Exhibit 10.76
STOCK PURCHASE AGREEMENT
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STOCK PURCHASE AGREEMENT (the "Agreement"), dated the 19th day of May,
1999, by and between XXXXX X. XXXXX ("Purchaser"), and THE WELLCARE MANAGEMENT
GROUP, INC., a New York corporation (the "Company").
W I T N E S S E T H:
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WHEREAS, the Company is the owner of record and beneficial owner of all of
the outstanding capital stock of WellCare of New York, Inc., a New York
corporation certified to operate a health maintenance organization in certain
counties in the State of New York ("WellCare- NY"); WHEREAS, WellCare-NY is the
owner of record and beneficial owner of all of the outstanding capital stock of
WellCare of Connecticut, Inc., a Connecticut corporation certified to operate a
health maintenance organization in the State of Connecticut ("WellCare-CT");
WHEREAS, the Company desires to sell to Purchaser, and Purchaser desires to
purchase from the Company, for the sum of Five Million Dollars ($5,000,000),
shares of a newly authorized series of preferred stock of the Company on the
terms and subject to the conditions set forth herein (the "Series A Preferred
Stock"), as a result of which purchase Purchaser shall own and shall have the
immediate right to vote fifty-five percent (55%) of the outstanding voting stock
of the Company and such Series A Preferred Stock shall be convertible into
fifty-five percent (55%) of the outstanding shares of Common Stock, $.01 par
value per share (the "Common Stock") of the Company (after giving effect to any
shares issuable to any other holder of any outstanding series of preferred stock
of the Company and after the authorization of the number of additional shares of
Common Stock necessary to permit the conversion of the Series A Preferred Stock
into Common Stock as provided herein).
NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties and promises herein contained, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. Definitions. The following terms, as used herein, have the following
meanings: "Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.
"Affiliated Group" means any affiliated group within the meaning of
Code Section 1504 or any similar group defined under a similar provision of
state, local or foreign law.
"Basis" means any past or present fact, situation, circumstance,
status, condition, activity, plan, occurrence, event, incident, action, failure
to act, or transaction of which the Company has Knowledge that could reasonably
be expected to form the basis for any specified consequence.
"Closing" has the meaning set forth in Section 2(d) below.
"Closing Date" has the meaning set forth in Section 2(d) below.
"Code" means the Internal Revenue Code of 1986, as amended.
"Common Stock" means the common stock of the Company, par value $.01per
share.
"Class A Common Stock" means the Class A common stock of the
Company,$.01 per share.
"Company" means The WellCare Management Group, Inc., a New York
business corporation.
"Company's Disclosure Letter" has the meaning set forth in Section 3(a)
below.
"CHMI" means Comprehensive Health Management, Inc., a Florida
corporation.
"Consents" has the meaning set forth in Section 5(b) below.
"Controlled Group of Corporations" has the meaning set forth in Code
Section 1563.
"Debt" means any liability except accounts payable and accrued
liabilities arising in the Ordinary Course of Business.
"Deferred Intercompany Transaction" has the meaning set forth in
Treasury Regulation ss. 1.1502-13. "Distributed Assets" has the meaning set
forth in Section 5(d) below.
"Employee Benefit Plan" means any (a) nonqualified deferred
compensation or retirement plan or arrangement which is an Employee Pension
Benefit Plan, (b) qualified defined contribution retirement plan or arrangement
which is an Employee Pension Benefit Plan, (c) qualified defined benefit
retirement plan or arrangement which is an Employee Pension Benefit Plan
(including any Multi-Employer Plan), or (d) Employee Welfare Benefit Plan or
material fringe benefit plan or program.
"Employee Pension Benefit Plan" has the meaning set forth in ERISA
Section 3(2).
"Employee Welfare Benefit Plan" has the meaning set forth in ERISA
Section 3(1).
"Environmental Laws" means any federal, state or local environmental
law, ordinance, rule or regulation, including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act of 1980 (42
U.S.C. Section 9601 et seq.) as amended, the Hazardous Materials Transportation
Act (49 U.S.C. Section 1801 et seq.) as amended, the Resource Conservation and
Recovery Act (42 U.S.C. Section 6901 et seq.) as amended, and in the regulations
adopted and rules promulgated pursuant thereto
"Environmental, Health, and Safety Laws" means the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the Resource
Conservation and Recovery Act of 1976, the Occupational Safety and Health Act of
1970, the Medical Waste Tracking Act of 1988, the U. S. Public Vessel Medical
Waste Anti-Dumping Act of 1988, the Marine Protection, Research and Sanctuaries
Act and Human Services, National Institute for Occupational Safety and Health,
Infections Waste Disposal Guidelines, Publication No. 88-119, each as amended,
together with all other laws (including rules, regulations, codes, plans,
injunctions, judgments, orders, decrees, rulings and charges thereunder) of
federal, state, local and foreign governments (and all agencies thereof)
concerning pollution or protection of the environment, public health and safety,
or employee health and safety, including laws relating to emissions, discharges,
releases or threatened releases of medical wastes, pollutants, contaminants, or
chemical, industrial, hazardous or toxic materials or wastes into ambient air,
surface water, ground water, or lands or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of pollutants, contaminants, or chemical, industrial, hazardous or
toxic materials or wastes.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Excess Loss Account" has the meaning set forth in Treasury Regulation
ss. 1.1502-19.
"Extremely Hazardous Substance" has the meaning set forth in Section
302 of the Emergency Planning and Community Right-to-Know Act of 1986, as
amended.
"Fiduciary" has the meaning set forth in ERISA Section 3(21).
"Financial Statements" has the meaning set forth in Section 4(f) below.
"Fund" shall mean The 1818 Fund II, L.P.
"GAAP" means United States generally accepted accounting principles as
in effect from time to time.
"Hazardous Materials" means any flammable explosives, radioactive
materials, hazardous materials, hazardous wastes, hazardous or toxic substances
or related or similar material, asbestos or any material containing asbestos, or
petroleum or any other substance or material of a type and in quantities
regulated by Environmental Law.
"HCFA" means the Health Care Financing Administration.
"HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976, as amended, and the published rules and regulations thereunder.
"Knowledge" means actual knowledge of a Person.
"Liability" means any liability or obligation to pay money (whether
known or unknown, asserted or unasserted, absolute or contingent, accrued or
unaccrued, liquidated or unliquidated, and whether due or to become due),
including any liability for Taxes.
"Management Agreements" means the Management Agreements to be entered
into by and among WellCare-NY and WellCare-CT and CHMI and/or its successors and
assigns, in the forms attached hereto as Exhibit A.
"Material Adverse Effect" means any event, change or effect that,
individually or when taken together with all other such events, changes or
effects, is or could reasonably be expected (as far as can be foreseen at the
time) to be materially adverse to the business, assets, liabilities, condition
(financial or otherwise) or results of operations of the Company and its
Subsidiaries taken as a whole, other than effects caused by changes in general
economic conditions or conditions generally affecting the types of businesses in
which the Company and its Subsidiaries are engaged.
"Most Recent Balance Sheet" means the balance sheet contained within
the Most Recent Financial Statements.
"Most Recent Financial Statements" has the meaning set forth in Section
3(f) below.
"Most Recent Fiscal Month End" has the meaning set forth in Section
3(f) below.
"Most Recent Fiscal Year End" has the meaning set forth in Section 3(f)
below.
"Multi-Employer Plan" has the meaning set forth in ERISA Section 3(37).
"Note" shall mean the promissory note by the Company to the Fund in the
amount of approximately Fifteen Million Dollars ($15,000,000).
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Person" means any individual, partnership, corporation, association,
joint stock company, limited liability company, trust, joint venture,
unincorporated organization, or governmental entity (or any department, agency
or political subdivision thereof).
"Preferred Stock" means the preferred stock of the Company, $.01 par
value per share. "Prohibited Transaction" has the meaning set forth in ERISA
Section 406 and Code Section 4975.
"Purchase Price" has the meaning set forth in Section 2(a) below.
"Purchaser's Disclosure Letter" has the meaning set forth in Section 4
below.
"Reportable Event" has the meaning set forth in ERISA Section 4043.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Security Interest" means any mortgage, pledge, lien, encumbrance,
charge or other security interest, other than (a) mechanics', materialmen's, and
similar liens, (b) liens for Taxes not yet due and payable, and (c) other liens
arising in the Ordinary Course of Business and not incurred in connection with
the borrowing of money.
"Series A Preferred Stock" means the series of preferred stock of the
Company being issued for sale to Purchaser under this Agreement, which preferred
stock shall be issued pursuant to the terms set forth on Exhibit B attached
hereto, which shall include but not be limited to the following: (i) automatic
conversion into shares of Common Stock equal to Fifty-Five percent (55%) of the
outstanding Common Stock of the Company upon the authorization of the increase
of the capital stock of the Company to Seventy-Five Million Shares (75,000,000);
(ii) no liquidation preference; and (iii) no dividend preference.
"Shares" means that number of shares of Series A Preferred Stock being
sold to
Purchaser under this Agreement.
"Statutory Net Worth" is defined by the New York statutes, rules and
regulations with respect to certified health maintenance organizations.
