects the financial position of PRI and NCL as of the dates indicated and
present fairly in all material respects the results of the operations of PRI and
NCL for the periods then ended.
(b) Neither Seller, PRI or NCL have admitted in writing
its inability to pay its debts, generally as they become due; filed or consented
to the filing against it respectively of a petition in bankruptcy or a petition
to take advantage of an insolvency act; made an assignment for the benefit of
its creditors; consented to the appointment of a receiver for itself
respectively or for the whole or any substantial part of its property; had a
petition in bankruptcy filed against it; been adjudged a bankrupt or filed a
petition or answer seeking reorganization or arrangement under the federal
bankruptcy laws or any law or statute of the United States of America or any
other jurisdiction.
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2.7 Absence of Certain Changes or Events. Except (i) as otherwise
set forth in the Seller Disclosure Schedule hereto, or (ii) as otherwise
expressly contemplated in this Agreement since December 31, 2000, PRI and NCL
have been operated only in the ordinary course, and neither PRI nor NCL have:
(i) suffered any material adverse change in working
capital, condition (financial or otherwise), assets,
liabilities, reserves, business or operations;
(ii) paid, discharged or satisfied any material liability
other than in the ordinary course of business;
(iii) written off as uncollectible any account receivable
other than in the ordinary course of business;
(iv) compromised any debts, claims or rights or disposed
of any of its properties or assets other than in the
ordinary course of business;
(v) entered into any commitments or transactions not in
the ordinary course of business involving aggregate
value in excess of $25,000 or made aggregate capital
expenditures or commitments in excess of $25,000;
(vi) made any material change in any method of accounting
or accounting practice;
(vii) sold, assigned or transferred any tangible asset
other than in the ordinary course of business or any
patents, trademarks, trade names, copyrights or other
intangible assets;
(viii) subjected any of its assets, tangible or intangible,
to any lien, encumbrance or restriction of any nature
whatsoever, except for liens for current property
taxes not yet due and payable;
(ix) increased any salaries, wages or employee benefits or
made any arrangement for payment of any bonus or
special compensation for any employee of PRI or NCL
other than in the ordinary course of business;
(x) hired, committed to hire or terminated any employee
other than in the ordinary course of business;
(xi) terminated or amended any material contract, license
or other instrument or suffered any loss or
termination or threatened loss or termination of any
existing material business arrangement or supplier,
the termination or loss of which, in the aggregate,
could reasonably be expected to materially and
adversely affect PRI or NCL or the Rights and Assets
(as defined in Section 2.11(a));
(xii) sold or otherwise transferred any interest in the
Rights and Assets other than in the ordinary course
of business; or
(xiii) agreed, whether in writing or otherwise, to take any
action described in this Section 2.7.
2.8 No Undisclosed Liabilities. Except as listed on the Seller
Disclosure Schedule hereto or reflected in the Financial Statements, PRI and NCL
have no Liabilities or obligations, whether accrued, absolute, contingent or
otherwise, that are greater than $25,000.00 in the aggregate.
2.9 Litigation, etc. Except as listed on the Seller Disclosure
Schedule hereto, there are no claims, lawsuits, actions, arbitrations,
administrative or other proceedings pending against PRI or NCL. Except as listed
on
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the Seller Disclosure Schedule, (i) to the knowledge of the Sellers, no such
matter described in the previous sentence is threatened and there is no basis
for any such action, and (ii) there are no governmental or administrative
investigations or inquiries pending that involve PRI or NCL. Except as listed on
the Seller Disclosure Schedule, there are no judgments against or consent
decrees binding on PRI or NCL or, to the knowledge of the Sellers, any licensed
professional providing services in connection with the operation of PRI or NCL.
2.10 No Violation of Law.
(a) Neither any Seller, PRI or NCL have been or is
currently in material violation of any applicable local, state or federal Law,
order, injunction or decree, or any other requirement of any governmental body,
agency or Regulatory Authority or court binding on it, or relating to its
property or business or its advertising, sales or pricing practices.
(b) Neither any Seller nor PRI or NCL is currently
subject to any material fine, penalty, liability or disability as the result of
a failure to comply with any requirement of federal, state or local Law, nor has
any Seller, PRI or NCL received any notice of such noncompliance.
2.11 Real and Personal Property.
(a) the Seller Disclosure Schedule sets forth a list and
location of all items of personal and mixed, tangible and intangible property,
rights and assets of PRI or NCL having an original or replacement cost or value
greater than $2,500.00 ("Rights and Assets"). Except as set forth on the Seller
Disclosure Schedule, PRI and NCL respectively (i) has good and valid title to
all of the personal and mixed, tangible and intangible property, rights and
assets which it purports to own, and (ii) owns such rights, assets and personal
property free and clear of all Liens (except for current year ad valorem taxes.)
All of the Rights and Assets, whether owned or leased, are in the possession and
control of PRI and NCL. Except as disclosed on the Seller Disclosure Schedule,
no affiliate of the Sellers, has any claim or interest in any of the rights or
assets that are used or useful in the business conducted by PRI or NCL or in any
operations that are similar to or competitive with that business, even if
geographically distant.
(b) PRI and NCL do not own any real property. the Seller
Disclosure Schedule contains a true and correct description of all real property
leased by PRI or NCL, including all improvements located thereon. PRI and NCL
have valid and binding leases for each such property, copies of which are
attached to the Seller Disclosure Schedule, and (i) PRI and NCL are current with
respect to all payments due under such leases; (ii) PRI and NCL have complied in
all material respects with their obligations under such leases, and (iii) there
are no material defaults on the part of PRI or NCL, and to the knowledge of
Sellers on the part of any other party under any such lease that remain uncured
and no condition exists which, with the lapse of time or giving of notice, or
both, would give rise to a material default under any such lease. Buyer has been
furnished with true, correct and complete copies of all leases, deeds, easements
and other documents and instruments concerning the matters listed on the Seller
Disclosure Schedule. No condemnation or similar actions are currently in effect
or pending or, to the knowledge of the Sellers, threatened against any part of
any real property leased by PRI or NCL. To the knowledge of the Sellers, there
are no encroachments, leases, easements, covenants, restrictions, reservations
or other burdens of any nature which might impair in any material respect the
use of any such leased real property in a manner consistent with past practices
nor does any part of any building structure or any other improvement thereon
encroach on any other property.
(c) Except as set forth on the Seller Disclosure
Schedule, the present zoning, subdivision, building and other ordinances and
regulations applicable to the leased real property listed on the Seller
Disclosure Schedule permit the continued operation, use, occupancy and enjoyment
of such real property consistent with past practices, and, with respect to such
leased real property, PRI and NCL are in compliance in all material respects
with, and have received no notices of violations of, any applicable zoning,
subdivision or building regulation, ordinance or other law, regulation, or
requirement. PRI and NCL have all rights and easements necessary for public
ingress thereto and egress therefrom and for the provision of all utility
services thereto, including any required curb cut or street opening permits or
licenses for vehicular access over presently existing roads and driveways. No
portion of the leased real property listed on the Seller Disclosure Schedule, or
any building, structure, fixture or improvement thereon, is the subject of, or
affected by, any condemnation, taking, eminent domain or inverse
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condemnation proceeding currently instituted or pending, and, to the knowledge
of the Sellers, none of the foregoing are, or will be, the subject of, or
affected by, any such proceedings.
(d) The Rights and Assets and the leased premises at
which PRI and NCL operate their business are in good operating condition and
repair, ordinary wear and tear excepted, and the Rights and Assets include all
rights, properties, interests in properties, and assets necessary to permit PRI
and NCL to continue their business after the Closing Date as presently
conducted. PRI and NCL have only conducted the Business under such names and at
such locations as are identified on the Seller Disclosure Schedule and all of
the Rights and Assets are currently located at those locations identified on the
Seller Disclosure Schedule.
(e) The Seller Disclosure Schedule contains a complete
and correct list of all trademarks, trade names, service marks, service names,
brand names, copyrights, technology rights and licenses, know-how, software and
patents, registrations thereof and applications therefor, and any other
intellectual property used by PRI and NCL, together with a complete list of all
licenses granted by or to any Seller, PRI and NCL with respect to any of the
foregoing. None of the Sellers, PRI and NCL are in receipt of any notice of any
violation of the rights of others with respect to any such matter.
(f) The operating and applications computer software
programs and databases used by PRI and NCL in the conduct of their business
(collectively, the "Software") are listed on the Seller Disclosure Schedule
hereto. Except as set forth in the Seller Disclosure Schedule hereto, PRI and
NCL hold valid licenses to all copies of such software material to their
business, and have not sold, licensed, leased or otherwise transferred or
granted any interest or rights to any thereof. Except as set forth in the Seller
Disclosure Schedule hereto, none of the software owned by PRI and NCL infringes
upon or violates any patent, copyright, trade secret or other proprietary right
of any other person and no claim with respect to any such infringement or
violation is threatened.
(g) Upon consummation of the transactions contemplated by
this Agreement, PRI and NCL will continue to license all the Software used by
them and material to their business, free and clear of all other claims, liens,
encumbrances, obligations and liabilities and, with respect to all agreements
for the lease or license of Software which require consent or other actions as a
result of the consummation of the transactions contemplated by this Agreement in
order for PRI and NCL to continue to use and operate such Software after the
Closing Date, PRI and NCL will have obtained such consents or taken such other
actions so required except where the failure to obtain such consent would not
have a material adverse effect on PRI and NCL.
2.12 Contracts and Commitments.
(a) The Seller Disclosure Schedule contains a complete
and accurate list of all contracts, agreements, commitments and instruments
(whether written or oral, contingent or otherwise) of PRI and NCL of or
concerning the following matters (the "Seller Agreements"):
(i) the lease, as lessee or lessor, or license, as
licensee or licensor, of any real or personal
property (tangible or intangible);
(ii) the employment or engagement of any officer,
director, employee, consultant or agent, other than
those terminable at will without severance
obligation, and any covenant not to compete with any
former employees;
(iii) any arrangement limiting the freedom of the Sellers,
PRI or NCL to compete in any manner in any line of
business or requiring the Sellers, PRI or NCL to
share profits other than commissions payable to
employed sales persons;
(iv) any arrangement that could reasonably be anticipated
to have a material adverse effect on PRI or NCL,
financial or otherwise;
(v) any material arrangement not in the ordinary course
of business;
(vi) any power of attorney, whether limited or general,
granted by or PRI or NCL;
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(vii) any arrangement with customers, patients, managed
care organizations, third party payors, pharmacy
benefit managers or drug suppliers;
(viii) any arrangement that requires performance for a
period of more than 30 days or that requires
aggregate payments in excess of $25,000; and
(ix) any relationship with PRI or NCL or any person or
entity affiliated with or related to PRI or NCL or
any officer or director thereof.
(b) The Sellers have delivered to Buyer true and complete
copies of all of the Seller Agreements. Except as indicated on the Seller
Disclosure Schedule, the Seller Agreements are valid and effective in accordance
with their terms, and there is not under any of such Seller Agreements (i) any
existing or claimed material default by PRI or NCL or event which, with the
notice or lapse of time, or both, would constitute a material default by PRI or
NCL, or (ii) to the knowledge of the Sellers, any existing or claimed material
default by any other party or event which with notice or lapse of time, or both,
would constitute a material default by any such party. Except as indicated on
the Seller Disclosure Schedule, the Acquisition will not result in a breach of
or default under, or require the consent of any other party to, or give rise to
a right of termination by any other party to, any of the Seller Agreements.
There is no actual or, to the knowledge of the Sellers, threatened termination,
cancellation or limitation of any Seller Agreements that would have a material
adverse effect on PRI, NCL, their business, finances or otherwise. To the
knowledge of the Sellers, there is no pending or threatened bankruptcy,
insolvency or similar proceeding with respect to any other party to the Seller
Agreements.
2.13 Employment and Labor Matters.
(a) The Seller Disclosure Schedule sets forth a list of
all current and former (within the last 12 months) full-time and part-time
employees or consultants of PRI and NCL, broken down by location and which
includes the name, title or position, years in service with PRI or NCL, salary,
bonus and benefits information for each such person (the "Business Employees").
(b) PRI and NCL are in compliance in all material
respects with all applicable laws respecting employment and employment
practices, terms and conditions of employment, wages and hours, occupational
safety and health, including laws concerning unfair labor practices within the
meaning of Section 8 of the National Labor Relations Act, and the employment of
non-residents under the Immigration Reform and Control Act of 1986.
(c) Except as disclosed on the Seller Disclosure
Schedule,
(i) there are no charges, governmental audits,
investigations, administrative proceedings or
complaints concerning the employment practices of PRI
or NCL pending or, to the knowledge of the Sellers,
threatened before any federal, state or local agency
or court that could reasonably be expected to have a
material adverse effect on PRI, NCL or their business
or the Rights and Assets, financial or otherwise,
and, to the knowledge of the Sellers, no basis for
any such matter exists;
(ii) to the knowledge of the Sellers, there are no
inquiries, investigations or monitoring of activities
of any licensed, registered, or certified
professional personnel employed by, credentialed or
privileged by, or otherwise affiliated with PRI or
NCL pending or threatened by any state professional
board or agency charged with regulating the
professional activities of health care practitioners;
(iii) PRI and NCL are not a party to any union or
collective bargaining agreement, and, to the
knowledge of the Sellers, no union attempts to
organize the Business Employees have been made, nor
are any such attempts now threatened;
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(iv) PRI and NCL have not experienced any organized
slowdown, work interruption, strike, or work stoppage
by any of the Business Employees; and
(v) PRI and NCL will not incur any liability or
obligation to any Business Employees or violate any
applicable laws respecting employment and employment
practices as a result of the Acquisition.
