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Exhibit 4.2
EXECUTION COPY
SERIES B STOCK PURCHASE AGREEMENT
Dated as of September 20, 1996
by and between
BALANCED CARE CORPORATION
and
The Investors listed on Schedule 1.1
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TABLE OF CONTENTS
SECTION 1 THE TRANSACTION....................................................1
1.1 Sale and Issuance of Series B Stock ......................................1
1.2 Delivery and Payment for the Purchased Shares.............................1
1.3 Closings .................................................................1
1.4 Option for Purchase of Additional Shares of Series B Stock ...............2
1.5 Option Closings...........................................................3
1.6 Delivery and Payment for the Shares ......................................3
SECTION 2 INVESTORS' REPRESENTATIONS ........................................4
SECTION 3 REPRESENTATIONS AND WARRANTIES OF BCC..............................5
3.1 Valid Corporate Existence; Qualification..................................5
3.2 Capitalization............................................................6
3.3 Due Issuance of Purchased Shares..........................................6
3.4 No Violation..............................................................6
3.5 Authorization; Validity...................................................7
3.6 Financial Statements......................................................7
3.7 Budget ...................................................................7
3.8 Issuance Taxes............................................................7
3.9 Changes Subsequent to Date of Balance Sheet ..............................7
3.10 No Registration Rights ..................................................9
3.11 No Voting Agreements ....................................................9
3.12 Other Agreements ........................................................9
3.13 Loans and Advances......................................................11
3.14 Assumptions, Guaranties, Etc. of Indebtedness of Other Persons..........11
3.15 Significant Customers and Suppliers.....................................11
3.16 Title to Properties and Assets; Liens, Etc. ............................11
3.17 Litigation, Permits, Etc. ..............................................12
3.18 Proprietary Information of Third Parties ...............................12
3.19 Patents, Trademarks, Etc. ..............................................13
3.20 Tax Returns and Payments ...............................................13
3.21 Employee Matters .......................................................14
3.22 Transactions With Affiliates............................................14
3.23 Government Consent, etc. ...............................................15
3.24 Finder's Fee............................................................15
3.25 Disclosure..............................................................15
3.26 Offering of the Purchased Shares........................................15
3.27 No Violation ...........................................................16
3.28 U.S. Real Property Holding Corporation .................................16
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3.29 Environmental Protection................................................16
3.30 ERISA Matters...........................................................17
3.31 Fraud and Abuse ........................................................19
3.32 Health Professional's Financial Relationships ..........................20
3.33 Third Party Payor and Customer Contracts................................20
3.34 Foreign Corrupt Practices Act ..........................................20
SECTION 4 COVENANTS OF BCC..................................................20
4.1 Use of Proceeds .........................................................20
4.2 Annual and Monthly Financial Statements..................................20
4.3 Inspection Rights........................................................22
4.4 Prompt Payment of Taxes..................................................22
4.5 Accounts and Reports.....................................................22
4.6 Corporate Existence......................................................22
4.7 Maintenance of Properties; Employees ....................................22
4.8 Insurance................................................................23
4.9 Key Man Insurance........................................................23
4.10 Government Consents and Licenses .......................................23
4.11 Loans to Employees......................................................23
4.12 Conflicts of Interest ..................................................23
4.13 Shareholder Listing and Ownership ......................................23
4.14 Reserve for Conversion Shares...........................................23
4.15 Restrictive Agreements Prohibited ......................................24
4.16 Transactions with Affiliates............................................24
4.17 Expenses of Directors ..................................................24
4.18 Board of Directors Meetings.............................................24
4.19 Compensation Arrangements...............................................24
4.20 By-laws.................................................................25
4.21 Performance of Contracts................................................25
4.22 Vesting of Reserved Employee Shares.....................................25
4.23 Employee Nondisclosure and Developments Agreements......................25
4.24 Activities of Subsidiaries..............................................26
4.25 Compliance with Laws ...................................................26
4.26 Keeping of Records and Books of Account.................................26
4.27 Change in Nature of Business............................................26
4.28 U.S. Real Property Interest Statement...................................26
4.29 Rule 144A Information...................................................27
4.30 Compensation and Audit Committees.......................................27
4.31 Termination of Covenants ...............................................27
SECTION 5 CONDITIONS TO CLOSING.............................................27
5.1 Conditions Precedent to Obligations of Investors ........................27
5.2 Conditions Precedent to Obligations of BCC...............................30
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SECTION 6 RIGHT OF FIRST REFUSAL............................................31
6.1 Right of First Refusal ..................................................31
SECTION 7 MISCELLANEOUS ....................................................32
7.1 Modification or Waiver...................................................32
7.2 Notices..................................................................32
7.3 Binding Effect and Assignment............................................33
7.4 Exhibits, Schedules and Entire Agreement.................................33
7.5 Governing Law............................................................33
7.6 Counterparts.............................................................34
7.7 Section Headings ........................................................34
7.8 Survival of Agreements...................................................34
7.9 Brokerage................................................................34
7.10 Parties in Interest ....................................................34
7.11 Severability............................................................34
7.12 Expense Reimbursement ..................................................34
INDEX TO SCHEDULES
Schedule 1.1 Investors
Schedule 1.3 Closings
Schedule 3.1 Subsidiaries; Qualifications
Schedule 3.2 Capitalization
Schedule 3.9 Changes Subsequent to Date of Balance Sheet
Schedule 3.10 Registration Rights
Schedule 3.12 Other Agreements
Schedule 3.14 Assumptions, Guarantees, Etc.
Schedule 3.16 Title to Properties and Assets
Schedule 3.17 Litigation, Etc.
Schedule 3.19 Patents, Trademarks, Etc.
Schedule 3.21 Employee Matters
Schedule 3.22 Transactions with Affiliates
Schedule 3.24 Finder's Fee
Schedule 3.30 ERISA Matters
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Schedule 5.1 Acquired Facilities
INDEX TO EXHIBITS
EXHIBIT A Amended and Restated Charter
EXHIBIT B Securityholders
EXHIBIT C Balance Sheet
EXHIBIT D Operating Budget
EXHIBIT E Employee Nondisclosure and
Developments Agreement
EXHIBIT F Business Plan
EXHIBIT G Performance Milestones
EXHIBIT H Form of Opinion of Company Counsel
EXHIBIT I Stock Restriction Agreement
EXHIBIT J Registration Rights Agreement
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SERIES B STOCK PURCHASE AGREEMENT
THIS SERIES B STOCK PURCHASE AGREEMENT, dated as of September 20,
1996, by and between Balanced Care Corporation ("BCC"), a Delaware corporation
with its principal place of business at 0000 Xxxxxx Xxxxx, Xxxxx 000,
Xxxxxxxxxxxxx, Xxxxxxxxxxxx 00000, and the persons named in Schedule 1.1 hereto
(each, an "Investor", collectively, the "Investors").
W I T N E S S E T H:
BCC was organized in 1995 to offer long term care to the elderly. BCC
is seeking to raise funds for general corporate purposes and to fund
acquisitions. The Investors desire to make an equity investment in BCC by
purchasing shares of BCC's Series B Stock, $0.001 par value per share ("Series
B Stock"), having the rights and preferences described in the Amended and
Restated Certificate of Incorporation of Balanced Care Corporation attached to
this Agreement as Exhibit A (the "Charter"). The investors severally
contemplate purchasing, for cash, up to an aggregate of 2,460,875 shares of the
Series B Stock at the Closings (as defined herein) and up to an additional
2,460,875 shares of Series B Stock (the "Option Shares") pursuant to the
options granted by BCC to the Investors hereby at the Option Closings, if any
(as defined herein).
NOW THEREFORE, in consideration of the mutual promises herein
contained, the parties hereto, intending to be legally bound hereby, agree as
follows:
SECTION 1 THE TRANSACTION
1.1 Sale and Issuance of Series B Stock. BCC agrees to issue and sell
to the Investors and each Investor severally agrees to purchase from BCC, the
number of shares of Series B Stock listed opposite its name on Schedule 1.1
(the "Purchased Shares") at a price of $2.50 per share (the "Purchase Price").
1.2 Delivery and Payment for the Purchased Shares. Each Investor shall
make payment of the Purchase Price for the Purchased Shares at the Closing (as
defined below) for such shares specified pursuant to Section 1.3 below by wire
transfer of funds to BCC's account, by certified check or by other delivery
acceptable to BCC. Against receipt of the aggregate Purchase Price for the
Purchased Shares to be purchased in such Closing, BCC shall deliver to the
Investors or such Investor's counsel duly issued certificates representing such
Purchased Shares.
1.3 Closings. The consummation of the purchase and sale of the
Purchased Shares shall take place at three closings (each a "Closing" and,
collectively, the "Closings"). The first such Closing (the "First Closing")
shall take place on the date specified on Schedule 1.3 hereto under the heading
"First Closing", the second such closing (the "Second Closing") shall take
place on the date specified on Schedule 1.3 under the heading "Second Closing".
The third closing (the "Third Closing") shall take place on or before the day
that is 30 days following the
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Second Closing. The date of any Closing shall be referred to herein as a
"Closing Date." Each Closing shall take place at the offices of Xxxxxxxxxxx &
Xxxxxxxx LLP, 1500 Xxxxxx Building, Pittsburgh Pennsylvania, or at such other
time, date or place as the parties agree.
In addition to the Purchased Shares to be purchased by the Investors
at the Third Closing, BCC (a) will sell, at the request of Xxxxxxxxx, Xxxxxxxx
& Company ("Xxxxxxxxx") up to 220,000 additional shares of Series B Stock and
an option to purchase an additional 220,000 shares pursuant to Section 1.4
below to an affiliate or affiliates of Xxxxxxxxx and (b) may sell up to 220,875
additional shares of Series B Stock and an option to purchase an additional
220,875 shares pursuant to Section 1.4 below to Meditrust Mortgage Investments,
Inc. (or any affiliate thereof reasonably acceptable to Xxxxxxxxx) (each such
purchaser under Section 1.3(a) or (b) an "Additional Investor" and,
collectively, the "Additional Investors"). Any sale of shares to an Additional
Investor shall be under the terms and conditions, including the Purchase Price,
set forth herein. By execution of a counterpart page of this Agreement, the
Additional Investor shall be deemed to be an Investor under this Agreement
(including without limitation for purposes of the Options set forth in Section
1.4 below), the shares so purchased at the Third Closing shall be deemed to be
Purchased Shares hereunder, and Schedule 1.1 shall be automatically amended to
reflect the sale of such shares sold, and to reflect the Option Shares (as
defined below) that may be sold, to such Additional Investor.