"Subsidiaries" shall have the meaning set forth in Rule 405 of the
Securities Act and shall include, with respect to the Company, without
limitation, WellCare Administration, Inc., WellCare-CT, WellCare-NY, WellCare
Development, Inc., WellCare Medical Management, Inc., WellCare Management
Corporation, and WellCare Foundation, Inc. (which is in the process of being
dissolved pursuant to Article 10 of the New York Not-for-Profit Corporation
Law).
"Tax" means any federal, state, local or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code Section
59A), customs duties, capital stock, franchise, profits, withholding, social
security (or similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative or add-on
minimum, estimated, or other tax of any kind whatsoever, including any interest,
penalty or addition thereto, whether disputed or not.
"Tax Return" means any return, declaration, report, claim for refund,
or information return or statement relating to any Tax, including any schedule
or attachment thereto and any amendment thereof.
2. Purchase and Sale of Shares.
(a) Purchase and Sale. On and subject to the terms and conditions of
this Agreement, Purchaser agrees to purchase from the Company, and the Company
agrees to sell to Purchaser, the Shares. As set forth on Exhibit B attached
hereto regarding the terms of the Series A Preferred Stock, the Shares shall
have immediate voting rights equal to fifty-five percent (55%) of the
outstanding shares of Common Stock (after giving effect to the conditions set
forth in Sections 6(a)(vii), 6(a)(x) and 6(a)(xi) hereof and any conversion
rights pursuant thereto) of the Company, and the Shares shall be convertible
into fifty-five percent (55%) of the outstanding shares of Common Stock at the
time of conversion thereof (subject to the Section 2(b) hereof). For purposes of
the foregoing calculations only, the number of outstanding shares of Common
Stock shall include the Ten Million (10,000,000) shares of nonvoting common
stock issuable upon conversion of the Preferred Stock that is to be issued to
the Fund in satisfaction of the liabilities of the Company to the Fund under the
Note. The Purchaser acknowledges and agrees that as of the date of this
Agreement and as of the Closing Date there is not and there shall not be a
sufficient number of authorized shares of Common Stock to permit Purchaser to
convert the Shares into Common Stock, and that the charter of the Company must
be amended after the Closing to authorize such additional shares of Common Stock
as shall be necessary to permit Purchaser to convert the Shares into Common
Stock.
(b) Anti-Dilution of Shares. If the Company should either directly or
indirectly distribute, convey, sell or by any other means increase its
authorized, issued and outstanding shares, then Purchaser shall receive from the
Company those number of shares that would permit Purchaser to maintain his
ownership of fifty-five percent (55%) of the outstanding voting stock of the
Company. For purposes of this Section 2(b), the term "directly or indirectly"
includes, but is not limited to, stock sales, options, warrants, additional
public offerings, employee stock ownership options or plans, payment of shares
to creditors, bonuses of stock, or any other scheme or device to issue shares of
the Company. The terms of this Section 2(b) shall be applicable until
Seventy-Five Million (75,000,000) shares of capital stock of the Company being
authorized, issued or outstanding. Notwithstanding the foregoing sentence or
anything to the contrary set forth in this Agreement, after having given effect
to all of the transactions contemplated by this Agreement (including the
issuance of capital stock of the Company to the Purchaser and the Fund, the
conversion of any such stock and of the Class A Common Stock into Common Stock
or other capital stock of the Company, as applicable, and the post-Closing
authorization of the additional shares of Common Stock and other capital stock
necessary therefor, but excluding any issuance of capital stock of the Company
in connection with and in satisfaction of (i) outstanding claims payable by the
Company to any of its providers, (ii) any claims by any of the Company's
creditors, and (iii) any fee owed to Bear, Xxxxxxx & Co., Inc. by the Company),
if and to the extent the Company issues any shares of capital stock up to
Seventy-Five Million (75,000,000) shares and any such additional shares of
capital stock of the Company are issued for consideration less than or equal to
Fifty Cents ($0.50) per share (a "Below Value Issue"), Purchaser shall not be
issued such additional shares as are necessary to maintain his ownership of
fifty-five percent (55%) of the outstanding voting stock of the Company but
instead shall be issued such additional shares as will result in his ownership
being diluted by fifty percent (50%) of the shares issued in such Below Value
Issue.
(c) Payment of Purchase Price. At the Closing, Purchaser shall deliver
to the Company the sum of Five Million Dollars ($5,000,000.00) in certified or
other immediately available funds as payment for the Shares.
(d) The Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Xxxxxxx Xxxxxx &
Green, P.C., 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, commencing at 9:00 a.m.
local time on or before June 1, 1999, or such other date as Purchaser and the
Company may mutually determine (the "Closing Date"); provided, however, that the
Closing Date shall be no later than June 1, 1999.
(e) Deliveries at the Closing. At the Closing, (i) Purchaser will
deliver to the Company the various consideration, certificates, instruments and
documents referred to in Section 7(a) below, and (ii) the Company will deliver
to Purchaser the various consideration, certificates, instruments, and documents
referred to in Section 7(b) below.
3. Representations and Warranties of the Company. The Company represents
and warrants to Purchaser that the statements contained in this Section 3 are
correct and complete as of the date of this Agreement with respect to the
Company, except as set forth in documents filed by the Company with the SEC on
or prior to the Closing Date hereof or the Company's Disclosure Letter executed
and delivered by the Company at or prior to the Closing (the "Company's
Disclosure Letter"). The Company's Disclosure Letter has been arranged in
paragraphs corresponding to the lettered and numbered paragraphs contained in
this Section 3.
(a) Organization, Qualification, and Corporate Power. The Company is a
business corporation duly organized, validly existing, and in good standing
under the laws of the State of New York. Each of its Subsidiaries are
corporations duly organized, validly existing and in good standing in their
respective states of incorporation. The Company and each of its Subsidiaries is
duly authorized to conduct business and is in good standing under the laws of
each jurisdiction where such qualification is required, except where the failure
to so qualify would not have a Material Adverse Effect. The Company owns one
hundred percent (100%) of all the outstanding capital stock of each of its
Subsidiaries. There are no stock options, voting agreements, warrants,
shareholder agreements or other obligations with respect to its Subsidiaries and
its Subsidiaries' capital stock. Other than its Subsidiaries, the Company does
not own, directly or indirectly, any capital stock, equity interest or other
ownership interest in any corporation, partnership, association, joint venture,
limited liability company or other entity. The Company and each of its
Subsidiaries have full corporate power and authority and all licenses,
approvals, permits, and authorizations necessary to carry on the business in
which each of them is engaged and to own and use their respective properties.
The Company's Disclosure Letter lists each of the Company's Subsidiaries, along
with the directors and officers of the Company and each of its Subsidiaries. The
Company has delivered to Purchaser correct and complete copies of the charter
and bylaws of the Company and each of its Subsidiaries (as amended to date). The
minute books of the Company and each of its Subsidiaries (which contain the
records of meetings of the stockholders, the board of directors, and any
committees of the board of directors of the Company and the minute books of each
of its Subsidiaries) are correct and complete. The Company and its Subsidiaries
are not in violation of any provision of their respective charters or bylaws.
(b) Capitalization. The authorized capital stock of the Company
consists of 1,041,233 shares of Class A Common Stock, 20,000,000 shares of
Common Stock, and 1,000,000 shares of Preferred Stock, of which, as of May 6,
1999, 926,243 shares of Class A Common Stock, 6,673,149 shares of Common Stock,
and, subject to Section 6(a)(vii) hereof, no shares of Preferred Stock are
outstanding, and 14,266 shares of Common Stock are held as treasury stock. The
Series A Preferred Stock has not been authorized as of the date hereof. In
addition, Paragraph 3(b) of Company's Disclosure Letter describes all
outstanding options, warrants, voting trust or agreements, and any other items
which are or maybe applicable to any of the unissued, issued, or outstanding
capital stock of the Company or its Subsidiaries. Except as disclosed in
Paragraph 3(b) of Company's Disclosure Letter, there are no outstanding or
authorized stock appreciation, phantom stock, profit participation, voting
trusts, proxies, options, warrants, purchase rights, preemptive rights,
subscription rights, conversion rights, exchange rights, or other contracts or
commitments that could require the Company or the Subsidiaries to issue, sell or
otherwise cause to become outstanding any of its capital stock.
(c) Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(i) violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which the Company is subject or any provision
of the charter or bylaws of the Company (except that there is not and there
shall not be as of the Closing Date a sufficient number of shares of authorized
Common Stock to permit Purchaser to convert the Shares into Common Stock) or
(ii) conflict with, result in a breach of, constitute a default under, result in
the acceleration of, create in any party the right to accelerate, terminate,
modify or cancel, or require any notice under any "put" right, agreement,
contract, lease, license, instrument or other arrangement to which the Company
is a party or by which it is bound or to which any of its assets is subject (or
result in the imposition of any Security Interest upon any of its assets). The
Company is not required to give any notice to, make any filing with, or obtain
any authorization, consent or approval of any Person in order for the parties to
consummate the transactions contemplated by this Agreement, except for the
Consents. To the best of the Company's Knowledge, except for the Consents and
the authorization of the Series A Preferred Stock, no consent, approval, order
or authorization of, or registration, declaration or filing with, any
Governmental Entity is required by or with respect to the Company or any of its
Subsidiaries in connection with the execution and delivery of this Agreement by
the Company or the consummation by the Company of the transactions contemplated
hereby.