2.14 Employee Benefit Matters.
(a) PRI and NCL currently maintain or contribute to, and
the Business Employees receive benefits or are eligible under, only the employee
pension benefit plans, as defined in Section 3(2) of ERISA, as are listed on the
Seller Disclosure Schedule (the "Pension Plans"). Seller have never maintained
or contributed to any other employee pension benefit plan, as defined in Section
3(2) of ERISA.
(b) PRI and NCL currently maintain or contribute to, and
the Business Employees receive benefits or are eligible under, only the employee
welfare benefit plans, as defined in Section 3(1) of ERISA (including but not
limited to, life insurance, medical, hospitalization, holiday, vacation,
disability dental and vision plans) as are listed on the Seller Disclosure
Schedule (the "Welfare Plans").
(c) PRI and NCL currently maintain, or contribute to, and
the Business Employees receive benefits or are eligible under, only the
compensation programs and/or employment arrangements, (including but not limited
to, any written or unwritten incentive compensation, fringe benefit, payroll or
employment practice, bonus, option, stock purchase, severance, sick pay, salary
continuation, deferred compensation, supplemental executive compensation plans,
employment agreements and consulting agreements for the benefit of their
officers, directors, employees, former employees, or independent contractors) as
are listed on the Seller Disclosure Schedule (the "Compensation Programs").
(d) Neither PRI nor NCL nor an ERISA Affiliate
contributes or has contributed within the last five years to any multiemployer
plan, as defined by Section 3(37) of ERISA.
(e) Each Pension Plan and Welfare Plan has been operated
and administered in substantial compliance with ERISA and the Code; each Pension
Plan which is intended to be qualified under Section 401(a) of the Code has been
determined by the IRS to be so qualified or a request for such determination has
been timely filed with the IRS (and neither Seller nor PRI and NCL has any
knowledge that any event has occurred between the date of the last such
determination and the Closing Date that would cause the Internal Revenue Service
to revoke such determination).
(f) Each Pension Plan and Welfare Plan designed to
satisfy the requirements of Section 125, Section 401, Section 401(k), Section
409, Section 501(c)(9), Section 4975(e)(7), and/or Section 4980B of the Code,
satisfies such section.
(g) No accumulated funding deficiency, as defined in
Section 302(a)(2) of ERISA, exists (whether or not waived) with respect to any
Pension Plan as of the date hereof.
(h) All amounts required to be paid by PRI and NCL with
respect to each Pension Plan, Welfare Plan and Compensation Program on or before
the Closing Date have been paid.
(i) Neither the execution and delivery of this Agreement
nor the consummation of any of the transactions contemplated hereby will (i)
result in any payment (including, without limitation, severance, unemployment
compensation, golden parachute or otherwise) becoming due to any current or
former Business Employee, (ii) increase any benefits otherwise payable under any
Pension Plan, Welfare Plan or Compensation Program to any Business Employee, or
(iii) result in any acceleration of the time of payment or vesting of any such
benefits.
(j) Neither the execution and delivery of this Agreement
nor the consummation of any of the transactions contemplated hereby will result
in a material increase in the premium costs of any Welfare Plan for
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which benefits are insured or a material increase in benefit costs of any
Welfare Plan which provides self-insured benefits for which any Business
Employee is a beneficiary.
(k) No Pension Plan is subject to a lien (or expected to
be subject to a lien) under Code Section 412(n) or ERISA Section 302(f) or to
tax under Code Section 4971. No Pension Plan has a "liquidity shortfall" as
defined in Code Section 412(m)(5). No event has occurred in connection with a
Pension Plan that could result in liability under Title IV of ERISA. PRI and NCL
have not incurred any liability to the Pension Benefit Guaranty Corporation in
connection with any Pension Plan.
(l) The assets of each Pension Plan are sufficient to
provide all "benefit liabilities" (as defined in ERISA Section 4001(a)(16))
under such Pension Plan if such Pension Plan is terminated, and are also
sufficient to provide all other benefits due under the Pension Plan (including,
but not limited to, ancillary, disability, shutdown, early retirement and
welfare benefits).
(m) None of the Pension Plans nor PRI or NCL nor any
party in interest or disqualified person has engaged in any non-exempt
"prohibited transactions" as defined in Section 406 of ERISA or Section 4975 of
the Code.
(n) Except as disclosed in the Seller Disclosure
Schedule, no Pension Plan or Welfare Plan provides benefits, including without
limitation death or medical benefits (whether or not insured), with respect to
any Business Employee beyond their retirement or other termination of service
other than (i) coverage mandated by applicable law, (ii) retirement benefits
under a Pension Plan, (iii) death benefits under a Welfare Plan, (iv) deferred
compensation accrued on the books of PRI, NCL or a Subsidiary, or (v) benefits
the full cost of which is borne by the Business Employee (or his or her
beneficiary).
(o) No "leased employee," as that term is defined in
Section 414(n) of the Code, is included among the Business Employees.
(p) No liability has been, or is expected to be, incurred
by PRI or NCL under Section 4062 of ERISA with respect to any Pension Plan.
(q) No reportable event within the meaning of Title IV of
ERISA has occurred with respect to any Pension Plan.
(r) Sellers have furnished Buyer with correct and
complete copies of each Pension Plan, Welfare Plan, and Compensation Program,
together with any trust agreements, summary plan descriptions, employee
informational material, IRS Forms 5500, the most recent actuarial valuation for
any Pension Plan, financial statements relating thereto and participant
listings.
(s) PRI and NCL have complied with the continuation
coverage requirements of Section 1001 of the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended, and ERISA Sections 601 through 608.
2.15 Insurance Policies.
(a) All of the Rights and Assets and the operations of
PRI and NCL of an insurable nature and of a character usually insured by
companies of similar size and in similar businesses are insured by PRI and NCL
in such amounts and against such losses, casualties or risks as is (i) required
by any Law applicable to PRI or NCL, or (ii) required by any contract or
agreement entered into by PRI or NCL. The Seller Disclosure Schedule contains a
complete and accurate list of all insurance policies held or owned by PRI or NCL
and now in force and such Schedule indicates the name of the insurer, the type
of policy, the risks covered thereby, the amount of the premiums, the term of
each policy, the policy number, the amounts of coverage, the deductible in each
case and all outstanding claims thereunder. Correct and complete copies of
certificates of insurance for all such policies have been delivered to Buyer by
the Sellers on or before the date of this Agreement. All such policies are in
full force and effect and enforceable in accordance with their terms. Neither
PRI nor NCL, as the case may be, is now in default regarding the provisions of
any such policy, including, without limitation, failure to make timely payment
of
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all premiums due thereon, and none of them has failed to file any notice or
present any claim thereunder in due and timely fashion. Neither PRI nor NCL have
been refused, or denied renewal of, any insurance coverage by insurance
companies offering such insurance. the Seller Disclosure Schedule contains
copies of all insurance audit reports, loss prevention reports, all claims made
and loss history reports in respect of any insurance maintained by PRI or NCL or
any predecessor of PRI or NCL during the past five (5) years.
(b) Sellers, and to the Sellers' knowledge, other
licensed professional employees of PRI or NCL have not, in the last seven (7)
years, filed a written application for professional malpractice insurance
coverage which has been denied by an insurance agency or carrier. All licensed
professional employees of PRI or NCL have been continuously insured for
professional malpractice claims since their employment by PRI or NCL. Neither
Sellers nor to the Seller's knowledge any other professional employees of PRI or
NCL are in default with respect to any provision contained in any professional
malpractice policy and neither Seller's, nor to the Sellers knowledge any other
professional employees of PRI or NCL has failed to give any notice or present
any claim under any such policy in due and timely fashion.
(c) Since their incorporation, PRI and NCL has
continuously maintained workers compensation and employer liability, commercial
property, general liability, inland marine, commercial auto, commercial excess
liability and umbrella liability and general professional liability (including
completed operations hazard endorsement), insurance coverage on an occurrence
basis, or on a claims made basis with tail coverage upon each change in carrier,
at a level equal to or greater than that shown on the Seller Disclosure
Schedule.
2.16 Environmental Matters. Except as set forth in the Seller
Disclosure Schedule, there are no present or past Environmental Conditions
relating to or which could in any way materially and adversely affect PRI or NCL
or the Rights and Assets. For the purposes of this Agreement, "Environmental
Condition" means (a) the introduction into the environment of any pollution,
including without limitation any contaminant, irritant or pollutant or other
toxic or hazardous substance, in violation of any federal, state or local law,
ordinance or governmental rule or regulations, as a result of any spill,
discharge, leak, emission, escape, injection, dumping or release of any kind
whatsoever of any substance or exposure of any type in any work places or to any
medium, including without limitation air, land, surface waters or ground waters,
or from any generation, transportation, treatment, discharge, storage or
disposal of waste materials, raw materials, hazardous materials, toxic materials
or products of any kind or from the storage, use or handling of any hazardous or
toxic materials or other substances, and (b) any noncompliance with any federal,
state or local environmental Law or order as a result of or in connection with
any of the foregoing.
2.17 Taxes.
(a) Except as listed in the Seller Disclosure Schedule,
or as reflected in the Financial Statements there does not exist any liability
for Taxes which may be asserted by any taxing authority against, and no Lien or
other encumbrance for Taxes will attach to, PRI or NCL or any of the Rights and
Assets other than Taxes due in respect of periods for which Tax Returns are not
yet due and for which adequate accruals have been made in the Financial
Statements. All Tax Returns required to be filed prior to the date hereof by PRI
or NCL have been filed (other than Tax Returns for which extensions to file have
been granted) with the appropriate governmental agencies in all jurisdictions in
which such Tax Returns are required to be filed, all of which are true, correct
and complete in all material respects, and all amounts shown as owing thereon
have been paid.
(b) Except as listed on the Seller Disclosure Schedule,
neither Seller, PRI or NCL have received notice of any Tax claims being asserted
or any proposed assessment by any taxing authority and no Tax Returns of PRI or
NCL have been audited by the Internal Revenue Service (the "IRS") or the
appropriate state agencies for any fiscal year or period ended prior to the date
hereof, and PRI and NCL are not presently under, nor have they received notice
of any, contemplated investigation or audit by the IRS or any state agency
concerning any fiscal year or period ended prior to the date hereof. Except as
listed on the Seller Disclosure Schedule, neither PRI nor NCL have executed any
extension or waivers of any statute of limitations on the assessment or
collection of any Tax due that is currently in effect.
(c) Each of PRI and NCL and any of its predecessors in
interest that has employed a Business Employee has withheld or collected from
each payment made to each of their employees the amount of all
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Taxes required to be withheld or collected therefrom and PRI, NCL and any of
their predecessors in interest has paid the same to the proper tax depositories
or collecting authorities.
(d) Since incorporation of PRI and NCL, Sellers have
filed all elections necessary for PRI and NCL to be taxed as a Subchapter S
Corporation and PRI and NCL have been recognized as Subchapter S Corporations by
the Internal Revenue Service and Sellers know of no basis for any challenge to
the status of PRI or NCL as Subchapter S Corporations.
2.18 Licenses, Authorizations and Provider Programs.
(a) PRI and NCL hold all valid licenses and other rights,
accreditations, permits and authorizations required by law, ordinance,
regulation or ruling of any governmental regulatory authority necessary to
operate their business as now conducted. PRI and NCL are certified for
participation and reimbursement under Titles XVIII and XIX of the Social
Security Act (the "Medicare and Medicaid programs") (Medicare and Medicaid
programs and such other similar federal, state or local reimbursement or
governmental programs for which PRI and NCL are eligible are hereinafter
referred to collectively as the "Government Programs") and have current provider
agreements for such Government Programs and with such private non-governmental
programs, including without limitation any private insurance program, under
which PRI and NCL directly or indirectly are presently receiving payments (such
non-governmental programs herein referred to as "Private Programs"). Set forth
on the Seller Disclosure Schedule is a correct and complete list of such
licenses, accreditations, permits and other authorizations, and provider
agreements under all Government and Private Programs, complete and correct
copies of which have been provided to Buyer. True, complete and correct copies
of all surveys of PRI and NCL or their predecessors in interest and conducted in
connection with any Government Program, Private Program or licensing or
accrediting body during the past two (2) years have been provided to Buyer.
(b) No violation, default, order or deficiency exists
with respect to any of the items listed on the Seller Disclosure Schedule.
Neither Sellers, PRI or NCL have received any notice of any action pending or
recommended by any state or federal agencies having jurisdiction over the items
listed on the Seller Disclosure Schedule, either to revoke, withdraw or suspend
any license, right or authorization, or to terminate the participation of PRI or
NCL in any Government or Private Program. To the knowledge of the Sellers, 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 the Seller Disclosure Schedule or to
revoke, withdraw or suspend any such license, or to terminate or modify the
participation of PRI or NCL in any Government or Private Program. To the
knowledge of the Sellers, there has been no decision not to renew any provider
or third-party payor agreement of PRI or NCL. Except as listed on the Seller
Disclosure Schedule, 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 such license, right or authorization, or
Government or Private Program, by reason of the Acquisition.