1.4 Option for Purchase of Additional Shares of Series B Stock. (a) In
addition to the Purchased Shares to be issued and sold to the Investor pursuant
to this Section 1, BCC hereby grants an option to each Investor (each an
"Option" and, collectively, the "Options") to purchase up to the aggregate
number of additional shares of Series B Stock set forth opposite such
Investor's name on Schedule 1.1 hereto (as such amount may be adjusted pursuant
to Section 1.4(b) hereof) (the "Option Shares") under the terms and conditions,
including Purchase Price, set forth herein. Each Option shall be exercisable on
or before the date that is six (6) months after the date of the First Closing,
and shall be exercised, in whole or in part, by delivery to BCC of a written
notice of exercise (the "Exercise Notice") from the Investor exercising its
Option, which notice shall also specify a closing date (which shall be a
business day) for the consummation of the sale of the Option Shares (each, an
"Option Closing Date"), which date shall not be more than thirty (30) days
following delivery of the Exercise Notice to BCC.
(b) Notwithstanding the above, in the event that BCC provides
reasonable documentation (the "Documentation") to the Investors that it has
achieved all of the performance milestones set forth on Exhibit G hereto, then
each Investor shall be deemed to have exercised its option as of the date of
delivery of the Documentation, and shall be obligated, subject to the other
term and conditions of this Agreement, to purchase all of its unpurchased
Option Shares at a closing to be held thirty (30) days after delivery of the
Documentation (or if such day is not a business day, the next following
business day.) Such closing shall take place in the same manner as an Initial
Option Closing (as defined herein) and shall constitute an Option Closing (as
defined herein for purpose of this Agreement).
(c) In the event that an Investor does not deliver an
Exercise Notice by the date which is (6) months after the First Closing Date,
BCC shall send a notice (the "Notice") to
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each Investor who has delivered an Exercise Notice (an "Option Investor")
indicating the aggregate number of Option Shares for which no Exercise Notice
has been delivered (the ("Available Option Shares"). Each Option Investor may
elect to purchase all or any part of the Available Option Shares by delivery of
a written notice specifying the number of Option Shares to be purchased to BCC
within fifteen (15) days of delivery of the Notice by BCC. In the event that
the Option Investors elect to purchase more than the number of Available Option
Shares, each Option Investor shall be entitled to purchase that fraction of
Available Option Shares as is equal to a fraction the numerator of which is the
total number of shares of Series B Stock held by such Option Investor and the
denominator of which is the total number of Series B Stock held by all Option
Investors electing to purchase Available Option Shares.
1.5 Option Closings. (a) The consummation of the purchase and sale of
any Option Shares to be sold pursuant to an Exercise Notice (an "Initial Option
Closing") shall take place on the Option Closing Date specified in such
Exercise Notice at the offices of Xxxxxxxxxxx & Xxxxxxxx LLP, 1500 Xxxxxx
Building, Pittsburgh, Pennsylvania, or at such other time, date or place as the
parties agree.
(b) The consummation of the purchase and sale of any
Available Option Shares to be purchased pursuant to Section 1.4(c) hereof (the
"Available Option Closing") shall take place on the 30th day following the
delivery of the Notice by BCC to the Option Investors (or, if such day is not a
business day, the next following business day) (each Initial Option Closing and
Available Option Closing hereunder an "Option Closing").
(c) Unless otherwise agreed by the parties, to the extent
that (a) any Option remains unexercised and the Available Option Shares have
not been elected to be purchased by the Option Investors or (b) any Option
Closing to be held hereunder does not take place because (i) all conditions to
closing set forth in Section 5.2(a)-(c) hereof have not been met or waived by
BCC or (ii) all conditions to closing set forth in Section 5.1 hereof have not
been met other than due to a failure by BCC to take any necessary action or to
use its best efforts to cause in a third party to take any necessary action
thereunder, then on the date that is 225 days following the First Closing all
Options granted hereunder shall expire and neither BCC nor any Investor shall
have any further rights or obligations with respect thereto.
1.6 Delivery and Payment for the Shares. Each Investor shall make
payment of the aggregate Purchase Price for the Option Shares or any Available
Option Shares purchased hereunder (as set forth on Schedule 1.1 hereto) at the
Option Closing or Available Option Closing therefor by wire transfer of funds
to BCC's account, by certified check or by other delivery acceptable to BCC.
Against receipt of the aggregate Purchase Price for the Option Shares or
Available Option Shares purchased in the Option Closing or Available Option
Closing therefor, BCC shall deliver to the Investors or such Investor's counsel
duly issued certificates representing such Option Shares or Available Option
Shares.
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SECTION 2 INVESTORS' REPRESENTATIONS.
As an inducement to BCC to enter into this Agreement and consummate
the transactions contemplated hereby, each Investor represents and warrants to
BCC the following as to itself/himself:
(a) except as otherwise indicated on Schedule 1.1 hereto,
it/he is an "accredited investor" within the meaning of Rule 501 under the
Securities Act of 1933, as amended (the "Securities Act") and was not organized
for the specific purpose of acquiring the Purchased Shares or Option Shares;
(b) it/he has sufficient knowledge and experience in
investing in companies similar to BCC in terms of BCC's stage of development so
as to be able to evaluate the risks and merits of its/his investment in BCC and
it/he is able financially to bear the risks thereof;
(c) it/he has had an opportunity to discuss BCC's business,
management and financial affairs with BCC's management;
(d) the Purchased Shares (and any Option Shares acquired
hereunder) being purchased by it/him are being acquired for its/his own account
for the purpose of investment and not with a view to or for SALE in connection
with any distribution thereof and it/he has no present intention of making any
sale, pledge or other assignment or transfer for value of such shares or any
interest therein;
(e) it/he understands that (i) the Purchased Shares, any
Option Shares acquired hereunder, and the Conversion Shares (as defined in
Section 3.1 hereof) have not been registered under the Securities Act by reason
of their issuance in a transaction exempt from the registration requirements of
the Securities Act pursuant to Section 4(2) thereof or Rule 505 or 506
promulgated under the Securities Act, and that BCC is relying upon its/his
representations and warranties in this Section 2 for purposes of complying with
such exemptions; (ii) the Purchased Shares, any Option Shares acquired
hereunder and, upon conversion thereof, the Conversion Shares must be held
indefinitely unless a subsequent disposition thereof is registered under the
Securities Act or is exempt from such registration, and the Investor must
therefore bear the economic risks of its investment in the Purchased Shares,
and in any Option Shares acquired hereunder for an indefinite period of time,
(iii) the Purchased Shares, any Option Shares acquired hereunder, and the
Conversion Shares will bear a legend to such effect and (iv) BCC will make a
notation on its transfer books to such effect;
(f) if it/he sells any Conversion Shares pursuant to Rule
144A promulgated under the Securities Act it/he will take all necessary steps
in order to perfect the exemption from registration provided thereby, including
(i) obtaining on behalf of BCC information to enable BCC to establish a
reasonable belief that the purchaser is a qualified institutional buyer and
(ii) advising such purchaser that Rule 144A is being relied upon with respect
to such resale;
(g) as to each Investor which is not a natural person (i) it
is a corporation, partnership or other entity duly organized under the
applicable laws of the jurisdiction of its
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incorporation or formation and is validly existing and in good standing under
the laws of such jurisdiction, (ii) such jurisdiction of incorporation and such
Investor's principal place of business are as set forth on Schedule 1.1 hereto,
(iii) it has the requisite power and authority to execute, deliver and perform
this Agreement, (iv) it has duly taken all corporate, partnership or other
action required to be taken for such Investor to enter into and carry out this
Agreement and to acquire the Purchased Shares and Option Shares, and (v) the
Agreement has been duly executed and delivered by such Investor and constitutes
the valid and binding obligation of such Investor (except as may be limited by
bankruptcy, reorganization, insolvency, moratorium or similar laws of general
application relating to or affecting the enforcement of rights of creditors and
except that enforceability of the Investor's obligations hereunder is subject
to general principles of equity); and
(h) such Investor agrees to furnish such additional
information concerning itself/himself reasonably requested by BCC in order for
it to comply with applicable federal and state securities laws in connection
with the sale of the Purchased Shares and any Option Shares hereunder.
SECTION 3 REPRESENTATIONS AND WARRANTIES OF BCC.
As an inducement to the Investors to enter into this Agreement and
consummate the transactions contemplated hereby, BCC and its Subsidiaries, as
the case may be, represent and warrant to the Investors, as follows:
3.1 Valid Corporate Existence; Qualification. BCC does not own or
control, directly or indirectly, any interest or investment in any other
corporation, association or other business entity other than the wholly-owned
subsidiaries named in Schedule 3.1 hereto (each a "Subsidiary" and
collectively, the "Subsidiaries"). BCC and each Subsidiary is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation. BCC and each Subsidiary has the requisite
corporate power and authority to carry on its business as currently conducted
and as currently proposed to be conducted, to own its assets, and BCC has the
requisite corporate power and authority to execute, deliver and perform this
Agreement, the Registration Rights Agreement by and among BCC, the Investors
and certain stockholders of BCC in substantially the form attached hereto as
Exhibit J (the "Registration Rights Agreement") and the Stock Restriction
Agreement by and among BCC, the Investors and certain securityholders of BCC in
substantially the form attached hereto as Exhibit I (the "Stock Restriction
Agreement"), to issue, sell and deliver the Purchased Shares and the Option
Shares and to issue and deliver the shares of Common Stock, $.001 par value, of
BCC (the "Common Stock") issuable upon conversion of the Purchased Shares and
Option Shares, if any, (the Conversion Shares"). BCC and each Subsidiary has
qualified or is otherwise authorized to do business as a foreign corporation in
all states or jurisdictions in which the character of the properties owned or
leased by) it required such qualification or authorization. The states or
jurisdictions in which BCC and each of the Subsidiaries is so qualified or
authorized to do business are set forth in Schedule 3.1 hereto.
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3.2 Capitalization.
(a) The authorized capital stock of BCC consists of (i)
14,000,000 shares of Common Stock, $0.001 par value per share (the "Common
Stock"), (ii) 1,150,958 shares of Series A Preferred Stock, $0.001 par value
per share (the "Series A Stock") and (iii) 4,921,750 shares of Series B Stock
(collectively, the "Capital Stock"). Immediately prior to the sale of the
Purchased Shares by the Investors, there are outstanding 5,044,444 shares of
Common Stock, and 1,150,958 shares of Series A Stock, all of which are owned of
record as shown on Exhibit B, and no shares of the Series B Stock.
(b) All outstanding shares of BCC's Capital Stock have been
duly authorized and are validly issued, fully paid and nonassessable, and have
been issued in compliance with the 1933 Act and applicable state securities
laws.
