EXHIBIT 10.1
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT ("Option Agreement") dated November 27,
1996, between Cardinal Health, Inc., an Ohio corporation ("Cardinal"), and Xxxx
Healthcare, Inc., a Texas corporation
("Xxxx").
WITNESSETH:
WHEREAS, the Board of Directors of Cardinal and the Board of
Directors of Xxxx have approved an Agreement and Plan of Merger dated as of even
date herewith (the "Merger Agreement") providing for the merger of a wholly
owned subsidiary of Cardinal with and into Xxxx;
WHEREAS, as a condition to Cardinal's entering into the Merger
Agreement, Cardinal has required that Xxxx agree, and Xxxx has agreed, to grant
to Cardinal the option set forth herein to purchase authorized but unissued
shares of Xxxx Common Stock;
NOW, THEREFORE, in consideration of the premises herein
contained, the parties agree as follows:
1. DEFINITIONS.
Capitalized terms used but not defined herein shall have the same
meanings as in the Merger Agreement.
2. GRANT OF OPTION.
Subject to the terms and conditions set forth herein, Xxxx hereby
grants to Cardinal an option (the "Option") to purchase up to 3,396,750
authorized and unissued shares of Xxxx Common Stock (the "Option Shares") at a
price per share equal to the lower of (x) $27.25 or (y) the Exchange Ratio
multiplied by the Closing Price (as defined below) of Cardinal Common Shares on
the date of exercise (the "Purchase Price") payable in cash as provided in
Section 4 hereof. As used herein, the term "Closing Price" as of any date with
respect to any Cardinal Common Shares means the average of the closing prices
(or, if such securities should not trade on any trading day, the average of the
bid and asked prices therefor on such day) of such Cardinal Common Shares as
reported on the New York Stock Exchange Composite Tape during the five
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consecutive trading days ending on (and including) the trading day immediately
prior to such date (or, if such Cardinal Common Shares are not traded on the New
York Stock Exchange, on such other exchange or quotation system on which such
Cardinal Common Shares are then traded).
3. EXERCISE OF OPTION.
(a) Cardinal may exercise the Option, in whole or in part, at any
time or from time to time if a Purchase Event (as defined below) shall have
occurred; PROVIDED, HOWEVER, that to the extent the Option shall not have been
exercised, it shall terminate and be of no further force and effect upon the
earlier to occur of (i) the Effective Time of the Merger, (ii) 5:00 p.m. Houston
time, on the date which is one year following the occurrence of a Purchase Event
or (iii) termination of the Merger Agreement in accordance with its terms prior
to the occurrence of a Purchase Event and (iv) if the Option cannot be exercised
before its date of termination as a result of any injunction, order or similar
restraint issued by a court of competent jurisdiction, the Option shall expire
on the 30th business day after such injunction, order or restraint shall have
been dissolved or when such injunction, order or restraint shall have become
permanent and no longer subject to appeal, as the case may be.