(c) PRI and NCL have timely filed all reports and
xxxxxxxx required to be filed by them prior to the date hereof with respect to
the Government and Private Programs, all fiscal intermediaries and other
insurance carriers and all such reports and xxxxxxxx are complete and accurate
in all material respects and have been prepared in compliance with all
applicable laws, regulations, and principles governing reimbursement and payment
claims. True and complete copies of such reports and xxxxxxxx for the most
recent year have heretofore been made available to Buyer. PRI and NCL have paid
or caused to be paid all known and undisputed refunds, overpayments, discounts
or adjustments which have become due pursuant to such reports and xxxxxxxx and
have no liability under any Government or Private Program (known or unknown,
contingent or otherwise) for any refund, overpayment, discount or adjustment. To
the knowledge of the Sellers, except as set forth on the Seller Disclosure
Schedule, (i) there are no pending appeals, adjustments, challenges, audits,
litigation, or notices of intent to audit such prior reports or xxxxxxxx, and
(ii) during the last two years neither PRI or NCL have been audited, examined or
otherwise by any Government or Private Program. There are no other reports
required to be filed by PRI or NCL in order to be paid under any Government or
Private Program for services rendered in connection with their business that
have not been timely filed, except for cost reports not yet due.
2.19 Inspections and Investigations. Except as set forth and
described in the Seller Disclosure Schedule, (i) neither the right of PRI or
NCL, nor, to the knowledge of the Sellers, the right of any licensed
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professional or other individual affiliated with PRI or NCL, to receive
reimbursements pursuant to any Government 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, (ii) neither PRI nor NCL, nor, to the knowledge of the Sellers, any
licensed professional or other individual affiliated with PRI or NCL or who has
provided services to PRI or NCL during the past three (3) years, has 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
any Seller, PRI or NCL received any notice of deficiency during the past three
years in connection with the operations of their business, (iii) 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 PRI or NCL or the Rights and Assets, or requiring conformity to any
applicable agreement, statute, regulation, ordinance or bylaw, including but not
limited to, the Government and Private Programs, and (iv) 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 PRI or NCL or the
Rights and Assets 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 the Seller Disclosure Schedule are copies of all reports,
correspondence, notices and other documents relating to any matter described or
referenced therein.
2.20 Certain Relationships. Except as set forth on the Seller
Disclosure Schedule, neither PRI, NCL or any Seller has:
(i) 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
an entity in which a physician or physician family
member has an ownership or investment interest,
including, but not limited to:
(A) payments for personal or management services
pursuant to a medical director agreement,
consulting agreement, management contract,
personal services agreement, or otherwise;
(B) 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;
(C) 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
(ii) offered, paid, solicited or received any Remuneration
(excluding fair market value payments for services,
equipment or supplies) to or from any healthcare
provider, pharmacy, drug or equipment supplier,
distributor or manufacturer, including, but not
limited to:
(A) payments or exchanges of anything of value
under a warranty provided by a manufacturer
or supplier of an item to PRI or NCL; or
(B) discounts, rebates, or other reductions in
price on a good or service received by PRI
or NCL;
(iii) 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;
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(iv) entered into any joint venture, partnership,
co-ownership or other arrangement involving any
ownership or investment interest by any physician, or
family member of a physician, or an 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 PRI or NCL;
(v) 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 PRI or NCL; or
(vi) entered into any agreement providing for the referral
of any patient for the provision of goods or services
by PRI or NCL, or payments by PRI or NCL as a result
of any referrals of patients to PRI or NCL.
2.21 Xxxxx; Fraud and Abuse; False Claims. Except as disclosed in
the Seller Disclosure Schedule, neither PRI nor NCL nor any of their respective
employees, nor to Sellers' knowledge, persons and entities providing
professional services to PRI or NCL, have engaged in any activities which are
prohibited under 42 U.S.C. ss. 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
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.
2.22 Rates and Reimbursement Policies. Except for ethical
limitations, the jurisdictions in which PRI and NCL conduct business do not
currently impose any restrictions or limitations on rates which may be charged
to private pay patients receiving services provided by PRI or NCL. Neither PRI
or NCL have any rate appeal currently pending before any governmental authority
or any administrator of any Private Programs. None of the Sellers have knowledge
of any applicable law, which has been enacted, promulgated or issued within the
eighteen (18) months preceding the date of this Agreement of any such legal
requirement proposed or currently pending in the jurisdictions in which PRI or
NCL does business, which would have a material adverse effect on PRI or NCL or
may result in the imposition of additional Medicaid, Medicare, charity, free
care, welfare, or other discounted or government assisted patients or require
PRI or NCL to obtain any necessary authorization which they do not currently
possess.
2.23 Changes in Laws. To the knowledge of the Sellers there are no
pending changes in applicable law or regulations that would prevent PRI or NCL
from conducting their business in substantially the same manner as their
business is currently conducted prior to the Closing Date.
2.24 Patients and Orders. Set forth on the Seller Disclosure
Schedule is a list of all patients or customers of PRI and NCL during the last
twelve months and a list of all outstanding orders from such customers or
patients on the Closing Date.
2.25 Controlled Substances. Neither PRI, NCL nor their officers,
directors, and employees and persons who provide professional services to PRI or
NCL have, in connection with their activities directly or
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indirectly related to PRI or NCL, 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.
2.26 Inventories. All items of inventory of PRI and NCL consist,
and will consist of items of a quality and quantity usable and saleable in the
ordinary course of business and conform to generally accepted standards in the
industry. Except as set forth on the Seller Disclosure Schedule, since December
31, 2000, no inventory items have been sold or disposed of, except through sales
in the ordinary course of business, and in no event at prices less than book
value of such inventory items as of December 31, 2000.
2.27 Business Relationships.
(a) Except as disclosed on the Seller Disclosure
Schedule, the relationships between PRI and NCL and all customers, clients,
third party payors, patients, Employees and vendors who receive goods and
services from or provide goods and services to PRI or NCL are satisfactory, and
the Sellers have no knowledge of (i) any facts or circumstances which would
reasonably be expected to materially alter, negate, impair or in any way
adversely affect the continuity of any such relationships or (ii) any
complaints, claims, threats, plans or intentions to discontinue or curtail
relations under any such relationships. To the knowledge of the Sellers, neither
PRI nor NCL have any obligation to obtain the return of goods in the possession
of customers or patients.
(b) Except as disclosed on the Seller Disclosure
Schedule, the Sellers have no knowledge of any present or future condition or
state of facts or circumstances which would prevent PRI or NCL from carrying on
its business after the Closing Date in the same manner as it is presently being
carried on.
2.28 Absence of Certain Business Practices. Except as set out on
the Seller Disclosure Schedule, neither PRI, NCL, nor any officer, director,
employee or agent of PRI or NCL, nor to the knowledge of Sellers, any other
person or entity acting on behalf of PRI or NCL, acting alone or together, has
(i) received, directly or indirectly, any rebates, payments, commissions,
promotional allowances or any other economic benefits, regardless of their
nature or type, from any customer, governmental employee or other person or
entity with whom PRI or NCL have done business directly or indirectly, or (ii)
directly or indirectly, given or agreed to give any gift or similar benefit to
any customer, governmental employee or other person or entity who is or may be
in a position to help or hinder PRI or NCL (or assist PRI or NCL in connection
with any actual or proposed transaction) which, in the case of either clause (i)
or clause (ii) above, would reasonably be expected to subject PRI or NCL to any
damage or penalty in any civil, criminal or governmental litigation or
proceeding. Neither PRI or NCL, nor, to the knowledge of the Sellers, any
officer thereof has used any funds for unlawful contributions, gifts,
entertainment or other expenses relating to political activity or otherwise, or
has made any direct or indirect unlawful payment to governmental officials or
employees from the entities' funds or been reimbursed from the entities' funds
for any such payment, or is aware that any other person associated with or
acting on behalf of PRI or NCL have engaged in any such activities.
2.29 Accounts Receivable. Except as set forth in the Seller
Disclosure Schedule, the accounts receivable reflected in the most recent
balance sheet for PRI and NCL, separately included in the Financial Statements
referred to in Section 2.6 hereof, and all accounts receivable arising between
December 31, 2000 and the date hereof, arose from bona fide transactions in the
ordinary course of business. Except as set forth in the Seller Disclosure
Schedule, the accounts receivable reflected on such balance sheet, have been
properly recorded and reserved against consistent with past practice. No such
account receivable has been assigned or pledged to any other person, firm or
corporation. Reasonable provision has been made in the Financial Statements for
collection losses, contractual discounts and other adjustments from third party
payers.
2.30 Related Party Transactions. Except as set forth in the Seller
Disclosure Schedule hereto, there are no existing arrangements or proposed
transactions between PRI and NCL, and (i) any officer or director of PRI or NCL
or any member of the immediate family of any of the foregoing persons (such
officers, directors and family members being hereinafter individually referred
to as a "Related Party"), (ii) any business (corporate or otherwise) which a
Related Party owns, or controls directly or indirectly, or in which a Related
Party has an ownership interest,
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or (iii) between any Related Party and any business (corporate or otherwise)
with which PRI and NCL regularly does business.
2.31 RESERVED.
2.32 Sellers' 1362 Election. Sellers represent that:
(a) PRI made a valid election under Section 1362 of the
Internal Revenue Code of 1986, as amended (the "Code"), to be treated as an S
corporation as defined in Code Section 1361, which election was acknowledged by
the IRS and became effective on July 1, 1996. The election has remained in
effect since that date without revocation, cessation or termination, and PRI has
qualified to be taxed under the provisions of Subchapter S of the Code and under
applicable similar provisions of state income tax law for all periods beginning
on or after July 1, 1996.
(b) PRI does not own any assets in which its basis is
determined (in whole or in part) by reference to the basis of such assets (or
any other property) in the hands of a C corporation.
(c) NCL made a valid election under Section 1362 of the
Internal Revenue Code of 1986, as amended (the "Code"), to be treated as an S
corporation as defined in Code Section 1361, which election was acknowledged by
the IRS and became effective on March 27, 1996. The election has remained in
effect since that date without revocation, cessation or termination, and NCL has
qualified to be taxed under the provisions of Subchapter S of the Code and under
applicable similar provisions of state income tax law for all periods beginning
on or after March 27, 1996.
(d) NCL does not own any assets in which its basis is
determined (in whole or in part) by reference to the basis of such assets (or
any other property) in the hands of a C corporation.
2.33 Statements True and Correct. No representation or warranty
made herein by any Seller, nor in any statement, certificate or instrument
executed and delivered to Buyer by PRI, NCL or any Seller pursuant to any
Acquisition Document, contains or will contain any untrue statement of material
fact or omits or will omit to state a material fact necessary to make these
statements contained herein and therein not misleading in light of the
circumstances in which they were made.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to the Sellers as follows:
3.1 Organization, Authority and Capacity. Buyer is a corporation,
duly organized, validly existing and in good standing under the laws of the
State of Delaware. Buyer has the full power and authority necessary to (i)
execute, deliver and perform its obligations under the Acquisition Documents to
be executed and delivered by it, and (ii) carry on its business as it has been
and is now being conducted and to own and lease the properties and assets which
it now owns or leases. Buyer is duly qualified to do business and is in good
standing in each jurisdiction in which a failure to be so qualified or in good
standing would have a material adverse effect on its ability to perform its
obligations under the Acquisition Documents.
3.2 Authorization and Validity. The execution, delivery and
performance of the Acquisition Documents to be executed and delivered by Buyer
have been duly authorized by all necessary action by Buyer. The Acquisition
Documents to be executed and delivered by Buyer have been or will be, as the
case may be, duly executed and delivered by Buyer and constitute or will
constitute the legal, valid and binding obligations of Buyer,
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enforceable in accordance with their respective terms, except as may be limited
by bankruptcy, insolvency, or other laws affecting creditors' rights generally,
or as may be modified by a court of equity.
3.3 Absence of Conflicting Agreements or Required Consents. The
execution, delivery and performance by Buyer of the Acquisition Documents to be
executed and delivered by it: (i) do not require the consent of or notice to any
governmental or regulatory authority or any other third party; (ii) will not
conflict with any provision of Buyer's charter or bylaws; (iii) will not
conflict with or result in a violation of any law, ordinance, regulation,
ruling, judgment, order or injunction of any court or governmental
instrumentality to which Buyer is a party or by which Buyer or any of their
respective properties is bound; and (iv) will not conflict with, constitute
grounds for termination of, result in a breach of, constitute a default under,
require any notice under, or accelerate or permit the acceleration of any
performance required by the terms of any agreement, instrument, license or
permit to which Buyer is a party or by which any of Buyer's properties are
bound.
3.4 Statements True and Correct. No representation or warranty
made herein by Buyer, nor in any statement, certificate or instrument executed
and delivered to the Sellers by Buyer pursuant to any Acquisition Document
contains or will contain any untrue statement of material fact or omits or will
omit to state a material fact necessary to make these statements contained
therein not misleading in light of the circumstances in which they were made.