(d) Brokers' Fees. The Company has no Liability or obligation to pay
any fees or commissions to any broker, finder or agent with respect to the
transactions contemplated by this Agreement.
(e) Title to Assets. The Company has good and marketable title to, or a
valid leasehold interest in, all of its properties and assets, free and clear of
all Security Interests, and has not sold, transferred, exchanged or conveyed any
of its properties and assets since the date of the Most Recent Balance Sheet
except for properties and assets disposed of in the Ordinary Course of Business.
(f) Financial Statements. Attached as collective Paragraph 4(f) to the
Company's Disclosure Letter are the following financial statements of the
Company (collectively the "Financial Statements"): (i) unaudited balance sheet
and statement of income, changes in stockholders' equity, and cash flow as of
and for the fiscal year ended December 31, 1998 (the "Most Recent Fiscal Year
End"); and (ii) unaudited balance sheet and statement of income, changes in
stockholders' equity, and cash flow (the "Most Recent Financial Statements") as
of March 31, 1999 (the "Most Recent Fiscal Month End"). The Financial Statements
(including the notes thereto) have been prepared in accordance with GAAP applied
on a consistent basis and in accordance with the books and records of the
Company, present fairly the financial condition of the Company and the results
of operations of the Company and its Subsidiaries for such periods and as of
such dates, and are correct and complete.
(g) Events Subsequent to Most Recent Fiscal Year End. Since the Most
Recent Fiscal Year End and up to the date of this Agreement, there has not been
any Material Adverse Effect regarding the business, financial condition,
operations, results of operations, or future prospects of the Company. Without
limiting the generality of the foregoing, since that date:
(i) the Company has not sold, leased, transferred or assigned
any of its assets, tangible or intangible, other than for
fair consideration in the Ordinary Course of Business;
(ii) the Company has not entered into any agreement, contract,
lease or license (or series of related agreements,
contracts, leases, and licenses) involving more than
$50,000.00 (alone or in the aggregate) or outside the
Ordinary Course of Business;
(iii) no party (including the Company) has accelerated,
terminated, modified or canceled any agreement, contract,
lease or license (or series of related agreements,
contracts, leases, and licenses) involving more than
$50,000.00 (alone or in the aggregate) to which the
Company is a party or by which the Company or its
properties are bound;
(iv) the Company has not created, suffered or permitted to
attach or be imposed any Security Interest upon any of its
assets, tangible or intangible;
(v) the Company has not made any capital expenditure (or
series of related capital expenditures) involving more
than $50,000.00 (alone or in the aggregate) or outside the
Ordinary Course of Business;
(vi) the Company has not made any capital investment in, loan
to, or acquisition of the securities or assets of any
other Person (or series of related capital investments,
loans and acquisitions) involving more than $50,000.00
(alone or in the aggregate) or outside the Ordinary Course
of Business;
(vii) the Company has not issued any note, bond or other debt
instrument or security, or created, incurred, assumed or
guaranteed any indebtedness for borrowed money or
capitalized lease obligation;
(viii) the Company has not delayed or postponed the payment of
accounts payable and other Liabilities outside the
Ordinary Course of Business;
(ix) the Company has not canceled, compromised, waived or
released any right or claim (or series of related rights
and claims) involving more than $50,000.00 (alone or in
the aggregate) or outside the Ordinary Course of Business;
(x) the Company has not granted any license or sublicense of
any rights under or with respect to any Intellectual
Property;
(xi) unless approved in writing by Purchaser, there has been no
change made or authorized in the charter or bylaws of the
Company;
(xii) except as set forth in this Agreement, unless approved in
writing by Purchaser, the Company has not issued, sold or
otherwise disposed of any of its capital stock, or granted
any options, warrants or other rights to purchase or
obtain (including upon conversion, exchange, or exercise)
any of its capital stock;
(xiii) the Company has not declared, set aside, or paid any
dividend or made any distribution with respect to its
capital stock (whether in cash or in kind) or redeemed,
purchased or otherwise acquired any of its capital stock;
(xiv) the Company has not experienced any damage, destruction or
loss (whether or not covered by insurance) to its
property;
(xv) the Company has not made any loan to, or entered into any
other transaction with, any of its directors, officers and
employees outside the Ordinary Course of Business;
(xvi) the Company has not entered into any employment contract
or collective bargaining agreement, written or oral, or
modified the terms of any existing such contract or
agreement outside the Ordinary Course of Business;
(xvii) with respect to any of its directors, officers and
employees, the Company has not: (1) granted any increase
in the base compensation; (2) adopted, amended, modified
or terminated any bonus, profit-sharing, incentive,
severance or other plan, contract or commitment for the
benefit thereof (or taken any such action with respect to
any other Employee Benefit Plan); or (3) made any other
change in employment terms;
(xviii)the Company has not made or pledged to make any charitable
or other capital contribution; and (xix) the Company has
not committed to any of the foregoing.
(h) Undisclosed Liabilities. The Company has no Liability, except for
(i) Liabilities set forth on the face of the Most Recent Balance Sheet (rather
than in any notes thereto); (ii) Liabilities which have arisen in the Ordinary
Course of Business after the Most Recent Fiscal Month End and (iii) Liabilities
described in Paragraph 3(h) of the Company's Disclosure Letter (and, with
respect to each Liability described in items (i)-(iii) immediately above, none
of which results from, arises out of, relates to, is in the nature of, or was
caused by any breach of contract, breach of warranty, tort, malpractice or
infringement, or violation of law, except for any violation of law of which
Purchaser has Knowledge based on information provided to Purchaser by the
Company).
(i) Legal Compliance. The Company and its Subsidiaries have complied
with all applicable laws (including rules, regulations, codes, plans,
injunctions, judgments, orders, decrees, rulings, and charges thereunder) of
federal, state, local and foreign governments and all agencies thereof
(including but not limited to the New York and Connecticut Departments of
Insurance and Health, and HCFA), and no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, demand or notice has been filed or
commenced against any of them alleging any failure so to comply.
(j) Tax Matters.
(i) The Company has filed all Tax Returns that it has been
required to file. All such Tax Returns are correct and
complete in all material respects. All Taxes owed by the
Company (whether or not shown on any Tax Return) have been
paid or accrued in the Financial Statements. The Company is
not the beneficiary of any extension of time within which to
file any Tax Return. No claim has ever been made by an
authority in a jurisdiction where the Company does not file
Tax Returns that it is or may be subject to taxation by that
jurisdiction. There are no Security Interests with respect
to any of the assets of the Company that have arisen in
connection with any failure (or alleged failure) to pay any
Tax.
(ii) The Company has withheld and paid all Taxes required to have
been withheld and paid in connection with amounts paid or
owing to any employee, independent contractor, creditor,
stockholder or other third party.
(iii)There is no dispute or claim concerning any Tax Liability of
the Company either (A) claimed or raised by any authority in
writing or (B) as to which the Company has Knowledge.
Paragraph 3(j) of the Company's Disclosure Letter lists all
federal, state, local and foreign income Tax Returns filed
with respect to the Company for taxable periods ended on or
after December 31, 1992, indicates those Tax Returns that
have been audited, and indicates those Tax Returns that
currently are the subject of audit. The Company has
delivered to Purchaser correct and complete copies of all
examination reports in respect of the audit of any Tax
Return and statements of deficiencies assessed against or
agreed to by the Company since December 31, 1992.
(iv) The Company has not waived any statute of limitations in
respect of Taxes or agreed to any extension of time with
respect to a Tax assessment or deficiency.
(v) The Company has not filed a consent under Code Section
341(f) concerning collapsible corporations. The Company has
not made any payment, is not obligated to make any payment,
or is not a party to any agreement that under certain
circumstances could obligate it to make any payments that
will not be deductible under Code Section 280G. The Company
has not been a United States real property holding
corporation within the meaning of Code Section 897(c)(2)
during the applicable period specified in Code Section
897(c)(1)(A)(ii). The Company has disclosed on its federal
income Tax Returns all positions taken therein that could
give rise to a substantial understatement of federal income
Tax within the meaning of Code Section 6662. The Company is
not a party to any Tax allocation or sharing agreement. The
Company (A) has not been a member of an Affiliated Group
filing a consolidated federal income Tax Return or (B) has
no Liability for the Taxes of any Person (other than of the
Company under Treasury Regulationss.1.1502-6 or any similar
provision of state, local or foreign law), as a transferee
or successor, by contract or otherwise.
(vi) Paragraph 3(j) of the Company's Disclosure Letter sets forth
the following information with respect to the Company as of
the most recent practicable date: (A) the basis of the
Company in its assets; and (B) the amount of any net
operating loss, net capital loss, unused investment or other
credit, unused foreign tax, or excess charitable
contribution.
(vii)The Company has no Knowledge of any Basis for any authority
to assess any additional Taxes for any period for which Tax
Returns have been filed by the Company.