(c) There are no liens, encumbrances, subscriptions or other
restrictions, commitments or agreements to which BCC is a party relating to the
voting, issuance, transfer, sale or disposition of any shares of Capital Stock
of BCC, other than as provided in this Agreement, or as disclosed on Schedule
3.2 hereof.
(d) Except as set forth in Exhibit B or as disclosed on
Schedule 3.2, there are no outstanding rights, options or warrants to purchase,
or securities convertible or exchangeable into shares of the capital stock of
BCC or any other securities of BCC or other agreements for the purchase or
acquisition from BCC, or to the knowledge of BCC, from any of its stockholders
of any shares of its capital stock or any other securities of BCC. The rights
and preferences of the Series B Stock are set forth in the Charter, which has
been approved by all requisite corporate action, has been duly filed with the
Secretary of State of the State of Delaware and is in full force and effect.
3.3 Due Issuance of Purchased Shares. The Purchased Shares, the Option
Shares and the Conversion Shares are duly authorized, and, when issued to the
Investors as provided herein and in the Charter, will be duly and validly
issued, fully paid and nonassessable. No person has any right of first refusal
or preemptive right granted in connection with the Purchased Shares, the Option
Shares, the Conversion Shares or any future issuances of securities by BCC
except as provided in this Agreement or as disclosed in Schedule 3.2 hereof.
3.4 No Violation. Neither the execution and delivery of this
Agreement, the Registration Rights Agreement or the Stock Restriction
Agreement, nor compliance by BCC with any of the provisions hereof or thereof
will:
(a) violate or conflict with any provision of the charter
documents or by-laws of BCC or any Subsidiary;
(b) violate or, with or without the giving of notice or the
passage of time or both, result in a default under, the breach or termination
of, or otherwise give any other contracting party the right to terminate, or
declare a default under, the terms of any agreement or
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other document or undertaking to which BCC or any Subsidiary is a party, except
violations, breaches or rights of termination that have been waived in writing;
or
(c) violate any law or regulation of any jurisdiction
relating to BCC or any Subsidiary, or result in the termination or impairment
of any Permit (as defined in Section 3.17 hereof).
3.5 Authorization; Validity. All corporate action required to be taken
by or on behalf of BCC to authorize BCC to enter into and carry out this
Agreement, the Registration Rights Agreement and the Stock Restriction
Agreement, to issue, sell and deliver the Purchased Shares, the Option Shares
and to issue and deliver the Conversion Shares has been duly and properly taken
and BCC is bound by such actions. Each of this Agreement, the Stock Restriction
Agreement and the Registration Rights Agreement has been duly executed and
delivered by BCC and is valid and binding upon it and enforceable against it in
accordance with its terms, except as may be limited by bankruptcy,
reorganization, insolvency, moratorium or similar laws of general application
relating to or affecting the enforcement of rights of creditors and except that
enforceability of its obligations hereunder is subject to general principles of
equity.
3.6 Financial Statements. Attached hereto as Exhibit C is a
preliminary draft of the audited consolidated balance sheet of BCC and its
Subsidiaries as of June 30, 1996 (the "Balance Sheet") and the related draft
consolidated statements of earnings, stockholders' equity and cash flows of BCC
and its subsidiaries for the fiscal year then ended. All such financial
statements have been prepared in accordance with generally accepted accounting
principles consistently applied throughout the period indicated and fairly
present the financial position of BCC at the date thereof and the results of
operations of BCC for the period covered thereby.
3.7 Budget. Attached hereto as Exhibit D is BCC's operating budget for
the one year period ending June 30, 1997 (the "Operating Budget"). BCC has also
provided to the Investors a preliminary forecast of the operating budget for
the one year period ending June 30, 1998, which is in the same form as the
Operating Budget.
3.8 Issuance Taxes. There are no taxes, levies, assessments or other
charges due to any governmental entity in connection with the issuance of the
Purchased Shares or the Option Shares.
3.9 Changes Subsequent to Date of Balance Sheet. Except as disclosed
in Schedule 3.9, since the date of the Balance Sheet and through the date
hereof:
(a) There has not been any material adverse change in the
condition (financial or otherwise), assets, liabilities, commitments, business,
properties, operations, prospects or affairs of BCC and its Subsidiaries from
that reflected in the Balance Sheet, except for changes in the ordinary course
of business which have not been, either in any case or in the aggregate,
materially adverse;
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(b) neither BCC nor any Subsidiary has suffered any damage,
destruction or loss, whether or not covered by insurance, materially and
adversely affecting its financial condition, properties, business, operations,
prospects or affairs;
(c) neither BCC nor any Subsidiary has waived any rights or
claims held by it or canceled any debts owed to it;
(d) neither BCC nor any Subsidiary has entered into any
leases for capital equipment, incurred any material obligations for capital
expenditures or become subject to any other indebtedness, obligations or
liabilities (absolute, accrued or contingent) other than current liabilities
shown on the Balance Sheet and current liabilities incurred since the date
thereof in the ordinary course of business;
(e) neither BCC nor any Subsidiary has mortgaged, pledged or
subjected to a lien or any other encumbrance, any of its assets;
(f) neither BCC nor any Subsidiary has sold, assigned or
transferred its tangible assets or canceled any debts or claims, except in each
case, in the ordinary course of business at prices not less than those which it
reasonably believed to be the then prevailing market prices;
(g) neither BCC nor any Subsidiary has sold, assigned or
transferred, or granted any exclusive license with respect to, any patents,
trademarks, trade names, copyrights, licenses, applications for any thereof, or
any other intangible assets;
(h) neither BCC nor any Subsidiary has defaulted in any
material respect in the performance of any material contract or other material
obligation;
(i) neither BCC nor any Subsidiary has purchased or otherwise
acquired any equity or debt security of any other corporation, entity or
person;
(j) neither BCC nor any Subsidiary has entered into any
material transaction or contract other than in the ordinary course of business,
all of which are accurately reflected in its books and records;
(k) neither BCC nor any Subsidiary has made any loans to its
employees, officers or directors other than advances of expenses in the
ordinary course of business;
(l) neither BCC nor any Subsidiary has made any change in the
compensation of any officer or directors whose total per annum compensation is
$75,000 or more;
(m) BCC has not declared or paid any dividend or made any
other distribution of its assets to securityholders;
(n) neither BCC nor any Subsidiary has experienced any labor
organization activity.
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(o) neither BCC nor any Subsidiary has issued any stock, bond
or other corporate security;
(p) neither BCC nor any Subsidiary has made any material
change in its manner of business or operations; and
(q) neither BCC nor any Subsidiary has entered into any
commitment (contingent or otherwise) to do any of the foregoing.
3.10 No Registration Rights. Prior to the Closing, no person or entity
has any demand, Form S-3 or other piggyback registration rights, under the 1933
Act with respect to any securities of BCC, other than those disclosed on
Schedule 3.10 hereof.
3.11 No Voting Agreements. Prior to the Closing, there are no
agreements or arrangements to which BCC is a party or, to the best of its
knowledge, among any other persons, relating to the voting of any securities of
BCC.
3.12 Other Agreement. Except as set forth in the attached Schedule
3.12, BCC is not a party to or otherwise bound by any written or oral:
(a) distributor, dealer, manufacturer's representative or
sales agency agreement which is not terminable on less than ninety (90) days'
notice without cost or other liability to BCC (except for agreements which, in
the aggregate, are not material to the business of BCC);
(b) any contract or agreement with any governmental authority
or third party fiscal intermediary or carrier administering any state Medicaid
program or the Medicare program, any state Medicaid program, the Medicare
program, any hospital, nursing facility or other inpatient health care
facility, health maintenance organization, preferred provider organization or
self-insured employer or other third party payor;
(c) agreement with any supplier containing any provision
permitting any party other than BCC to renegotiate the price or other terms, or
containing any pay-back or other similar provision, upon the occurrence of a
failure by BCC to meet its obligations under the agreement when due or the
occurrence of any other event;
(d) agreement for the future purchase of fixed assets or for
the future purchase of materials, supplies or equipment in excess of its normal
operating requirements;
(e) bonus, pension, profit-sharing, retirement,
hospitalization, insurance, Stock, purchase, stock option or other plan,
agreement or understanding pursuant to which benefits are provided to any
employee of BCC (other than group insurance plans applicable to employees
generally);
(f) agreement relating to the borrowing of money or to the
mortgaging or pledging of, or otherwise placing a lien or security interest on,
any asset of BCC;
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(g) guaranty of any obligation for borrowed money or
otherwise;
(h) agreement, or group of related agreements with the same
party or any group of affiliated parties, under which BCC has advanced or
agreed to advance money or has agreed to lease any property as lessee or
lessor;
(i) agreement or obligation (contingent or otherwise) to
issue, sell or otherwise distribute or to repurchase or otherwise acquire or
retire any share of its capital stock or any of its other equity securities;
(j) assignment, license or other agreement with respect to
any form of intangible property;
(k) agreement under which it has limited or restricted its
right to compete with any person in any respect; or
(1) other agreement or group of related agreements with the
same party involving more than $25,000 or continuing over a period of more than
six months from the date or dates thereof (including renewals or extensions
optional with another party), which agreement or group of agreements is not
terminable by BCC without penalty upon notice of thirty (30) days or less, but
excluding any agreement or group of agreements with a customer of BCC for the
sale, lease or rental of BCC's products or services if such agreement or group
of agreements was entered into by BCC in the ordinary course of business.
With respect to the above agreements, BCC and its Subsidiaries, and to the best
of BCC's knowledge after due inquiry, each other party thereto, have in all
material respects performed all the obligations required to be performed by
them to date (or each non-performing party has received a valid, enforceable
and irrevocable written waiver with respect to its non-performance) and have
received no notice of default and are not in default (with due notice or lapse
of time or both) under any such agreement, instrument, commitment, plan or
arrangement to which BCC or any Subsidiary is a party or by which its property
may be bound. Neither BCC nor any Subsidiary has a present expectation or
intention of not fully performing all its obligations under each such
agreement, instrument, commitment, plan or arrangement, and neither BCC nor any
Subsidiary has any knowledge of any breach or anticipated breach by the other
party to any agreement, instrument, commitment, plan or arrangement to which
BCC or any Subsidiary is a party. Each of BCC and its Subsidiaries is in full
compliance with all of the terms and provisions of its Charter and By-laws, as
amended.
3.13 Loans and Advances. Neither BCC nor any Subsidiary has any
outstanding loans or advances to any person and is not obligated to make any
such loans or advances, except, in each case, for advances to employees of BCC
or such Subsidiary in respect of reimbursable business expenses anticipated to
be incurred by them in connection with their performance of services for BCC or
such Subsidiary.