(b) As used herein, a "Purchase Event" shall mean any of
the following events:
(i) any person (other than Cardinal or any of its
subsidiaries) shall have commenced (as such term is defined in
Rule 14d-2 under the Securities Exchange Act of 1934, as amended
(the "Exchange Act")), or shall have filed a registration
statement under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to, a tender offer or exchange
offer to purchase any shares of Xxxx Common Stock such that, upon
consummation of such offer, such person would own or control 10%
or more of the then outstanding Xxxx Common Stock;
(ii)Xxxx or any of its subsidiaries shall or shall have
entered into, authorized, recommended, proposed or publicly
announced an intention to enter into, authorize, recommend, or
propose, an agreement, arrangement or understanding with any
person (other than Cardinal or any of its subsidiaries) to, or
any person (other than Cardinal or any of its subsidiaries) shall
have publicly announced an intention to, (A) effect any
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Competing Transaction with Xxxx, (B) purchase, lease or otherwise
acquire 10% or more of the assets of Xxxx or any of its
subsidiaries or (C) purchase or otherwise acquire (including by
way of merger, consolidation, tender or exchange offer or similar
transaction) Beneficial Ownership (as defined below) of
securities representing 10% or more of the voting power of Xxxx
or any of its subsidiaries;
(iii) any person (other than Cardinal or any subsidiary
of Cardinal, and other than Xxxx X. Xxxx) shall have acquired
Beneficial Ownership or the right to acquire Beneficial Ownership
of 10% or more of the voting power of Xxxx;
(iv)Xxxx'x Board of Directors shall have withdrawn,
modified or changed in a manner adverse to Cardinal, or refused
to reaffirm within two business days of any written request from
Cardinal, the Xxxx Board Recommendation;
(v) if Xxxx X. Xxxx shall have breached any of her
obligations under that certain Support/Voting Agreement with
Cardinal, dated the date hereof;
(vi)if at the meeting of Xxxx Stockholders (including
any adjournment or postponement thereof) the requisite vote of
the Xxxx Stockholders to approve the Merger and the transactions
contemplated by the Merger Agreement shall not have been
obtained; or
(vii) the Merger Agreement shall have been terminated
by either party pursuant to Section 7.1 thereof (other than a
termination pursuant to Sections 7.1(a), 7.1(b), 7.1(c) (other
than a termination by Cardinal pursuant to Section 7.1(c) of the
Merger Agreement if Xxxx'x or Xxxx'x affiliate's failure to
perform any material covenant or obligation under the Merger
Agreement has been the cause of or resulted in the failure of the
Merger to occur on or before May 31, 1997) or 7.1(g)).
(c) As used herein, the terms "Beneficial Ownership", "Beneficial
Owner" and "Beneficially Own" shall have the meanings ascribed to them in Rule
13d-3 under the Exchange Act. As used
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herein, "person" shall have the meaning specified in Sections 3(a)(9) and
13(d)(3) of the Exchange Act.
(d) In the event Cardinal wishes to exercise the Option, it shall
deliver to Xxxx a written notice (the date of receipt of which being herein
referred to as the "Notice Date") specifying (i) the total number of shares it
intends to purchase pursuant to such exercise and (ii) a place and date not
earlier than two business days nor later than 60 calendar days from the Notice
Date for the closing of such purchase (the "Closing Date"); PROVIDED that if the
closing of the purchase and sale pursuant to the Option (the "Closing") cannot
be consummated by reason of any applicable judgment, decree, order, law or
regulation, the period of time that otherwise would run pursuant to this
sentence shall run instead from the date on which such restriction on
consummation has expired or been terminated; and, PROVIDED FURTHER that, without
limiting the foregoing, if prior notification to or approval of any regulatory
authority is required in connection with such purchase, Cardinal and, if
applicable, Xxxx shall promptly file the required notice or application for
approval and shall expeditiously process the same (and Xxxx shall cooperate with
Cardinal in the filing of any such notice or application and the obtaining of
any such approval), and the period of time that otherwise would run pursuant to
this sentence shall run instead from the date on which, as the case may be, (i)
any required notification period has expired or been terminated or (ii) such
approval has been obtained, and in either event, any requisite waiting period
has passed.
4. PAYMENT AND DELIVERY OF CERTIFICATES.
(a) At the closing, referred to in Section 3 hereof, on the
Closing Date, Cardinal shall pay to Xxxx the aggregate Purchase Price for the
shares of Xxxx Common Stock purchased pursuant to the exercise of the Option in
immediately available funds by wire transfer to a bank account designated not
later than one business day prior to the Closing Date by Xxxx.
(b) At such closing, simultaneously with the delivery of cash as
provided in Section 4(a), Xxxx shall deliver to Cardinal a certificate or
certificates representing the number of shares of Xxxx Common Stock purchased by
Cardinal, registered in the name of Cardinal or a nominee designated in writing
by Cardinal, which shares shall be fully paid and non-assessable and free and
clear of all liens, claims, charges and encumbrances of any kind whatsoever.
(c) If at the time of issuance of any Xxxx Common Stock pursuant
to any exercise of the Option, Xxxx shall have issued any share purchase rights
or similar securities to holders of Xxxx
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Common Stock, then each such share of Xxxx Common Stock shall also represent
rights with terms substantially the same as and at least as favorable to
Cardinal as those issued to other holders of Xxxx Common Stock.
