EXHIBIT 2.2
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (the "Agreement") is dated the 8th day of
October, 1999, by and among AMERICAN PSYCH SYSTEMS HOLDINGS, INC., a Delaware
corporation ("Buyer"), COMBINED BENEFITS MANAGEMENT, INC., a Montana
corporation ("Seller"), and VYDAS RESOURCES, INC., (formerly known as
Vocational Resources, Inc.) a Montana corporation (the "Company").
WHEREAS, Seller owns, free and clear of all liens, encumbrances, and
adverse claims, all of the issued and outstanding shares of capital stock (the
"Company Common Stock") of the Company;
WHEREAS, Seller desires to sell, and Buyer desires to purchase, 100% of
the issued and outstanding shares of the Company Common Stock (the "Company
Shares")(representing 100% of the outstanding shares of capital stock) for the
consideration and upon the terms and subject to the conditions hereinafter set
forth;
WHEREAS, the Seller is the holding company for companies engaged in the
business of providing, among other services and programs, Employer Assistance
Programs (such business and operation hereinafter collectively referred to as
the "Business").
NOW, THERFORE, in consideration of the premises, the provisions and the
respective agreements hereinafter set forth, the parties hereto hereby agree as
follows:
ARTICLE 1
PURCHASE AND SALE OF STOCK.
1.1 AGREEMENT TO PURCHASE AND SELL. Upon the terms and subject to the
conditions set forth in this Agreement and upon the representations and
warranties made herein by each of the
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parties to the other, on the Closing Date (as such term is hereinafter defined),
Seller shall sell, grant, convey, assign, transfer and deliver to Buyer, and
Buyer shall purchase and acquire from Seller, 100% of the Company Shares. The
Company Shares to be sold by Seller hereunder consist of Seven Hundred Ten (710)
shares of common stock, no par value.
1.2 PURCHASE PRICE. Upon the terms and subject to the conditions set forth
in this Agreement, in reliance upon the representations, warranties, covenants
and agreements of Seller contained herein, and in exchange for the Company
Shares, Buyer agrees to pay to Seller the sum of Six Million Five Hundred
Thousand Dollars ($6,500,000) (the "Cash Purchase Price") and issue shares of
its common stock, $.001 par value per share (the "Buyer's Shares"). The exact
number of shares of Buyer's Shares to be issued by Buyer hereunder is One
Million Seven Hundred Eighty Nine Thousand Four Hundred Seventy Three
(1,789,473) shares. The issuance of the Buyer's Shares, plus the Cash Purchase
Price, constitute the purchase price by the Buyer hereunder (the "Purchase
Price").
1.3 PAYMENT OF PURCHASE PRICE. Subject to the terms and conditions hereof,
at the Closing: (1) Seller shall deliver to Buyer a certificate representing the
Company Shares, duly endorsed in blank or with a duly executed stock power
attached thereto for the transfer of the Company Shares to Buyer; and (2) Buyer
shall deliver to Seller (i) a wire transfer to an account designated in writing
prior to the Closing Date in the amount of the Cash Purchase Price and (ii)
stock certificate(s) representing the Buyer's Shares to be delivered to Seller
pursuant to this Agreement.
1.4 BALANCE SHEET ADJUSTMENTS. Certain adjustments will be made to the
Company's Unaudited Balance Sheet (as defined in Section 2.7 below) at the
Closing (as defined in Section 1.4 below). These adjustments are as follows: (i)
$825,000 in cash will be paid by the Company
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to the Seller; (ii) a dividend of $665,000 will be paid by the Company to the
Seller; and (iii) the Seller will assume (a) $84,000 of the $298,000 notes
payable current related to Blue Cross Blue Shield of Montana ("BCBSMT"), (b)
$60,000 in accrued bonus payable, and (c) $681,000 in the Company's
proportionate share of income taxes. The Buyer agrees that the $324,000
representing the Company's proportionate share of income taxes payable to the
Seller are due and payable to the Seller within one (1) year of the Closing. The
Buyer shall be liable for all other liabilities listed on the Unaudited Balance
Sheet not otherwise assumed by the Seller.
1.5 CLOSING. The closing of the purchase and sale of the Company Shares
provided herein (the "Closing") will be at the office of Seller at 10:00 a.m.,
local time, on October 18, 1999, or at such other place or at such other date
and time as Seller and Buyer may mutually agree. Such date and time of Closing
is herein referred to as the "Closing Date."
ARTICLE 2
SELLER'S REPRESENTATIONS AND WARRANTIES
Seller hereby warrants, represents, and covenants to Buyer as follows:
2.1 SELLER'S AUTHORITY AND CONSENTS. Seller has the right, power,
legal capacity, and authority to enter into and perform its obligations under
this Agreement and the related agreements contemplated herein, and this
Agreement constitutes a valid and binding obligation of the Seller, enforceable
in accordance with its terms, and except as set forth in Schedule 2.1, no
approvals or consents are necessary in connection with the execution, delivery,
or performance of this Agreement. The Seller shall be responsible for and shall
take such steps necessary to obtain all such approvals and consents.
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2.2 OWNERSHIP AND TRANSFER OF THE COMPANY SHARES. Seller owns 100% of the
Company Shares, beneficially and of record, and as of the date hereof, such
ownership is, and as of Closing, shall be, free and clear of all liens, charges,
encumbrances, or restrictions of any kind. Seller has the right to sell,
transfer, and deliver to Buyer, in accordance with this Agreement, the Company
Shares free and clear of all liens, charges, claims, encumbrances, or
restrictions of any kind, and all of such shares are validly issued and
outstanding, fully paid, and non-assessable. The sale, transfer, and delivery of
the Company Shares to Buyer pursuant to this Agreement is exempt from the
registration requirements of all applicable federal and state laws.
2.3 NO BREACH. Neither the execution and delivery of this Agreement and
the related agreements contemplated herein, nor performance of, and compliance
with, this Agreement by Seller and Company will, with or without the giving of
notice or the passage of time, or both: (i) violate any federal, state, or local
law, regulation, ordinance, or other provision applicable to the Seller and/or
the Company; (ii) conflict with or result in any breach of any of the terms,
conditions, or provisions of, or constitute a default under, the Seller's and/or
the Company's respective Articles of Incorporation, Bylaws, or any indenture,
mortgage, deed of trust, contract, undertaking, or other agreement or instrument
to which the Seller and/or Company is a party to or is bound or affected; (iii)
result in the creation of, any lien, charge, or encumbrance upon any of the
Company Shares or upon any of the properties or assets of the Seller and/or (iv)
conflict with or result in the violation of any judgment, order, or decree of
any court or arbiter under which the Seller and/or Company is bound.
2.4 AFFILIATED ENTITIES. Except as set forth in Schedule 2.4 hereof, the
Company does not own, directly or indirectly, a majority or controlling interest
in any corporation, business trust, joint stock company, partnership or other
business organization or association relating to the
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business operations of the Company, nor has the Company guaranteed any
indebtedness or the performance of any other party. The affiliated entities set
forth in Section 2.4 hereof are hereinafter referred to collectively within this
Agreement as the "Affiliates." As used in this Article 2, each reference to the
"Company" shall include each Affiliate. The Company has not assumed, guaranteed,
or otherwise assumed liability for, any debts, obligations, liabilities, or
liens of any Affiliate.
2.5 ORGANIZATION, GOOD STANDING, AND QUALIFICATION. The Company is duly
organized, validly existing, and in good standing under the laws of its state of
organization, and has all requisite corporate power and authority to carry on
its business and to own, lease, or operate its properties as and in the places
where such business is now conducted and such properties are owned, leased, or
operated; and is duly qualified to do business and are in good standing in each
jurisdiction where such qualification may be necessary. All of the jurisdictions
in which the Company is duly qualified and in good standing as a foreign
corporation are listed in Schedule 2.5 hereof. The Company has its principal
place of business at Missoula, Montana.
2.6 AUTHORIZED CAPITAL. The authorized, issued, and outstanding capital
stock of the Company consists solely of the Company Shares. Except as set forth
on Schedule 2.6, there are no outstanding stock options or warrants with respect
to, or privileges or rights to purchase or subscribe for, any capital stock of
the Company, obligations, or securities issued by the Company convertible into
shares of its capital stock, agreements providing for or relating to any
options, warrants, purchase rights, privileges, convertible obligations, or any
agreements by the Company to issue, sell, or acquire any of its capital stock,
nor does Seller or any other party have any preemptive rights in respect of the
Company Shares. No authorized shares of the Company have been reserved for any
purpose or are held as treasury shares.
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2.7 FINANCIAL STATEMENTS. Seller has furnished to Buyer (i) an audited
balance sheet and notes thereto for each of the Company and of the Seller as of
the end of the last fiscal year (the "Audited Balance Sheet"), (ii) an audited
statement of operations for each of the Company and of the Seller for the last
fiscal year, (iii) an unaudited balance sheet and notes thereto for each of the
Company and of the Seller as of August 31, 1999 (the "Unaudited Balance Sheet"),
and (iv) an unaudited statement of operations for each of the Company and of the
Seller for the period ending August 31, 1999, copies of which are attached
hereto as Schedule 2.7 (collectively the "Financial Statements"). The Audited
Balance Sheet and the Unaudited Balance Sheet are hereinafter collectively
referred to as the "Balance Sheets" and August 31, 1999 as the "Balance Sheet
Date". The Financial Statements fully and fairly set forth the financial
condition of the Company and of the Seller, respectively, as of the dates
indicated, and the results of their respective operations for the periods
indicated, in accordance with generally accepted accounting principles
consistently applied, except as otherwise stated therein and in the related
reports of independent accountants, and as to unaudited financial statements,
for the absence of footnotes and subject to normal year-end audit adjustments.
Copies of the related reports of independent accountants are attached hereto as
part of Schedule 2.7. Notwithstanding the foregoing, the Financial Statements of
the Company does not include those of AZ Care, Inc.