3.14 Assumptions, Guaranties, Etc. of Indebtedness of Other Persons.
Except as set forth on the attached Schedule 3. 14, neither BCC nor any
Subsidiary has assumed, guaranteed,
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endorsed or otherwise become directly or contingently liable on any
indebtedness of any other person (including, without limitation, liability by
way of agreement, contingent or otherwise, to purchase, to provide funds for
payment, to supply funds to or otherwise invest in the debtor, or otherwise to
assure the creditor against loss), except for guaranties by endorsement of
negotiable instruments for deposit or collection in the ordinary course of
business.
3.15 Significant Customers and Suppliers. No customer or supplier
which was significant to BCC and its Subsidiaries, taken as a whole, during the
period covered by the financial statements referred to in Section 3.6 or which
thereafter has been significant to BCC and its subsidiaries, taken as whole,
has terminated, materially reduced or threatened to terminate or materially
reduce its purchases from or provision of products or services to BCC and its
Subsidiaries, as the case may be.
3.16 Title to Properties and Assets; Liens, Etc. Except as set forth
on Schedule 316: BCC or a Subsidiary has good and marketable title to its
properties and assets and the properties and assets reflected in the Balance
Sheet (except properties and assets disposed of since the date of such Balance
Sheet in the ordinary course of business), in each case subject to no mortgage,
pledge, lien, lease, encumbrance or charge, other than (i) the lien of current
taxes not yet due and payable, (ii) liens imposed by law and incurred in the
ordinary course of business for obligations not yet due to carriers,
warehousemen, materialmen, laborers and the like, (iii) liens in respect of
pledges or deposits under workers' compensation laws or similar legislation, or
(iv) minor defects in title, and none of the foregoing, individually or in the
aggregate, materially interferes with BCC's or such Subsidiary's present or
proposed use of such property or assets, including without limitation the
ability to secure financing using such property and assets as collateral. To
the best of BCC's knowledge, after due inquiry, there are no condemnation,
environmental, zoning or other land use regulation proceedings, either
instituted or planned to be instituted, which would adversely affect the use or
operation of BCC's and its Subsidiaries' properties and assets for their
respective intended uses and purposes, or the value of such properties, and
neither BCC nor any Subsidiary has received notice of any special assessment
proceedings which would so affect such properties and assets.
With respect to the property leased by BCC or any Subsidiary ("Leased
Property"), no event has occurred and is continuing which, with due notice or
lapse of time or both, would constitute a default or event of default by BCC or
such Subsidiary under any lease or agreement respecting such property. With
respect to all Leased Property, BCC or its Subsidiary as the case may be, holds
a valid leasehold interest free of any liens, claims and encumbrances, subject
to clauses (i) through (iv) of the preceding paragraph. Neither BCC nor any
Subsidiary's possession of any Leased Property has been disturbed and, to the
best of BCC's knowledge after due inquiry, no claim has been asserted against
BCC or any Subsidiary adverse to its rights in any Leased Property.
3.17 Litigation, Permits, Etc. (a) Except as otherwise set forth in
Schedule 3.17, there is no (i) action, suit, claim, proceeding or investigation
pending or, to the best of BCC's knowledge, threatened against or affecting BCC
or any Subsidiary, at law or in equity, or before or by any Federal, state,
municipal or other governmental department, commission, board,
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17
bureau, agency or instrumentality, domestic or foreign, (ii) arbitration
proceeding relating to BCC or any Subsidiary pending under collective
bargaining agreements or otherwise or (iii) governmental inquiry pending or, to
the best of BCC's knowledge, threatened against or affecting BCC or any
Subsidiary (including without limitation any inquiry as to the qualification of
BCC or any Subsidiary to hold or receive any license or permit), and there is
no basis for any of the foregoing. Neither BCC nor any Subsidiary has received
any opinion or memorandum or legal advice from legal counsel to the effect that
it is exposed, from a legal standpoint, to any liability or disadvantage which
may be material to its business, prospects, financial condition, operations,
property or affairs. Neither BCC nor any Subsidiary is in default with respect
to any order, writ, injunction or decree known to or served upon BCC or any
Subsidiary of any court or of any Federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign. There is no action or suit by BCC or any Subsidiary
pending or threatened against others.
(b) Each of BCC and its Subsidiaries has complied with all
laws, rules, regulations and orders applicable to its business, operations,
properties, assets, products and services, has all necessary permits, licenses,
franchises, certificates of need and other authorizations (the "Permits")
required to conduct its business as conducted and as proposed to be conducted,
and, in the event that any such Permits have been issued on a temporary basis,
such Permits shall be issued (or reissued, as the case may be) on a permanent
basis within ninety (90) days of the date hereof. Each of BCC and its
Subsidiaries has been operating their respective businesses pursuant to and in
compliance with the terms of all such Permits and all such Permits are in full
force and effect. There is no existing law, rule, regulation or order, and BCC,
after due inquiry, is not aware of any proposed law, rule, regulation or order,
whether Federal, state, county or local, which would prohibit or restrict BCC
or any Subsidiary from, or otherwise materially adversely affect BCC or any
Subsidiary in, conducting its business in any jurisdiction in which it is now
conducting business or in which it proposes to conduct business.
3.18 Proprietary Information of Third Parties. To the best of BCC's
knowledge, no third party has claimed or has reason to claim that any person
employed by or affiliated with BCC or any Subsidiary has (a) violated or may be
violating any of the terms or conditions of his employment, non-competition or
non-disclosure agreement with such third party, (b) disclosed or may be
disclosing or utilized or may be utilizing any trade secret or proprietary
information or documentation of such third parry or (c) interfered or may be
interfering in the employment relationship between such third party and any of
its present or former employees. No third party has requested information from
BCC which suggests that such a claim might be contemplated. To the best of
BCC's knowledge, no person employed by or affiliated with BCC or any Subsidiary
has employed or proposes to employ any trade secret or any information or
documentation proprietary to any former employer, and to the best of the BCC's
knowledge, no person employed by or affiliated with BCC or any Subsidiary has
violated any confidential relationship which such person may have had with any
third party, in connection with the development, manufacture or sale of any
product or proposed product or the development or sale of any service or
proposed service of BCC or any Subsidiary, and BCC has no reason to believe
there will be any such employment or violation. To the best of BCC's knowledge,
none of the execution, delivery or performance of this Agreement, the
Registration Rights Agreement or the
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Stock Restriction Agreement, or the carrying on of the business of BCC as
officers, employees or agents by any officer, director or key employee of BCC
or any Subsidiary, or the conduct or proposed conduct of the business of BCC or
any Subsidiary, will conflict with or result in a breach of the terms,
conditions or provisions of or constitute a default under any contract,
covenant or instrument under which any such person is obligated.
3.19 Patents, Trademarks, Etc. Set forth in Schedule 3.1 is a list and
brief description of all domestic and foreign patents, patent rights, patent
applications, trademarks, trademark applications, service marks, service xxxx
applications, trade names and copyrights, and all applications for such which
are in the process of being prepared, owned by or registered in the name of BCC
or any Subsidiary, or of which BCC or any Subsidiary is a licenser or licensee
or in which BCC or any Subsidiary has any right, and in each case a brief
description of the nature of such right. BCC owns or possesses adequate
licenses or other rights to use all patents, patent applications, trademarks,
trademark applications, service marks, service xxxx applications, trade names,
copyrights, manufacturing processes, formulae, trade secrets, customer lists
and know how (collectively, "Intellectual Property") necessary or desirable to
the conduct of the business of BCC or any of its Subsidiaries as conducted and
as proposed to be conducted, and no claim is pending or, to the best of the
BCC's knowledge, threatened to the effect that the operations of BCC or any of
its Subsidiaries infringe upon or conflict with the asserted rights of any
other person under any Intellectual Property, and there is no basis for any
such claim (whether or not pending or threatened). No claim is pending or
threatened to the effect that any such Intellectual Property owned or licensed
by BCC or any Subsidiary, or which BCC or any Subsidiary otherwise has the
right to use, is invalid or unenforceable by BCC or such Subsidiary, and there
is no basis for any such claim (whether or not pending or threatened). All
prior art known to BCC which may be or may have been pertinent to the
examination of any United States patent or patent application listed in
Schedule 3.19 has been cited to the United States Patent and Trademark Office.
To the best of the BCC's knowledge, all technical information developed by and
belonging to BCC or any Subsidiary which has not been patented has been kept
confidential. Neither BCC nor any Subsidiary has granted or assigned to any
other person or entity any right to manufacture, have manufactured, assemble or
sell the products or proposed products or to provide the services or proposed
services of BCC or its Subsidiaries.
3.20 Tax Returns and Payments. All of the respective Federal, state
and local tax returns and reports of BCC required by law to be filed have been
duly filed within the time prescribed by law and all amounts which are shown as
due thereon have been paid. The federal income tax returns of BCC have not been
audited by the Internal Revenue Service, and there are in effect no waivers of
the applicable statutes of limitations for federal taxes, for any period. No
deficiency, assessment or proposed adjustment of BCC's Federal, state or local
income or franchise taxes is pending and BCC has no knowledge of any proposed
liability for any tax to be imposed upon its properties or assets for which
there is not an adequate reserve reflected in the Balance Sheet. BCC has paid
all social security taxes when due and has withheld and paid over all federal,
state and local taxes which it has been obligated to withhold. There is no tax
lien, whether imposed by any Federal, state, county or local taxing authority,
outstanding against the assets, properties or business of BCC. Neither BCC nor
any of its present or former stockholders
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has ever filed an election pursuant to Section 1362 of the Internal Revenue
Code of 1986, as amended (the "Code"), that BCC be taxed as an S corporation.
3. 21 Employee Matters.
(a) Except as provided in Schedule 3.21, no employee of BCC
is represented by a labor union and BCC has not entered into any collective
bargaining agreements with any of its employees, nor has it received notice, in
any manner, that any group of its employees is seeking to organize a bargaining
unit or to engage in collective bargaining with BCC.
(b) Except as provided in Schedule 3.21, no officer or
employee of BCC or other person has any written or oral agreement with BCC
relating to his/her employment by BCC on a full-time, part-time or consultative
basis;
(c) Each of the officers of BCC, each key employee and each
other employee now employed by BCC or a Subsidiary who has access to
confidential information of BCC or such Subsidiary has executed an Employee
Nondisclosure and Developments Agreement substantially in the form of Exhibit E
(collectively, the "Employee Nondisclosure and Developments Agreements"), and
such agreements are in full force and effect.