(d) Certificates for Xxxx Common Stock delivered at any closing
hereunder shall be endorsed with a restrictive legend which shall read
substantially as follows:
"The shares represented by this Certificate have not been
registered under the Securities Act of 1933, as amended, or the
blue sky law of any state. Transfer or sale of such shares shall
not be made until (i) the issuer has been furnished with an
opinion of counsel for the registered owner of these shares,
reasonably satisfactory to counsel for the issuer, that such
transfer or sale will not violate the Securities Act of 1933, as
amended, or applicable securities laws of any state or (ii) such
transfer or sale shall have been registered and qualified
pursuant to the Securities Act of 1933, as amended, and any
applicable state securities laws."
It is understood and agreed that the above legend shall be removed by delivery
of substitute certificate(s) without such legend in connection with a transfer
or sale if (i) Xxxx has been furnished with an opinion of counsel, reasonably
satisfactory to counsel for Xxxx , that such transfer or sale will not violate
the Securities Act or applicable securities laws of any state or (ii) such
transfer or sale shall have been registered and qualified pursuant to the
Securities Act and any applicable state securities laws.
5. AUTHORIZATION, ETC.
(a) Xxxx hereby represents and warrants to Cardinal
that:
(i) Xxxx has full corporate authority to execute and
deliver this Option Agreement and to consummate the transactions
contemplated hereby;
(ii)such execution, delivery and consummation have been
authorized by the Board of Directors of Xxxx, and no other
corporate proceedings are necessary therefor;
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(iii) this Option Agreement has been duly and validly
executed and delivered by Xxxx and represents a valid and legally
binding obligation of Xxxx, enforceable against Xxxx in
accordance with its terms; and
(iv)Xxxx has taken all necessary corporate action to
authorize and reserve and permit it to issue and, at all times
from the date hereof through the date of the exercise in full or
the expiration or termination of the Option, shall have reserved
for issuance upon exercise of the Option, 3,396,750 shares of
Xxxx Common Stock (subject to adjustment as provided herein), all
of which, upon issuance in accordance with the terms of this
Option Agreement, shall be duly authorized, validly issued, fully
paid and nonassessable, and shall be delivered free and clear of
all claims, liens, encumbrances and security interests and not
subject to any preemptive rights of any shareholder of Xxxx.
(b) Cardinal hereby represents and warrants to Xxxx
that:
(i) Cardinal has full corporate authority to execute
and deliver this Option Agreement and to consummate the
transactions contemplated hereby;
(ii) such execution, delivery and consummation have been
authorized by all requisite corporate action by Cardinal, and no
other corporate proceedings are necessary therefor;
(iii) this Option Agreement has been duly and validly
executed and delivered by Cardinal and represents a valid and
legally binding obligation of Cardinal, enforceable against
Cardinal in accordance with its terms;
(iv) any Xxxx Common Stock acquired by Cardinal upon
exercise of the Option will be acquired for its own account and
not be taken with a view to the public distribution thereof and
will not be transferred or otherwise disposed of except in
compliance with the Securities Act; and
(v) any Option Shares acquired by Cardinal upon
exercise of the Option will be acquired for its own account and
not with a view to the sale or distribution thereof within the
meaning of the Securities Act.
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Cardinal has received copies of, or its officers and directors
have had an opportunity to examine, all reports filed by Xxxx
pursuant to Sections 12, 13 or 14 of the Exchange Act in the
preceding twelve months and Cardinal's employees, officers and
directors have had an opportunity to ask questions concerning the
Option Shares and business and financial affairs of Xxxx, and to
receive answers concerning the same, from representatives of
Xxxx. The officers and directors of Cardinal have such knowledge
and experience in business and financial matters as to be capable
of utilizing the information which is available to them to
evaluate the merits and risks of an investment by Cardinal in the
Option Shares and Cardinal is able to bear the economic risks of
any investment in the Option Shares which Cardinal may acquire
upon exercise of the Option.