2.8 ABSENCE OF SPECIFIED CHANGES. Except as set forth in Schedule 2.8,
attached hereto, and except as provided under Section 1.4 regarding adjustments
to the Company's Unaudited Balance Sheet, since the Balance Sheet Date, the
Company has conducted its business only in the ordinary course and there has
not, since that date, been any:
(a) Material transaction by the Company;
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(b) Material capital expenditure by the Company;
(c) Material adverse change in the financial condition,
liabilities, assets, business, or prospects of the Company;
(d) Destruction, damage to, or loss of any assets of the Company
(whether or not covered by insurance) that materially and adversely affects the
financial condition, business, or prospects of the Company;
(e) Labor trouble or other event or condition of any character
materially and adversely affecting the financial condition, business, assets, or
prospects of the Company;
(f) Change in accounting methods or practices (including without
limitation, any change in depreciation or amortization policies or rates) by the
Company;
(g) Material re-valuation by the Company of any of its assets;
(h) Declaration, setting aside, or payment of a dividend or other
distribution in respect to the shares of the Company, or any direct or indirect
redemption, purchase, or other acquisition by the Company of any of its shares;
(i) Any sale or transfer of any asset of the Company, except
inventory in the ordinary course of business, cash on hand, or in banks or other
depositories and the assets described herein;
(j) Amendment or termination of any contract, agreement, lease, or
license to which the Company is a party, except in the ordinary course of
business and which has not had a materially adverse effect on the Company's
assets, operations, or prospects;
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(k) Loan by the Company to any person or entity (other
than extensions of credit to customers in the ordinary course of business),
or guaranty by the Company of any loan;
(l) Waiver, discharge, or release of any right or claim of the
Company, except in the ordinary course of business and consistent with prior
practice;
(m) Mortgage, pledge, or other encumbrance of any asset of the
Company, or any borrowing, other than in the ordinary course of business;
(n) Issuance or sale by the Company of any of its shares of
Company Shares or of any other of its securities;
(o) Cancellation of any policy of liability insurance of Company
or any refusal of any carrier to renew or continue any existing liability
insurance of Company, or any increase in premiums for any such insurance
exceeding 10% of the amount of the premium in effect on January 1, 1999;
(p) Adoption of any employee benefit, bonus, welfare, or other
plan;
(q) Change in the Company's banking or safe deposit arrangements
or authority of any person in respect thereof;
(r) Institution, settlement, or agreement to settle any
litigation, action, or proceeding by or against the Company or of the Seller
before any court or governmental body relating to the Company, or Seller or its
property.
2.9 DEBTS, OBLIGATIONS, AND LIABILITIES. The Company as of the Balance
Sheet Date had no material debts, obligations, or liabilities of any nature,
whether accrued, absolute, contingent,
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or otherwise, and whether due or to become due, except as those set forth on
Schedule 2.9, and the Company is not in default in the performance of any
obligation, agreement, or condition contained in the items identified on
Schedule 2.9.
2.10 TAX RETURNS AND AUDITS. Within the times and in the manner prescribed
by law, the Company has filed all federal, state, and local tax returns, if any,
required by law and have paid all taxes, assessments, and penalties reflected
therein as due and payable. The results of IRS audits, if any, are accurately
reflected in the Financial Statements. Neither the Company nor the Seller has
received notice of or are aware of any pending or threatened examination of the
state or federal income tax returns of the Company. The Company's federal and
state income tax liability is accurately reflected in the Financial Statements.
There are no present disputes as to tax of any nature payable by the Company.
The Financial Statements contain provision for the payment of all taxes,
assessments, and penalties for taxes payable through the date thereof for the
Company.
2.11 REAL PROPERTY LEASED. The Company owns no real property. Schedule
2.11 attached hereto is a complete and accurate description of each parcel of
real property which is leased by or to the Company as of the Closing. All the
leases listed in Schedule 2.11 are valid and in full force on their present
terms and conditions. Except as indicated in said Schedule 2.11, there does not
exist any default or event that with notice or lapse of time, or both, would
constitute a default under any of such leases. Except as set forth in Schedule
2.11, all such leases will be unaffected by the sale of the Company Shares
hereunder so that, after such sale, the Company will remain entitled to the full
benefits thereof.
2.12 PERSONAL PROPERTY LEASED. Schedule 2.12 attached hereto is a complete
and accurate description of each item of personal property which is leased by or
to the Company as
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of the Closing. All the leases listed in Schedule 2.12 are valid and in full
force on their present terms and conditions. Except as indicated in said
Schedule 2.12, there does not exist any default or event that with notice or
lapse of time, or both, would constitute a default under any of such leases. All
such leases will be unaffected by the sale of Company Shares hereunder so that,
after such sale, Company will remain entitled to the full benefits thereof.
2.13 OTHER TANGIBLE PERSONAL PROPERTY. Schedule 2.13 attached hereto is a
complete and accurate schedule describing and specifying, as of the Balance
Sheet Date, the location of all tangible personal property owned by, in the
possession of, or used by the Company and that was as of such date, in
possession of or used by the Company in connection with the Business.
2.14 INTANGIBLE PERSONAL PROPERTY. Schedule 2.14 attached hereto is a
complete and accurate schedule describing and specifying, as of the Balance
Sheet Date, a complete description of all intangible personal property owned by,
in the possession of, or used by the Company and that was as of such date in the
possession of or used by the Company in connection with the Business.
2.15 CONTRACTS.
(a) Schedule 2.15(a) attached hereto is a complete and accurate
schedule describing and specifying as to the Company: (i) all contracts not made
in the ordinary course of business; (ii) all employee benefit, employee welfare
benefit, or employee pension plans, policies, or agreements; (iii) all
partnership, joint venture, license or management agreements or contracts; (iv)
all contracts and agreements with any independent contractor or employee; (v)
all managed care and other payor contracts pursuant to which the Company
provides or receives services; (vi) all labor contracts, and all collective
bargaining agreements and arrangements and practices of Company affecting any of
its employees; and (vii) any and all other contracts,
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agreements, commitments, or other understandings or arrangements to which the
Company is a party or by which any of its property is bound or affected, but
excluding any purchase and sale order made in the ordinary course of business
providing by its terms for payments or receipts by the Company of less than
(singly or in the aggregate) $10,000.
(b) All such contracts or other commitments listed on Schedule
2.15(a) are valid, binding, and enforceable by the Company. The Company is not
in default under any such contract agreement, plan, or arrangement, and in
accordance with its respective terms, and each such contract is in full force
and effect. Except as set forth on Schedule 2.15(a), the Company is not a party
to any oral or written (i) contract for the employment of any officer, employee,
consultant, or independent contractor; (ii) license agreement or distributor,
dealer, manufacturer's representative, sales agency, advertising, property
management or brokerage contract; (iii) contract for the future purchase of
materials, supplies, services, merchandise, or equipment involving payments of
more than $10,000, over its remaining term (including periods covered by any
option to renew by either party); (iv) contract for the purchase or sale of any
real or personal property having a value of more than $10,000 or agreement or
arrangement for the grant of any preferential rights to purchase any of the
Company's assets, properties, or rights having a value of more than $10,000; (v)
joint venture agreement or arrangement or other agreement involving the sharing
of profits; (vi) contract or agreement with any party that has the effect of
limiting or restricting the Company's ability to market, promote, sell, or
manage the Business, and activities related thereto, in any geographic area; and
(vii) any contract or agreement that by its terms does not terminate, or is not
terminable by the Company, within 60 days or upon 60 days' notice.
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(c) Except as set forth on Schedule 2.15(b) hereto, all contracts
set forth in Schedule 2.15(a) are: (i) evidenced in writing; (ii) have been duly
and validly executed by the Company and by each of the other parties thereto;
(iii) are in full force and effect in accordance with their respective terms;
and (iv) constitute the legal, valid and binding obligation of, and are
enforceable against, the Company, and each of the other parties thereto. Except
as set forth on Schedule 2.15(b), no event has occurred which, with or without
notice or the passage of time or both, constitutes or would constitute a default
by the Company under any contract, and no event has occurred which, with or
without notice of the passage of time or both, constitutes or would constitute a
default by any other party under a contract. Neither the execution or the
effectuation of this Agreement nor of the related agreements described herein
will or would constitute a default or material breach of the contracts set forth
in Schedule 2.15(a).
2.16 TITLE TO ASSETS. The Company has, and upon the Closing the Company
will have, good, valid and marketable fee title to all its properties and assets
(other than those which are leased or licensed and have been so disclosed),
including the properties and assets reflected on Schedules 2.13 and 2.14. All
such properties and assets are free and clear of all title defects or
objections, liens, mortgages, deeds of trust, claims, charges, pledges, security
interests, liabilities, obligations, or other encumbrances of any nature
whatsoever (collectively, "Liens"), except as set forth in Schedule 2.16.
2.17 LITIGATION. Except as set forth on Schedule 2.17, there is no suit,
action, arbitration, or legal, administrative, or other proceeding, or
governmental investigation pending or threatened against or affecting the
Company, or the business, assets, or financial condition of the Company. The
Company is not in default with respect to any order, writ, injunction, or decree
of any federal, state, local, or foreign court, department, agency, or
instrumentality.
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Neither the Company nor Seller is presently engaged, or is considering engaging,
in any legal action to recover moneys due to either of them or for damages
sustained by either of them arising out of the Business, or resulting from the
ownership of the Company Shares.
2.18 CORPORATE DOCUMENTS. Seller has furnished to Buyer copies of (i) the
minute books of the Company containing all existing records of all proceedings,
consents, actions, and meetings of the shareholders and board of directors of
the Company and (ii) the stock transfer books of the Company. Such minute books
and stock books of the Company are true and correct, and there have been no
transactions involving the business of the Company which properly should have
been set forth therein and which have not been accurately so set forth. Copies
of the Articles of Incorporation of the Company and all amendments thereto, and
copies of the Bylaws and minute books of the Company as presently in effect,
certified as complete and correct by the Secretary of the Company, have been
delivered to Buyer.
2.19 OFFICERS AND DIRECTORS; SIGNING AUTHORITY; BANKS. Schedule 2.19
attached hereto is a complete and accurate list of (i) the names of all of the
officers and directors of the Company showing their offices; (ii) the names of
all persons holding a power of attorney on behalf of the Company; and (iii) the
names of all banks or other financial institutions in which the Company has an
account, deposit, or safe deposit box, with the names of all persons authorized
to draw on these accounts or deposits or to have access to these boxes on behalf
of the Company.
2.20 INSURANCE. All of the property of the Company is covered as of the
date hereof and will be covered as of the date hereof until the Closing Date by
property and casualty insurance, copies of which are attached as Schedule 2.20.
The business and operations of the Company is covered as of the date hereof and
will be covered until the Closing Date by
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professional liability, general liability, and worker's compensation insurance,
copies of which are attached as Schedule 2.20. Schedule 2.20 also contains a
complete and accurate schedule of all insurance policies of the Company
currently in effect. All such policies are in full force and effect and the
Company has not received any notice of cancellation or reduction of coverage of
any such policies. Seller has furnished to Buyer copies of all insurance
policies held by the Company within the five (5) year period immediately prior
to the date of this Agreement.