(k) Real Property. The Company shall not own any real property at the
time of the Closing, and has not executed and delivered or otherwise entered
into any contract to purchase any real property. Paragraph 3(k) of the Company's
Disclosure Letter lists and describes briefly all real property leased or
subleased to the Company. The Company has delivered to Purchaser correct and
complete copies of the mortgages, promissory notes, evidences of indebtedness,
leases and subleases listed in Paragraph 3(k) of the Company's Disclosure Letter
(as such have been amended to date). Prior to the Closing, the Company shall
have satisfied all indebtedness due with respect to any and all real property
and/or have transferred all real property back to the respective lenders by way
of deed-in-lieu or such other device and the Company shall have obtained full
releases of debt with respect thereto. With respect to each lease and sublease
listed in Paragraph 3(k) of the Company's Disclosure Letter, except as otherwise
set forth in such Paragraph of the Company's Disclosure Letter:
(i) to the best of the Company's Knowledge, the lease or
sublease is legal, valid, binding, enforceable, and in full
force and effect;
(ii) to the best of the Company's Knowledge, the lease or
sublease will continue to be legal, valid, binding,
enforceable, and in full force and effect on identical terms
following the consummation of the transactions contemplated
hereby;
(iii)the Company, and, to the best of Company's Knowledge, no
other party to the lease or sublease is in breach or
default, and no event has occurred which, with notice or
lapse of time, would constitute a breach or default or
permit termination, modification or acceleration thereunder;
(iv) the Company, and, to the best of Company's Knowledge, no
party to the lease or sublease has repudiated any provision
thereof;
(v) to the best of Company's Knowledge, there are no disputes,
oral agreements or forbearance programs in effect as to the
lease or sublease;
(vi) with respect to each sublease, the representations and
warranties set forth in subsections (i)-(v) above are true
and correct with respect to the underlying lease;
(vii)the Company has not assigned, transferred, conveyed,
mortgaged, deeded in trust, or encumbered any interest in
the leasehold or subleasehold;
(viii) all facilities leased or subleased thereunder have
received all approvals of governmental authorities
(including licenses, permits and certificates of need)
required in connection with the operation thereof and have
been operated and maintained in accordance with applicable
laws, rules and regulations; and
(ix) all facilities leased or subleased thereunder are supplied
with utilities and other services necessary for the
operation of said facilities.
(l) Tangible Personal Property. The Company owns or leases all
machinery, equipment and other tangible assets necessary for the conduct of its
business as presently conducted. The Company has received with respect to all
such machinery and equipment all approvals of governmental authorities
(including licenses, permits and certificates of need) required in connection
with the operation thereof, and the same have been operated and maintained in
accordance with applicable laws, rules, and regulations
(m) Intentionally Omitted.
(n) Contracts. Paragraph 3(n) of the Company's Disclosure Letter lists
the following contracts and other agreements to which the Company is a party:
(i) any agreement (or group of related agreements) for the lease
of personal property to or from any Person providing for
lease payments in excess of $50,000.00 per annum;
(ii) any agreement (or group of related agreements) for the
purchase or sale of inventory, commodities, supplies,
products or other personal property, or for the furnishing
or receipt of services, the performance of which will extend
over a period of more than one year, result in a loss to the
Company, or involve consideration in excess of $50,000.00
(alone or in the aggregate);
(iii)any agreement concerning a partnership or joint venture in
which the Company or any of its Subsidiaries is a partner or
joint venturer;
(iv) any agreement (or group of related agreements) under which
the Company has created, incurred, assumed or guaranteed any
indebtedness for borrowed money, or any capitalized lease
obligation, in excess of $50,000.00 (alone or in the
aggregate), or under which the Company has imposed a
Security Interest on any of its assets, tangible or
intangible;
(v) any agreement concerning confidentiality or non-competition;
(vi) any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance, or other
plan or arrangement for the benefit of the Company's current
or former directors, officers and employees;
(vii) any collective bargaining agreement;
(viii) any agreement for the employment of any individual on a
full-time, part-time, consulting or other basis providing
annual compensation in excess of $50,000.00 (alone or in the
aggregate) or providing severance benefits;
(ix) any agreement under which the Company has advanced or loaned
any amount to any of its directors, officers and employees
outside the Ordinary Course of Business;
(x) any agreement the default or termination of which could have
Material Adverse Effect on the Company; or
(xi) any other agreement (or group of related agreements) the
performance of which involves consideration in excess of
$50,000.00 (alone or in the aggregate).
The Company has delivered to Purchaser a correct and complete copy of
each written agreement listed in Paragraph 3(n) of the Company's Disclosure
Letter (as amended to date) and a written summary setting forth the terms and
conditions of each oral agreement referred to in Paragraph 3(n) of the Company's
Disclosure Letter. With respect to each such agreement, to the best of the
Company's Knowledge: (1) the agreement is legal, valid, binding, enforceable and
in full force and effect; (2) the agreement will continue to be legal, valid,
binding, enforceable and in full force and effect on identical terms following
the consummation of the transactions contemplated hereby; (3) no party is in
breach or default, and no event has occurred which with notice or lapse of time
would constitute a breach or default, or permit termination, modification or
acceleration, under the agreement; and (4) no party has repudiated any provision
of the agreement.
(o) Notes and Accounts Receivable. All notes and accounts receivable of
the Company are reflected properly on its books and records, are valid
receivables subject to no setoffs or counterclaims except contractual
adjustments or discount arrangements with third-party reimbursers.
(p) Insurance. Paragraph 3(p) of the Company's Disclosure Letter sets
forth the following information with respect to each insurance policy (including
policies providing property, casualty, liability, medical malpractice, and
workers' compensation coverage and bond and surety arrangements) to which the
Company has been a party, a named insured, or otherwise the beneficiary of
coverage at any time within the past five (5) years:
(i) the name, address, and telephone number of the agent;
(ii) the name of the insurer, the name of the policyholder, and
the name of each covered insured;
(iii) the policy number and the period of coverage;
(iv) the scope (including an indication of whether the coverage
was on a claims made, occurrence, or other basis) and amount
(including a description of how deductibles and ceilings are
calculated and operate) of coverage; and
(v) a description of any retroactive premium adjustments or
other loss-sharing arrangements.
With respect to each such insurance policy which has not been
terminated or expired prior to the date hereof, to the best of the Company's
Knowledge: (A) the policy is in full force and effect; and (B) neither the
Company nor any other party to the policy is in breach or default (including
with respect to the payment of premiums or the giving of notices), and no event
has occurred which, with notice or the lapse of time, would constitute such a
breach or default, or permit termination, modification, or acceleration, under
the policy. The Company has been covered during the past five (5) years by
insurance in scope and amount customary and reasonable for the businesses in
which it has engaged during the aforementioned period. Paragraph 3(p) of the
Company's Disclosure Letter describes any self-insurance arrangements affecting
the Company.
(q) Litigation. Section 3(q) of the Company's Disclosure Letter sets
forth each instance in which either the Company (i) is subject to any
outstanding injunction, judgment, order, decree, ruling or charge; or (ii) is a
party, or its threatened to be made a party, to any action, suit, proceeding,
hearing or investigation of, in or before any court or quasi-judicial or
administrative agency of any federal, state, local or foreign jurisdiction or
before any arbitrator, except for any such threatened action with respect to the
Company's non-compliance with the health maintenance organization laws, rules
and regulations of the States of New York and Connecticut or any of the
creditors of the Company (including, without limitation, any party to whom the
Company may have outstanding claims payable) of which Purchaser has Knowledge
based on information provided to the Purchaser by the Company.
(r) Employment and Labor Matters.
(i) To the best of the Company's Knowledge, there are no
collective bargaining agreements or other labor union agreements or
understandings to which the Company or any of its Subsidiaries is a party or by
which any of them is bound, nor is it or any of its subsidiaries the subject of
any proceeding asserting that it or any subsidiary has committed an unfair labor
practice or seeking to compel it to bargain with any labor organization as to
wages or conditions. Except as set forth in Paragraph 3(r) of the Disclosure
Letter, neither the Company nor any of its subsidiaries has encountered any
labor union organizing activity, or had any actual or threatened employee
strikes, work stoppages, slowdowns, lockouts, labor disputes, lawsuits,
administrative proceedings or representation questions and no such actions are
threatened at present.
(ii) The Company and its Subsidiaries have complied in all
material respects with all laws relating to the employment of labor, including
any provisions thereof relating to wages, hours, overtime, bonuses, severance
pay, benefits, COBRA, WARN, state and local equivalents to the WARN Act, Family
and Medical Leave Act, FLSA, state wage/hour laws, Americans with Disabilities
Act, Age Discrimination in Employment Act, collective bargaining, and the
payment of social security, unemployment compensation and similar taxes, and
neither the Company nor its Subsidiaries are liable for any arrears of wages or
any taxes or penalties for failure to comply with any of the foregoing;
(iii) There are no charges, suits, actions, administrative
proceedings or investigations, and/or claims, instituted by or against, pending,
threatened against and/or affecting, naming or involving the Company or its
Subsidiaries, before any court, governmental agency, department, board of
instrumentality, or before any arbitrator concerning or in any way related to
the employees of the Company or its subsidiaries, including, without limitation,
actions involving unfair labor practices, wrongful discharge and/or any other
restriction on the right of the Company or its Subsidiaries to terminate their
respective employees, employment discrimination, occupational safety and health,
and workers' compensation;
(iv) There are no post-employment benefits, including but not
limited to retiree medical and retiree accidental death and disability benefits,
for current or former employees of Company or its Subsidiaries; and
(v) There are no express or implied agreements, policies,
practices or procedures, whether written or verbal, pursuant to which any
employee or agent or contractor of the Company or its Subsidiaries is not
terminable at will without cost to the Company or its Subsidiaries.
(s) Employee Benefits.