(d) No officer or key employee of BCC or any Subsidiary has
advised BCC or such Subsidiary (orally or in writing) that he or she intends to
terminate employment with BCC or such Subsidiary.
(e) BCC and each Subsidiary has complied in all material
respects with all applicable laws relating to the employment of labor,
including provisions relating to wages, hours, equal opportunity. collective
bargaining and the payment of Social Security and other taxes, and with the
Employee Retirement Income Security Act of 1974, as amended ("ER1SA").
(f) Set forth in Schedule 3.21 is a list of the names of the
officers of BCC, together with the title or job classification of each such
person and the total compensation paid to such person by BCC and/or its
Subsidiaries in 1995 and the total compensation anticipated to be paid to each
such person by in 1996.
3.22 Transactions With Affiliates. Except as set forth on Schedule
3.22. No director, officers, employee or stockholder of BCC or any Subsidiary,
or member of the family of any such person, or any corporation, partnership,
trust or other entity in which any such person, or any member of the family of
any such person, has a substantial interest or is an officer, director,
trustee, partner or holder of more than 5% of the outstanding capital stock
thereof, is a party to any transaction with BCC or any Subsidiary, including
any contract, agreement or other arrangement providing for the employment of,
furnishing of services by, rental of real or personal property from or
otherwise requiring payments to any such person or firm, other than
employment-at-will arrangements in the ordinary course of business.
3.23 Government Consent, etc. No consent, approval or authorization of
or designation, declaration or filing with any governmental authority on the
part of BCC is required
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in connection with the valid execution, delivery and performance of this
Agreement, the Registration Rights Agreement or the Stock Restriction
Agreement, or the offer, sale or issuance of the Purchased Shares or the Option
Shares, except such filings, qualifications or approvals (if necessary)
relating to the offer and sale of the Purchased Shares or the Option Shares
under applicable blue sky laws, which filings will have been made or which
qualifications or approvals will have been obtained prior to the closing with
respect to such shares.
3.24 Finder's Fee. Except as set forth on Schedule 3.24 BCC has not
retained any investment banker, broker, finder or similar agent in connection
with the transactions contemplated hereby. The total finder's fees, commissions
or similar expenses which will become due and payable by BCC as a result of
completing the transactions contemplated hereby will not exceed $250,000.
3.25 Disclosure. Neither this Agreement, nor any Schedule or Exhibit
to this Agreement, nor the Business Plan of BCC and attached hereto as Exhibit
F (the "Business Plan"), contains an untrue statement of a material fact or
omits a material fact necessary to make the statements contained herein or
therein not misleading. None of the statements, documents, certificates or
other items prepared or supplied by BCC with respect to the transactions
contemplated hereby contains an untrue statement of a material fact or omits a
material fact necessary to make the statements contained therein not
misleading. There is no fact which BCC has not disclosed to the Investors and
their counsel in writing and of which BCC is aware which materially and
adversely affects or could materially and adversely affect the business,
prospects, financial condition, operations, property or affairs of BCC or any
of its subsidiaries. The financial projections and other estimates contained in
the Business Plan were prepared by BCC based on BCC's experience in the
industry and on assumptions of fact and opinion as to future events which BCC,
at the date of the issuance of the Business Plan, believed to be reasonable,
but which BCC cannot and does not assure or guarantee the attainment of in any
manner. As of the date hereof no facts have come to the attention of BCC which
would, in its opinion, require BCC to revise or amplify the assumptions
underlying such projections and other estimates or the conclusions derived
therefrom.
3.26 Offering of the Purchased Shares. Neither BCC nor any person
authorized or employed by BCC as agent, broker, dealer or otherwise in
connection with the offering or sale of the Purchased Shares and Option Shares
or any security of BCC similar to the Purchased Shares and Option Shares has
offered the Purchased Shares and Option Shares or any such similar security for
sale to, or solicited any offer to buy the Purchased Shares and Option Shares
or any such similar security from, or otherwise approached or negotiated with
respect thereto with, any person or persons, and neither BCC nor any person
acting on its behalf has taken or will take any other action (including,
without limitation, any offer, issuance or sale of any security of BCC under
circumstances which might require the integration of such security with
Purchased Shares or Option Shares under the Securities Act or the rules and
regulations promulgated thereunder), in either case so as to subject the
offering, issuance or sale of the Purchased Shares or Option Shares to the
registration provisions of the Securities Act.
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3.27 No Violation. In reliance in part on the representations in
Section 2 made by the Investors, the offer, sale and issuance of the Purchased
Shares in conformity with the terms of this Agreement will not result in a
violation of Section 5 of the Securities Act or the registration requirements
of the securities laws of any state.
3.28 U.S. Real Property Holding Corporation. BCC is not now and has
never been a "United States real property holding corporation", as defined in
Section 897(c)(2) of the Code and Section 1.897-2(b) of the Regulations
promulgated by the Internal Revenue Service, and BCC has filed with the
Internal Revenue Service all statements, if any, with its United States income
tax returns which are required under Section 1.897-2(h) of such Regulations.
3.29 Environmental Protection. Neither BCC nor any Subsidiary has
caused or allowed, or contracted with any party for, the generation, use,
transportation, treatment, storage or disposal of any Hazardous Substances (as
defined below) in connection with the operation of its business or otherwise.
BCC and its Subsidiaries, the operation of its business, and any real property
that BCC or any Subsidiary owns, leases or otherwise occupies or uses (the
"Premises") are in compliance with all applicable Environmental Laws (as
defined below) and orders or directives of any governmental authorities having
jurisdiction under such Environmental Laws, including, without limitation, any
Environmental Laws or orders or directives with respect to any cleanup or
remediation of any release or threat of release of Hazardous Substances.
Neither BCC nor any Subsidiary has received any citation, directive, letter or
other communication, written or oral, or any notice of any proceeding, claim or
lawsuit, from any person arising out of the ownership or occupation of the
Premises, or the conduct of its operations, and neither BCC nor any Subsidiary
is aware of any basis therefor. BCC and each Subsidiary have obtained and are
maintaining in full force and effect all necessary permits, licenses and
approvals required by all Environmental Laws applicable to the Premises and the
business operations conducted thereon (including operations conducted by
tenants on the Premises), and is in compliance with all such permits, licenses
and approvals. Neither BCC nor any Subsidiary has caused or allowed a release,
or a threat of release, of any Hazardous Substance unto, at or near the
Premises, and, to the best of the BCC's knowledge, neither the Premises nor any
property at or near the Premises has ever been subject to a release, or a
threat of release, of any Hazardous Substance. For the purposes of this
Agreement, the term "Environmental Laws" shall mean any Federal, state or local
law or ordinance or regulation pertaining to the protection of human health or
the environment, including, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. Sections 9601, et seq., the
Emergency Planning and Community Right-to-Know Act, 42 U.S.C. Sections 11001,
et seq., and the Resource Conservation and Recovery Act, 42 U.S.C. Sections
6901, et seq. For purposes of this Agreement, the term "Hazardous Substances"
shall include oil and petroleum products, asbestos, polychlorinated biphenyls,
urea formaldehyde and any other materials classified as hazardous or toxic
under any Environmental Laws.
3.30 ERISA Matters.
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(a) As used in this Section 3.30, the following terms shall
have the following meanings (such meanings to be equally applicable to both the
singular and plural forms of the terms defined):
(i) "Benefit Arrangement" means each employment,
severance or other similar contract, arrangement or policy (written or
oral) and each plan or arrangement (written or oral) providing for
severance benefits, insurance coverage (including any self-insured
arrangements), workers' compensation, disability benefits,
supplemental unemployment benefits, vacation benefits, retirement
benefits or for deferred compensation, profit-sharing, bonuses, stock
options, stock appreciation rights or other forms of incentive
compensation or post-retirement insurance, compensation or benefits
which (i) is not an Employee Plan and (ii) covers any employee or
former employee of BCC.
(ii) ""Employee Plan" means each "employee benefit
plan," as such term is defined in Section 3(3) of ERISA, that (A)(i)
is subject to any provision of ERISA and (ii) is maintained or
contributed to by BCC, or (B)(i) is subject to any provision of Title
IV of ER1SA and (ii) is maintained or contributed to by any of BCC's
ERISA Affiliates.
(iii) "EBONY" means the Employee Retirement Income
Security Act of 1974, as amended.
(iv) "ERISA Affiliate" of any entity means any other
entity that, together with such entity, would be treated as a single
employer under Section 414 of the Code.
(v) "Multiemployer Plan" means each Employee Plan
that is a multiemployer plan, as defined in Section 3(37) of ERISA.
(b) Schedule 3.30 lists each Employee Plan that covers any
employee of BCC or any Subsidiary, copies or descriptions of all of which have
previously been made available or furnished to the Investors. With respect to
each Employee Plan, the BCC has provided the most recently filed Form 5500 and
an accurate summary description of such plan. BCC has provided the Investors
with complete age, salary, service and related data as of the most recent
practicable date for officers and directors of BCC whose total per annum
compensation is $75,000 or more.
(c) Schedule 3.30 also includes a list of each Benefit
Arrangement of BCC and its Subsidiaries, copies or descriptions of all of which
have been made available or furnished previously to the Investors.
(d) No Employee Plan is a Multiemployer Plan and no Employee
Plan is subject to Title IV of ERISA. BCC and its Affiliates have not incurred
any liability under Title IV of ERISA arising in connection with the
termination of any plan covered or previously covered by Title IV of ERISA.
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(e) None of the Employee Plans or other arrangements listed
on Schedule 3.30 covers any non-United States employee or former employee of
BCC or any Subsidiary.
(f) No "prohibited transaction," as defined in Section 406 of
ERISA or Section 4975 of the Code, has occurred with respect to any Employee
Plan.
(g) Each Employee Plan which is intended to be qualified
under Section 401(a) of the Code is so qualified and has been so qualified
during the period from its adoption to date, and each trust forming a part
thereof is exempt from tax pursuant to Section 501(a) of the Code. BCC has
furnished to the Investors copies of the most recent Internal Revenue Service
determination letters with respect to each such plan. Each Employee Plan has
been maintained in compliance with its terms and with the requirements
prescribed by any and all statutes, orders, rules and regulations, including
but not limited to ERISA and the Code, which are applicable to such plan.
(h) Each Employee Plan and each Benefit Arrangement has been
maintained in substantial compliance with its terms and with the requirements
prescribed by any and all statutes, orders, rules and regulations which are
applicable to such Employee Plan and Benefit Arrangement.