2.21 NON-COMPETITION AGREEMENTS. Schedule 2.21 attached hereto contains a
complete list of all contracts or commitments of the Company which contain
non-competition provisions that would restrict its rights to freely carry on its
business.
2.22 EMPLOYEES.
2.22.1 EMPLOYEE BENEFITS. Except as set forth in Schedule 2.22.1,
the Company is not a party to, bound by or obligated to contribute to or under,
any pension or retirement plan (except for Social Security), medical,
hospitalization, vision, dental, life, disability or other similar benefit plan,
deferred compensation plan, or other similar plan, severance plan or policy, or
any other similar performance, bonus, incentive or benefit plans, trusts, funds,
arrangements, policies, agreements or understandings (collectively, "Benefit
Plans") with respect to its employees.
2.22.2 LABOR AGREEMENTS. Except as set forth on Schedule 2.22.2(a)
there is no pending or threatened unfair labor practice complaint against the
Company before the National Labor Relations Board, (b) there is no strike, labor
dispute, slowdown, union organizing activity or stoppage actually pending or
threatened against the Company, (c) no union representation question exists
respecting the employees, or any group of employees of the Company, (d) no
grievance which might have a material adverse effect on its operations nor any
arbitration
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proceeding arising out of or under collective bargaining agreements is pending,
and no claims therefor exist, and (e) the Company has not experienced any
material work stoppage or other material labor difficulty within the three (3)
year period prior to the Closing Date.
2.22.3 COMPLIANCE WITH EMPLOYMENT LAWS. The Company has materially
complied with, and is currently materially complying with, and has not received
any notice of noncompliance with, any applicable laws relating to the employment
of labor. The Company has withheld all amounts required by law or agreement to
be withheld from the wages or salaries of its employees.
2.22.4 COMPANY PLANS. All Company Plans and Other Arrangements in
which Company employees participate are listed on Schedule 2.22.4(A). Except as
set forth in Schedule 2.22.4(B): (a) the Company has made all contributions and
other payments required by and due under the terms of each such Company Plan and
Other Arrangement, and each Company Plan and Other Arrangement has been
administered in accordance with its terms; (b) the Company has materially
complied with and is in material compliance with all applicable provisions of
the Employee Retirement Income Security Act, as amended ("ERISA"), the Internal
Revenue Code of 1986, as amended ("Code"), the National Labor Relations Act,
Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment
Act, the Fair Labor Standards Act, the Securities Exchange Act of 1934 and all
other laws, in each case pertaining to each Company Plan or Other Arrangement,
and has paid all premiums and assessments relating to all Company Plans and
Other Arrangements. The Company has no pending or threatened unfair labor
practice charges, contract grievances, or other administrative charges, claims,
grievances, or lawsuits, by or before any governmental body, any court or
arbitrator, or any other party, relating to the Company Plans or Other
Arrangements.
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For purposes of this Agreement, "Company Plan" shall mean any plan, program, or
arrangement, whether or not written, that it is or was an "employee benefit
plan" as such term is defined in Section 3(3) of ERISA and (a) which was or is
established or maintained by or on behalf of the Company, (b) to which the
Seller or an affiliate of the Seller on behalf of the Company, or the Company
contributed or was obligated to contribute or to fund or to provide benefits, or
(c) which provides or promises benefits to any party who performs or has
performed services for the Company and because of those services is or has been
a participant therein or entitled to benefits thereunder. For purposes of this
agreement, "Other Arrangement" shall mean a benefit program or practice
providing for bonuses, incentive compensation, vacation pay, severance pay,
insurance, restricted stock, stock options, employee discounts, company cars,
tuition reimbursement or any other perquisite or benefit (including any fringe
benefit under the Code) to employees, officers, or independent contractors that
is not a Company Plan.
2.23 LICENSES. The Company has obtained all licenses, permits and
approvals of any governmental body which are required in connection with the
operation of its Business as currently conducted and in the locations in which
such business is conducted. Schedule 2.23 attached hereto contains a complete
and accurate schedule of all licenses presently in effect for the Company.
Except as set forth in Schedule 2.23, there is no claim, proceeding, or
controversy, pending or threatening, involving any such license, permit, or
approval.
2.24 ACCOUNTS RECEIVABLE. All receivables (including accounts receivable,
loans receivable, and advances) of the Company which are reflected on the
Audited and Unaudited Balance Sheets, and all receivables of the Company created
since the date thereof, arose from bona fide transactions in the ordinary course
of business, all receivables shall be (or have been) fully collectible (i.e.,
there exists no impediment to collection) when due, or in the case of each
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such account receivable shall be (or have been) fully collectible within ninety
(90) days after it arose, without resort to litigation or counterclaim, in the
aggregate face amounts thereof except to the extent of the normal allowance for
doubtful accounts with respect to accounts receivable computed as a percentage
of sales consistent with prior practices as reflected on the most recent annual
audited Financial Statements.
2.25 ABSENCE OF CERTAIN BUSINESS PRACTICES. None of the Company, any of
the officers, employees, or agents, or any other person acting on behalf of the
Company, has, directly or indirectly, within the past five years given or agreed
to give any gift or similar benefit to any customer, supplier, governmental
employee or other person who is or may be in a position to help or hinder the
business of the Company (or assist either in connection with any actual or
proposed transaction) which (i) might subject the Company to any damage or
penalty in any civil, criminal, governmental litigation or proceeding that would
have a materially adverse effect on the assets, business, or operations of the
Company as reflected in the Financial Statements, or as it relates to the
Company, the statements provided in accordance with Section 2.8, or, (ii) if not
given in the past, might have had a materially adverse effect on the assets,
business, or operations of the Company as reflected in the Financial Statements,
or as it relates to the Company, the statements provided in accordance with
Section 2.8, or (iii) if not continued in the future, might have a materially
adverse effect on the assets, business, operations, or prospects of the Company
as reflected in the Financial Statements, or as it relates to the Company, the
statements provided in accordance with Section 2.8.
2.26 COMPLIANCE WITH LAWS. The Company has materially complied with all
existing laws, rules, and regulations, and has complied with all orders,
judgments, and decrees now or hereafter applicable to the Business, properties,
or operations as presently conducted. Neither
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the ownership nor use of the Company's properties nor the conduct of its
Business materially violates the rights of any other person, firm, or
corporation.
2.27 PATENTS, TRADE NAMES, TRADEMARKS AND COPYRIGHTS. In its business the
Company uses no patents, copyrights, trademarks, service names, trade names,
trade secrets or other intangible proprietary rights (collectively "Intangible
Proprietary Rights") or any licenses relating to any Intangible Proprietary
Rights, except its name "Vydas Resources, Inc." and "VRI" and certain software
set forth in Schedule 2.27. Except as otherwise set forth in Schedule 2.27, the
Company is not infringing upon or otherwise acting adversely to the Intangible
Proprietary Rights owned by any other person, and there is no claim or action by
any such other person pending or threatened with respect thereto.
2.28 RELATED PARTY TRANSACTIONS. Except as set forth in Schedule 2.28
herein, the Company is not providing any goods or services (including, without
limitation, consulting services) to, receives any goods or services (including,
without limitation, consulting services) from, or is a party to any agreement
with, any Related Party (other than transactions solely between the Company and
the Seller). "Related Party" means any person or entity controlled by,
controlling or under common control with the Company or the Seller.
2.29 DISCLOSURE. No representation or warranty by Seller contained in this
Agreement or any statement or certificate furnished or to be furnished by Seller
or the Company to Buyer or its representatives in connection herewith or
pursuant thereto contains, or will contain, any untrue statement of a material
fact, or omits or will omit to state any material fact required to make the
statements herein or therein contained not misleading or necessary in order to
provide a prospective purchaser of the Company Shares with adequate information
as to the Company, and its condition (financial and otherwise), properties,
assets, liabilities, business, and prospects, and
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has disclosed to Buyer in writing all material adverse facts known to Seller
relating to the same. Seller has also disclosed to the Buyer in writing all
material adverse facts known to Seller relating to the Company Shares and
Seller's authority to enter into this Agreement, and the existence of any
material breach or violation of any contract, agreement, law, regulation, or
ordinance relating to or affecting the Company.
2.30 INVESTMENT REPRESENTATIONS.
(a) The Seller acknowledges and understands that the Buyer's Shares
to be delivered to it pursuant to Section 1.2 will not be registered under the
Securities Act of 1933, as amended, or any applicable state securities laws
(collectively, the "SECURITIES LAWS"), is being or will be sold to it in a
transaction that is exempt from the registration requirements of the Securities
Laws, and cannot be offered, sold or otherwise transferred except pursuant to an
exemption from the registration requirements of the Securities Laws or pursuant
to an effective registration statement under the Securities Laws, and agrees
that the certificates representing any Buyer's Shares conveyed to Seller may
contain a legend to the foregoing effect. Seller agrees not to sell or dispose
of any Buyer's Shares other than pursuant to an exemption from the registration
requirements of the Securities Laws or an effective registration statement.
(b) Seller (i) has such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of its
investment in the Buyer's Shares and (ii) is an "accredited investor" as such
term is defined in Regulation D promulgated under the Securities Act of 1933.
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(c) Seller is acquiring the Buyer's Shares pursuant to Section 1.2
for investment, solely for its own account, and not with a view to the
distribution thereof in violation of applicable laws.
2.31 FRAUD & ABUSE. Neither the Company nor any person who provides
professional services under agreements with the Company has engaged in any
activities which are prohibited under federal Medicare and Medicaid statutes
(including, without limitation, 42 U.S.C. xx.xx. 1320a-7, 1320a-7(a),
1320a-7(b), 1395nn and 1396b), the federal Civil False Claims Act (31 U.S.C. ss.
3729 ET SEQ.), the federal CHAMPUS statute, or the regulations promulgated
pursuant to such statutes or related state or local statutes or regulations, or
which are prohibited by rules of professional conduct.
2.32 ENVIRONMENTAL MATTERS.
(a) Except as set forth in SCHEDULE 2.32(A) hereto, the Company has
materially complied and is in material compliance with all Environmental Laws.