(i) Paragraph 3(s) of the Company's Disclosure Letter lists each
Employee Benefit Plan that the Company maintains or to which
the Company contributes:
(A) Each such Employee Benefit Plan (and each related
trust, insurance contract, or fund) complies in form
and in operation in all respects with the applicable
requirements of ERISA, the Code, and other applicable
laws.
(B) All required reports and descriptions (including Form
5500 Annual Reports, Summary Annual Reports, PBGC-1's,
and Summary Plan Descriptions) have been filed or
distributed appropriately with respect to each such
Employee Benefit Plan. The requirements of Part 6 of
Subtitle B of Title I of ERISA and of Code Section
4980B have been met with respect to each such Employee
Benefit Plan which is an Employee Welfare Benefit Plan.
(C) All contributions (including all employer contributions
and employee salary reduction contributions) which are
due have been paid to each such Employee Benefit Plan
which is an Employee Pension Benefit Plan and all
contributions for any period ending on or before the
Closing Date which are not yet due have been paid to
each such Employee Pension Benefit Plan or accrued in
accordance with the past custom and practice of the
Company. All premiums or other payments for all periods
ending on or before the Closing Date have been paid
with respect to each such Employee Benefit Plan which
is an Employee Welfare Benefit Plan.
(D) Each such Employee Benefit Plan which is an Employee
Pension Benefit Plan meets the requirements of a
"qualified plan" under Code Section 401(a) and has
received, within the last two (2) years, a favorable
determination letter from the Internal Revenue Service.
(E) The market value of assets under each such Employee
Benefit Plan which is an Employee Pension Benefit Plan
(other than any Multi-Employer Plan) equals or exceeds
the present value of all vested and nonvested
Liabilities thereunder determined in accordance with
PBGC methods, factors, and assumptions applicable to an
Employee Pension Benefit Plan terminating on the date
for determination.
(F) The Company has delivered to Purchaser correct and
complete copies of the plan documents and summary plan
descriptions, the most recent determination letter
received from the Internal Revenue Service, the most
recent Form 5500 Annual Report, and all related trust
agreements, insurance contracts, and other funding
agreements which implement each such Employee Benefit
Plan.
(ii) With respect to each Employee Benefit Plan that the Company
maintains or ever has maintained or to which it contributes,
ever has contributed, or ever has been required to
contribute:
(A) No such Employee Benefit Plan which is in Employee
Pension Benefit Plan (other than any Multi-Employer
Plan) has been completely or partially terminated or
been the subject of a Reportable Event as to which
notices would be required to be filed with the PBGC. No
proceeding by the PBGC to terminate any such Employee
Pension Benefit Plan (other than any Multi-Employer
Plan) has been instituted or threatened.
(B) There have been no Prohibited Transactions with respect
to any such Employee Benefit Plan. No Fiduciary has any
Liability for breach of fiduciary duty or any other
failure to act or comply in connection with the
administration or investment of the assets of any such
Employee Benefit Plan. No action, suit, proceeding,
hearing, or investigation with respect to the
administration or the investment of the assets of any
such Employee Benefit Plan (other than routine claims
for benefits) is pending or threatened.
(C) The Company has not incurred, and neither the Company
nor the directors and officers (and employees with
responsibility for employee benefits matters) of the
Company has any reason to expect that the Company will
incur, any Liability to the PBGC (other than PBGC
premium payments) or otherwise under Title IV of ERISA
(including any withdrawal Liability) or under the Code
with respect to any such Employee Benefit Plan which is
an Employee Pension Benefit Plan.
(iii)The Company does not contribute to, has never contributed
to, and has not been required to contribute to any
Multi-Employer Plan or has any Liability (including
withdrawal Liability) under any Multi-Employer Plan.
(iv) The Company does not maintain, has never maintained, has
never contributed, and has not been required to contribute
to any Employee Welfare Benefit Plan providing medical,
health, or life insurance or other welfare-type benefits for
current or future retired or terminated employees, their
spouses, or their dependents (other than in accordance with
Code Section 4980B).
(t) Guaranties. The Company is not a guarantor or is not otherwise
liable for any Liability or obligation (including indebtedness) of any other
Person.
(u) Environment, Health, and Safety.
(i) The Company and its Subsidiaries have complied with all
Environmental, Health, and Safety Laws, and no action, suit, proceeding,
hearing, investigation, charge, complaint, claim, demand, or notice has been
filed or commenced against any of them alleging any failure so to comply.
Without limiting the generality of the preceding sentence, the Company and their
respective Affiliates has obtained and been in compliance with all of the terms
and conditions of all permits, licenses, and other authorizations which are
required under, and has complied with all other limitations, restrictions,
conditions, standards, prohibitions, requirements, obligations, schedules, and
timetables which are contained in, all Environmental, Health, and Safety Laws.
(ii) The Company has no Liability for damage to any site,
location, or body of water (surface or subsurface), for any illness of or
personal injury to any employee or other individual, or for any reason under any
Environmental, Health, and Safety Law.
(iii) All properties and equipment used in the historical
business of the Company have been free of asbestos, PCB's, methylene chloride,
dioxins, dibenzofurans, trichloroethylene, 1,2-trans-dichloroethylene, and
Extremely Hazardous Substances.
(iv) The Company is not aware of any asbestos-containing
materials installed on any real property owned or leased by the Company, nor has
the Company received any notice from any governmental authority, landlord or any
third party alleging any violation of any Environmental Laws and the Company
does not use or store Hazardous Materials on its owned or leased real property,
except for reasonable quantities of cleaning and office supplies which are
maintained in accordance with laws.
(v) Healthcare Compliance. The Company has not perpetrated any
Medicare or Medicaid fraud or abuse nor has any government agency claimed that
the Company has committed any fraud or abuse within the last five (5) years. The
Company is participating in or otherwise authorized to receive reimbursement
from or is a party to Medicare, Medicaid and other third-party payor programs.
All necessary certifications and contracts required for participation in such
programs are in full force and effect and have not been amended or otherwise
modified, rescinded, revoked or assigned and, to the best of the Company's
Knowledge, no condition exists or event has occurred which in itself or with the
giving of notice or the lapse of time or both would result in the suspension,
revocation, impairment, forfeiture or non-renewal of any such third party payor
program. The Company is and, after the execution and delivery hereof and of the
Management Agreements, will be in full compliance with the requirements of all
such third party payor programs applicable thereto.
(w) Rates and Reimbursement Policies. The Company has no rate appeal
currently pending before any governmental authority or any administrator of any
third party payor program.
(x) Authorization of Transaction. The Company has all the requisite
legal capacity and, except as provided in Section 3(y), has full power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder. Assuming the due execution and delivery hereof by the Purchaser, this
Agreement constitutes the valid and legally binding obligation of the Company,
enforceable in accordance with its terms, subject to applicable bankruptcy,
moratorium, insolvency and other laws affecting the rights of creditors and
general equity principles.
(y) Stockholder Approval Requirements. Except for the authorization
post- Closing of such number of additional shares of Common Stock as shall be
necessary to permit Purchaser to convert the Shares into Common Stock, no other
action by the stockholders of the Company is required to approve this Agreement
and the transactions contemplated hereby.
(z) The Company's SEC Filings. No document filed by the Company with
the SEC since December 31, 1995 contained a misstatement of a material fact or
failed to state a material fact required to be stated therein or necessary to
make the statements made therein in light of the circumstances under which they
were made not misleading as of the date such filing was made. The Company has
filed all documents required to be filed by it with the SEC since December 31,
1995, except for the Company's Annual Statement on Form 10-K for the year ended
December 31, 1998 and the Company's Quarterly Report on Form 10-Q for the
quarter ended March 30, 1999 which shall be filed with reasonable promptness by
the Company.
4. Representations and Warranties of Purchaser. Purchaser represents and
warrants to the Company that the statements contained in this Section 4 are
correct and complete as of the date of this Agreement except as set forth in the
disclosure letter executed and delivered by Purchaser at or prior to the Closing
(the "Purchaser's Disclosure Letter"). Purchaser's Disclosure Letter shall be
satisfactory to the Company and its counsel and will be arranged in paragraphs
corresponding to the lettered and numbered paragraphs contained in this Section
4.
(a) Existence and Power.
(i) CHMI is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization;
(ii) CHMI has the power and authority to own and operate its
property, to lease the property it operates as lessee and to conduct the
business in which it is currently, or is currently proposed to be, engaged; and
(iii) Purchaser and CHMI are in compliance with all requirements
of applicable law.
(b) Authorization; No Contravention. The execution, delivery and
performance by Purchaser of this Agreement and by CHMI of the Management
Agreements:
(i) are within Purchaser's and CHMI power and authority and has
been duly authorized by all necessary action;
(ii) will not violate, conflict with or result in any breach or
contravention of any contractual obligation of Purchaser or CHMI, or any order
or decree directly relating to Purchaser or CHMI.
(c) Binding Effect. This Agreement has been duly executed and delivered
by Purchaser, and this Agreement constitutes the legal, valid and binding
obligation of Purchaser enforceable against it in accordance with its terms.