(i) All contributions and payments accrued under each
Employee Plan and Benefit Arrangement, determined in accordance with prior
funding and accrual practices, as adjusted to include proportional accruals for
the period ending on the Closing Date, will be discharged and paid on or prior
to the Closing Date except to the extent reflected on the Balance Sheet. Except
as disclosed in writing to the Investors prior to the date hereof, there has
been no amendment to, written interpretation of or announcement (whether or not
written) by BCC or any of its ERISA Affiliates relating to, or change in
employee participation or coverage under, any Employee Plan or Benefit
Arrangement that would increase materially the expense of maintaining such
Employee Plan or Benefit Arrangement above the level of the expense incurred in
respect thereof for the fiscal year ended prior to the date hereof.
(j) There is no contract, agreement, plan or arrangement
covering any employee or former employee of BCC or any Subsidiary that,
individually or collectively, could give rise to the payment of any amount that
would not be deductible pursuant to the terms of Section 280G of the Code.
(k) No tax under Section 4980B of the Code has been incurred
in respect of any Employee Plan that is a group health plan, as defined in
Section 5000(b)(1) of the Code.
(l) With respect to the employees and former employees of BCC
and its Subsidiaries, there are no employee post-retirement medical or health
plans in effect, except as required by Section 4980B of the Code.
(m) No employee of BCC or any Subsidiary will become entitled
to any bonus, retirement, severance or similar benefit or enhanced benefit
solely as a result of the transactions contemplated hereby.
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(n) BCC and its Subsidiaries do not have, nor are they
reasonably expected to have, any liability under Title IV of ERISA.
3.31 Fraud and Abuse. Neither BCC, any Subsidiary, nor to BCC's
knowledge, any affiliate or any of their respective partners, officers and
directors, or any person who provides professional services under agreements
with BCC, any Subsidiary or any affiliate has engaged in any activities which
are prohibited under federal Medicare or Medicaid statutes, 42 U.S.C. Sections
1320a-7, 1320-7(a) and 1320a-7b, the federal CHAMPUS statute, or the regulations
promulgated pursuant to such statutes or related state or local statutes or
regulations or which are prohibited by rules of professional conduct, including
but not limited to the following:
(a) knowingly and willfully making or causing to be made a
false statement or representation of a material fact in any application for any
benefit or payment;
(b) knowingly and willfully making or causing to be made any
false statement or representation of a material fact for use in determining
rights to any benefit or payment;
(c) presenting or causing to be presented a claim for
reimbursement for services under Medicare, Medicaid, CHAMPUS or other state
health care program that is for an item or service that is known or should be
known not be (i) not provided as claimed, or (ii) false or fraudulent;
(d) failing to disclose knowledge by a claimant of the
occurrence of any event affecting the initial or continued right to any benefit
or payment on its own behalf or on behalf of another, with intent to
fraudulently secure such benefit or payment;
(e) knowingly and willfully offering, paying, soliciting or
receiving any remuneration (including any kickback, bribe, or rebate), directly
or indirectly, overtly or covertly, in cash or in kind (i) in return for
referring an individual to a person for the furnishing or arranging for the
furnishing of any item or service for which payment may be made in whole or in
part by CHAMPUS, Medicare or Medicaid, or other state health care program, or
(ii) in return for purchasing, leasing or ordering or arranging for or
recommending purchasing, leasing, or ordering any good, facility, service or
item for which payment may be made in whole or in part by CHAMPUS, Medicare or
Medicaid or other state health care program; or
(f) knowingly and willfully making or causing to be made or
inducing or seeking to induce the making of any false statement or
representation (or omit to state a fact required to be stated therein or
necessary to make the statements contained therein not misleading) of a
material fact with respect to (i) the conditions or operations of a facility in
order that the facility may qualify for CHAMPUS, Medicare, Medicaid or other
state healthcare program certification, or (ii) information required to be
provided under Section 1124A of the Social Security Act (42 U.S.C.
Section 1320a-3).
3.32 Health Professional's Financial Relationships. The operations of
BCC and the Subsidiaries are in compliance with and do not otherwise violate the
federal Medicare and Medicaid statutes regarding health professional
self-referrals, 42 U.S.C. Section 1395nn and 42 U.S.C Section 1396b, or the
regulations promulgated pursuant to such statute, or similar state or local
statutes or regulations.
3.33 Third Party Payor and Customer Contracts. Except as set forth in
Schedule 3.9 hereto, neither BCC nor any Subsidiary has, since the date of the
Balance Sheet, lost, or been notified by any representative of a third party
payor or other customer that it will lose or suffer diminution in its
relationship with any such third party payor or customer either as a result of
the transactions contemplated by this Agreement or otherwise.
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3.34 Foreign Corrupt Practices Act. Neither BCC nor any Subsidiary has
taken any action which would cause it to be in violation of the Foreign Corrupt
Practices Act of 1977, as amended, or any rules and regulations thereunder. To
the best of BCC's knowledge after due inquiry, there is not now and there has
never been, any employment by BCC or any Subsidiary of, or beneficial ownership
in BCC or any Subsidiary by, any governmental or political official in any
country in the world.
SECTION 4 COVENANTS OF BCC.
4.1 Use of Proceeds. BCC covenants that it will use the proceeds
(after deduction of reasonable and necessary expenses) from the sale of the
Purchased Shares and, if applicable, the Option Shares to the Investors to
satisfy working capital needs of BCC and for general corporate purposes,
including acquisitions, joint ventures and capital expenditures, all in
accordance with the Operating Budget, as approved and ratified by the Board of
Directors of BCC on or after the date hereof.
4.2 Annual and Monthly Financial Statements. BCC shall deliver to each
Investor the following:
(a) within ninety (90) days after the end of each fiscal year
of BCC, an audited consolidated balance sheet, profit or loss statement and
statement of cash flows for such fiscal year completed prepared in accordance
with generally accepted accounting principles, consistently applied, and
setting forth in each case in comparative form the figures from the previous
fiscal year, certified by KPMG Peat Marwick LLP or another nationally
recognized firm of independent accountants selected by the Board of Directors
of BCC;
(b) within thirty (30) days after the end of each month,
internally prepared unaudited consolidated financial statements which shall
include a profit or loss statement, a balance sheet, and a statement of cash
flows for the previous month prepared in accordance with generally accepted
accounting principles consistently applied (provided that such financial
statements need not include year end audit adjustments or notes) and certified
by the chief financial officer of BCC, in each case with comparative figures
from the prior fiscal year and from the budgeted figures for the corresponding
period;
(c) at the time of delivery of each annual financial
statement pursuant to Section 5.01(a), a certificate executed by the Chief
Financial Officer of BCC stating that such officer has caused this Agreement
and the terms of the Series B Stock to be reviewed and has no knowledge of any
default by BCC in the performance or observance of any of the provisions of
this Agreement or the terms of the Series B Stock or, if such officer has such
knowledge, specifying such default and the nature thereof;
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(d) at the time of delivery of annual and monthly financial
statements pursuant to Sections 5.01(a) and (b), a certificate executed by the
Chief Financial Officer of BCC stating that such officer has caused each loan
agreement with Meditrust Mortgage Investments Inc. to which BCC or any
subsidiary is a party to be reviewed and has no knowledge of any breach or
default (or any condition which would constitute a default thereunder) by BCC
or any subsidiary under such agreements or, if such officer has such knowledge,
specifying such breach or default and the nature thereof provided, that BCC's
obligation hereunder may be satisfied by delivery to the Investors of copies of
annual and monthly statements delivered to Meditrust pursuant to such loan
agreements;
(e) at the time of delivery of each monthly statement
pursuant to Section 5.01(b), a management narrative report explaining all
significant variances from forecasts and all significant current developments
in staffing, marketing, sales and operations;
(f) at the time of delivery of each monthly statement
pursuant to Section 5.01(b), a report of census information for each facility
operated by BCC showing total bed capacity, current bed occupancy and
year-to-date bed occupancy as a percentage of total bed capacity, and such
other census information as is reasonably requested by such Investor;
(g) no later than sixty (60) days prior to the start of each
fiscal year, consolidated capital and operating expense budgets, cash flow
projections and income and loss projections for BCC and its subsidiaries in
respect of such fiscal year, all itemized in reasonable detail and prepared on
a monthly basis, and, promptly after preparation, any revisions to any of the
foregoing;
(h) promptly following receipt by BCC, each audit response
letter, accountant's management letter and other written report submitted to
BCC by its independent public accountants in connection with an annual or
interim audit of the books of BCC or any of its subsidiaries;
(i) promptly after the commencement thereof, notice of all
actions, suits, claims, proceedings, investigations and inquiries of the type
described in Section 2.07 that could materially adversely affect BCC or any of
its subsidiaries;
(j) promptly upon sending, making available or filing the
same, all press releases, reports and financial statements that BCC sends or
makes available to its stockholders or directors; and
(k) promptly, from time to time, such other information
regarding the business, prospects, financial condition, operations, property or
affairs of BCC and its subsidiaries as such Investor reasonably may request.
4.3 Inspection Rights. Each Investor shall have the right, as may be
requested by any Investor at reasonable times upon reasonable notice, to
examine BCC's or any subsidiary's books and records and take copies and
extracts therefrom and to discuss BCC's or any Subsidiary's affairs, finances
and accounts with its officers, employees and public accountants; provided,
however, that neither BCC nor any subsidiary shall be obligated to provide to
any Investor any information that it considers to be a trade secret or to
contain confidential information unless said Investor has entered into an
appropriate confidentiality agreement.
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4.4 Prompt Payment of Taxes. BCC shall promptly pay and discharge, or
cause to be paid and discharged, prior to the earliest date on which any
penalty or interest is incurred or begins to accrue, all lawful taxes,
assessments and governmental charges or levies imposed upon any of its income,
profits, property or business; provided, however, that any such tax,
assessment, charge or levy need not be paid if the validity thereof shall
currently be contested in good faith by appropriate proceedings and if BCC
shall have set aside on its books adequate reserves, with respect thereto; and
provided, further that BCC shall pay all such taxes, assessments, charges or
levies forthwith upon the commencement of proceedings to foreclose any lien
which may have attached as security therefor or with respect thereto.
4.5 Accounts and Reports. BCC shall keep true records and books of
account in which full and correct entries shall be made of all dealings or
transactions in relation to its business and affairs in accordance with
generally accepted accounting principles consistently applied.
4.6 Corporate Existence. BCC shall maintain, and except as permitted
by Section 4.24 cause any subsidiary to maintain, its valid corporate existence
and good standing under the laws of the jurisdiction of its incorporation.
4.7 Maintenance of Properties; Employees. BCC and each subsidiary
shall maintain all of its properties used or useful in any material respect in
the conduct of its business in good repair, working order and condition,
ordinary wear and tear excepted, as necessary to permit such business to be
properly and advantageously conducted. BCC shall pay all wages and salaries due
to its employees and agents within a reasonable time unless the Board of
Directors and such persons agree to defer such payments.