For purposes of this section, "Environmental Laws" mean all Federal, state and
local statutes, ordinances, orders, rules, regulations, or decrees and the like
relating to (a) environmental matters, including, without limitation, those
relating to fines, injunctions, penalties, damages, contribution, cost recovery
compensation, losses or injuries resulting from the emission, spill, escape or
other release ("Release") or threatened Release of Hazardous Materials; (b) the
generation, use, storage, transportation, treatment or disposal of Hazardous
Materials, or (c) land use or the protection of human, plant or animal health or
welfare, in any manner applicable to the Company or any of its properties,
including, without limitation, the Comprehensive Environmental Response,
Compensation, and Liability Act (42 U.S.C. ss. 9601 ET SEQ.) and any analogous
local,
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state and Federal statutes and regulations promulgated pursuant thereto, each as
amended or supplemented.
For purposes of this Section, "Hazardous Materials" shall mean (a)
any chemical, material or substance at any time defined as or included in the
definition of "hazardous substance," "hazardous waste," "hazardous material,"
"infectious wastes," infectious material," bloodborne pathogen," "etiologic
agent," "infectious substance," "medical waste," "regulated medical waste,"
"toxic substance" or any other formulation intended to define, list or classify
substance by reason of deleterious properties such as ignitibility, corrosivity,
reactivity, carcinogenicity, infectious nature, radioactivity, toxicity,
reproductive toxicity, "TCLP toxicity" or "EP toxicity" or words of similar
import under any applicable Environmental Law or publications promulgated
pursuant thereto, (b) any oil, petroleum, petroleum fraction or petroleum
derived substance, (c) any flammable substances or explosives, (d) any
radioactive wastes, substances or other materials, (e) asbestos or asbestos
containing materials, (f) urea formaldehyde form insulation, (g) electrical
equipment which contains any oil or dielectric fluid containing levels of
polychlorinated biphenyls in excess of fifty parts per million, (h) pesticides
and (i) any other chemical, material or substance which is limited or regulated
by any governmental body.
(b) The Company has been duly issued, and currently has, all
material permits, licenses, certificates and approvals (collectively, "PERMITS")
required under the Environmental Laws. A true and complete list of such Permits,
all of which are valid and in full force and effect, is set out in SCHEDULE
2.32(B). Except in accordance with such Permits or as permitted by Environmental
Laws, there has been no Release of Hazardous Material.
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(c) There are no pending or threatened, actions, suits, orders,
claims, litigations, arbitrations, audits or proceedings based on, and the
Company has not received any notice of any complaint, order, directive,
citation, notice of responsibility, notice of potential responsibility, or
information request from any governmental body or any other party and Seller has
no knowledge, of any facts which would form the basis for any such actions,
suits, orders, claims, litigations, arbitrations, audits, proceedings or notices
arising out of or attributable to: (i) the current or past presence, Release, or
threatened Release, of Hazardous Materials by the Company; (ii) the off-site
disposal or treatment by the Company of Hazardous Materials; (iii) any
operations of the Company which do not conform in all material respects to
requirements of the Environmental Laws; or (iv) any material violation of
Environmental Laws arising from the Company's activities (or the activities of
the Company's predecessors-in-interest, if any) involving Hazardous Materials.
2.33 ACTIVITIES OF PROVIDERS. Except as set forth on Schedule 2.33, in the
aggregate no more than five percent (5%) of the individual providers and no
hospital or other institutional provider, who or which has an agreement to
provide services to the Company, has expressed an intent (whether or not legally
binding) to terminate such agreement with the Company.
2.34 ACTIVITIES OF PAYORS AND EMPLOYEES. Except as set forth on Schedule
2.34, no third party payor(s) or employer(s) having an agreement with the
Company for services, and representing in the aggregate five percent (5%) or
more of the enrollee, patient, and/or member population of the Company, or in
the aggregate five percent (5%) or more of the revenues of the Company, have
expressed an intent (whether or not legally binding) to terminate such
agreement(s) with the Company.
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2.35 MARKETING MATERIALS. EXCEPT AS SET FORTH IN SCHEDULE 2.35, COMPANY
HAS, AND UPON CLOSING WILL RETAIN, THE OWNERSHIP OF, AND FULL RIGHT TO USE AND
DEVELOP, ALL MARKETING AND ADVERTISING MATERIALS, PAMPHLETS, AND BROCHURES, AND
ALL ARTWORK RELATED THERETO, RELATING TO THE BUSINESS.
2.36 ADDING OF SCHEDULES. Schedules described above that are not attached
as of the date of execution of this Agreement will be attached prior to Closing,
subject to Buyer's approval of such schedules.
ARTICLE 3
BUYER'S REPRESENTATIONS AND WARRANTIES
Buyer hereby represents, warrants, and covenants to Sellers that:
3.1 ORGANIZATION, GOOD STANDING, AND QUALIFICATION. Buyer is a corporation
duly organized, validly existing, and in good standing, under the laws of the
State of Delaware.
3.2 AGREEMENT WILL NOT CAUSE BREACH OR VIOLATION. The execution and
delivery of this Agreement and the performance by Buyer of its terms do not
conflict with or result in the violation of Buyer's Articles of Incorporation or
Bylaws or any judgment, order, or decree of any court or arbiter under which
Buyer is bound and do not conflict with and will not constitute a material
breach of the terms, conditions, or provisions of or constitute a default under
any contract, undertaking, indenture, or other agreement or instrument by which
Buyer is now bound or to which Buyer is now a party.
3.3 BUYER'S AUTHORITY AND CONSENTS. Buyer has the right, power, legal
capacity, and authority to enter into and perform Buyer's obligations under this
Agreement, and no approvals
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or consents of any person are necessary in connection with it. The execution and
delivery of this Agreement by Buyer has been duly authorized by Buyer's Board of
Directors.
3.4 BUYER'S SHARES. The Buyer's Shares, when issued and delivered to
Seller pursuant to this Agreement, will be duly authorized, validly issued,
fully paid and nonassessable, free and clear of all encumbrances, and not
subject to any preemptive rights.
ARTICLE 4
SELLER'S AND COMPANY'S OBLIGATIONS BEFORE CLOSING Seller and
Company hereby covenant that from the date hereof until the
Closing:
4.1 BUYER'S ACCESS TO PREMISES AND INFORMATION. Seller and Company shall
provide Buyer and its representatives access to the offices of the Company from
time to time during normal business hours to inspect the premises, books,
accounts, records, contracts, and documents and to confer with the Company's
employees and consultants for the purpose of independently verifying Seller's
representations and warranties regarding the Company, whether contained in this
Agreement or otherwise made or given.
4.2 CONDUCT OF BUSINESS IN NORMAL COURSE. Seller will use its best efforts
to cause the Company to, and the Company will, carry on its business diligently
and in substantially the same manner as previously has been carried on, and
solely in the ordinary course of business.
4.3 PRESERVATION OF BUSINESS AND RELATIONSHIPS. The Company and Seller
will use their best efforts to (i) maintain the Company's business and
properties; (ii) preserve the business organization and the goodwill of the
Company and the Seller; (iii) maintain and preserve the Company's relationships
with customers, suppliers, and providers; (iv) operate in the ordinary course of
business; and (v) take no action inconsistent with the above, except as provided
under
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Section 1.4 regarding adjustments to the Company's Unaudited Balance Sheet.
Without the consent of the Buyer, such consent not to be unreasonably withheld,
there shall not be any:
(a) Material transaction by the Company except in the ordinary
course of business;
(b) Material capital expenditure by the Company;
(c) Change in accounting methods or practices (including without
limitation, any change in depreciation or amortization policies or rates) by the
Company;
(d) Material re-valuation by the Company of any of its assets;
(e) Declaration, setting aside, or payment of a dividend or other
distribution in respect to the shares of the Company, or any direct or indirect
redemption, purchase, or other acquisition by the Company of any of its shares;
(f) Any sale or transfer of any asset of the Company, except
inventory in the ordinary course of business, cash on hand, or in banks or other
depositories and the assets described herein;
(g) Amendment or termination of any contract, agreement, lease, or
license to which the Company is a party, except in the ordinary course of
business and which has not had a materially adverse effect on the Company's
assets, operations, or prospects;
(h) Loan by the Company to any person or entity (other than
extensions of credit to customers in the ordinary course of business), or
guaranty by the Company of any loan;
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(i) Waiver, discharge, or release of any right or claim of the
Company, except in the ordinary course of business and consistent with prior
practice;
(j) Mortgage, pledge, or other encumbrance of any asset of the
Company, or any borrowing, other than in the ordinary course of business;
(k) Issuance or sale by the Company of any of its shares of
Company Shares or of any other of its securities;
(l) Cancellation of any policy of liability insurance of Company
or any refusal of any carrier to renew or continue any existing liability
insurance of Company, or any increase in premiums for any such insurance
exceeding 10% of the amount of the premium in effect on January 1, 1999;
(m) Adoption of any employee benefit, bonus, welfare, or other
plan;
(n) Change in the Company's banking or safe deposit arrangements
or authority of any person in respect thereof;
(o) Institution, settlement, or agreement to settle any
litigation, action, or proceeding by or against the Company or of the Seller
before any court or governmental body relating to the Company, or Seller or its
property; or
(p) Agreement to do any of the foregoing.
4.4 CORPORATE MATTERS. The Company will not: (a) (i) amend its
Articles of Incorporation or Bylaws, (ii) issue any shares of capital stock,
(iii) issue or create any warrants, obligations, subscriptions, options,
convertible securities, or other commitments under which any
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additional shares might be directly or indirectly authorized, issued, or
transferred from treasury, (b) merge or consolidate or obligate itself with or
unto any other entity, or (c) agree to do any of the acts listed in (a) or (b)
above.
4.5 EMPLOYEES AND COMPENSATION. The Company will not, nor agree to,
perform any of the following acts without the prior written consent of Buyer:
(i) grant an increase in salaries payable to or become payable to any officer,
employee, sales agent, or representative, (ii) increase benefits payable to any
officer, employee, sales agent, or representative under any bonus or pension
plan or other contract or commitment, or (iii) modify any collective bargaining
agreement to which the Company is a party or by which it may be bound.
4.6 DIVIDENDS, DISTRIBUTIONS AND ACQUISITIONS OF STOCK. Except as set
forth and described in Schedule 4.6, the Company will not (i) declare, set
aside, or pay any dividend or make any distribution in respect of its capital
stock; (ii) directly or indirectly purchase, redeem, or otherwise acquire any
shares of its capital stock; (iii) enter into any agreement or obligation to do
any of the foregoing.