(d) Purchase for Own Account. The Shares (including, for purposes of
this Section 4(d), the shares of Common Stock into which the Shares may be
converted) to be acquired by Purchaser pursuant to this Agreement are being
acquired by Purchaser for his own account and with no intention of distributing
or reselling such securities or any part thereof in any transaction that would
be in violation of the securities laws of the United States of America or any
state, without prejudice, however, to the rights of Purchaser at all times to
sell or otherwise dispose of all or any part of such securities under an
effective registration statement under the Securities Act, or under an exemption
from such registration available under the Securities Act, and subject,
nevertheless, to the disposition of Purchaser's property being at all times
within its control. If Purchaser should in the future decide to dispose of any
of such securities, Purchaser understands and agrees that he may do so only in
compliance with the Securities Act, the Securities Exchange Act, and applicable
state securities laws, as then in effect, and that stop-transfer instructions to
that effect, where applicable, will be in effect with respect to such
securities. If Purchaser should decide to dispose of any of such securities,
Purchaser will have the obligation in connection with such disposition, at
Purchaser's expense, of delivering an opinion of counsel of recognized standing
in securities law, in connection with such disposition to the effect that the
proposed disposition of such securities would not be in violation of the
Securities Act or any applicable state securities laws and, assuming such
opinion is required and is otherwise appropriate in form and substance under the
circumstances, the Company will accept, and will recommend to any applicable
transfer agent or trustee for any of such securities that it accept, such
opinion. Purchaser agrees to the imprinting, so long as required by law, of a
legend on all of such securities to the following effect: "THE SECURITIES
REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OTHERWISE
DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH
ACT AND APPLICABLE STATE SECURITIES LAWS OR AN APPLICABLE EXEMPTION TO THE
REGISTRATION REQUIREMENTS OF SUCH ACT OR SUCH LAWS."
(e) Broker's, Finder's or Similar Fees. There are no brokerage
commissions, finder's fees, or similar fees or commissions payable in connection
with the transactions contemplated hereby based on any agreement, arrangement or
understanding with Purchaser or any action taken by Purchaser.
5. Pre-Closing Covenants. The parties agree as follows with respect to the
period between the execution of this Agreement and the Closing.
(a) General. Each of the parties will use his or its best efforts to
take all action and to do all things necessary in order to consummate and make
effective the transactions contemplated by this Agreement (including
satisfaction of the closing conditions set forth in Section 6 below).
(b) Notices and Consents. The Company will give all notices to third
parties, and will use its best efforts to obtain all third-party consents and
authorizations, that may be required by law or the terms of any contract to
which the Company may be subject. Each of the parties will (and the Company will
cause its Subsidiaries to) give any notices to, make any filings with, and use
its best efforts to obtain any authorizations, consents, and approvals of
governments and governmental agencies required to consummate the transaction
contemplated by this Agreement, including, without limitation, those required
under : (i) the New York Business Corporation Act; (ii) the Securities Exchange
Act, including the filing of a Schedule 14D-9 by the Company and the filing of a
Schedule 13-D by Purchaser; (iii) the Health Maintenance Organization Acts of
the States of New York and Connecticut and the published rules and regulations
thereunder; (iv) Section 1876 of the Social Security Act, as amended, and the
published rules and regulations thereunder; (v) the Federal Employee Health
Benefits Program (5 U.S.C. Section 8901 et seq.) as amended; and (vi) the HSR
Act (items (i)-(vi) above being collectively referred to herein as the
"Consents").
(c) Operation of Business. The Company will not engage or permit any
officer, director or employee of the Company to engage in any practice, take any
action, or enter into any transaction outside the Ordinary Course of Business.
Without limiting the generality of the foregoing, the Company will not: (i)
declare, set aside, or pay any dividend or make any distribution with respect to
its capital stock or redeem, purchase or otherwise acquire any of its capital
stock; or (ii) otherwise engage in any practice, take any action, or enter into
any transaction that would violate any of the Company's representations and
warranties set forth in Section 3(g) above.
(d) Preservation of Business; Distribution of Assets. Unless Purchaser
agrees in writing and except as provided in this Agreement, the Company will
keep its properties substantially intact, including its present physical
facilities, working conditions, and relationships with lessors, licensors,
suppliers, patients and employees. The Company will, or will cause its
Subsidiaries, to sell, transfer, assign, convey, return, terminate (or permit
termination of), permit foreclosure upon, or otherwise distribute or dispose of
the following assets (the "Distributed Assets"), so that such Distributed Assets
are not assets or liabilities of the Company as of the Closing, except as agreed
by Purchaser at or prior to the Closing and as set forth on Schedule 5(d)
attached hereto:
(i) all real property;
(ii) all leases with respect to real property;
(iii) all tangible property leases; and
(iv) automobiles, aircraft and other vehicles.
(e) Full Access. The Company will permit representatives of Purchaser
to have full access at all reasonable times, and in a manner so as not to
interfere with the normal business operations of the Company, to all premises,
properties, personnel, books, records (including Tax records), contracts and
documents of or pertaining to the Company. In that regard, the Company will
cause the Company to permit the independent accountants for Purchaser to conduct
such audits of the financial statements of the Company as Purchaser shall elect
or be required to obtain, and shall cause the accounting personnel of the
Company to assist such accountants in the preparation for and conduct of such
audit.
(f) Notice of Developments. The Company will give prompt written notice
to Purchaser of any material adverse development of which it learns that would
constitute or otherwise cause a breach of any of the representations and
warranties set forth in Section 3 above. Purchaser will give prompt written
notice to the Company of any material adverse development of which he learns
that would constitute or otherwise cause a breach of any of the representations
and warranties set forth in Section 4 above. No disclosure by any party pursuant
to this Section 5(f), however, shall be deemed to amend or supplement the
Company's Disclosure Letter or the Purchaser's Disclosure Letter (as
applicable), or to prevent or cure any misrepresentation, breach of warranty, or
breach of covenant.
(g) Exclusivity. Except as expressly permitted by the following
provisions of this Section 5(g), the Company shall not, and the Company shall
not authorize or permit any officer, director or employee of, or any financial
advisor, attorney, accountant or other advisor or representative retained by,
the Company to, solicit, initiate, encourage, endorse, or enter into any
agreement with respect to, or take any other action to knowingly facilitate, any
inquiries or the making of any proposal that constitutes, or may reasonably be
expected to lead to, any Acquisition Proposal (as defined below).
Notwithstanding the foregoing, nothing contained in this Letter shall prevent
the Board of Directors of the Company from (i) furnishing information to,
entering into discussions or negotiations with, or consummating the sale of
assets of WellCare-NY relating to its commercial HMO products, (ii) furnishing
information or entering into discussions or negotiations with or consummating
any Acquisition Proposal with any person or entity if and only to the extent (A)
the Board of Directors of the Company shall have determined in good faith that
such action is required in the exercise of its fiduciary duties, based upon the
advice of counsel, or (B) directed to so act by New York of Connecticut HMO
regulatory authorities, (iii) complying with Rules 14d-9 and 14e-2 promulgated
under the Securities Exchange Act, or (iv) making any disclosures to the
Company's shareholders if the Board of Directors of the Company shall have
determined, after consultation with outside counsel, that failure to make such
disclosures would be inconsistent with applicable law. As used in this
Agreement, "Acquisition Proposal" shall mean any tender or exchange offer, or
proposal, other than a proposal by Purchaser or its Affiliates, or offer to
acquire in any manner an equity interest in the Company or its subsidiaries or
the assets of the Company or its subsidiaries.
(h) Authorization of Series A Preferred Stock. The Company shall
authorize the Series A Preferred Stock in accordance with the terms set forth on
Exhibit B attached hereto.
(i) SEC Filings. The Company shall file with the SEC and any
appropriate state securities regulatory authority with reasonable promptness all
required disclosures, documents and necessary filings. The cost and expenses
associated with any such filings shall be the responsibility of the Company.