6. ADJUSTMENT UPON CHANGES IN CAPITALIZATION.
In the event of any change in Xxxx Common Stock by reason of
stock dividends, split-ups, recapitalizations or the like, the type and number
of shares subject to the Option, and the purchase price per share, as the case
may be, shall be adjusted appropriately. In the event that any additional shares
of Xxxx Common Stock are issued after the date of this Option Agreement (other
than pursuant to an event described in the preceding sentence or pursuant to
this Option Agreement or options granted under employee benefit plans), the
number of shares of Xxxx Common Stock subject to the Option shall be adjusted so
that, after such issuance, it equals at least 19.9% of the number of shares of
Xxxx Common Stock then issued and outstanding (without considering any shares
subject to or issued pursuant to the Option).
7. REPURCHASE.
(a) At the request of Cardinal, at any time from and after the
occurrence of a Purchase Event and ending 13 months immediately thereafter (the
"Cardinal Repurchase Period"), Xxxx (or any successor entity thereof) shall
repurchase the Option from Cardinal together with all (but not less than all)
shares of Xxxx Common Stock purchased by Cardinal pursuant thereto with respect
to which Cardinal then has Beneficial Ownership, at a price (when calculated on
a per share basis, the "Per Share Repurchase Price") equal to the sum of:
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(i) The difference between (A) the "Market/Tender Offer
Price" for shares of Xxxx Common Stock (defined as the higher of
(x) the highest price per share at which a tender or exchange
offer has been made for shares of Xxxx Common Stock or (y) the
highest closing price per share of Xxxx Common Stock as reported
by the NYSE Composite Tape for any day within that portion of the
Cardinal Repurchase Period which precedes the date Cardinal gives
notice of the required repurchase under this Section 7) and (B)
the exercise price as determined pursuant to Section 2 hereof
(subject to adjustment as provided in Section 6), multiplied by
the number of shares of Xxxx Common Stock with respect to which
the Option has not been exercised, but only if such Market/Tender
Offer Price is greater than such exercise price;
(ii)The exercise price paid by Cardinal for
any shares of Xxxx Common Stock acquired pursuant to the
Option;
(iii) The difference between the Market/Tender Offer
Price and the exercise price paid by Cardinal for any shares of
Xxxx Common Stock purchased pursuant to the exercise of the
Option, multiplied by the number of shares so purchased, but only
if such Market/Tender Offer Price is greater than such exercise
price; and
(iv)Cardinal's out-of-pocket expenses incurred in
connection with pursuing the transactions contemplated by the
Merger Agreement, including, without limitation, legal,
accounting and investment banking fees, less any amounts
previously paid by Xxxx to Cardinal solely in reimbursement for
Costs pursuant to Section 7.2 of the Merger Agreement.
(b) In the event Cardinal exercises its rights under this Section
7, Xxxx shall, within 10 business days thereafter, pay the required amount to
Cardinal by wire transfer of immediately available funds to an account
designated by Cardinal and Cardinal shall surrender to Xxxx the Option and the
certificates evidencing the shares of Xxxx Common Stock purchased thereunder
with respect to which Cardinal then has Beneficial Ownership.
(c) In determining the Market/Tender Offer Price, the
value of any consideration other than cash shall be determined by
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an independent nationally recognized investment banking firm selected by
Cardinal.