4.7 MAINTENANCE OF INSURANCE. The Company, until the time of Closing, will
continue to carry all of its insurance policies set forth in Schedule 2.20
attached hereto.
4.8 PAYMENT OF LIABILITIES AND WAIVER OF CLAIM. The Company will not, nor
agree to, without Buyer's prior written consent: (i) waive or compromise any
material right or claims; (ii) pay any obligation or liability fixed or
contingent, other than current liabilities; (iii) cancel, without full payment,
any material note, loan, or other obligation owing to the Company.
4.9 EXISTING AGREEMENT. Except in the ordinary course of its business and
consistent with prior practice, the Company will not and Seller will not permit
the Company to modify, amend, cancel, or terminate any of its existing material
contracts or agreements.
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4.10 NOTIFICATION. Seller shall promptly notify and in any event shall
provide notice prior to Closing to Buyer of any material transaction, event, or
occurrence involving the Company that is outside the ordinary course of its
business.
ARTICLE 5
CONDITIONS PRECEDENT TO BUYER'S PERFORMANCE
The obligation of Buyer to purchase the Company Shares under this
Agreement is subject to the satisfaction, at or before the Closing, of all the
conditions set out below in this Article 5.
5.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. Except as otherwise
permitted by this Agreement, all representations and warranties by Seller
(including representations and warranties regarding the Company) in this
Agreement or in any written statement delivered to Buyer hereunder shall be true
in all material respects on the Closing Date, and Buyer shall have received a
certificate to that effect from Seller, dated the Closing Date.
5.2 PERFORMANCE BY SELLER. Seller and the Company shall have performed,
satisfied, and complied with, all covenants, agreements, and conditions required
by this Agreement.
5.3 OPINION OF COUNSEL. Buyer shall have received from counsel for the
Company an opinion dated the Closing Date, in form and substance satisfactory to
Buyer and its counsel, to the effect that:
(a) The Company is duly incorporated and validly existing and in
good standing under the laws of the State of Montana and has all necessary
corporate power to own its properties as now owned and operate its business as
now operated.
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(b) All the issued and outstanding shares of capital stock of the
Company are owned of record by Seller, such stock is validly issued, fully paid,
and nonassessable, there are no outstanding stock options or warrants with
respect to, or privileges or rights to purchase or subscribe for, any capital
stock of the Company, obligations or securities issued by the Company
convertible into shares of capital stock of the Company, agreements providing
for or relating to any options, warrants, purchase rights, privileges,
convertible obligations, or any agreements by the Company to issue, sell, or
acquire any of its capital stock, nor does the Seller have preemptive rights
with respect to any such shares of capital stock.
(c) This Agreement has been duly and validly executed and delivered
by Seller and the Company and is valid and binding on the Seller and the Company
and enforceable in accordance with its terms, except as limited by bankruptcy
and insolvency laws and by other laws affecting the rights of creditors and by
general principles of equity.
(d) Neither the execution or delivery of this Agreement, nor the
consummation of the transactions contemplated in this Agreement, to the best of
such counsel's knowledge, will constitute (i) a default or an event that would,
with notice or lapse of time, or both, constitute a default under, or violation
or breach of, the Articles of Incorporation or Bylaws of the Company, or any
indenture, license, lease, franchise, mortgage, instrument, or other agreement
known to counsel to which the Company, or Seller are a party, or by which the
Company, or any of the properties of the Company may be bound, or (ii) an event
that would permit any party to any agreement or instrument known to counsel to
terminate it or to accelerate the maturity of any indebtedness or other
obligation of the Company thereunder, or (iii) any event that would under any
agreement known to counsel to which the Company is a party, result
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in the creation or imposition of any lien, charge, or encumbrance on any of the
assets of the Company.
5.4 ABSENCE OF LITIGATION. No action, suit, or proceeding before any court
or any governmental body or authority, in which a plaintiff not a party to this
Agreement seeks to restrain or prohibit the consummation of the transactions
contemplated hereby or to obtain substantial damages in connection herewith,
shall have been instituted or threatened on or before the Closing Date.
5.5 CONSENTS. All agreements and consents of any parties necessary to the
consummation of the transactions contemplated by this Agreement shall have been
obtained by Seller and delivered to Buyer.
5.6 APPROVAL OF DOCUMENTATION. The form and substance of all agreements,
certificates, instruments, opinions, and other documents delivered to Buyer
under this Agreement shall be reasonably satisfactory to Buyer and its counsel.
5.7 GOOD STANDING CERTIFICATE. Buyer shall have received a certificate of
good standing for the Company issued by the Secretary of State of the State of
Montana as of a date not more than ten (10) days prior to the Closing Date.
5.8 RESIGNATION OF OFFICERS AND DIRECTORS. Buyer shall have received the
written resignation of all of the officers and directors of the Company,
effective as of the Closing Date.
5.9 NO ADVERSE CHANGES. Buyer shall have received a certificate from the
Seller dated the Closing Date, that since the date hereof there shall not have
occurred any material adverse change in condition (financial or otherwise) to
the business, properties, assets, or prospects of the Company.
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5.10 USE OF TRADE NAMES, TRADEMARKS AND COPYRIGHTS. Seller shall have
agreed in writing that it may not use or permit anyone other than the Buyer to
use for any purpose any xxxx, name, slogan, or logo that is owned by Seller or
the Company and used in the Company's business by the Company, and a copy of
such agreement shall have been delivered to the Buyer.
5.11 DUE DILIGENCE. Buyer shall have performed such due diligence review
of the Seller and the Company, including but not limited to the inspection
contemplated by Section 4.1, as it deems necessary, and shall have determined,
in its reasonable discretion, that it is satisfied with the results of its due
diligence investigation.
5.12 EMPLOYMENT AGREEMENTS. American Psych Systems, Inc. ("APS") shall
have entered into certain employment agreements (the "Employment Agreements")
with the Company's senior management (i.e., Xxxxxxxx Xxxxxx, Dee Xxx Xxxxxxxxxx,
Xxxxx Xxxxxxx, Art Held, and Xxxx Xxxxxxx), and as of the Closing such
agreements will be in full force and effect, and any previously existing
employment agreements with persons will be terminated and superseded. Certain
obligations under previously existing employment agreements will be the
obligation of the Seller, in accordance with Section 9.1.
Notwithstanding the foregoing, in the event that a member of the Company's
senior management, as set forth above, elects not to enter into such Employment
Agreement with the Buyer, but elects rather to maintain his/her current
agreement with the Company, such election may be deemed by the Buyer as
equivalent to that person having entered into an Employment Agreement with APS
for purposes of satisfying the requirements of this section, where the Buyer has
reviewed and approved the terms of such current agreement prior to the Closing.
5.13 SHAREHOLDER'S RIGHTS AGREEMENT. The Buyer and Seller shall have
entered into a Shareholder's Rights Agreement, on terms reasonably acceptable to
Buyer, which agreement
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shall include, but not be limited to, the following
provisions: (i) at such time as there is an initial public offering ("IPO") of
the Buyer's Shares, the Buyer will utilize its best efforts to provide Seller
with freely tradable shares within one (1) year of such IPO; (ii) the Buyer will
use its best efforts to give Seller the right to participate in any secondary
offering, based upon Seller's percentage ownership in the Buyer; (iii) in the
event of a change in control of the Buyer, Seller will be offered the
opportunity to sell its shares on the same valuation as the holders of the
majority of the Buyer's shares; and (iv) in the event that there is neither an
IPO nor a change in control of the Buyer within five (5) years of the Closing
Date, Seller will be permitted to put its shares to the Buyer for cash, and the
Buyer will be permitted to call Seller's shares in the Buyer for cash.
5.14 BCBSMT/COMPANY SERVICES AGREEMENTS. BCBSMT and the Company shall have
entered into such agreement or agreements, on terms reasonably acceptable to
Buyer, for the provision of services by the Company to BCBSMT.
5.15 BCBSMT/COMPANY INTER-COMPANY SERVICES AGREEMENT. BCBSMT and the
Company shall have cancelled the current Inter-Company Services Agreement
between BCBSMT and the Company
5.16 LIABILITY INSURANCE. THE SELLER WILL PRESENT TO THE BUYER APPROPRIATE
EVIDENCE OF LIABILITY INSURANCE, WHETHER AS "TAIL" INSURANCE OR OTHERWISE, TO
COVER SUFFICIENTLY ANY OF THE COMPANY'S LIABILITIES THAT MAY ARISE IN CONNECTION
WITH THE BUSINESS AS A RESULT OF THE COMPANY'S ACTS OR OMISSIONS OR THOSE OF THE
COMPANY'S EMPLOYEES OR AGENTS THAT OCCURRED PRIOR TO CLOSING. ANY DEDUCTIBLES
WILL BE THE RESPONSIBILITY OF THE SELLER.
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5.17 TERMINATION OF TAX SHARING AGREEMENT. The Company shall
terminate its participation in the Agreement for the Sharing of Federal
Income Taxes, executed in October 1994, by and among BCBSMT, the Seller, the
Company, Xxxxxxxxxxx, Xxxxxx & Associates, Inc., Intermountain
Administrators, Inc. Intermountain Underwriters, Inc., Western States
Insurance Agency, Inc., and Insurance Coordinators of Montana, Inc.
5.18 TERMINATION OF JOINDER AGREEMENT. Effective on or before Closing,
Seller will cause Company to terminate, without the creation or transfer of any
liabilities or other obligations to the Buyer, of that certain "Joinder
Agreement" dated April 23, 1991 between Company and BCBSMT, pursuant to which
Company has heretofore participated in the "Tax-Favored Savings Program" (the
"PLAN") a qualified defined contribution plan maintained by BCBSMT for the
benefit of its employees and employees of participating affiliates of BCBSMT.
Upon such termination, the obligation of Company to make contributions to the
plan shall cease, except for contributions accrued with respect to compensation
payable to Company's employees on or before the effective date of such
termination, and all such contributions shall be paid to the Plan on or before
Closing. Any and all rights which employees of Company have under the Plan with
respect to amounts contributed thereto shall remain in full force and effect
after termination of the Joinder Agreement. Seller agrees to cooperate with
Buyer and Company to effect a transfer of the accrued benefits of Company
employees under the Plan to a successor qualified defined contribution plan as
soon as administratively practicable after Closing.
5.19 STATEMENT OF FAIR MARKET VALUE. A Statement of Fair Market Value for
the transaction shall have been provided by the Seller to the Buyer.