3.5 Litigation, etc. Except as listed on Schedule 3.5 hereto,
there are no claims, lawsuits, actions, arbitrations, administrative or other
proceedings pending against Buyer relating to or which in any way could affect
PRI's and NCL's ability to conduct their business after the Closing in
substantially the same manner as heretofore conducted. Except as listed on
Schedule 3.5, (i) to the knowledge of the Buyer, no such matter described in the
previous sentence is threatened and there is no basis for any such action, and
(ii) there are no governmental or administrative investigations or inquiries
pending that involve Buyer or any of its affiliates relating to or which in any
way could affect the operation of PRI or NCL after the Closing. Except as listed
on Schedule 3.5, there are no judgments against or consent decrees binding on
Buyer or any of its affiliates relating to or which in any way could affect the
operation of PRI or NCL after the Closing or, to the knowledge of the Buyer, any
licensed professional providing services in connection with the operation of PRI
or NCL.
3.6 No Violation of Law.
(a) Buyer is not currently in material violation of any
applicable local, state or federal law, order, injunction or decree, or any
other requirement of any governmental body, agency or Regulatory Authority or
court binding on it, or relating to its property or business or its advertising,
sales or pricing practices.
(b) Buyer is not currently subject to any material fine,
penalty, liability or disability as the result of a failure to comply with any
requirement of federal, state or local law nor has Buyer received any notice of
such noncompliance.
3.7 Inspections and Investigations. Except as set forth and
described in Schedule 3.7, (i) Buyer's right to receive reimbursements pursuant
to any Governmental or Private Program has not 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, (ii)
Buyer has not, during the past three (3) 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 Buyer received
any notice of deficiency during the past three years in connection with the
operations of its business, (iii) 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 Buyer's business, or requiring
conformity to any applicable agreement, statute, regulation, ordinance or bylaw,
including but not limited to, the Government and Private Programs, and (iv)
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
Buyer's business 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 Schedule 3.7 are copies of all reports, correspondence, notices and
other documents relating to any matter described or referenced therein.
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3.8 Xxxxx; Fraud and Abuse; False Claims. Buyer has not engaged in
any activities which are prohibited under 42 U.S.C. Section 1320a-7b, 42 U.S.C.
Section 1395nn or 31 U.S. C. Section 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 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, 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.
3.9 Controlled Substances. Buyer has not, in connection with its
activities directly or indirectly related to PRI or NCL, engaged in any
activities which are prohibited under the Federal Controlled Substances Act, 21
U.S.C. Section 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.
ARTICLE 4
ADDITIONAL AGREEMENTS
4.1 Access to Information. After the Closing, Buyer will afford
Sellers access upon reasonable notice to all applicable books and records of PRI
and NCL and will furnish such parties with such additional financial, operating
and other information as to the business and properties of PRI and NCL as such
parties may from time to time reasonably request for purposes of filing fax
returns, responding to claims, investigations or audits. Sellers shall also be
allowed access, upon reasonable notice and as shall be mutually agreeable, to
consult with the officers, employees, accountants, counsel and agents of PRI and
NCL in that regard.
4.2 Payback of Receivables. In the event that at the earlier of
(i) April 30, 2002, or (ii) such date as Sellers and Buyer shall agree that the
receivable is uncollectable (the "Write Off Date"), PRI and NCL have not
collected an accounts receivable which existed at the close of business on April
30, 2001 and which was recorded as such on the Closing Balance Sheet in excess
of the reserves therefor, Sellers will pay to Buyer the amount of said accounts
receivable that remain uncollected and in exchange therefor, Buyer shall cause
PRI and NCL to assign and transfer the uncollected accounts receivables to
Sellers. Sellers hereby acknowledge and agree that on the Write Off Date Buyer
may in addition to its other rights and remedies, recover the amount of the
uncollected receivables which are owed to it by Sellers from either the Earnout
Amount or the Escrow without limitation on, or prejudice to, Buyer's rights to
collect this amount through a right of offset or in any other legal manner.
4.3 Affirmative Covenants of Sellers, PRI and NCL. From the date
hereof until the earlier of the Closing Date or the termination of this
Agreement, unless the prior written consent of Buyer shall have been obtained,
and except as otherwise expressly contemplated herein, PRI, NCL and Sellers
shall to the extent any of the following relates to or in any way may affect
PRI, NCL, the Acquisition, or the Rights and Assets:
(i) operate the business of PRI and NCL only in the
usual, regular, and ordinary course of business,
consistent with past practices;
(ii) use reasonable commercial efforts to preserve intact
its business organization, licenses, permits,
government programs, private programs and customers;
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(iii) use reasonable commercial efforts to retain the
services of its employees, agents and consultants on
terms and conditions not less favorable than those
existing prior to the date hereof and to ensure that
there are no material or adverse changes to employee
relations;
(iv) keep and maintain PRI and NCL assets in their present
condition, repair and working order, except for
normal depreciation and wear and tear, and use
reasonable commercial efforts to maintain its
insurance, rights and licenses;
(v) pay all accounts payable of PRI and NCL in accordance
with past practice and use reasonable commercial
efforts to collect all accounts receivable in
accordance with past practice, but not less than in
accordance with prudent business practices;
(vi) confer on a regular and frequent basis with one or
more designated representatives of Buyer to report
material operational matters and to report the
general status of ongoing business operations or PRI
and NCL;
(vii) make available to Buyer true and correct copies of
all internal management and control reports
(including aging of accounts receivable, listings of
accounts payable, and inventory control reports) and
financial statements related to PRI or NCL;
(viii) cause all tax returns that are due and have not been
filed prior to the date hereof or which become due
prior to the Closing Date, to be prepared and filed
on or before the date such tax return is required to
be filed (taking into account any extensions of the
filing deadlines granted); provided, however, that
any such tax return shall not be filed without a
reasonable opportunity for prior review and comment
by Buyer;
(ix) as soon as reasonably practicable after they become
available, but in no event more than thirty (30) days
following the end of each calendar month, deliver to
Buyer true and complete copies of monthly financial
statements of PRI and NCL for each calendar month
ending subsequent to the date hereof in the format
historically utilized by PRI and NCL;
(x) perform in all material respects all obligations
under agreements relating to or affecting its assets,
properties or rights, except for the failure of which
performance would not have a material adverse effect
on PRI and NCL taken as a whole, financial or
otherwise;
(xi) use reasonable efforts to keep in full force and
effect present insurance policies or other comparable
insurance coverage; and
(xii) notify Buyer of (i) any event or circumstance which
is reasonably likely to have a material adverse
effect on PRI or NCL or would cause or constitute a
breach of any of Sellers representations, warranties
or covenants contained herein; or (ii) any unexpected
change in the normal course of business or in the
operation of the assets of PRI or NCL, and of any
governmental complaints, investigations or hearings
(or communications indicating that the same may be
contemplated), adjudicatory proceedings, budget
meetings or submissions involving any material
property. Sellers shall keep Buyer fully informed of
such events and permit Buyer's representatives prompt
access to all materials prepared in connection
therewith.
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4.4 Negative Covenants of Sellers.
(a) From the date hereof until the earlier of the Closing
Date or the termination of this Agreement, Sellers will not do any of the
following without the prior written consent of Buyer to the extent any of the
following relates to or in any way may affect PRI, NCL, the Acquisition, or the
Rights and Assets:
(i) take any action which would (a) adversely affect the
ability of any party to the Acquisition Documents to
obtain any consents required for the transactions
contemplated thereby, or (b) adversely affect the
ability of any party hereto to perform its covenants
and agreements under the Acquisition Documents;
(ii) amend any of its organizational or governing
documents, except as provided herein or for the
purpose of accomplishing the transactions
contemplated by this Agreement;
(iii) impose, or suffer the imposition, on any material
asset of PRI or NCL of any Lien or permit any such
Lien to exist;
(iv) other than pursuant to the Acquisition Documents,
sell, pledge or encumber, or enter into any contract
to sell, pledge or encumber, any interest in the
assets of PRI or NCL, except in the ordinary course
of business;
(v) purchase or acquire any assets or properties of PRI
or NCL, whether real or personal, tangible or
intangible, or sell or dispose of any assets or
properties, whether real or personal, tangible or
intangible, except in the ordinary course of business
and consistent with past practices;
(vi) except for the employment agreements contemplated
herein, grant any increase in compensation or
benefits to the employees or officers of any Seller
Party, except in accordance with past practice; pay
any severance or termination pay or any bonus other
than pursuant to written policies or written
contracts in effect as of the date hereof and
disclosed on the Schedules hereto; enter into or
amend any severance agreements with officers of PRI
or NCL; or grant any material increase in fees or
other increases in compensation or other benefits to
directors of PRI or NCL except in accordance with
past practice;
(vii) except for the employment agreements contemplated
herein, enter into or amend any employment contract
between PRI or NCL and any person or entity (unless
such amendment is required by law) that PRI or NCL
does not have the unconditional right to terminate
without liability (other than liability for services
already rendered), at any time on or after the
Closing Date;
(viii) adopt any new employee benefit plan or make any
material change in or to any existing employee
benefit plans other than any such change that is
required by law or that, in the opinion of counsel,
is necessary or advisable to maintain the tax
qualified status of any such plan;
(ix) make any significant change in any tax or accounting
methods or systems of internal accounting controls,
except as may be appropriate to conform to changes in
tax laws or regulatory accounting requirements or
GAAP;
(x) commence any litigation other than in accordance with
past practice, settle any litigation involving any
liability of PRI or NCL for material money damages or
restrictions upon the operations of their business;
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(xi) except in the ordinary course of business and which
is not material, modify, amend or terminate any
material contract or waive, release, compromise or
assign any material rights or claims;
(xii) except in the ordinary course of business and, even
if in the ordinary course of business, then not in an
amount to exceed $5,000 in the aggregate, make or
commit to make any capital expenditure, or enter into
any lease of capital equipment as lessee or lessor,
related to PRI or NCL;
(xiii) take any action, or omit to take any action, which
would cause any of the representations and warranties
contained in Article 2 to be untrue or incorrect in
any material respect; or
(xiv) make any loan to any person or increase the aggregate
amount of any loan currently outstanding to any
person.
4.5 Public Announcements. Each party hereto agrees (i) not to
disclose any aspect of the discussions, negotiations, terms, status or
conditions relating to the transactions contemplated herein to any third party
other than their respective officers, directors, authorized employees and
authorized representatives and then only on a need to know basis and shall cause
and require all such persons to whom such information is disclosed to abide by
the provisions of this Section 4.5, and (ii) not to issue any press release or
other general public announcement (including in any trade journal or other
publication) of the transaction, in either case, without the prior written
consent of each of the parties hereto, except to the extent that disclosure may
be required by law, and except that Sellers acknowledge that Buyer shall issue a
press release promptly upon the execution of this Agreement in a form consented
to by Sellers, such consent not to be unreasonably withheld or delayed, and
Sellers agree that Buyer shall file its 8-K, 10-Q, 10-K and like filing without
prior notice to or consent of Sellers.
4.6 Confidential Information. The parties hereto acknowledge and
affirm the Confidentiality Agreement between them, dated April 11, 2001.
4.7 Relations. PRI and NCL further covenant and agree that they
will not take or fail to take any action which is likely to affect their
relationship with any suppliers or representatives between the date hereof and
the Closing Date.
4.8 Use of Names. On and after the Closing Date, Sellers shall
cease to use Pharmacare Resources, Inc. and NCL Management, Inc. or any
derivation thereof or other name confusingly similar thereto for any commercial
or other public purpose without the prior written consent of Buyer.
4.9 Conditions to Closing. PRI, NCL, Sellers and Buyer agree to
use their commercially reasonable efforts to satisfy the closing conditions set
forth in Articles 5 and 6 of this Agreement by May 31, 2001, and if not by such
time, as soon thereafter as possible. PRI, NCL and Sellers agree, on or prior to
the Closing Date, to execute those documents listed in Article 5 hereof to which
they are a party. Buyer agrees, on or prior to the Closing Date, to execute
those documents listed in Article 6 hereof to which it is a party.
4.10 Risk of Loss. PRI, NCL and Sellers shall maintain all risk of
condemnation, destruction, loss or damage due to fire or other casualty from the
date of this Agreement until the Closing. If the condemnation, destruction, loss
or damage is such that the operation of PRI or NCL is materially interrupted or
curtailed or the Rights and Assets are materially affected, then Buyer shall
have the right to terminate this Agreement. If Buyer nonetheless elects to
close, Sellers shall remit all net condemnation proceeds or third party
insurance proceeds to Buyer and the Consideration shall be adjusted at Closing
to reflect such condemnation, destruction, loss or damage to the extent that
insurance or condemnation proceeds are not sufficient to cover such destruction,
loss or damage.
4.11 Tax Matters.
(a) Transfer Taxes. Any transfer taxes incurred by
Sellers in connection with the sale of the capital stock of PRI and NCL to the
Company pursuant to this Agreement shall be borne by Sellers. Sellers
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shall prepare and file, at their own expense, all necessary tax returns and
other documentation with respect to all such transfer taxes.
(b) Tax Returns.