8. REPURCHASE AT OPTION OF XXXX
Except to the extent that Cardinal shall have previously
exercised its rights under Section 7, at the request of Xxxx during the
six-month period commencing 180 days following the first occurrence of a
Purchase Event, Xxxx may repurchase from Cardinal, and Cardinal shall sell to
Xxxx, all (but not less than all) of the Xxxx Common Stock acquired by Cardinal
pursuant to the Option and with respect to which Cardinal has Beneficial
Ownership at the time of such repurchase at a price per share equal to the
greater of (i) 110% of the Market/Tender Offer Price per share (calculated in
the manner set forth in Section 7(a)(i) hereof but utilizing the period
beginning on the occurrence of a Purchase Event and ending on the date Xxxx
exercises its repurchase right pursuant to this Section 8), (ii) the Per Share
Repurchase Price or (iii) the sum of (A) the aggregate Purchase Price of the
shares so repurchased plus (B) interest on the aggregate Purchase Price paid for
the shares so repurchased from the date of purchase by Cardinal to the date of
repurchase at the highest rate of interest announced by Bank One, Columbus, NA
as its prime or base lending or reference rate during such period, less any
dividends received on the shares so repurchased, plus (C) Cardinal's
out-of-pocket expenses incurred in connection with pursuing the transactions
contemplated by the Merger Agreement, including, without limitation, legal,
accounting and investment banking fees, less any amounts previously paid by Xxxx
to Cardinal solely in reimbursement for Costs pursuant to Section 7.2(i) of the
Merger Agreement, which sum shall be divided by the number of shares of Xxxx
Common Stock to be repurchased by Xxxx. Any repurchase under this Section 8
shall be consummated in accordance with Section 7(b).
9. REGISTRATION RIGHTS.
At any time after a Closing, Xxxx shall, if requested by any
holder or Beneficial Owner of shares of Xxxx Common Stock issued upon exercise
of the Option (each a "Holder"), as expeditiously as possible file a
registration statement on a form for general use under the Securities Act if
necessary in order to permit the sale or other disposition of the shares of Xxxx
Common Stock that have been acquired upon exercise of the Option in accordance
with the intended method of sale or other disposition requested by any such
Holder. Each such Holder shall provide all information reasonably requested by
Xxxx for inclusion in any
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registration statement to be filed hereunder. Xxxx shall use its best efforts to
cause such registration statement first to become effective and then to remain
effective for such period not in excess of 180 days from the day such
registration statement first becomes effective as may be reasonably necessary to
effect such sales or other dispositions. The registration effected under this
Section 9 shall be at Xxxx'x expense except for underwriting commissions and the
fees and disbursements of such Holders' counsel attributable to the registration
of such Xxxx Common Stock. In no event shall Xxxx be required to effect more
than one registration hereunder. The filing of any registration statement
required hereunder may be delayed for such period of time (not to exceed 90
days) as may reasonably be required to facilitate any public distribution by
Xxxx of Xxxx Common Stock, if a special audit of Xxxx would otherwise be
required in connection therewith during which Xxxx is in possession of material
information concerning it, its business affairs or a material transaction in
each case the public disclosure of which could have a material adverse effect on
Xxxx or significantly disrupt such material transaction. If requested by any
such Holder in connection with such registration, Xxxx shall become a party to
any underwriting agreement relating to the sale of such shares on terms and
including obligations and indemnities which are customary for parties similarly
situated. Upon receiving any request for registration under this Section 9 from
any Xxxxxx, Xxxx agrees to send a copy thereof to any other person known to Xxxx
to be entitled to registration rights under this Section 9, in each case by
promptly mailing the same, postage prepaid, to the address of record of the
persons entitled to receive such copies.
10. SEVERABILITY.
Any term, provision, covenant or restriction contained in this
Option Agreement held by a court or other Governmental Authority of competent
jurisdiction to be invalid, void or unenforceable, shall be ineffective to the
extent of such invalidity, voidness or unenforceability, but neither the
remaining terms, provisions, covenants or restrictions contained in this Option
Agreement nor the validity or enforceability thereof in any other jurisdiction
shall be affected or impaired thereby. Any term, provision, covenant or
restriction contained in this Option Agreement that is so found to be so broad
as to be unenforceable shall be interpreted to be as broad as is enforceable.
11. MISCELLANEOUS.
(a) EXPENSES. Each of the parties hereto shall pay all
costs and expenses incurred by it or on its behalf in connection
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with the transactions contemplated hereunder, including fees and expenses of its
own financial consultants, investment bankers, accountants and counsel, except
as otherwise provided herein.
(b) ENTIRE AGREEMENT. This Option Agreement, the Support
Agreements, the Merger Agreement (including the documents and the instruments
referred to therein) and the Confidentiality Agreement constitute the entire
agreement among the parties and supersede all prior agreements and
understandings, agreements or representations by or among the parties, written
and oral, with respect to the subject matter hereof and thereof.