5.20 APPROVAL OF LENDER. The Buyer's lending institution shall have
reviewed and approved this Agreement and the related agreements contemplated
herein.
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ARTICLE 6
CONDITIONS PRECEDENT TO SELLERS' PERFORMANCE
The obligations of Seller to sell and transfer the Stock under this
Agreement are subject to the satisfaction, at or before the Closing, of all of
the following conditions:
6.1 PERFORMANCE BY BUYER. Buyer shall have performed, satisfied, and
complied with, in all material respects, all covenants, agreements, and
conditions required by this Agreement to be performed or complied with by Buyer
on or before the Closing Date, and Seller shall have received a certificate to
that effect from a duly authorized officer of Buyer, dated the Closing Date.
6.2 OPINION OF BUYER'S COUNSEL. Seller shall have received from counsel
for Buyer an opinion dated the Closing Date, in form and substance satisfactory
to Seller and its or Company's counsel, substantially to the effect that:
(a) Buyer is a corporation duly incorporated, organized, and validly
existing and in good standing under the laws of the State of Delaware and has
all requisite corporate power to perform its obligations under this Agreement.
(b) This Agreement has been validly executed and delivered by Buyer
and is valid and binding on Buyer and enforceable in accordance with its terms,
except as limited by bankruptcy and insolvency laws and by other laws affecting
the rights of creditors and subject to general principles of equity.
(c) The execution and delivery of this Agreement and the performance
by Buyer of its terms do not conflict with or result in a violation of Buyer's
Articles of Incorporation or Bylaws or any judgment, order, or decree of any
court or arbiter, known to such counsel, by
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which Buyer is bound, and, to the best of such counsel's knowledge do not
conflict with and will not constitute a material breach of the terms,
conditions, or provisions of or constitute a default under any contract,
undertaking, indenture, or other agreement or instrument known to counsel by
which Buyer is now bound.
(d) The Buyer's Shares, when issued and delivered to Seller pursuant
to this Agreement, will be duly authorized, validly issued, fully paid and
nonassessable, free and clear of all encumbrances and restrictions, except as
otherwise set forth in the Shareholder's Rights Agreement.
6.3 CONSENTS. All agreements and consents of any parties necessary to the
consummation of the transactions contemplated by this Agreement shall have been
obtained.
6.4 CORPORATE APPROVAL. The execution and delivery of this Agreement by
Buyer, and the performance of Buyer's covenants and obligations hereunder, shall
have been duly authorized by all necessary corporate action on the part of
Buyer.
6.5 APPROVAL OF DOCUMENTATION. The form and substance of all agreements,
certificates, instruments, opinions, and other documents delivered to Seller
under this Agreement shall be satisfactory in all reasonable respects to Seller
and its or Company's counsel.
6.6 SELLER'S ACCESS TO INFORMATION. Buyer shall make available to Seller,
on a pre-Closing or post-Closing basis, if requested by Seller with reasonable
notice, such records of the Company for events occurring prior to the Closing as
Seller may need for compliance with regulatory or taxing authorities.
6.7 STATEMENT OF FAIR MARKET VALUE. A STATEMENT OF FAIR MARKET VALUE
FOR THE TRANSACTION SHALL HAVE BEEN PROVIDED BY THE BUYER TO THE SELLER.
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6.8 DUE DILIGENCE. Seller shall have performed such due diligence review
of the Buyer as it deems necessary, and shall have determined, in its reasonable
discretion, that it is satisfied with the results of its due diligence
investigation.
6.9 TERMINATION OF EMPLOYMENT AGREEMENT. APS shall have entered into the
Employment Agreements as defined in Section 5.12, and as of the Closing such
agreements will be in full force and effect, and any previously existing
employment agreements with persons will be terminated and superseded. Certain
obligations under previously existing employment agreements will be the
obligation of the Seller, in accordance with Section 9.1.
Notwithstanding the foregoing, in the event that a member of the Company's
senior management, as set forth in Section 5.12, elects not to enter into such
Employment Agreement with the Buyer, but elects rather to maintain his/her
current agreement with the Company, such election may be deemed by the Seller as
equivalent to that person having entered into an Employment Agreement with APS
for purposes of satisfying the requirements of the Section.
6.10 SHAREHOLDER'S RIGHTS AGREEMENT. The Buyer and Seller shall have
entered into a Shareholder's Rights Agreement, on terms reasonably acceptable to
Seller, which agreement shall include, but not be limited to, the following
provisions: (i) at such time as there is an initial public offering ("IPO") of
the Buyer's Shares, the Buyer will utilize its best efforts to provide Seller
with freely tradable shares within one (1) year of such IPO; (ii) the Buyer will
use its best efforts to give Seller the right to participate in any secondary
offering, based upon Seller's percentage ownership in the Buyer; (iii) in the
event of a change in control of the Buyer, Seller will be offered the
opportunity to sell its shares on the same valuation as the holders of the
majority of the Buyer's shares; and (iv) in the event that there is neither an
IPO nor a change in control of the Buyer within five (5) years of the Closing
Date, Seller will be permitted to put its
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shares to the Buyer for cash, and the Buyer will be permitted to call Seller's
shares in the Buyer for cash.
ARTICLE 7
TERMINATION AND ABANDONMENT
7.1 METHODS OF TERMINATION. The transactions contemplated herein may be
terminated and/or abandoned at any time before or after approval thereof by
Seller and Buyer, but not later than the Closing:
(a) By mutual consent of Buyer and Seller; or
(b) By Buyer at Closing, if any of the conditions provided for in
Article 5 hereof shall not have been met or waived in writing by Buyer prior to
such date; or
(c) By Seller at Closing, if any of the conditions provided for in
Article 6 hereof shall not have been met or waived in writing by Seller prior to
such date.
(d) Notwithstanding the foregoing, the parties agree that in the
event that a party fails to meet one or more conditions to Closing by the
Closing Date, such party may request an additional period, up to 5 business
days, to meet such conditions, which request shall not be unreasonably denied by
the other parties.
7.2 PROCEDURES UPON TERMINATION. In the event of termination and/or
abandonment by Buyer or Seller, or both, pursuant to Article 7 hereof, written
notice thereof shall forthwith be given to the other party and the transactions
contemplated by this Agreement shall be terminated and/or abandoned, without
further action by Buyer or Seller. If the transactions contemplated by this
Agreement are terminated and/or abandoned as provided herein:
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(a) Each party will redeliver all documents, work papers and other
material of any other party relating to the transactions contemplated hereby,
whether so obtained before or after the execution of this Agreement, to the
party furnishing the same; and
(b) No party hereto shall have any liability or further obligation
to any other party to this Agreement except as stated in this Section 7.2, as
the case may be.
ARTICLE 8
THE CLOSING
8.1 SELLER'S OBLIGATIONS AT CLOSING. At the Closing, Seller shall
deliver, or cause to be delivered, to Buyer the following:
(a) Share certificates representing all of the Company Shares,
duly endorsed to Buyer or accompanied by duly executed stock powers;
(b) A certificate of Seller, executed by a duly authorized officer
of Seller on behalf of Seller, dated the Closing Date, in the form and substance
reasonably satisfactory to Buyer, to the effect that (i) all representations and
warranties of Seller in this Agreement are true and correct as of the Closing
Date; (ii) Seller has performed, satisfied, and complied in all material
respects with all covenants, agreements, and obligations required to be
performed and complied with by Seller at or prior to Closing contained in this
Agreement; and (iii) that since the date of this Agreement through the Closing
Date, there has not occurred any material adverse change in condition (financial
or otherwise) to the business, properties, assets, or prospects of the Company;
(c) Opinion of Counsel as required by Section 5.3;
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(d) The good standing certificate as required by Section 5.7;
(e) The resignations of officers and directors required by
Section 5.8;
(f) The undertaking relating to marks, names and logos required
by Section 5.10;
(g) The respective Employment Agreements, as required by
Section 5.12, executed and delivered by the respective employees;
(h) The Shareholder's Rights Agreement, as required by Section
5.13, executed and delivered by the Seller;
(i) The BCBSMT/Company Services Agreement, as required by
Section 5.14, executed and delivered by BCBSMT and the Company;
(j) Evidence of liability coverage, as required by Section 5.16;
(k) Certified copies of (i) the resolutions of the Board of
Directors of Seller and of BCBSMT (or BCBSMT's duly authorized Executive
Committee), in full force and effect on the Closing Date, authorizing the
execution, delivery and performance of this Agreement and each other agreement
required pursuant to this Agreement to be delivered by Seller, and/or BCBSMT,
(ii) the Articles of Incorporation of the Company, together with all amendments
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thereto, certified by the Secretary of State of Montana as of a date not more
than thirty (30) days prior to the Closing and certified by the Secretary of the
Company as in effect on the Closing Date, and (iii) the Bylaws of the Company,
together with all amendments thereto, certified by the Secretary of the Company
as in effect on the Closing Date; and
(l) Such other documents and certificates as Buyer shall
reasonably request.
8.2 BUYER'S OBLIGATIONS AT CLOSING. At the Closing, Buyer shall
deliver to Seller the following:
(a) The wire transfer described in Section 1.3;
(b) The stock certificates representing the Buyer's Shares, as
provided in Section 1.3;
(c) A certificate of the Buyer, executed by a duly authorized
officer, dated the Closing Date, in the form and substance reasonably
satisfactory to the Seller, to the effect that: (i) all representations and
warranties of Buyer in this Agreement are true and correct as of the Closing
Date; (ii) Buyer has performed, satisfied, and complied with, in all material
respects, all covenants, agreements, and obligations required by this Agreement
to be performed or complied with by the Buyer on or before the Closing Date; and
(iii) that since the date of this Agreement through the Closing Date, there has
not occurred any material adverse change in condition (financial or otherwise)
to the business, properties, assets or prospects of the Buyer.
(d) The respective Employment Agreements, as required by Section
5.12, executed and delivered by APS;
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(e) The Shareholder's Rights Agreement, as required by Section
5.13, executed and delivered by the Buyer;
(f) Opinion of Counsel as required by Section 6.2;
(g) Certified copies of (i) the resolutions of the Board of
Directors of the Buyer, in full force and effect on the Closing Date,
authorizing the execution, delivery and performance of this Agreement and each
other agreement required pursuant to this Agreement to be delivered by the
Company, (ii) the Articles of Incorporation of Buyer, together with all
amendments thereto, certified by the Secretary of State of Delaware as of a date
not more than thirty (30) days prior to the Closing and certified by the
Secretary of Buyer as in effect on the Closing Date, and (iii) the Bylaws of the
Buyer, together with all amendments thereto, certified by the Secretary of the
Buyer as in effect on the Closing Date; and
(h) Such other documents and certificates as Sellers shall
reasonably request.