(i) Except for tax returns required pursuant to Section
4.11(g) below, Sellers shall prepare (or cause to be
prepared) and PRI and NCL shall timely file for all
taxable periods ending on or before the Effective
Date (a "Pre-Effective Period") all Tax Returns
required to be filed after the Effective Date by or
on behalf of PRI and NCL (the "Pre-Effective Period
Tax Returns"). The preparation of such Tax Returns
and the positions taken thereon shall be consistent
in all respects with PRI's and NCL's past tax
accounting principles and practices.
(ii) The Company shall prepare and timely file (or cause
to be prepared and timely filed) for all taxable
periods beginning before and ending after the close
of the Effective Date (a "Straddle Period"), all Tax
Returns required to be filed after the Effective Date
by PRI and NCL. For purposes of this Agreement, the
portion of the Straddle Period ending on and
including the Effective Date shall be referred to as
the "Pre-Effective Straddle Period" and the portion
of the Straddle Period beginning after the Effective
Date shall be referred to as the "Post-Effective
Straddle Period". Any such Taxes for a Straddle
Period with respect to PRI and NCL shall be
apportioned to the Pre-Effective Straddle Period
based on the actual operations of PRI and NCL during
the portion of such period ending on and including
the Effective Date, determined as though PRI and
NCL's books closed at the close of the Effective
Date. The cost and expenses of preparing any Tax
Return for a Straddle Period shall be borne by the
Company.
(iii) All Tax Returns referred to in Sections 4.11(b)(i)
shall be subject to review and approval by the
Company, and all Tax Returns referred to in Section
4.11(b)(ii) which affect the liability of Sellers for
Taxes pursuant to this Agreement or otherwise shall
be subject to review and approval by Sellers, in each
case prior to filing, and such approval shall not be
unreasonably withheld or delayed by either such
party. The party charged with responsibility to
prepare a Tax Return subject to review (the
"Preparing Party") shall present such Tax Return to
the other party (the "Reviewing Party") no less than
thirty(30) days prior to the due date (including
extensions) for filing the Tax Return. The parties
shall cooperate with one another by making available
for review all related work papers and analyses
utilized in preparing the Tax Return and all related
books, records and personnel for this purpose without
cost. Within fifteen (15) days after receipt of the
Tax Return, the Reviewing Party shall communicate to
the Preparing Party as to whether it concurs with the
Tax Return or, if not, stating its exceptions
thereto, together with the reasons and supporting
information relating to such exceptions. If there are
no such exceptions or such exceptions are resolved by
the parties, then such resolution shall be the final
determination. If such exceptions cannot be resolved
by the parties within ten (10) business days after
delivery of the list of exceptions, the dispute shall
be submitted to an independent tax consultant who
shall make a final determination in accordance with
the terms of this Agreement within fifteen (15) days
after submission to such independent tax consultant.
The independent tax consultant shall be one of the
"Big Five" public accounting firms or a law firm with
a nationally recognized tax practice with no material
relationship to the parties or their affiliates, and
such independent tax consultant shall be chosen by
agreement of the parties, or if they are unable to
agree, chosen by lot from an equal number of nominees
submitted by each party. The fees and expenses of the
independent tax consultant shall be allocated by it
in inverse proportion to the adjustment granted the
Reviewing Party. For example, if such tax consultant
grants a portion of the exceptions proposed by the
Reviewing Party that results in an adjustment to the
amount of Taxes owed that is 25% of the total
adjustment to the amount of Taxes owed that would
have occurred had all of the Reviewing Party's
proposed exceptions been granted, it shall assess the
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Reviewing Party with 75% of its fees and expenses.
The independent tax consultant's decision shall be
final and binding upon, and non-appealable by, the
parties.
(c) Tax Payments. Sellers shall pay all Taxes with
respect to all Tax Returns described in Section 4.11(b) attributable to
Pre-Effective Periods or apportioned to Pre-Effective Straddle Periods pursuant
to Section 4.11(b)(ii), to the extent not accrued for on the Financial
Statements, ten (10) days prior to the respective due dates (excluding
extensions or waivers thereof) for such Taxes or, if later, when the respective
Tax Returns reporting such Taxes are filed, other than any Taxes payable (the
"Excluded Taxes") as the result of any (i) events occurring on the Effective
Date, outside of the ordinary course of business, except for events occurring as
a condition of closing this transaction, (ii) any increase in Taxes resulting
from PRI or NCL amending any Pre-Effective Tax Returns without the prior written
permission of Sellers, and (iii) Taxes which were previously paid through
estimated Tax payments. Buyer shall pay all taxes with respect to Tax Returns
described in Section 4.11(b) attributable to Post-Effective Periods or not
apportioned to Pre-Effective Straddle Periods pursuant to Section 4.11(b)(ii).
(d) Refunds. The Company agrees to, and shall cause PRI
and NCL to, cooperate in obtaining any refunds of Taxes (other than any Excluded
Taxes) for Pre-Effective Tax Returns and the Pre-Effective Straddle Periods and
to promptly remit to Sellers any such refunds received by the Company, or PRI
and NCL net of any Taxes incurred by the Company, or PRI or NCL in the
Pre-Effective Straddle Period which are assessed after the Effective Date and
which have not been reimbursed by Sellers, provided that such refunds were not
reflected on the Closing Balance Sheet. Any reasonable out-of-pocket costs or
expenses incurred by the Company or PRI or NCL in obtaining such refunds shall
be borne by Sellers. In no event shall Sellers be entitled to file an amended
return or otherwise make a claim for refund (or have such an amended return
filed or such claim made on its behalf) without the prior approval of the
Company (which approval shall not be unreasonably withheld or delayed) to the
extent that such action would increase the Tax liability of the Company for any
taxable period or portion thereof following the Effective Date.
(e) Tax Characterization. Any payments made pursuant to
(i) this Section 4.11, (ii) the indemnity provisions of Article 8, or (iii) the
purchase price adjustment provisions of this Agreement, shall be treated by each
of the parties hereto as an adjustment to the Purchase Price paid by the Company
for the Shares for all Tax and financial accounting purposes. The parties hereto
agree to account for the transactions contemplated herein in a manner consistent
with all the provisions of this Agreement when filing their respective Tax
Returns and the Tax Returns of PRI and NCL.
(f) Post-Closing Audits and Other Proceedings.
(i) Sellers, on the one hand, and Company on the other
hand, each agree, at its own expense (except to the
extent such expense, incurred to third parties, is
subject to indemnification pursuant to Section 8), to
furnish or cause to be furnished to each other, upon
request, as promptly as practicable, such information
and assistance (including access to books and
records) relating to PRI and NCL as is reasonably
necessary or is reasonably requested for the
preparation of any return for Taxes, any claim for
refund or any audit, and the prosecution or defense
of any claim, suit or proceeding relating to any
proposed adjustment.
(ii) Sellers on the one hand, and the Company, on the
other hand, each agree to give prompt notice to each
other of any written inquiry by a Tax authority,
scheduling of an examination or proposed adjustment
with respect to Taxes for any Pre-Effective Period or
any Pre-Effective Straddle Period. Sellers and the
Company shall cooperate with each other in the
conduct of any Tax audit or other Tax proceedings
involving PRI or NCL for such periods and each may
participate at its own expense; provided, however,
that Sellers shall have the right to control the
conduct of any such audits or proceedings to the
extent such audits or proceedings relate to a
proposed adjustment that could adversely affect the
liability of Sellers for Taxes pursuant to this
Agreement or otherwise. The Company also may, at its
own expense, be present in any such audit
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or proceeding and, if Sellers do not assume the
defense of any such audit or proceeding, the Company
may defend the same in such manner as it may deem
appropriate, including, but not limited to, settling
such audit or proceeding after giving thirty (30)
days' prior written notice to Sellers setting forth
the terms and conditions of settlement, provided that
Sellers have not objected within fifteen (15) days of
receipt of such notice and assumed control of the
audit. In the event that a potential adjustment is
present in an audit or proceeding (otherwise
controlled by Sellers) for which the Company would be
liable and not entitled to indemnification hereunder,
the Company shall have the right, at its expense, to
control the audit or proceeding with respect to such
proposed adjustment. With respect to a proposed
adjustment which could adversely affect the liability
of Sellers for Taxes pursuant to this Agreement or
otherwise, on the one hand, and the liability of the
Company for Taxes pursuant to this Agreement or
otherwise, on the other hand, (i) Sellers and the
Company each may participate in the audit or
proceeding, and (ii) any issues with respect to the
proposed adjustment or otherwise pertaining to the
audit or proceeding shall be decided jointly by
Sellers and the Company. Notwithstanding the
foregoing provisions of this Section, the parties to
this Agreement shall endeavor to agree on a joint
representative or representatives in any proceeding
in which each is entitled to and desires to be
represented.
(g) 338(h)(10) Election - All parties hereto agree that
the Company's purchases of all of the issued and outstanding shares (consisting
of 20 shares of No Par Common Stock in PRI and 100 shares of No Par Common Stock
in NCL) of PRI and NCL are intended to be "qualified stock purchases" as defined
in IRC ss. 338(d)(3). The parties hereto also agree that these "qualified stock
purchases" are intended to be treated as deemed asset sales pursuant to IRC ss.
338(h)(10) and Treasury Reg. ss. 1.338(h)(10)-1. Accordingly, the Sellers agree
to cooperate in the joint filing (as required by Treasury Reg. ss.
1.338(h)(10)-1(d)) of Section 338(h)(10) elections on IRS Form 8023 with Company
as a condition to closing, said Forms 8023 to be signed by all shareholders of
PRI and NCL as of the Effective Date.
4.12 Title Search; Discharge of Liens. As soon as practicable after
the date hereof, but in no event later than the Closing, Sellers shall (i) each
use commercially reasonable efforts to ascertain all Liens, if any, to which any
of the Company owned Rights and Assets is subject, (ii) notify Buyer in writing
of the nature and extent thereof, and (iii) discharge all such Liens. Without
limiting the generality of the foregoing, Buyer shall obtain and provide to
Seller Uniform Commercial Code searches (conducted as soon as possible after the
date hereof, but in no event later than the Closing) of filings made pursuant to
Article 9 thereof in all jurisdictions where there are any Rights and Assets.
4.13 Transfer Taxes. Sellers shall pay (a) all transfer and
documentary taxes and fees imposed, if any, with respect to instruments of
conveyance in the transaction contemplated hereby and (b) all sales, excise and
other transfer or similar taxes on the transfer of the shares contemplated
hereunder, if any. Buyer and Sellers shall cooperate with one another in
promptly making any filings in connection with any such taxes. Buyer or Seller,
as the case may be, shall execute and deliver to each other, at Closing any
certificates or other documents as the other may reasonably request to perfect
any exemption from any such transfer, documentary sales, or excise tax.
4.14 Tail Insurance. Sellers agree to obtain and provide to Buyer
evidence of customary extended reporting endorsements, or "tail binders", on any
"claims made" insurance covering professional and general liability related to
PRI and NCL.
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ARTICLE 5
CONDITIONS TO OBLIGATIONS OF BUYER
The obligation of Buyer to consummate the Acquisition is subject to the
satisfaction or waiver, at or prior to Closing, of each of the following
conditions:
5.1 Representations and Warranties. The representations and
warranties of Sellers set forth in this Agreement, or any document or instrument
delivered to Buyer hereunder, shall be true and correct as of the Closing Date
with the same force and effect as if such representations and warranties had
been made at and as of the Closing Date, except with respect to any of such
representations and warranties referring to a state of facts existing on a
specified date prior to the Closing Date, it shall be sufficient if at the
Closing Date such representation and warranty continues to describe accurately
the state of facts existing on the date so specified.
5.2 Performance; Covenants. All of the terms, covenants and
conditions of the Acquisition Documents to be complied with or performed by each
of PRI, NCL and Sellers at or prior to Closing shall have been complied with and
performed in all material respects including, but not limited to, the delivery
of the following documents:
(a) A certificate of existence regarding PRI and NCL
certified by the Secretary of State of their respective state of incorporation
dated within ten (10) business days of the Closing;
(b) A certificate dated as of the Closing Date signed by
the Sellers and the duly authorized officers of PRI and NCL certifying the
satisfaction of the conditions in Section 5.1 and that Sellers and PRI and NCL
have fulfilled all of the conditions of this Article 5;
(c) Written consents of all third parties necessary for
the consummation of the transactions contemplated by the Acquisition Documents;
(d) A copy of resolutions duly adopted by PRI
and NCL authorizing and approving their performance of the transactions
contemplated hereby and the execution and delivery of the documents described
herein, certified as true and in full force and effect as of Closing by the
Secretary or an Assistant Secretary of each entity;
(e) A certified copy of the Articles of Incorporation,
and all amendments thereto, of PRI and NCL from its respective state of
incorporation, dated the most recent practical date prior to Closing;
(f) A copy of the Bylaws, and all amendments thereto, of
PRI and NCL, certified as true and in full force and effect as of Closing by the
Secretary or Assistant Secretary of each such entity;
(g) Incumbency certificates certifying the identity of
the officers of each of PRI and NCL ;
(h) A covenant not to compete agreement in form and
substance acceptable to Buyer from each of Xxxx Xxxxxx, Xxxxxxxx Xxx and
Xxxxxxxx Xxxxxx;
(i) RESERVED.
(j) All books and records pertaining to the Business,
including all corporate and other records, books of accounts, contracts,
agreements and such other documents or certificates as shall be reasonably
requested by Buyer including minute books and stock records; and.