(c) SUCCESSORS; NO THIRD PARTY BENEFICIARIES. The terms and
conditions of this Option Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective successors and permitted assigns.
Nothing in this Option Agreement, expressed or implied, is intended to confer
upon any party, other than the parties hereto, and their respective successors
and assigns, any rights, remedies, obligations, or liabilities under or by
reason of this Option Agreement, except as expressly provided herein.
(d) NOTICES. All notices or other communications which are
required or permitted hereunder shall be in writing and sufficient if delivered
in accordance with Section 8.2 of the Merger Agreement (which is incorporated
herein by reference).
(e) COUNTERPARTS. This Option Agreement may be executed in
counterparts, and each such counterpart shall be deemed to be an original
instrument, but both such counterparts together shall constitute but one
agreement.
(f) SPECIFIC PERFORMANCE. The parties hereto agree that if for
any reason Cardinal or Xxxx shall have failed to perform its obligations under
this Option Agreement, then either party hereto seeking to enforce this Option
Agreement against such non-performing party shall be entitled to specific
performance and injunctive and other equitable relief, and the parties hereto
further agree to waive any requirement for the securing or posting of any bond
in connection with the obtaining of any such injunctive or other equitable
relief. This provision is without prejudice to any other rights that either
party hereto may have against the other party hereto for any failure to perform
its obligations under this Option Agreement.
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(g) GOVERNING LAW. Except to the extent that the laws of the
jurisdiction of organization of any party hereto, or any other jurisdiction, are
mandatorily applicable to matters arising under or in connection with this
Option Agreement, this Option Agreement shall be governed by the laws of the
State of Delaware. All actions and proceedings arising out of or relating to
this Option Agreement shall be heard and determined in any Delaware state or
federal court sitting in the City of Wilmington.
(h) CONSENT TO JURISDICTION; VENUE.
(i) Each of the parties hereto irrevocably submits
to the exclusive jurisdiction of the state courts of Delaware and to the
jurisdiction of the United States District Court for the District of Delaware,
for the purpose of any action or proceeding arising out of or relating to this
Option Agreement and each of the parties hereto irrevocably agrees that all
claims in respect to such action or proceeding may be heard and determined
exclusively in any Delaware state or federal court sitting in the City of
Wilmington. Each of the parties hereto agrees that a final judgment in any
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
(ii) Each of the parties hereto irrevocably
consents to the service of any summons and complaint and any other process in
any other action or proceeding relating hereto, on behalf of itself or its
property, by the personal delivery of copies of such process to such party.
Nothing in this Section 11(h) shall affect the right of any party hereto to
serve legal process in any other manner permitted by law.
(i) REGULATORY APPROVALS; SECTION 16(b). If, in connection with
the exercise of the Option under Section 3, prior notification to or approval of
any Governmental Authority is required, then the required notice or application
for approval shall be promptly filed and/or expeditiously processed by Xxxx and
periods of time that otherwise would run pursuant hereto (if any) shall run
instead from the date on which any such required notification period has
expired or been terminated or such approval has been obtained, and in either
event, any requisite waiting period shall have passed. Periods of time that
otherwise would run pursuant to Sections 3, 7 or 8 shall also be extended to the
extent necessary to avoid liability under Section 16(b) of the Exchange Act.
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(j) WAIVER AND AMENDMENT. Any provision of this Option Agreement
may be waived at any time by the party that is entitled to the benefits of such
provision. This Option Agreement may not be modified, amended, altered or
supplemented except upon the execution and delivery of a written agreement
executed by the parties hereto.
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IN WITNESS WHEREOF, each of the parties hereto has executed this
Option Agreement as of the date first written above.
CARDINAL HEALTH, INC.
By:/s/ XXXXXX X. XXXXXX
Name: Xxxxxx X. Xxxxxx
Title: Chairman
XXXX HEALTHCARE, INC.
By:/s/ XXXX X. XXXXXX
Name: Xxxx X. Xxxxxx
Title: President and CEO
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