ARTICLE 9
POST-CLOSING OBLIGATIONS
9.1 CHANGE OF CONTROL PAYMENT. In the event that a party employed by the
Company exercises at any time by, on, or after the Closing, a right to receive a
severance or other payment pursuant to an employment agreement or other
arrangement with the Company entered into prior to the Closing Date, the Seller
shall bear full and complete responsibility for such payment.
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9.2 DISCLOSURE NOTICES. The Seller shall file all appropriate
disclosure notices as may be required with all necessary and appropriate
regulatory bodies.
9.3 UNSCHEDULED LIABILITIES. Seller shall satisfy and discharge,
post-Closing, when due, any material debt, obligation, liability, or lien not
listed on Schedule 2.8 or Schedule 2.9, whether known or unknown and whether
accrued, contingent, or otherwise, that was incurred prior to Closing, was
outside the ordinary course of business, and in the aggregate was over $10,000,
regardless of when the discovery of such incurrence is made (an "Unscheduled
Liability"), upon written notice from Buyer or Company of such Unscheduled
Liability. In the event Seller fails to pay or otherwise satisfy and discharge
when due any such Unscheduled Liability, the Company shall have the right to
pay, upon ten (10) days' prior written notice to Seller, such Unscheduled
Liability, and Seller shall have the obligation to reimburse the Company within
five (5) business days of receiving a notice of such payment from Company and/or
the Buyer. In the event that the Seller fails to make such payment to the
Company in a timely fashion, Company and/or Buyer shall have the right to (i)
interest on the payment for the period it remains unpaid, at a rate of the Prime
Rate plus 2% and (ii) recover all attorneys fees and expenses stemming from any
action brought by the Company and/or the Buyer to recover such payment from the
Seller.
9.4 APPOINTMENT OF SELLER'S PRESIDENT TO BOARD. THE BUYER AGREES THAT IT
SHALL NOMINATE THE PRESIDENT OF THE SELLER (OR HIS/HER DESIGNEE) TO SERVE, EX
OFFICIO, WITH FULL VOTING RIGHTS, AS A MEMBER OF THE BOARD OF DIRECTORS OF THE
BUYER, AND SHALL SUBMIT SUCH NOMINATION TO THE SHAREHOLDERS OF THE BUYER FOR
THEIR CONSIDERATION, FOR SO LONG AS THE SELLER HOLDS TITLE TO THE BUYER'S
SHARES.
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9.5 MAINTENANCE OF ASSETS OF SELLER. The Seller agrees that for the 2 year
survival period of the indemnification set forth in Section 10.6, below, the
Seller will maintain at least $6.5 million in total assets (excluding the
Buyer's Shares), of which at least $2 million will be in current assets. In
addition, the Seller agrees that it shall be prohibited from transferring the
Buyer's Shares unless and until the transferee of the Buyer's Shares agrees in
writing, satisfactory to the Buyer, to indemnify the Buyer up to the value of
such shares, in accordance with the provisions of Article 10.
ARTICLE 10
INDEMNIFICATION
10.1 INDEMNIFICATION OF BUYER. Seller agrees to indemnify and hold
harmless Buyer and the Company from and against any and all claims, demands,
losses, costs, expenses, obligations, liabilities, damages, recoveries, and
deficiencies, including interest, penalties, and reasonable attorneys' fees,
that it shall incur or suffer, which arise, result from, or relate to any breach
of, or failure by Seller to perform, any of the representations, warranties,
covenants, or agreements in this Agreement or in any schedule, certificate,
exhibit, or other instrument furnished or to be furnished by Seller under this
Agreement, or from any civil or criminal actions, proceedings or investigations
involving the Company, including but not limited to, proceedings based upon
personal injury, property damage, negligence, or breach of contract, which
personal injury, property damage, negligence, or breach of contract occurred,
was in existence or was due prior to the Closing Date (hereinafter collectively
called "Claims").
10.2 INDEMNIFICATION OF SELLER. Buyer shall indemnify, defend, and hold
harmless Seller from and against any and all claims, demands, losses, costs,
expenses, obligations,
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liabilities, damages, recoveries, and deficiencies, including interest,
penalties, and reasonable attorneys' fees, that Seller may incur or suffer and
that arise, result from, or relate to any breach of or failure by Buyer to
perform any of its representations, warranties, covenants, and agreements
contained in this Agreement or in any schedule, certificate, exhibit, or other
instrument furnished or to be furnished by Buyer under or in connection with
this Agreement.
10.3 TAX INDEMNITY. Upon the terms and subject to the conditions set forth
in Section 10.4 hereof and this Section 10.3, Seller agrees to indemnify and
hold Buyer, and the Company harmless against, and will reimburse Buyer (or the
Company if Buyer so requests) on demand for:
(a) any and all tax deficiencies in respect of federal, state, local
and foreign sales, use, income or franchise tax or taxes based on or measured by
income, including any interest or penalties thereon and legal fees and expenses
incurred by Buyer, the Company with respect to the taxable year ended December
31, 1998, and all prior taxable years; and
(b) any and all such taxes, interest, penalties and legal fees and
expenses in respect of the period from January 1, 1999 up to and including the
Closing Date, but only to the extent that such deficiencies, taxes, interest,
penalties and legal fees and expenses exceed, in the aggregate, the amount of
the aggregate reserves for such taxes, if any, shown as liabilities on the
Unaudited Balance Sheet.
The indemnity provided for in this Section 10.3 shall be independent of
and in addition to any other indemnity provision of this Agreement and, anything
in this Agreement to the contrary notwithstanding, shall survive until the
expiration of the applicable statutes of limitation for the taxes referred to
herein.
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10.4 LIMITATION OF INDEMNIFICATION. The indemnification provided in
Section 10.1 and Section 10.2 is subject to the following limitations:
(a) A party will be liable to the other party for all losses,
subject to the limitations set forth below, provided that no indemnification
payments shall be due until the amount of such losses exceed Five Thousand
Dollars ($5,000.00) for a single occurrence and/or Ten Thousand Dollars
($10,000.00) in the aggregate.
(b) A party will not be liable for any losses arising from any
breach of this Agreement unless written notice specifying the nature of such
claim is given within the survival period for indemnification set forth in
Section 10.6, below.
(c) In no event, shall either party be liable to the other party for
any losses pursuant to Section 10.1 or Section 10.2 in the aggregate amount in
excess of the Purchase Price, $11.6 million, provided that in the case of the
Seller, the first $6.5 million of such amount will be paid in cash, and the
remaining $5.1 million will be paid by return of shares of the Buyer's Shares,
valued at (in descending order of preference): (i) the then current price of
such shares if traded on a public market; and (ii) the higher of (a) the fair
market value of such shares as determined by an independent appraiser retained
by the Buyer; or (b) $2.85 per share. In the case of the Buyer, such amount
would be paid entirely in cash.
10.5 INDEMNIFICATION PROCEDURE. With respect to any indemnity action or
Claim, the party seeking indemnification (the "Indemnitee") shall, with
reasonable promptness, provide the other party (the "Indemnitor"), with copies
of any claims or other documents received and shall otherwise make available to
the Indemnitor all relevant information material to the defense of any claim
against the Indemnitee or which may serve as the basis for a claim by the
Indemnitee
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pursuant to the terms hereof. The Indemnitee shall have the right to choose
counsel, which counsel shall be of good professional standing with experience
and expertise in the subject matter of the claim. The Indemnitor shall have the
election to join in the defense of any litigation against Indemnitee in respect
of such claim and the Indemnitee shall not settle or compromise any such
litigated claim unless it shall first obtain the written consent of the
Indemnitor or unless suit shall have been instituted against the Indemnitee and
the Indemnitor shall have failed, after the lapse of a reasonable time after
written notice to him of such a suit, to take action to defend the same;
provided, however, that the Indemnitee's failure to give prompt notice or to
provide copies of documents or to furnish relevant data shall not constitute a
defense (in part or in whole) to any claim by the Indemnitee against the
Indemnitor, except and only to the extent that such failure by the Indemnitee
shall result in a material prejudice to the Indemnitor. The defense of any such
suit shall at all times be guided by the objective of keeping the financial
exposure of all the parties to a minimum.
10.6 SURVIVAL OF INDEMNIFICATION. The representations and warranties of
the Seller contained in Article 2 of this Agreement, and of the Buyer contained
in Article 3 of this Agreement, shall survive the Closing and, notwithstanding
such Closing, shall remain in full force and effect for the benefit of the Buyer
and of the Seller, respectively, for a period of two years and any claim for
indemnity with respect thereto shall be made within such time period; PROVIDED,
however, that the representations and warranties set forth in Sections 2.10 (Tax
Returns and Audits), shall survive until the expiration of any statute of
limitations period relating to such matters following the Closing. If written
notice of a specific claim has been given prior to the expiration of the
applicable survival period of the representations and warranties that are the
subject of such claim by the party for whose benefit such representations and
warranties have
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been made to the party that made such representations and warranties, then the
relevant representations and warranties shall survive for the purpose of such
claim, until the claim has been resolved.
ARTICLE 11
COSTS
11.1 FINDER AND BROKER FEES. With the exception of Advest, which has
served as a broker, finder, and/or agent for the Seller, and whose commissions,
fees, and/or expenses the Seller will be entirely responsible for, each party to
this Agreement hereby represents and warrants to the other parties that no
Broker or Finder acted directly or indirectly as such for such party in
connection with this Agreement or the transactions contemplated hereby and no
Broker or Finder is entitled to any Broker or Finder's Fee or other commission
fee in respect thereof.
11.2 ATTORNEY'S AND ACCOUNTANT'S FEES. Whether or not the transactions
contemplated by this Agreement are consummated, each of the parties hereto shall
pay all costs and expenses incurred or to be incurred by it or on its behalf in
negotiating or preparing this Agreement and closing the transaction contemplated
by this Agreement. Any costs or expenses incurred, or to be incurred, by the
Company shall be paid by the Seller.