(k) Evidence of the tail binders described in Section
4.16, if required.
5.3 Necessary Consents and Approvals. Buyer shall have obtained
all licenses, consents and permits, provided all notices, and all waiting
periods required by Law shall have expired, necessary in order for Buyer to
consummate the Acquisition.
5.4 No Material Adverse Change. There shall not have occurred any
material adverse change in the business, assets, liabilities or condition,
financial or otherwise, of PRI and NCL, between the date hereof and the
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Closing Date, and a certificate shall have been delivered to Buyer to such
effect signed by each of the executive officers of PRI and NCL as Buyer may
request.
5.5 No Injunction, Etc. No action, proceeding, investigation or
legislation shall have been instituted, threatened or proposed before any court,
governmental agency, or legislative body to enjoin, restrain, prohibit or obtain
substantial damages in respect of, this Agreement or the consummation of the
Acquisition, or which is related to PRI or NCL, if such action, proceeding,
investigation or legislation, in the reasonable judgment of Buyer or its
counsel, would make it inadvisable to consummate such transactions.
5.6 RESERVED.
5.7 Legal Opinion. Buyer shall have received an opinion of counsel
to Sellers substantially in the form attached as Exhibit 5.7.
5.8 Non-Competition Agreements. Yamin and Xxxx shall execute a
confidentiality and covenant not to compete agreement with Buyer in a form
acceptable to Buyer.
5.9 Employment Agreements. Buyer shall have entered into an
employment agreement with Xxxxxxx Xxxxx and Xxxxxx Xxxx in a form acceptable to
Buyer, and shall have reached agreement to employ Xxxx Xxxxxx, Xxxxxxxx Xxx and
Xxxxxxxx Xxxxxx.
5.10 RESERVED.
5.11 Audited Financial Statements. An unqualified accountants audit
opinion shall have been delivered to Buyer following an audit of Sellers for the
12 month period ending December 31, 2000 by Ernst & Young LLP conducted at
Buyer's cost.
5.12 Stock Power. Sellers shall deliver possession of the stock
certificates evidencing the Shares in PRI and NCL to Company at Closing,
together with executed stock powers conveying unencumbered title to said Shares
to Company.
5.13 Resignations and Release. Yamin and Xxxx shall have tendered
their resignation as a director and officer of PRI and NCL; and all other
directors and officers shall have tendered their resignations. As part thereof,
all officers and directors shall have released all claims against PRI and NCL,
whether contingent known or unknown, except for indemnity rights that arise by
statute or under the Certificate of Incorporation or By-laws of PRI or NCL to
the extent that the activity that gives rise to the right to indemnity is not
activity that constitutes a breach of any representation or warranty herein.
5.14 Insurance. A Certificate from each insurance company providing
coverage to PRI and NCL, setting forth all coverages in effect together with the
amount thereof.
5.15 Waiver. Any conditions set out in this Article V which are not
satisfied at closing shall be deemed waived by the parties if the parties elect
to close this transaction without the condition being satisfied.
ARTICLE 6
CONDITIONS TO OBLIGATIONS OF SELLERS
The obligations of the Sellers to close the Acquisition are subject to
the satisfaction or waiver, at or prior to Closing, of each of the following
conditions:
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6.1 Representations and Warranties. The representations and
warranties of Buyer set forth in this Agreement, or any document or instrument
delivered to any party hereunder, shall be true and correct as of the Closing
Date with the same force and effect as if such representations and warranties
had been made at and as of the Closing Date, except with respect to any of such
representations and warranties referring to a state of facts existing at a
specified date prior to the Closing Date, it shall be sufficient if at the
Closing Date such representation and warranty continues to describe accurately
the state of facts existing on the date so specified.
6.2 Performance; Covenants. All of the terms, covenants and
conditions of this Agreement to be complied with or performed by Buyer at or
prior to the Closing shall have been complied with and performed in all material
respects, including, but not limited to delivery of the following documents:
(a) A certificate dated as of the Closing Date signed by
a duly authorized officer of Buyer certifying the satisfaction of the condition
in Section 6.1 and that Buyer has fulfilled all of the conditions of this
Article 6;
(b) Resolutions adopted by the Board of Directors of
Buyer in form and substance satisfactory to the Sellers approving the execution,
delivery and performance of this Agreement and the consummation of the
Acquisitions, certified by the Secretary of Buyer;
(c) An incumbency certificate certifying the identity of
the officers of Buyer;
(d) A certificate of existence regarding the Buyer
certified by the Secretary of State of Delaware dated within ten (10) business
days of the Closing;
(e) A certified copy of the Charter and all amendments
thereto of Buyer certified by the Secretary of State of Delaware and dated the
most recent practical date prior to Closing; and
(f) A copy of the Bylaws, and all amendments thereto, of
Buyer certified as true and in full force and effect as of Closing by the
Secretary or Assistant Secretary of Buyer.
6.3 No Injunction, Etc. No action, proceeding, investigation or
legislation shall have been instituted, threatened or proposed before any court,
governmental agency, or legislative body to enjoin, restrain, prohibit or obtain
substantial damages in respect of, or which is related to, arises out of, this
Agreement or the consummation of the Acquisition, if such action, proceeding,
investigation or legislation, in the reasonable judgment of the Sellers or their
counsel, would make it inadvisable to consummate such transactions.
6.4 Purchase Price. Buyer shall pay the Purchase Price as
specified in Section 1.1 and execute all Ancillary Agreements, including the
employment agreements with Xxxx and Yamin.
6.5 Waiver. Any conditions set out in this Article VI which are
not satisfied at closing shall be deemed waived by the parties if the parties
elect to close this transaction without the condition being satisfied.
ARTICLE 7
TERMINATION
7.1 Right of Termination. This Agreement and the Acquisition may
be terminated at any time prior to the Closing Date:
(a) By the mutual written consent of Buyer and Sellers.
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(b) By Buyer in the event that the conditions set forth
in Article 5 of this Agreement shall not have been satisfied or waived by June
10, 2001, unless such satisfaction shall have been frustrated or made impossible
by any act or failure to act of Buyer.
(c) By Sellers in the event that the conditions set forth
in Article 6 of this Agreement shall not have been satisfied or waived by June
10, 2001, unless such satisfaction shall have been frustrated or made impossible
by any act or failure to act of any Seller Party.
(d) By Sellers or Buyer if the Closing shall not have
occurred by June 30, 2001.
(e) By Buyer in accordance with Section 4.10 hereof.
7.2 Effect of Termination. In the event of termination in
accordance with Section 7.1, this Agreement shall become void and of no further
force or effect, without any liability on the part of any of the parties hereto
or their respective owners, directors, officers or employees, except the
obligations of each party to preserve the confidentiality of documents,
certificates and information furnished to such party pursuant thereto and for
any obligation or liability of any party based on or arising from any breach or
default by such party with respect to its representations, warranties, covenants
or agreements contained in the Acquisition Documents.
ARTICLE 8
INDEMNIFICATION
8.1 Survival of Representations and Warranties. All covenants,
representations and warranties made by Sellers, PRI and NCL in this Agreement or
pursuant hereto or in any certificate delivered pursuant hereto SHALL SURVIVE
the Closing Date for the time periods indicated in this Article 8. The
representations, warranties, covenants and agreements made by either of the
Sellers, PRI or NCL shall not be affected or deemed waived by reason of the fact
that Company or its representatives should have known that any such
representations, warranties, covenants or agreements are or might be inaccurate
in any respect. Except as set forth in this Agreement, any furnishing of
information to Company by either of the Sellers, PRI or NCL, pursuant to, or
otherwise in connection with, this Agreement shall not waive Company's right to
rely on any representation, warranty, covenant or agreement made by either of
the Sellers, PRI or NCL.
8.2 Tax Indemnity.
(a) On the terms and subject to the limitations herein,
Sellers jointly and severally agree and shall indemnify and hold harmless the
Company and PRI and NCL (collectively the "Indemnitees"), from and against any
and all Taxes or related costs (other than Excluded Taxes) (i) imposed on or
incurred by Sellers, PRI or NCL for any taxable year or taxable period ending on
or prior to the close of the Effective Date (including any short periods up to
and including the close of the Effective Date and any Pre-Effective Straddle
Period), and (ii) imposed on or incurred by the Company, or Sellers with respect
to reasonable attorneys' fees and expenses with respect to contesting any of the
indemnified Taxes referred to in clause (i), above incurred by the Company, PRI
or NCL, as well as any applicable interest, penalty or additional charge with
respect to such Taxes. Sellers jointly and severally agree and shall indemnify
Indemnitees from and against any and all sales, transfer and other like taxes
and recording fees payable in connection with this Agreement or the transactions
contemplated hereby.
(b) Sellers shall not be required to indemnify the
Indemnitees in respect of any Tax or related costs until there occurs a Final
Determination (as defined below) of the liability of the Indemnitees for the Tax
(and any interest, penalties and additions to the Tax) asserted to be payable as
a result of any proposed adjustment, unless Sellers elect not to contest or
defend against the proposed adjustment of the Tax. A "Final Determination" shall
mean (i) a decision, judgment decree or other
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order by any court of competent jurisdiction, which decision, judgment, or
decree or other order has become final after all allowable appeals by either
party to the action have been exhausted or the time for filing such appeal has
expired, (ii) a closing agreement entered into under Section 7121 of the
Internal Revenue Code or other State authority, or any other settlement
agreement entered into in connection with an administrative or judicial
proceeding with the consent of Sellers, or (iii) the expiration of the time for
instituting a claim for refund, or if such claim was filed, the expiration of
the time for instituting a suit with respect thereto. If Sellers elect to
protest a proposed adjustment and payment is required in order to contest the
adjustment, Sellers shall deposit an amount equal to the taxes in dispute with
the Indemnitees (a "Tax Deposit"), and the Indemnitees shall, upon the receipt
of such Tax Deposit from Sellers, promptly remit such Tax Deposit to the tax
authority or court, as requested by Sellers, and properly designate the nature
of such amount. Any interest expense which is stopped as a result of such Tax
Deposit shall be for the account of Sellers. If the Indemnitees subsequently
receive a refund, in whole or in part, of the Tax Deposit or interest,
penalties, or additions to Tax paid with funds advanced by Sellers, the
Indemnitees shall within thirty (30) days of such receipt pay to Sellers the
amount of such refund, plus the amount of any additional interest received from
the Internal Revenue Service thereon. Within thirty (30) days after a Final
Determination of, or the election of Sellers not to contest or defend against,
the liability of the Indemnitees for which Sellers are required to make an
indemnity payment hereunder Sellers shall pay the Indemnitees any excess of such
full amount due over any advances or Tax Deposits previously made by Sellers
(net of any prior return to Sellers of such advances or Tax Deposits) pursuant
to this indemnity and any other payments previously made by Sellers with respect
to such Taxes. The Company shall cooperate fully with Sellers in obtaining any
refund or return of any Tax Deposits previously made by Sellers where so
requested by Sellers. In the event that any Tax Deposit made by Sellers has been
applied to any Taxes payable by the Company or PRI or NCL which are not subject
to indemnification under this Section 8.2, the Company shall pay to Sellers an
amount equal to the portion of the Tax Deposit so applied, together with any
applicable interest savings actually realized by the Company, PRI or NCL as a
result of such application of the Tax Deposit, within thirty (30) days following
the day on which such Taxes would have otherwise been paid, but for the
application of such Tax Deposit, by the Company, PRI or NCL as the case may be.
(c) If, as a result of a governmental audit or
examination or adjustment, an item of income is accelerated into a Pre-Effective
Straddle Period or an earlier period from a Post-Effective Straddle Period or
later period, or an item of deduction or credit is disallowed or deferred from a
Pre-Effective Straddle Period or earlier period into a Post-Effective Straddle
Period or later period, such shift in taxable periods shall not give rise to an
indemnifiable claim by Company, PRI or NCL. If, as a result of a governmental
audit or examination or adjustment, an item of income is deferred from a
Pre-Effective Straddle Period or earlier period to a Post-Effective Straddle
Period or later period, or an item of deduction or credit is disallowed or
accelerated from a Post-Effective Straddle Period or later period into a
Pre-Effective Straddle Period or earlier period, the Company shall be entitled
to file an amended Tax Return or otherwise claim a refund or credit, and retain
all such amounts for its own account, in respect to any reduction in Taxes in
such Pre-Effective Straddle Period or earlier period to the extent attributable
to such shift in Tax items.
(d) Anything in this Agreement to the contrary
notwithstanding, the provisions of Section 4.11 and this Section 8.2 shall
survive until the expiration of the applicable tax statute of limitation period
(including any extensions thereof provided that PRI and NCL will not apply for
or consent to the extension of the statute of limitations without Seller's
consent, such consent not to be unreasonably withheld) for the Taxes referred to
herein, and any Taxes subject to indemnification under this Section 8.2 shall
not be subject to the provisions of Sections 8.3 and 8.4 hereof.
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8.3 Sellers General Indemnity.