4.8 Insurance. BCC and its subsidiaries shall at all times carry
adequate insurance with financially sound and reputable insurers with respect
to all its properties and assets that are customarily insured by entities
engaged in the same or similar business similarly situated, against loss or
damage of the kinds customarily insured by such entities, which insurance shall
be of such types (including public liability) and product liability insurance
and will provide the levels of coverage as are customarily carried under
similar circumstances by such entities. Such insurance shall be sufficient in
amount to allow BCC and its subsidiaries to replace any of its properties or
assets that might be damaged or destroyed without creating a material adverse
effect on BCC or its operations.
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4.9 Key Man Insurance. BCC shall have obtained, prior to or within 30
days of the Closing, a policy of key man life insurance on the life of Xxxx X.
Xxxxxxxxx (so long as he remains an employee of BCC), in the amount of at least
$5,000,000 with BCC being named beneficiary on said policy. BCC shall not cause
or permit any assignment or change in beneficiary and shall not borrow against
any such policy. If requested by Investors holding at least a majority of the
outstanding Purchased Shares, BCC will add one designee of such Investors as a
notice party for each such policy and shall request that the issuer of each
policy provide such designee with ten (10) days' notice before such policy is
terminated (for failure to pay premiums or otherwise) or assigned or before any
change is made in the beneficiary thereof.
4.10 Government Consents and Licenses. BCC shall obtain and/or
maintain all necessary and appropriate Permits, governmental consents and
licenses in connection with the operation of its business and ownership or
possession of its assets.
4.11 Loans to Employees. BCC shall not lend money or extend credit to
any of its employees other than in the ordinary course of business (it being
acknowledged that BCC has heretofore made certain loans to one or more
employees in connection with the purchase of a new principal residence
following the employee's relocation).
4.12 Conflicts of Interest. BCC shall use its best efforts to ensure
that its employees do not engage in activities in conflict of interest with BCC
during the terms of their employment, without the prior consent of a majority
of the Board of Directors of BCC.
4.13 Shareholder Listing and Ownership. BCC shall deliver to the
investors within 30 days after the end of each fiscal year of BCC, a complete
listing of its shareholders by class and share ownership as of the end of the
fiscal year.
4.14 Reserve for Conversion Shares. BCC shall at all times reserve and
keep available out of its authorized but unissued shares of Common Stock, for
the purpose of effecting the conversion of the Purchased Shares and any Option
Shares otherwise complying with the terms of this Agreement, such number of its
duly authorized shares of Common Stock as shall be sufficient to effect the
conversion of the Purchased Shares and any Option Shares from time to time
outstanding or otherwise to comply with the terms of this Agreement. If at any
time the number of authorized but unissued shares of Common Stock shall not be
sufficient to effect the conversion of the Purchased Shares and any Option
Shares or otherwise to comply with the terms of this Agreement, BCC will
forthwith take such corporate action as may be necessary to increase its
authorized but unissued shares of Common Stock to such number of shares as
shall be sufficient for such purposes. BCC will obtain any authorization,
consent, approval or other action by or make any filing with any court or
administrative body that may be required under applicable state securities laws
in connection with the issuance of shares of Common Stock upon conversion of
the Purchased Shares and any Option Shares.
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4.15 Restrictive Agreements Prohibited. Neither BCC nor any of its
subsidiaries shall become a party to any agreement which by its terms restricts
BCC's performance of this Agreement, the Registration Rights Agreement, the
Stock Restriction Agreement or the Charter.
4.16 Transactions with Affiliates. Except for transactions
contemplated by this Agreement or as otherwise approved by the Board of
Directors, neither BCC nor any of its subsidiaries shall enter into any
transaction with any director, officer, employee or holder of more than 5% of
the outstanding capital stock of any class or series of capital stock of BCC or
any of its subsidiaries, member of the family of any such person, or any
corporation, partnership, trust or other entity in which any such person, or
member of the family of any such person, is a director, officer, trustee,
partner or holder of more than 5% of the outstanding capital stock thereof,
except for transactions on customary terms related to such person's employment.
4.17 Expenses of Directors. BCC shall promptly reimburse in full, each
director of BCC who is not an employee of BCC and who was elected as a director
solely or in part by the holders of Series B Stock, for all of his reasonable
out-of-pocket expenses incurred in attending each meeting of the Board of
Directors of BCC or any Committee thereof.
4.18 Board of Directors Meetings. BCC shall use its best efforts to
ensure that meetings of its Board of Directors are held at least six times each
year and at least once each quarter. In addition to any member of the Board of
Directors elected solely by the holders of Series B Stock, for so long as the
Investors hold any of the Purchased Shares, Option Shares and/or Conversion
Shares, BCC shall permit the Investors to designate one representative to
attend each meeting of the Board of Directors of BCC and each meeting of any
Committee thereof and to participate in all discussions during each such
meeting. BCC shall send to each such Investor and designee the notice of the
time and place of such meeting in the same manner and at the same time as it
shall send such notice to its directors or committee members, as the case may
be. BCC shall also provide to such designee copies of all notices, reports,
minutes and consents at the time and in the manner as they are provided to the
Board of Directors or committee, except for information reasonably designated
as proprietary information by the Board of Directors.
4.19 Compensation Arrangements.
(a) Any employment agreements between BCC and any officer
thereof shall be submitted to the Compensation Committee of the Board of
Directors (the "Compensation Committee") for its review and, in the event the
Compensation Committee recommends modifications to any such agreements, BCC
shall use its best efforts to enter into an amendment to such agreement with
the officer effecting such modifications.
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(b) BCC shall not (i) put into place any company-wide stock
option or other equity compensation plan without the prior approval of the
Compensation Committee, and any existing plan shall be subject to review and
modification by the Compensation Committee or (ii) issue any stock options or
other equity compensation to any person being hired to serve or serving as an
officer or director of BCC without the prior review and approval of the form of
agreement effecting such option grant by the Compensation Committee.
(c) BCC shall not pay to officers and directors whose total
per annum compensation is $75,000 or more compensation in excess of that
compensation customarily paid to management in companies of similar size, of
similar maturity, and in similar businesses without the unanimous written
consent of those members of BCC's Board of Directors elected solely by the
holders of Series B Stock.
4.20 By-laws. BCC shall at all times cause its By-laws to provide
that, (a) unless otherwise required by the laws of the State of Delaware BCC
shall be required to call a meeting of the Board of Directors or stockholders
upon the joint written request of a director elected solely by the holders of
Series B Stock and a director elected other than solely by the holders of
Series B Stock and (b) the number of directors fixed in accordance therewith
shall in no event conflict with any of the terms or provisions of the Series B
Stock as set forth in the Charter. BCC shall at all times maintain provisions
in its By-laws and/or Charter indemnifying all directors against liability and
absolving all directors from liability to BCC and its stockholders to the
maximum extent permitted under the laws of the State of Delaware.
4.21 Performance of Contracts. BCC shall not amend, modify, terminate,
waive or otherwise alter, in whole or in part, any of the Employee
Nondisclosure and Developments Agreements or the Non-Competition Agreements
without the unanimous written consent of those members of BCC's Board of
Directors elected solely by the holders of Series B Stock.
4.22 Vesting of Reserved Employee Shares. BCC shall not grant to any
of its employees options to purchase shares of BCC's capital stock which will
become exercisable at a rate in excess of 25% per annum from the date of such
grant without the unanimous written consent of those members of BCC's Board of
Directors elected solely by the holders of Series B Stock.
4.23 Employee Nondisclosure and Developments Agreements. BCC shall use
its best efforts to obtain, and shall cause its subsidiaries to use their best
efforts to obtain, an Employee Nondisclosure and Developments Agreement in
substantially the form of Exhibit E from all future officers, key employees and
other employees who will have access to confidential information of BCC or any
of its subsidiaries, upon their employment by BCC or any of its subsidiaries.
4.24 Activities of Subsidiaries. BCC shall not permit any subsidiary
to consolidate or merge into or with or sell or transfer all or substantially
all its assets, except that any subsidiary may (i) consolidate or merge into or
with or sell or transfer assets to any other subsidiary, or (ii) merge into or
sell or transfer assets to BCC. BCC shall not sell or otherwise transfer any
shares of capital stock of any subsidiary, except to BCC or another subsidiary,
or permit any subsidiary to issue, sell or otherwise transfer any shares of its
capital stock or the capital stock of any subsidiary, except to BCC or another
subsidiary. BCC shall not permit any subsidiary to purchase or set aside any
sums for the purchase of, or pay any dividend or make any distribution on, any
shares of its stock, except for dividends or other distributions payable to BCC
or another subsidiary.
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4.25 Compliance with Laws. BCC shall comply, and cause each subsidiary
to comply, with all applicable laws, rules, regulations and orders,
noncompliance with which could materially adversely affect its business or
condition, financial or otherwise, including without limitation Medicare and
Medicaid statutes, the federal CHAMPUS statute, related state and local
statutes and all regulations promulgated thereunder as well as applicable rules
of professional conduct.
4.26 Keeping of Records and Books of Account. BCC shall keep, and
cause each subsidiary to keep, adequate records and books of account, in which
complete entries will be made in accordance with generally accepted accounting
principles consistently applied, reflecting all financial transactions of BCC
and such subsidiary, and in which, for each fiscal year, all proper reserves
for depreciation, depletion, obsolescence, amortization, taxes, bad debts and
other purposes in connection with its business shall be made.
4.27 Change in Nature of Business. BCC shall not make, or permit any
subsidiary to make, any material change in the nature of its business as set
forth in the Business Plan.
4.28 U.S. Real Property Interest Statement.
(a) BCC shall use its best efforts to avoid becoming a "U.S.
Real Property Holding Company" within the meaning of Section 897(c)(1)(B) and
897(c)(2) of the Code and Treasury Regulations 1.897-2(b)("U.S. Real Property
Holding Company").
(b) Notwithstanding the above, should BCC determine that it
has become a U.S. Real Property Holding Company, it shall provide prompt
written notice to each Investor following any "determination date" (as defined
in Treasury Regulation Section 1.897-2(c)(i)) on which BCC becomes a United
Senates Real Property Holding Company. In addition, upon a written request by
any Investor, BCC shall provide such Investor with a written statement
informing the Investor whether such Investor's interest in BCC constitutes a
U.S. real property interest. BCC's determination shall comply with the
requirements of Treasury Regulation Section 1.897-2(h)(1) or any successor
regulation, and BCC shall provide timely notice to the Internal Revenue
Service, in accordance with and to the extent required by Treasury Regulation
Section 1.897-2(h)(2) or any successor regulation, that such statement has been
made. BCC's written statement to any Investor shall be delivered to such
Investor within ten (10) days of such Investor's written request therefor.