ARTICLE 12
MISCELLANEOUS
12.1 EFFECT OF HEADINGS; SCHEDULES. The subject headings of the sections
of this Agreement are included for purposes of convenience only, and shall not
affect the construction or interpretation of any of its provisions. All exhibits
and schedules attached to this Agreement
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are incorporated herein in their entirety, provided, however, that in the event
of any conflict between any such exhibit or schedule and this Agreement, this
Agreement shall control. Each exhibit and schedule hereto is hereby
cross-referenced to all other exhibits and schedules hereto to the extent
necessary to make any such exhibit or schedule complete.
12.2 ENTIRE AGREEMENT; MODIFICATION; WAIVER. This Agreement constitutes
the entire agreement between the parties pertaining to the subject matter
contained in it, except for any other agreements referenced herein. This
Agreement supersedes all prior and contemporaneous agreements (other than those
entered into in writing simultaneously with or pursuant to this Agreement),
representations, and understandings of the parties. No waiver of any of the
provisions of this Agreement shall be deemed, or shall constitute, a waiver of
any other provisions, whether or not similar, nor shall any waiver constitute a
continuing waiver. No waiver shall be binding unless executed in writing by the
party making the waiver and then only to the extent expressly specified therein.
12.3 ASSIGNMENT. This Agreement shall be binding on and shall inure to the
benefit of the parties to it and their respective heirs, legal representatives,
successors, and assigns; provided, however that no party to this Agreement may
assign any of its rights hereunder, or delegate any of its duties hereunder,
without the prior written consent of the other party.
12.4 NOTICES. All notices, requests, demands, and other communications
under this Agreement shall be in writing and shall be deemed to have been duly
given on the date of service if served personally on the party to whom notice is
to be given, or on the first day after mailing if mailed by a national courier
service for overnight delivery properly addressed as shown on the signature
page. Any party may change its address for purposes of this Section by giving
the other party written notice of the new address in the manner set forth above.
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If to Buyer: American Psych Systems Holdings, Inc.
ATTN: Xxxxxxx X. Xxxxxxx, M.D.
0000 Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxx, XX 00000
Copy to: Xxxxx X. Xxxxxx, Esq.
Xxxxxxx Xxxxxx & Green, P.C.
0000 00xx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
If to Seller: COMBINED BENEFITS MANAGMENT COMPANY
Attn: Xxxxxx X. Xxxx
000 XXXXX XXXX XXXXXX
XXXXXX, XX 00000
Copy to: Xxxxx Xxxxxxxx
Xxxxxxx, Haughey, Hanson, Toole & Xxxxxxxx
XX Xxx 000
Xxxxxx, XX 00000
12.5 PARTIES IN INTEREST. Nothing in this Agreement, whether express or
implied, is intended to confer any rights or remedies under or by reason of this
Agreement on any persons other than the parties to it and their respective
successors and assigns. Nothing in this Agreement is intended to relieve or
discharge the obligation or liability of any third person to any party to this
Agreement, nor shall any provision give any third person any right of
subrogation or action over and against any party to this Agreement.
12.6 PUBLIC DISCLOSURES. No party to this Agreement will until completion
of the Closing make any public disclosure or publicity release pertaining to the
existence of this Agreement or of the subject matter contained herein without
having first obtained the written consent of the other parties hereto. Buyer and
Seller shall consult with one another in advance concerning the form and
substance of any press release or other public disclosure of the matters covered
by this Agreement and shall make a diligent effort to prohibit shareholders,
members, directors, officers, partners, employees or advisors from granting
press interviews or engaging in
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similar actions that would result in public disclosure of such matters.
Notwithstanding the foregoing, each party shall be permitted to make such
disclosures to the public or to governmental agencies as its counsel shall deem
necessary to comply with this Agreement or applicable federal or state law. A
party making such announcement shall give written notice of such disclosure to
the other party promptly after such disclosure.
12.7 GOVERNING LAW. This Agreement shall be construed in accordance
with, and governed by, the laws of the State of Montana.
12.8 SEVERABILITY. Each term, covenant, condition, or provision of this
Agreement shall be viewed as separate and distinct, and in the event that any
such term, covenant, condition, or provision shall be held by a court of
competent jurisdiction to be unenforceable or invalid, such term or provision
shall only be ineffective as to such jurisdiction, and the remaining provisions
shall continue in full force and effect. The parties agree that they shall
negotiate in good faith in such cases a substitute provision that comes as close
as possible to the invalidated or unenforceable term or provision, and puts the
parties in a position as nearly comparable as possible to the position they
would have been in but for such holding, while remaining valid and enforceable.
12.9 NECESSARY ACTS. Each party to this Agreement agrees to perform any
further acts and execute and deliver any further documents that may be
reasonably necessary to carry out the provisions of this Agreement.
12.10 CONFIDENTIALITY.
(a) Subject to Section 12.10(b) hereof, each of the parties hereto
shall, and shall cause their respective directors, officers, members, partners,
shareholders, employees, representatives, affiliates, and subsidiaries, to keep
confidential and not disclose to any person
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(other than, with appropriate undertakings or obligations of confidentiality,
their respective directors, officers, members, partners, shareholders,
employees, attorneys, accountants and other advisers with a reasonable need to
know such information) all Confidential Information relating to the other party
and its affiliates or subsidiaries obtained by it or them from the other party
or its affiliates or subsidiaries in preparation for, or in connection with,
this Agreement or the transactions contemplated hereby, and use such information
only in connection with this Agreement and such transactions. Prior to
distributing or otherwise providing any Confidential Information to an affiliate
or subsidiary, a party shall obtain from such affiliate or subsidiary, in
writing, an agreement to be bound by the terms of this section. For purposes of
this Agreement, "Confidential Information" means all confidential or proprietary
written, recorded or oral information, data, records, files, lists, materials,
documents, know-how or software (including such information pertaining to
research, development, engineering, manufacturing, service, sale, marketing or
other advertising materials technical information, training materials, manuals,
intellectual property, financial, operating, cost, performance, business,
process, customers, clients, patients, or prospects), owned, leased, held or
used by a party, whether such confidential or proprietary nature is indicated
orally or in writing (by such terms or terms of similar effect) or in a context
in which the source of such information or data reasonably communicates, or the
recipient of such information or data should reasonably have understood, that it
should be treated as confidential or proprietary, whether or not the specific
word "confidential" or "proprietary" is used.
(b) The obligations imposed by Section 12.10(a) hereof shall not
apply, or shall cease to apply, to any Confidential Information when, and to the
extent that, (i) such Confidential Information (A) was known to the recipient
prior to the receipt of the Confidential
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Information from the discloser thereof; (B) was, or becomes through no breach of
the recipient's obligations hereunder, known to the public; (C) becomes known to
the recipient from sources other than the discloser under circumstances not
involving any breach of any confidentiality obligation between such source and
the discloser; (D) is independently developed by the recipient; (E) is required
to be disclosed by law or applicable legal process, or is necessary or advisable
to be disclosed in order to comply with any applicable statute or governmental
rule, regulation, order, directive or policy, any financial or accounting
requirement, or any government requests for additional information or documents
thereunder; (F) is necessary to be disclosed by the Buyer to lenders and other
financing sources and their representatives as a means to facilitate financing
related to the transactions contemplated hereby or in connection with other
transactions engaged in by the Buyer, PROVIDED that such individuals have agreed
to retain such information in confidence; or (G) involves disclosure by the
Buyer of the terms of the transactions contemplated hereby to persons in
response to specific inquiries, provided such disclosure is consistent with
information disclosed under Section 12.6 hereof (Public Disclosures); or (ii)
the party to this Agreement to which such Confidential Information relates
expressly consents thereto in writing. In addition, the obligations imposed on
Buyer by Section 12.10(a) shall cease to apply to Confidential Information
related to the Company after the Closing.
(c) In connection with its ownership of the Company, Seller and/or
its affiliates (including but not necessarily limited to BCBSMT) have obtained
Confidential Information relating to the business, operations, properties,
assets, products, condition (financial and otherwise), liabilities, employee
relations, customer, supplier, distributor and franchise relations and prospects
of the Company. Following the Closing of the transactions contemplated
-52-
hereby, Seller and its affiliates (pursuant to a written agreement with the
Seller) shall treat such information as confidential with respect to all
unrelated third parties and will otherwise refrain from using such information
to compete with the Buyer and/or the Company. The Seller and/or its affiliates
shall not duplicate or use such information and shall take such steps as are
reasonable so as to inform their respective board members, officers and
employees who have had access to such information to keep confidential and not
to use any such information with regards to any unrelated third party or as a
means of competing with the Buyer and/or the Company unless such information (i)
is now or is hereafter disclosed, through no act or omission of Seller and its
affiliates, in a manner making it available to the general public or (ii) is
required to be disclosed by law or applicable legal process, or is necessary or
advisable to be disclosed in order to comply with any applicable statute or
governmental rule, regulation, order, directive or policy, any financial or
accounting requirement or any governmental requests for additional information
or documents thereunder.
12.11 SPECIFIC PERFORMANCE. Buyer and Seller agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with its specific terms or were otherwise breached.
Buyer and Seller accordingly agree that both parties will be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement in any court of the
United States of America or of any state or other political subdivision thereof.
12.12 EXPENSES. Except as otherwise expressly provided herein, each party
shall bear its own expenses (including those of its accountants, advisers or
other agents or representatives) incident to the preparation, negotiation,
execution and delivery of this Agreement and the performance of its obligations
hereunder.
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12.13 MATERIALITY. For purposes of this Agreement, "material" or
"materially" means with a financial subject matter or effect of Ten Thousand
Dollars ($10,000) or more, provided that any and all amounts below the $10,000
threshold shall nonetheless be applied towards the calculation of losses for
purposes of the indemnification limitation described in Section 10.4.
12.14 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. Anything herein to the
contrary notwithstanding, this Agreement shall not be effective until each party
has signed at least one counterpart hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
SELLER
COMBINED BENEFITS MANAGEMENT, INC.
/s/ Xxxxx Xxxxxxx
----------------------------------------
Signature
Xxxxx Xxxxxxx
----------------------------------------
Print Name
President & CEO
----------------------------------------
Title
COMPANY
VYDAS RESOURCES, INC.
/s/ Xxxxxxxx X. Xxxxxx
----------------------------------------
Signature
Xxxxxxxx X. Xxxxxx
----------------------------------------
Print Name
President & CEO
----------------------------------------
Title
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BUYER
AMERICAN PSYCH SYSTEMS HOLDINGS, INC.
/s/ Xxxxxxx X. DaRe
----------------------------------------
Signature
Xxxxxxx X. DaRe
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Print Name
EVP and CFO
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Title
-55-