6. Conditions Precedent to Obligation of the Parties to Close.
(a) Conditions to Obligation of Purchaser. The obligation of Purchaser
to consummate the transactions to be performed by it in connection with Closing
is subject to satisfaction of the following conditions, any of which may be
waived by Purchaser if it executes a writing so stating at or prior to Closing:
(i) the representations and warranties set forth in Section 3
above shall be true and correct in all material respects at and as of the
Closing Date;
(ii) the Company shall have performed and complied with all of
his covenants hereunder in all material respects through Closing;
(iii) all Consents shall have been obtained;
(iv) no action, suit, or proceeding shall be pending or
threatened before any court or quasi-judicial or administrative agency of any
federal, state, local or foreign jurisdiction or before any arbitrator wherein
an unfavorable injunction, judgment, order, decree, ruling or charge would (A)
prevent consummation of any of the transactions contemplated by this Agreement,
(B) cause any of the transactions contemplated by this Agreement to be rescinded
following consummation, (C) affect adversely the right of Purchaser to own the
Shares and to control the Company, or (D) affect adversely the right of the
Company to own its assets and to operate its business (and no such injunction,
judgment, order, decree, ruling or charge shall be in effect);
(v) Purchaser shall have received the resignations, effective as
of Closing, of each director and officer of the Company and the Subsidiaries
other than those whom Purchaser shall have specified in writing prior to
Closing; (vi) WellCare-NY and WellCare-CT shall have executed and delivered to
CHMI the Management Agreements;
(vii) the Fund shall have converted the Note into One Million
(1,000,000) shares of Preferred Stock (which shares of Preferred Stock shall be
convertible into Ten Million (10,000,000) shares of non-voting common stock of
the Company, if and when such additional shares of common stock as are necessary
to permit such conversion have been authorized by the shareholders of the
Company) and the Company shall have entered into a shareholders' agreement with
the Fund pursuant to which the Fund and its Affiliates shall agree not to sell
any of such shares of Preferred Stock (or any of the shares of Common Stock into
which such Preferred Stock may be converted) for six (6) months after the
Closing Date;
(viii) the Company shall have entered into settlement agreements
with each of the twenty largest gross dollar volume hospitals to whom the
Company had outstanding claims payable as of April 30, 1999 (the "Settlement
Agreements"), which Settlement Agreements shall be in substantially the form
attached as Exhibit C hereto;
(ix) Premier Bank shall have cancelled its mortgage(s) on certain
of the real property of the Company and/or its Subsidiaries, taking a
deed-in-lieu of foreclosure, and Key Bank shall have terminated or cancelled its
mortgage(s) on certain of the real property of, and certain of its personal
property leases with, the Company and/or its Subsidiaries;
(x) the Company shall have settled the shareholders class action
litigation pursuant to a Stipulation of Settlement in substantially the form
attached hereto as Exhibit D; (xi) all of the holders of the Class A Common
Stock shall have converted their shares of Class A Common Stock into Common
Stock on a 1:1 basis, and no shares of Class A Common Stock shall remain
outstanding;
(xii) the Company shall have authorized the Series A Preferred
Stock, which stock shall provide for the voting and non-dilution rights set
forth in Section 2(a) and 2(b); (xiii) the Company shall have entered into stock
restriction agreements, with the following shareholders, the form of which shall
have been approved in writing by Purchaser and which shall restrict the sale,
transfer or assignment of such shareholders' stock of the Company: the Fund (as
set forth in Section 6(a)(vii) above), Xxxxxx Xxxxx, Xx Xxxxxxx, Xxxx Xxxx, and
Xxxxxxx Crew;
(xiv) WellCare-NY shall have closed, or shall close on the
Closing Date, the transaction between WellCare-NY and Group Health Incorporated
(Sub) ("GHI") pursuant to which WellCare-NY is selling to GHI certain assets
relating to WellCare-NY's commercial health maintenance organization business in
the State of New York, as set forth in the Asset Purchase Agreement dated May
18, 1999 by and between WellCare-NY and GHI;
(xv) no matter shall have been set forth in the Company's
Disclosure Letter that has or will have a Material Adverse Effect and about
which Purchaser shall not have had Knowledge as of the date of this Agreement;
(xvi) Purchaser shall have received from the Company's legal
counsel an opinion in form and substance reasonably acceptable to Purchaser and
his counsel; and (xvii) The Company shall have come to an agreement with Bear,
Xxxxxxx & Co., Inc. ("Bear Xxxxxxx") with respect to the payment or other
settlement of the fee owed by the Company to Bear Xxxxxxx, which agreement shall
be acceptable to Purchaser.
(b) Conditions to Obligation of the Company. The obligation of the
Company to consummate the transactions to be performed by it in connection with
the Closing is subject to satisfaction of the following conditions, any of which
may be waived by the Company if it executes a writing so stating at or prior to
the Closing:
(i) the representations and warranties set forth in Section 4
above shall be true and correct in all material respects at and as of the
Closing Date;
(ii) Purchaser shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing;
(iii) no action, suit or proceeding shall be pending or
threatened before any court or quasi-judicial or administrative agency of any
federal, state, local or foreign jurisdiction or before any arbitrator wherein
an unfavorable injunction, judgment, order, decree, ruling or charge would (A)
prevent consummation of any of the transactions contemplated by this Agreement
or (B) cause any of the transactions contemplated by this Agreement to be
rescinded following consummation (and no such injunction, judgment, order,
decree, ruling or charge shall be in effect);
(iv) WellCare-NY and WellCare-CT shall have executed and
delivered to the Company the Management Agreements; and
(v) the Company shall have received a fairness opinion from Bear
Xxxxxxx regarding the sale of the Shares to Purchaser.
7. Deliveries at Closing.
(a) Documents to be Delivered by Purchaser. At the Closing, Purchaser
shall deliver the following instruments and documents to the Company or other
appropriate party:
(i) Five Million Dollars ($5,000,000) in certified or other
immediately available funds;
(ii) a Certificate of Good Standing with respect to CHMI from the
Secretary of State of the State of Delaware, evidencing the
existence and good standing of the Company, dated not more
than five (5) days prior to the Closing Date; and
(iii) the Management Agreements duly executed by CHMI.
(b) Documents to be Delivered by the Company. At the Closing, the
Company shall deliver the following instruments and documents to Purchaser:
(i) stock certificate(s) representing the Shares;
(ii) a certificate of existence or good standing from the New
York Secretary of State evidencing the existence and good
standing of the Company, dated not more than five (5) days
prior to the Closing Date, along with certificates of good
standing or existence from the Secretary of State of
Connecticut or any other states in which the Company is
transacting business, and certificates of existence and good
standing from the appropriate state authority in each of the
Company's Subsidiaries' states of formation;
(iii) the resignations as described in Section 6(a)(v);
(iv) documents evidencing the Consents;
(v) a certificate, executed by the Secretary of the Company, to
the effect that attached thereto is a copy of the Articles
of Incorporation of the Company, including amendments,
certified by the New York Secretary of State as of a date
not more than five (5) days before the Closing, and bylaws
of the Company, all of which are in full force and effect
and have not been amended;
(vi) the Management Agreements, duly executed by WellCare-CT and
WellCare-NY; (vii) the opinion of the Company's counsel (as
set forth in Section 6(a)(xvi) above);
(viii) the corporate books and records of the Company and each of
its Subsidiaries, all of which shall be delivered to
Purchaser's counsel;
(ix) a certificate (dated the Closing Date and in form and
substance reasonably satisfactory to Purchaser) signed by a
President or Vice- President of the Company, certifying that
the conditions specified in Section 6(a)(i) have been
fulfilled; and
(x) a certificate of the Secretary of the Company (dated the
Closing Date and in form and substance reasonably
satisfactory to Purchaser) certifying and setting forth (i)
the names, signatures and positions of the officers of the
Seller authorized to execute this Agreement and (ii) a copy
of the resolutions adopted by the Board of Directors of the
Company authorizing the execution, delivery and performance
of this Agreement and the transactions contemplated hereby.
8. Termination.
(a) Methods of Termination. Anything herein to the contrary
notwithstanding, this Agreement may be terminated at any time prior to the
Closing: (i) by mutual consent of Purchaser and the Company; (ii) by Purchaser
if any material representation or warranty on the part of the Company shall have
been untrue when made or if the Company shall have failed to perform any
material agreement on its part contained herein at the time to be performed by
it; (iii) by the Company if any material representation or warranty on the part
of Purchaser shall have been untrue when made or Purchaser shall have failed to
perform any material agreement on his part contained herein at the time to be
performed by him; or (iv) by Purchaser or the Company by written notice if the
Closing has not occurred on or before June 1, 1999, unless a later date is
established by the mutual written consent of such parties before or after such
date or unless the failure of such consummation by June 1, 1999, shall be due to
the failure of the party seeking to terminate this Agreement to perform in all
material respects each of its obligations under this Agreement, including the
accuracy of the representations and warranties included herein, required to be
performed by it on or prior to such date pursuant to the terms hereof.
(b) Effect of Termination. After termination of this Agreement as
permitted by Section 8(a) above:
(i) each party hereto will redeliver all documents, work papers,
and other materials of any party relating to the transactions contemplated
hereby, and all copies of such materials, whether so obtained before or after
the execution hereof, to the party furnishing the same; and
(ii) all information received by any party hereto with respect to
any other party or the business of such other party (other than information
which is a matter of public knowledge or which has heretofore been published in
any publication for public distribution or filed as public information with any
governmental authority or which is required to be disclosed by law or by
judicial or administrative process) shall not at any time be used for the
advantage of, or disclosed to third parties by, such party.
Except as provided in this Section 8(b), after termination of this
Agreement as permitted by Section 8(a), no party hereto shall have any liability
or further obligation to any other party to this Agreement as a result hereof.
9. Survival, Indemnification and Expenses.
(a) Survival. All representations and warranties made in the Agreement
shall survive, and shall not be extinguished by the Closing or any investigation
made by or on behalf of any party hereto, for a period of eighteen (18) months
after the Closing Date; provided, however, that any claims made in respect
thereof by any party hereto must be in writing and must be received by the other
party within said period; and provided, further, that (i) claims with respect to
the representations and warranties set forth in Section 3(j) with respect to a
particular Tax may be made until the expiration of all applicable statutes of
limitation (and any extensions thereof in effect at the Closing Date) relative
to the liability relating to such Tax and (ii) claims based on fraud or willful
misrepresentation may in each case be asserted at any time within one (1) year
after Purchaser learns of such fraud or willful misrepresentation or breach of
such representation and warranty.
(b) Indemnification by the Company. Subject to the limits set forth in
this Section 9, the Company agrees to indemnify and hold harmless Purchaser,
upon its demand, from and against any and all losses, liabilities, damages,
obligations, costs and expenses (including, without limitation, amounts paid in
settlement and reasonable costs of investigating, preparing to defend and
defending any claim, action, suit, proceeding, inquiry or investigations in
respect thereof) incurred by Purchaser resulting from, relating to, or arising
out of (i) the inaccuracy of any representation or warranty made herein by the
Company, or (ii) breach of any covenant contained herein by the Company.