(a) Subject to the terms and conditions of this Article
8, Sellers agree to and will indemnify, defend and hold the Company, PRI and NCL
harmless from and against all demands, claims, actions or causes of actions,
assessments, losses, damages (including special and consequential damages),
liabilities, costs and expenses, including without limitation, interest,
penalties and reasonable attorney fees and expenses (hereinafter collectively
called "Damages"), asserted against, resulting to, imposed upon or incurred by
the Company, PRI and/or NCL resulting from or arising out of, (i) a breach of
any of the representations and warranties made by the Sellers herein, (except
that those representations and warranties listed in Section 8.4 shall be
excluded from this Section 8.3 and governed instead by the provisions of Section
8.4), or (ii) the nonfulfillment of any undertaking, agreement or covenant on
the part of the Sellers hereunder. The obligations of Sellers under this Section
8.3 shall survive and shall terminate at the close of business on the second
anniversary of the Closing Date ("First Indemnity Period"), except that Sellers
shall continue to be responsible after such date for those specific claims and
losses of which Company, PRI or NCL shall have given Sellers the notices
required by this Section prior to the end of the First Indemnity Period referred
to herein. In the event that Sellers receive actual notice, prior to the
expiration of the above-referenced First Indemnity Period, of a claim which
ultimately results in a loss to Company, PRI or NCL referenced in this Section
8.3, such notice shall be deemed to constitute the notice required to be given
by Company, PRI or NCL hereunder, the same as if Company, PRI or NCL had timely
given such notice to Sellers, Sellers' indemnity obligations shall not be
terminated as to those liabilities, losses, damages and expenses incurred by
Company, PRI or NCL as a result of said claim and such indemnity obligation
shall survive until such claim shall have been finally resolved and all damages
shall have been fully satisfied.
8.4 Ownership and Regulatory Indemnity. Subject to the terms and
conditions of this Article 8, Sellers jointly and severally agree to and will
indemnify, defend and hold the Company, PRI and NCL harmless from and against
all demands, claims, actions or causes of actions, assessments, losses, damages,
liabilities, costs and expenses, including without limitation, interest,
penalties and reasonable attorney fees and expenses (hereinafter collectively
called "Damages"), asserted against, resulting to, imposed upon or incurred by
the Company and/or PRI or NCL related to, resulting from or arising out of, a
breach of the representations and warranties made by the Sellers in Sections
2.5, 2.18, 2.19, 2.20, 2.21, 2.25, 2.28 and 2.32 herein.
The obligations of Sellers under this Section 8.4 shall
survive and shall terminate at the close of business on the fifth anniversary of
the Closing Date ("Second Indemnity Period"), except that Sellers shall continue
to be responsible after such date for those specific claims and losses of which
Company, PRI or NCL shall have given Sellers the notices required by this
Section prior to the end of the Second Indemnity Period referred to herein. In
the event that Sellers receive actual notice, prior to the expiration of the
above-referenced Second Indemnity Period, of a claim which ultimately results in
a loss to Company, PRI or NCL referenced in this Section 8.4, such notice shall
be deemed to constitute the notice required to be given by Company, PRI or NCL
hereunder, the same as if Company, PRI or NCL had timely given such notice to
Sellers, Sellers' indemnity obligations shall not be terminated as to those
liabilities, losses, damages and expenses incurred by Company, PRI or NCL as a
result of said claim and such indemnity obligation shall survive until such
claim shall have been finally resolved and all damages shall have been fully
satisfied.
8.5 Conditions of Indemnification. The obligations and liabilities
of Sellers (herein sometimes called the "indemnifying party"), to the Company,
PRI and NCL (herein sometimes collectively called the "party to be indemnified")
under Sections 8.2, 8.3 and 8.4 hereof with respect to claims resulting from the
assertion of liability by third parties shall be subject to the following terms
and conditions:
(a) within 20 days after receipt of notice of (i)
commencement of any action or (ii) the assertion of any claim by a third party,
or (iii) the party to be indemnified obtains actual knowledge that an event
giving rise to an indemnity obligation has arisen, the party to be indemnified
shall give the indemnifying party written notice thereof specifying the factual
basis of the claim in reasonable detail to the extent then known to the party to
be indemnified, together with a copy of such claim, process or other legal
pleading, if applicable, and the indemnifying party shall have the right to
undertake the defense thereof by representatives of its own choosing who shall
be reasonably satisfactory to the indemnified party;
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(b) in the case of a third party claim, in the event that
the indemnifying party, by the 30th day after receipt of notice of any such
claim (or, if earlier, by the tenth day preceding the day on which an answer or
other pleading must be served in order to prevent judgment by default in favor
of the person asserting such claim) does not elect to defend against such claim,
the party to be indemnified will (upon further notice to the indemnifying party)
have the right to undertake the defense through legal counsel reasonably
satisfactory to the indemnifying party, and, with consent of the indemnifying
party (which shall not be unreasonably withheld), compromise or settle such
claim on behalf of and for the account of the indemnifying party, subject to the
right of the indemnifying party, with the consent of the indemnified party, to
assume the defense of such claim at any time prior to settlement, compromise or
final determination thereof;
(c) anything in this Section 8.5 to the contrary
notwithstanding, (i) if there is a reasonable probability that a claim for
injunction, specific performance or similar equitable remedy other than money
damages which may materially and adversely affect the business or operations of
indemnified party, the indemnified party shall have the right, at its own cost
and expense, to compromise or settle such claim, but (ii) the indemnified party
shall not, without the prior written consent of the indemnifying party, settle
or compromise any claim or consent to the entry of any judgment which does not
include as an unconditional term thereof the giving by the claimant or the
plaintiff to the indemnifying party a release from all liability in respect of
such claim; and
(d) in connection with any such indemnification, the
indemnified party will cooperate in all reasonable requests of the indemnifying
party.
(e) the giving of any notice of any claim or event giving
rise to indemnity shall not excuse the obligation to give notice of any
subsequent claim or event giving rise to indemnity.
8.6 General Provisions Relating to Indemnification. The party
entitled to indemnification shall take all reasonable steps to mitigate all
indemnifiable liabilities and damages upon and after becoming aware of any event
which could reasonably be expected to give rise to any liabilities or damages
that are indemnifiable hereunder. No party shall be entitled to indemnification
to the extent of any insurance, federal or state income tax deductions or
credits arising from the indemnifiable event (to the extent that any savings
from such deduction or credit is actually realized) or net proceeds of actions
against third parties by Company or PRI or NCL based on pre-Closing Date facts;
such indemnified party agrees to timely notify the insurance carrier and
diligently prosecute claims against the insurance carrier without regard to the
possibility of indemnification hereunder.
8.7 Exclusive Remedies. The indemnification and setoff rights
provided in this Section 8 shall be the exclusive remedy of these parties
pursuant to this Agreement with respect to any claim or dispute arising out of
or related to this Agreement, except for (a) the right to seek specific
performance of any of the agreements contained herein, or (b) in any case where
one party has been guilty of fraud in connection with this transaction. As used
herein, fraud shall be construed as actual fraud and deceit as determined by
applicable law, and shall exclude conduct which would only give rise to a claim
for negligent misrepresentation. No provision contained in this Article 8 shall
apply to a breach of the terms of any other Acquisition Agreements, and the
parties to the other Acquisition Agreements shall have all rights and remedies
provided to them by law or equity without limitation. Subject only to those
indemnity claims for which notice has been given within the applicable Indemnity
Period, upon expiration of the applicable Indemnity Period, Sellers' obligations
for indemnity under this Agreement shall be discharged and extinguished.
Notwithstanding any provision herein to the contrary, the
obligation of Sellers in Sections 4.2 and 10.11 are in addition to and separate
from the indemnity obligations in this Section 8 and Buyer's rights and remedies
for a breach of Sellers' obligations under Section 4.2 and 10.11 are not limited
in any respect by the provisions of this Section 8.
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8.8 Escrow Agreement. The funds held in escrow by the escrow agent
pursuant to the Escrow Agreement are intended to give security to Company, PRI
and NCL in case either of the Sellers shall become liable, after the Closing
Date, for any amounts for which Company, PRI or NCL is entitled to
indemnification by such Seller pursuant to Sections 8.2, 8.3 and 8.4 hereof.
Subject to Section 8.11, Company, PRI or NCL may set off the amount to which it
is entitled under Article 8 against the escrowed funds in the Escrow Agreement
and by setoff against any Earnout Amount due under Section 1.5 provided,
however, that Company, PRI or NCL may not set off, withhold or otherwise retain
any amount exceeding the amount established under Section 8.11. The rights and
remedies of Company, PRI and NCL under the Escrow Agreement shall be in addition
to, and not exclusive of, any other rights and remedies that Company, PRI and
NCL may have against either of the Sellers for a breach of any provision of this
Agreement or with respect to any of the items enumerated above and Company may
first pursue set-off against the Earnout Amount prior to seeking recourse
through the escrow, or by first setting off against any other obligations that
Company or its Affiliates may owe Sellers or their Affiliates subject in all
such cases to Section 8.11.
8.9 Overall Limit.
(a) Notwithstanding anything in this Agreement to the
contrary, Sellers shall not be liable for any claims against them for indemnity
under Sections 8.2 (excluding claims for actual tax liability, interest and
penalties), 8.3 or 8.4 of this Agreement, either as asserted or as ultimately
determined, except and to the extent that such claims exceed Two Hundred Fifty
Thousand ($250,000.00) Dollars in the aggregate, and the maximum collective
liability of Sellers for any and all claims against them for indemnity under
Sections 8.2 (excluding claims for actual tax liability, interest and penalties
owing by PRI or NCL in respect to the periods prior to the Effective Date), 8.3
and 8.4 of this Agreement, shall not exceed Fifteen Million ($15,000,000.00)
Dollars, provided that claims for which Sellers are not liable by virtue of the
Two Hundred Fifty Thousand ($250,000.00) Dollar exclusion provided above in this
Section shall not be counted as a claim in determining said maximum liability.
For purposes of Section 8.2, the amount of the actual tax liability (including
interest and penalties) is not subject to the dollar floor and cap set out
herein, however, all other expenses associated with the tax liability and
subject to Section 8.2, such as attorney fees and costs of defense, are subject
to the dollar floor and cap set out in this Section 8.9(a).
(b) Notwithstanding anything in this Agreement to the
contrary, including but not limited to, the provisions of Section 8.9(a),
Sellers shall not be liable for any claims against them for indemnity under
Section 8.4 of this Agreement, either as asserted or as ultimately determined,
except and to the extent that such claims exceed Four Hundred Thousand
($400,000.00) Dollars in the aggregate, and Sellers' liability under Section 8.4
shall not exceed in the aggregate the following amounts, and Sellers will have
no liability with respect to the indemnification set forth in Section 8.4 for
any amount of claims which in the aggregate exceeds the following amounts:
(i) For any claim asserted against Sellers for liability
under Section 8.4 in the first twenty-four (24)
months following the Closing Date the sum of Fifteen
Million ($15,000,000.00) Dollars.
(ii) For any claim asserted against Sellers for liability
under Section 8.4 in the period comprising the
twenty-fifth (25th) month through the thirty-sixth
(36th) month following the Closing Date, the sum of
Twelve Million ($12,000,000.00) Dollars.
(iii) For any claim asserted against Sellers for liability
under Section 8.4 in the period comprising the
thirty-seventh (37th) month through the forty-eighth
(48th) month following the Closing Date, the sum of
Ten Million ($10,000,000.00) Dollars.
(iv) For any claim asserted against Sellers for liability
under Section 8.4 in the period comprising the
forty-ninth (49th) month through the sixtieth (60th)
month following the Closing Date, the sum of Eight
Million ($8,000,000.00) Dollars;
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In determining the aggregate maximum liability under subparts (i), (ii), (iii)
and (iv) above claims for which Sellers are not liable by virtue of the Four
Hundred Thousand ($400,000.00) Dollar exclusion provided above in this Section
shall not be counted as a claim in determining said maximum liability, and all
claims asserted under Section 8.4 at any time whether or not during the
particular measuring period shall be cumulative. For example, if a claim
totaling Fifteen Million Four Hundred Thousand ($15,400,000.00) Dollars is made
in the sixth month following Closing Date the maximum liability cap under
Section 8.4 shall have been met for the entire five year period for which
Section 8.4 survives.
(c) This Section 8.9 will not apply to (i) any
intentional breach of any of the Sellers' representations and warranties if
either Seller had actual knowledge of the breach on the date on which such
representation and warranty is made, or (ii) any intentional breach by either
Seller of any covenant or obligation in this Agreement, and Sellers will be
jointly and severally liable for all damages with respect to such intentional
breaches.
8.10 General Company Indemnity. The Company agrees to and will for
a period of two years after the Closing Date indemnify, defend and hold Sellers
harmless from and against all Damages asserted against, resulting to, imposed
upon or incurred by Sellers, resulting from or arising out of (i) a breach of
the representations, warranties or covenants made by the Company in this
Agreement or any document delivered by or for it pursuant to this Agreement, or
(ii) any event, claim or liability occurring or arising out of the operation of
PRI or NCL after the Closing Date other than those resulting from the acts or
omissions of Yamin and Xxxx which under the terms of the By-Laws of PRI or NCL
as they exist on the Closing Date would not entitle such person to
indemnification. The mechanics set forth in Sections 8.5 and 8.6 shall apply
with respect to any claims under this Section 8.10.