If any action, suit, proceeding or claim shall be brought against the
Company or Purchaser by any third party, which action, suit, proceeding or
claim, if determined adversely to the interest of the Company or Purchaser and
which would entitle Purchaser to indemnity pursuant to this Section 9(b),
Purchaser shall promptly notify the Company of the same in writing and, if the
Company so elects, the Company shall assume the defense thereof, including the
employment of counsel satisfactory to Purchaser and the payment of all
reasonable cost and expenses in respect thereof. Purchaser shall have the right
to employ counsel separate from any counsel employed by the Company n any
action, suit, proceeding or claim and to control (or, if Purchaser has elected
to allow the Company to assume the defense thereof, participate in) the defense
thereof and the fees and expense of such counsel employed by Purchaser shall be
at the expense of the Company. The Company shall not be liable for any
settlement of any such action, suit, proceeding or claim effected without its
written consent (which shall not be unreasonably withheld), but if settled with
the written consent of the Company, or if there shall be a final judgment for
plaintiff in any such action, subject to the limits set forth in this Section 9,
the Company agrees to indemnify and hold harmless Purchaser from and against any
loss, liability, obligation, damage, cost or expense by reason of such
settlement or judgment.
(c) Indemnification by Purchaser. Subject to the limits set forth in
this Section 9, Purchaser hereby agrees to indemnify and hold harmless the
Company upon its demand, from and against any and all losses, liabilities,
damages, obligations, costs and expenses (including, without limitation, amounts
paid in settlement and reasonable costs and expenses of investigating, preparing
to defend and defending any claim, action, suit, proceeding, inquiry or
investigations in respect thereof) resulting from, relating to or arising out of
(i) the inaccuracy of any representation or warranty made herein by Purchaser or
(ii) the breach of any covenant by Purchaser contained herein.
If any action, proceeding or claim shall be brought or asserted against
the Company by any third party, which action, proceeding or claim, if determined
adversely to the interest of the Company, would entitle it to indemnity pursuant
to this Section 9(c), the Company shall promptly notify Purchaser of the same in
writing, and, if Purchaser so elects, Purchaser shall assume the defense
thereof, including the employment of counsel satisfactory to the Company and the
payment of all reasonable costs and expenses thereof. the Company shall have the
right to employ counsel separate from any counsel employed by Purchaser in any
such action, suit, proceeding or claim and to control (or, if the Company has
elected to allow Purchaser to assume the defense thereof, participate in) the
defense thereof and the fees and expenses of such counsel employed by the
Company shall be at its expense. Purchaser shall not be liable for any
settlement of such action, suit, proceeding or claim effected without its
written consent (which shall not be unreasonably withheld), but if settled with
its written consent, or if there shall be a final judgment for plaintiff in any
such action, subject to the limits set forth in this Section 9(c), Purchaser
agrees to indemnify and hold the Company harmless from an against any loss,
liability, obligation, damage, cost or expense by reason of such settlement or
judgment.
(d) Claims for Indemnification. Neither party shall assert any claim
against the other for indemnification hereunder with respect to any inaccuracy
or breach of such warranties, representations or covenants entered into or given
under this Agreement unless and until the amount of such claim or claims with
respect thereto, as determined pursuant to this Section 9, shall exceed Fifty
Thousand Dollars ($50,000), calculated on a cumulative basis and not a per item
basis, and then only in respect to the excess over said Fifty Thousand Dollars
($50,000).
(e) Reduction for Insurance, Etc. The gross amount which a party
("Indemnifying Party") is liable to, for, or on behalf of the other party
("Indemnitee") pursuant to this Section 9 (the "Indemnifiable Loss") shall be
reduced (including, without limitation, retroactively) through subsequent
repayment as described below in this Section 9(e), by an amount equal to (i) any
insurance proceeds actually recovered by or on behalf of such Indemnitee (or the
Company to the extent such Indemnifiable Loss is suffered by the Company)
arising from the Indemnifiable Loss; and (iii) as to Purchaser only, in the
event that the Indemnifiable Loss is suffered by the Company directly, rather
than Purchaser, the amount in issue multiplied by fifty-five percent (55%), at
the time of such Indemnifiable Loss. If an Indemnitee shall have received or
shall have had paid on its behalf an indemnity payment in respect of an
Indemnifiable Loss and shall subsequently receive directly or indirectly
insurance proceeds or tax benefits in respect of such Indemnifiable Loss, then
such Indemnitee shall pay to such Indemnifying Party the amount of such
Insurance proceeds and/or tax benefits or, if less, the amount of such indemnity
payment.
10. Miscellaneous.
(a) Press Releases and Public Announcements. No party shall issue any
press release or make any public announcement relating to the subject matter of
this Agreement without the prior written approval of Purchaser and the Company;
provided, however, that any party may make any public disclosure it believes in
good faith is required by applicable law or any listing or trading agreement
concerning its publicly-traded securities (in which case the disclosing party
will use its best efforts to advise the other parties prior to making the
disclosure).
(b) Venue; Legal Fees. Any dispute arising under this Agreement shall
be brought in the Federal District Court Middle District Florida, Tampa
Division. The parties consent to and agree that venue for any proceeding shall
be with said Court. In addition, the prevailing party shall be entitled to
receive its costs and reasonable attorneys' fees for all phases of the dispute,
which includes, but is not limited to, those costs and attorney fees associated
with arbitration, mediation, pre-suit matters, trail of the issues, post suit
matters, appeals of any order, deposition and discovery costs, and such similar
items.
(c) No Third-party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any Person other than the parties and their respective
successors and permitted assigns.
(d) Entire Agreement. This Agreement (including the documents referred
to herein) constitutes the entire agreement among the parties and supersedes any
prior understandings, agreements, or representations by or among the parties,
written or oral, to the extent they related in any way to the subject matter
hereof.
(e) Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the parties named herein and their respective successors
and permitted assigns. No party may assign either this Agreement or any of his
or its rights, interests, or obligations hereunder without the prior written
approval of Purchaser and the Company; provided, however, that Purchaser may (i)
assign any or all of its rights and interests hereunder to one or more of its
Affiliates and (ii) designate one or more of its Affiliates to perform its
obligations hereunder (in any or all of which cases Purchaser nonetheless shall
remain responsible for the performance of all of its obligations hereunder).
(f) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(g) Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(h) Notices. All notices, requests, demands, claims and other
communications hereunder shall be made in writing. Any notice, request, demand,
claim or other communication hereunder shall be deemed duly given two (2)
business days after it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:
If to the Company: Copy to:
The WellCare Management Group, Inc. Xxxxxxx Xxxxxx & Green, P.C.
Park West/Xxxxxx Avenue Extension 000 Xxxx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000 Xxx Xxxx, Xxx Xxxx 00000
Attn.: President and CEO Attn.: Xxxx X. Xxxxxx, Esquire
If to Purchaser: Copy to:
Xxxxx X. Xxxxx Xxxxxx X. Xxxxx, Esquire
0000 X. Xxxx Xxxxx, Xxxxx 000 Xxxxx, Xxxxx & X'Xxxxxx, P.A.
Xxxxx, Xxxxxxx 00000 0000 Xxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
Any party may send any notice, request, demand, claim, or other
communication hereunder to the intended recipient at the address set forth above
using any other means (including personal delivery, expedited courier, messenger
service, telecopy, telex, ordinary mail, or electronic mail), but no such
notice, request, demand, claim or other communication shall be deemed to have
been duly given unless and until it actually is received by the intended
recipient. Notwithstanding the foregoing, in the event the delivery of any
notice is refused, or returned unopened, having been addressed to the most
recent address provided by the intended recipient in accordance with these
notice provisions, such notice shall be deemed to have been delivered on the
date of the attempted delivery. Any party may change the address to which
notices, requests, demands, claims and other communications hereunder are to be
delivered by giving the other parties notice in the manner herein set forth.
(i) Governing Law. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Florida without giving effect
to any choice or conflict of law provision or rule (whether of the State of New
York or any other jurisdiction) that would cause the application of the laws of
any jurisdiction other than the State of Florida.
(j) Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by
Purchaser and the Company. No waiver by any party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
(k) Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
(l) Expenses. Each of the parties will bear his or its own costs and
expenses (including legal fees and expenses) incurred in connection with this
Agreement and the transactions contemplated hereby.
(m) Construction. Any reference to any federal, state, local or foreign
statute or law shall be deemed also to refer to all rules and regulations
promulgated thereunder, unless the context requires otherwise. The word
"including" shall mean including without limitation. The parties intend that
each representation, warranty and covenant contained herein shall have
independent significance.
(n) Incorporation of Exhibits and Schedules. The Exhibits and Schedules
identified in this Agreement are incorporated herein by reference and made a
part hereof.
[REST OF THIS PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
date first above written.
PURCHASER:
/s/ Xxxxx X. Xxxxx
----------------------------------
XXXXX X. XXXXX
THE COMPANY:
THE WELLCARE MANAGEMENT GROUP, INC.
By: /s/ Xxxxx X. Xxxxxx
-----------------------------
Name: Xxxxx X. Xxxxxx
-----------------------------
Title: Acting President and
Chief Executive Officer