8.11 Setoff Limitations. Notwithstanding any provision herein to
the contrary, and without prejudice to their rights to claim setoff, the Buyer,
PRI and NCL shall not exercise any rights of setoff hereunder against the
Escrowed Funds in the Escrow Agreement or the Earnout Amounts unless and until
either:
(i) in the case of a third party claim against the
Company, PRI or NCL, the claim has been paid to the
third party with the written approval of Sellers not
to be unreasonably withheld, or pursuant to a court
order determining Sellers' obligation to pay such
claim as an indemnitor hereunder, or
(xii) in the case of a non-third party claim, Company, PRI
or NCL has actually suffered the loss or damage
claimed and the obligation of Sellers to indemnify
the Company, NCL or PRI hereunder in respect thereof
has been either (a) agreed to by the Seller or
Sellers as the case may be, or (b) determined by a
court of competent jurisdiction by a final
non-appealable order or judgment.
If neither of the conditions in (i) or (ii) above
have been satisfied, Company, PRI and NCL shall
nevertheless be entitled to claim a right of setoff
against the Earnout Amount or the Escrowed Funds and
until one of the conditions in (i) or (ii) have been
satisfied, that portion of the Earnout Amount and/or
the Escrowed Funds equal to the claims made by Buyer,
PRI or NCL shall not be paid to Sellers, but shall
instead be deferred until the claim of offset shall
be resolved by (a) a court of competent jurisdiction,
or (b) the agreement of the parties, or (c)
satisfaction of one of the conditions in (i) or (ii)
above. If the Earnout Amount is deferred as a result
of a claimed right of offset, Buyer shall pay the
amount of the deferred Earnout Amount into the escrow
account held by the Escrow Agent pursuant to the
Escrow Agreement referenced in Section 1.1(a) or pay
such amount into the registry of the applicable court
in which the dispute between the parties is being
litigated; to be held until the matter is resolved by
a court of competent jurisdiction or agreement of the
parties. If it is ultimately determined that the
Buyer, PRI or NCL did not have a valid claim which
should have been setoff against the Earnout Amount,
Sellers shall be entitled to receive, and Buyer shall
pay to Sellers, interest on the amount of the Earnout
Amount deferred from the date that said amount would
otherwise have been paid to Sellers at a
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rate of interest per annum equal to the "prime" rate
at Bank of America, New York; less any amounts that
the deferred amount earned while in escrow which are
ultimately paid to the Sellers provided that Sellers
shall not be entitled to both the interest under this
Section and the interest in Section 1.5(c) for any
overlapping time periods but shall instead only be
entitled to the higher of the two rates.
ARTICLE 9
CERTAIN DEFINITIONS
9.1(a) Except as otherwise provided herein, the capitalized terms set
forth below shall have the following meanings:
"Affiliate" of any party shall mean: (i) any other Person
directly, or indirectly through one or more intermediaries, controlling,
controlled by or under common control with such party; (ii) any officer,
director, partner, employer or direct or indirect beneficial owner of any ten
percent (10%) or greater equity or voting interest of such party; or (iii) any
other Person for which a Person described in clause (ii) above acts in any such
capacity. For purposes of the foregoing, "control" shall have the meaning
provided by Rule 405 of the Securities Act of 1933, as amended, or any successor
rule thereto.
"Acquisition Documents" shall mean this Agreement and the
other documents and instruments to be delivered pursuant to this Agreement.
"Agreement" shall mean this Stock Purchase Agreement,
including the Exhibits and Schedules delivered pursuant hereto and incorporated
herein by reference.
"Code" shall mean the Internal Revenue Code of 1986, as
amended, and the rules and regulations promulgated thereunder.
"ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended.
"ERISA Affiliate" shall mean, with respect to any entity, any
other entity, which, together with such entity, would be treated as a single
employer (i) under Section 414(b) or (c) of the Code or (ii) for purposes of any
Benefit Plan subject to Title IV of ERISA, under Section 414(b), (c), (m) or (o)
of the Code.
"Exhibits" shall mean the Exhibits so marked, copies of which
are attached to this Agreement. Such Exhibits are hereby incorporated by
reference herein and made a part hereof, and may be referred to in this
Agreement and any other related instrument or document without being attached
thereto.
"Knowledge" of any Seller (or words to that effect) shall
mean, include and refer to, such knowledge as (i) is actually possessed by any
Seller, or (ii) which any such Person should be possessed of through the
exercise of reasonable inquiry and diligence.
"Law" shall mean any code, law, ordinance, regulation,
reporting or licensing requirement, rule, or statute applicable to a person or
its assets, Liabilities or business, including those promulgated, interpreted or
enforced by any Regulatory Authority.
"Liability" shall mean any direct or indirect, primary or
secondary, liability, indebtedness, obligation, penalty, cost or expense
(including costs of investigation, collection and defense), claim, deficiency,
guaranty or endorsement of or by any Person (other than endorsements of notes,
bills, checks, and drafts presented for collection or deposit in the ordinary
course of business) of any type, whether accrued, absolute or contingent,
liquidated or unliquidated, matured or unmatured, or otherwise.
"Open Customer Orders" shall mean prescription orders from
patients that have been received by PRI or NCL but not filled prior to the
Closing Date, a list of
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which shall be provided to Buyer at the Closing, and which shall be limited to
orders received by PRI or NCL in the ordinary course of business consistent with
past practices (with prices no less favorable than customarily obtained by PRI
and NCL for similar prescriptions).
"Ordered Inventory" shall mean purchase orders by PRI or NCL
for prescription drugs that have not been received prior to the Closing (and
which are therefore not included among the Inventory), a list of which shall be
provided to Buyer at Closing and which shall be limited to orders in the
ordinary course of business consistent with past practices and not in excess of
normal, ordinary and usual requirements of PRI and NCL, and not at prices in
excess of prices normally and customarily paid by PRI and NCL or its affiliates
for similar prescription drugs.
"Person" shall mean a natural person or any legal, commercial
or governmental entity, such as, but not limited to, a corporation, general
partnership, joint venture, limited partnership, limited liability company,
trust, business association, group acting in concert, or any person acting in a
representative capacity.
"Regulatory Authorities" shall mean, collectively, all
federal and state regulatory agencies having jurisdiction over the Parties and
their respective affiliates.
"Taxes" shall mean any federal, state, county, local, foreign
or other tax, charge, imposition or other levy (including interest or penalties
thereon) including without limitation, income taxes, estimated taxes, excise
taxes, sales taxes, use taxes, gross receipts taxes, franchise taxes, taxes on
earnings and profits, employment and payroll related taxes, property taxes, real
property transfer taxes, Federal Insurance Contributions Act taxes, any taxes or
fees related to unclaimed property, taxes on value added and import duties,
whether or not measured in whole or in part by net income, imposed by the United
States or any political subdivision thereof or by any jurisdiction other than
the United States or any political subdivision thereof.
"Tax Return" shall mean any and all returns, reports, filings,
declarations and statements relating to Taxes that are required to be filed,
recorded, or deposited with any Regulatory Authority, including any attachment
thereto or amendment thereof.
(b) In addition to the terms defined in Section 9.1(a)
above, the terms set forth below shall have the meanings ascribed thereto in the
referenced sections:
Acquisition - Preamble Owner - Preamble
Pension Plans - Section 2.14(a)
Business Employees - Section 2.13 Private Programs - Section 2.18
Buyer - Preamble Remuneration - Section 2.20
Closing - Section 1.4 Seller - Preamble
Closing Date - Section 1.4 Seller Agreements - Section 2.12
Compensation Programs - Section 2.14(c) Software - Section 2.11(f)
Consideration Section 1.1 Welfare Plans - Section 2.14(b)
Earnout Amount - Section 1.1
Encumbrances 2.5(c)
Financial Statements - Section 2.6
GAAP - Section 2.6
Government Programs - Section 2.18
Indemnifies - Section 8.2
IRS - Section 2.17(b)
Medicare and Medicaid programs - Section 2.18
(c) Any singular term in this Agreement shall be deemed
to include the plural, and any plural term the singular. Whenever the words
"include," "includes" or "including" are used in this Agreement, they shall be
deemed followed by the words "without limitation."
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ARTICLE 10
MISCELLANEOUS PROVISIONS
10.1 Notices.
(a) Any notice sent in accordance with the provisions of this
Section 10.1 shall be deemed to have been received (even if delivery is refused
or unclaimed) on the date which is: (i) the date of proper posting, if sent by
certified U.S. mail or by Express U.S. mail or private overnight courier; or
(ii) the date on which sent, if sent by facsimile transmission, with
confirmation and with the original to be sent by certified U.S. mail, addressed
as follows:
If to the Sellers: c/o Pharmacare Resources, Inc.
0 Xxxxxxxxxxx Xxxxx
Xxxxxxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxx and Xxxxxx Xxxx
Telecopy Number: 000-000-0000
Copy to Counsel: Ackerman, Levine, Cullen & Xxxxxxxx, LLP
000 Xxxxx Xxxx Xxxx
Xxxxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxx
Telecopy Number: 000-000-0000
If to PRI, NCL or Buyer: Accredo Health, Incorporated
0000 Xxxxxxx Xxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxx
Telecopy Number: (000) 000-0000
Copy to Counsel: Xxxxxx X. Xxxx, Xx., Esq.
Accredo Health, Incorporated
0000 Xxxxxxx Xxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxxxx 00000
Number: (901) 385-3689
(b) Any party hereto may change its address specified for
notices herein by designating a new address by notice in accordance with this
Section 10.1.
10.2 Expenses. Each of the parties hereto shall bear and pay all
costs and expenses incurred by it or on its behalf in connection with the
transactions contemplated hereunder, including but not being limited to, the
fees of attorneys and accountants retained by that party incident to the
negotiation, preparation and execution of this Agreement.
10.3 Further Assurances. Each party covenants that at any time, and
from time to time, after the Closing, it will execute such additional
instruments and take such actions as may be reasonably requested by the other
parties to confirm or perfect or otherwise to carry out the intent and purposes
of this Agreement.
10.4 Waiver. Any failure on the part of any party to comply with
any of its obligations, agreements or conditions hereunder may be waived by any
other party to whom such compliance is owed. No waiver of any
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provision of this Agreement shall be deemed, or shall constitute, a waiver of
any other provision, whether or not similar, nor shall any waiver constitute a
continuing waiver.
10.5 Assignment. This Agreement shall not be assignable by any of
the parties hereto without the written consent of all other parties, provided
that Buyer may assign its rights and obligations under this Agreement without
the consent of Sellers to any direct or indirect subsidiary or affiliate of
Buyer or to any party that acquires substantially all of the assets or stock of
Buyer or any successor entity resulting from a merger or consolidation of or
with Buyer or the sole shareholder of Buyer. No such assignment shall relieve
Buyer of its obligations hereunder.
10.6 Binding Effect. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective heirs, legal
representatives, executors, administrators, successors and assigns. This
Agreement shall survive the Closing and not be merged therein.
10.7 Headings. The section and other headings in this Agreement are
inserted solely as a matter of convenience and for reference, and are not a part
of this Agreement.
10.8 Entire Agreement. All Schedules and Exhibits attached to this
Agreement are by reference made a part hereof. This Agreement and the Exhibits,
Schedules, certificates and other documents delivered pursuant hereto or
incorporated herein by reference, contain and constitute the entire agreement
among the parties and supersede and cancel any prior agreements,
representations, warranties, or communications, whether oral or written, among
the parties relating to the transactions contemplated by this Agreement. Neither
this Agreement nor any provision hereof may be changed, waived, discharged or
terminated orally, but only by an agreement in writing signed by the party
against whom or which the enforcement of such change, waiver, discharge or
termination is sought.
10.9 Governing Law; Severability. This Agreement shall be governed
by and construed in accordance with the Laws of the State of New York, without
regard to any applicable conflicts of Laws. The provisions of this Agreement are
severable and the invalidity of one or more of the provisions herein shall not
have any effect upon the validity or enforceability of any other provision.
10.10 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
10.11 Brokers. Sellers shall jointly and severally indemnify, hold
harmless and defend Buyer and its affiliates, and Buyer shall indemnify, hold
harmless and defend Sellers from and against the payment of any and all broker's
and finder's expenses, commissions, fees or other forms of compensation which
may be due or payable from or by the indemnifying party, or which may have been
earned by any third party acting on behalf of the indemnifying party in
connection with the negotiation, execution and consummation of the transactions
contemplated hereby. It is specifically agreed that First Healthcare Partners
was retained by, and shall be paid solely by, Sellers.
10.12 No Intention to Benefit Third Parties. Nothing in this \
Agreement is intended to and shall not benefit any Person other than the parties
hereto create any third party beneficiary right in any such other Person.
[Signatures Begin on Next Page]
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf and its corporate seal to be hereunto affixed and
attested by officers thereunto as of the day and year first above written.
ACCREDO HEALTH, INCORPORATED
By: /s/ Xxxx X. Xxxxxxxx
----------------------------------------
Title: Senior Vice President
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PHARMACARE RESOURCES, INC.
By: /s/ Xxxxxxx Xxxxx
---------------------------------------
Title: President
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NCL MANAGEMENT, INC.
By: /s/ Xxxxxxx Xxxxx
---------------------------------------
Title: President
-------------------------------------
/s/ Xxxxxxx Xxxxx
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XXXXXXX XXXXX
/s/ Xxxxxx Xxxx
-------------------------------------------
XXXXXX XXXX