BCC's obligation to furnish a written statement pursuant to this Section 4.29
shall continue notwithstanding the fact that a class of BCC's stock may be
regularly traded on an established securities market.
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4.29 Rule 144A Information. BCC shall, at all times during which it is
neither subject to the reporting requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), nor exempt
from reporting pursuant to Rule 12g3-2(b) under the Exchange Act, provide in
writing, upon the written request of any Investor or a prospective buyer of
Purchased Shares, Option Shares or Conversion Shares from any Investor, all
information required by Rule 144A(d)(4)(i) of the General Regulations
promulgated by the Commission under the Securities Act ("Rule l 44A
Information"). BCC also shall, upon the written request of any Investor,
cooperate with and assist such Investor or any member of the National
Association of Securities Dealers, Inc. PORTAL system in applying to designate
and thereafter maintain the eligibility of the Purchased Shares or Conversion
Shares, as the case may be, for trading through PORTAL. BCC's obligations under
this Section 4.29 shall at all times be contingent upon the relevant Investor's
obtaining from the prospective buyer of Purchased Shares, Option Shares or
Conversion Shares a written agreement to take all reasonable precautions to
safeguard the Rule 144A Information from disclosure to anyone other than a
person who will assist such buyer in evaluating the purchase of any Purchased
Shares, Option Shares or Conversion Shares.
4.30 Compensation and Audit Committees. BCC shall, by amending its
By-laws or otherwise, establish and maintain a Compensation Committee and an
Audit Committee of the Board of Directors, each of which shall consist of three
(3) directors, one of whom (on each Committee) shall be a director elected
solely by the holders of Series B Stock.
4.31 Termination of Covenants. The provisions of this Section 4 shall
terminate upon the closing of a firmly underwritten public offering of shares
of BCC's Common Stock, registered under the Securities Act, at an offering
price of at least $8.00 per share (which price shall be adjusted appropriately
in the event of stock splits, combinations and the like) and aggregate net
proceeds to BCC of at least $25,000,000 (such event being referred to herein as
the "Public Offering").
SECTION 5 CONDITIONS TO CLOSING.
5.1 Conditions Precedent to Obligations of Investors. The obligation
of the Investors to proceed with any Closing or any Option Closing under this
Agreement is subject to the fulfillment prior to or at the time of such Closing
or Option Closing of the following conditions with respect to BCC, any one or
more of which may be waived in whole or in part by the participating Investors
at such Investors' sole option:
(a) Each of the representations and warranties of BCC
contained in this Agreement shall be true and correct in all material respects
(disregarding all qualifications and exceptions contained in any representation
or warranty relating to materiality) on and as of the Closing Date or Option
Closing Date, with the same force and effect as though such representations and
warranties had been made on, as of and with reference to such Closing or Option
Closing and the President and the Chief Financial Officer BCC shall have
certified to such effect to the Investors in writing provided that BCC shall be
permitted to amend in writing any schedule to this Agreement prior to any
Closing or Option Closing. BCC shall have performed in all respects all of the
covenants and complied with all of the provisions required by this Agreement to
be performed or complied with by BCC at or before the Closing or Option Closing
and the President and the Chief Financial Officer of BCC shall have certified
to the Investors in writing to such effect and to the effect that all of the
conditions set forth in this Section 5 have been satisfied.
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(b) No order of any court or any administrative agency shall
be in effect that restrains or prohibits the transactions contemplated hereby
or that would limit or adversely affect the Investors' ownership of the Series
B Stock of BCC, and there has not been any threatened, nor shall there be
pending, any action or proceeding by or before any governmental body
challenging the lawfulness of or seeking to prevent or delay any of the
transactions contemplated by this Agreement.
(c) Between the date hereof and the Closing or Option
Closing, there shall have been no material adverse change, regardless of
insurance coverage therefor, in the assets, results of operations, liabilities,
prospects or conditions, financially or otherwise of BCC.
(d) Counsel to BCC shall deliver at each Closing or Option
Closing a legal opinion substantially in the form set forth in Exhibit H
hereto.
(e) [Reserved]
(f) Supporting Documents. The Investors and their counsel
shall have received copies of the following documents:
(i) (A) the Charter, certified as of a recent date
by the Secretary of State of the State of Delaware, (B) a certificate
of said Secretary dated as of a recent date as to the due
incorporation and good standing of BCC, the payment of all excise
taxes by BCC and listing all documents of BCC on file with said
Secretary, (C) a certificate of the Secretary of State of the
jurisdiction of incorporation of each of the Subsidiaries dated as of
a recent date as to the due incorporation and good standing of such
Subsidiary, and (D) a certificate of the Secretary of State of each
jurisdiction in which BCC and each Subsidiary is qualified to do
business dated as of a recent date as to the good standing of BCC and
each Subsidiary;
(ii) a certificate of the Secretary or an Assistant
Secretary of BCC dated the Closing Date or Option Closing Date and
certifying: (A) that attached thereto is a true and complete copy of
the By-laws of BCC as in effect on the date of such certification; (B)
that attached thereto is a true and complete copy of all resolutions
adopted by the Board of Directors or the stockholders of BCC
authorizing the execution, delivery and performance of this Agreement,
the Registration Rights Agreement, the Stock Restriction Agreement,
the issuance, sale and delivery of the Purchased Shares and the
reservation, issuance and delivery of the Conversion Shares, and that
all such resolutions are in full force and effect and are all the
resolutions adopted in connection with the transactions contemplated
by this Agreement and the Registration Rights Agreement, the Stock
Restriction Agreement; (C) that the Charter has not been amended since
the date of the last amendment referred to in the certificate
delivered pursuant to clause (i)(B) above; and (D) to the incumbency
and specimen signature of each officer of BCC executing this
Agreement, the Registration Rights Agreement, the Stock Restriction
Agreement, the stock certificates representing the Purchased Shares
and any certificate or instrument furnished pursuant hereto, and a
certification by another officer of BCC as to
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the incumbency and signature of the officer signing the certificate
referred to in this clause (ii); and
(iii) such additional supporting documents and other
information with respect to the operations and affairs of BCC as the
Investors or their counsel reasonably may request.
(i) Purchase by Other Investors. Prior to each Closing or the
Option Closing, each Investor shall have purchased and paid for the Purchased
Shares being purchased by it on the Closing Date or Option Closing Date, and
the aggregate purchase price paid by all of the Investors for the Purchased
Shares being purchased by them on each Closing Date and Option Closing Date
shall be as set forth on Schedule 1.3 hereto.
(j) Other Agreements. The Registration Rights Agreement and
the Stock Restriction Agreement shall have been executed and delivered by BCC
and each of the parties named therein.
(k) Non-Competition Agreements. Each of the following persons
shall have entered into a Non-Competition Agreement with BCC in the form
attached as Exhibit F (collectively, the "Non-Competition Agreements"), and
copies thereof shall have been delivered to counsel for the Investors: Xxxx X.
Xxxxxxxxx, Xxxxxx Xxxxxx, Xxxxx Xxxxx, Xxxxx Xxxxx and Xxxxxxx DiGillio.
(1) Charter. The Charter shall read in its entirety as set
forth in Exhibit A.
(m) Employee Agreements. BCC's By-laws shall have been
amended, if necessary in accordance with the provisions of Section 4.20.
(n) Employee Agreements. Copies of the Employee Nondisclosure
and Developments Agreements shall have been delivered to counsel for the
Investors.
(o) [Reserved].
(p) Election of Directors. The number of directors
constituting the entire Board of Directors shall have been fixed at 7 and the
following persons shall have been elected as the directors and shall each hold
such position as of the First Closing Date: Xxxxx Xxxxxxxxx (as the director
elected solely by the holders of the Series B Stock) and Xxxx Xxxxxxxxx, Xxxx
Xxxxxxx, Xxx Xxxxxx, Xxxxxx Xxxxxx and Xxxxx Xxx Xxxxxx (as the directors
elected other than solely by the holders of the Series B Stock).
(q) Preemptive Rights. All stockholders of BCC having any
preemptive, first refusal or other rights with respect to the issuance of the
Purchased Shares, the Option Shares or the Conversion Shares shall have
irrevocably waived the same in writing.
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(r) Termination of Shareholder's Agreement. The Shareholders'
Agreement by and among BCC and the Shareholders (as defined therein) dated as
of September 20, 1995 shall have been terminated and be of no further force and
effect.
(s) Fees of Investors' Counsel. BCC shall have paid in
accordance with Section 7.13 the fees and disbursements of Investors' counsel
invoiced at the Closing.
All such documents shall be satisfactory in form and substance to the Investors
and their counsel.
5.2 Conditions Precedent to Obligations of BCC. The obligation of BCC
to proceed with any Closing or any Option Closing under this Agreement is
subject to the fulfillment prior to or at the time of any Closing or any Option
Closing of the following conditions with respect to the Investors, any one or
more of which may be waived in whole or in part by BCC at BCC's sole option:
(a) Each of the representations of the investors contained in
this Agreement shall be true and correct in all material respects on or as of
the Closing Date or Option Closing Date, with the same force and effect as
though such representations had been made on, as of and with reference to such
date.
(b) No order of any court or any administrative agency shall
be in effect that restrains or prohibits the transaction contemplated hereby,
and there has not been any threatened, nor shall there be pending, any action
or proceeding by or before any governmental body challenging the lawfulness of
or seeking to prevent or delay any of the transactions contemplated by this
Agreement.
(c) Each Investor shall have complied with all of its
obligations hereunder in all material respects.
(d) Preemptive Rights. All stockholders of BCC having any
preemptive, first refusal or other rights with respect to the issuance of the
Purchased Shares, the Option Shares or the Conversion Shares shall have
irrevocably waived the same in writing.
SECTION 6 RIGHT OF FIRST REFUSAL
6.1 Right of First Refusal. BCC shall, prior to any issuance by BCC of
any of its securities (other than debt securities with no equity feature),
offer to each Investor by written notice the right, for a period of thirty (30)
days, to purchase all of such securities for cash at an amount equal to the
price or other consideration for which such securities are to be issued;
provided, however, that the first offer rights of the Investors pursuant to
this Section 7.1 shall not apply to (i) securities issued (A) upon conversion
of any of the Purchased Shares or Option Shares, (B) as a stock dividend or
upon any subdivision of shares of Common Stock, provided that the securities
issued pursuant to such stock dividend or subdivision are limited to additional
shares of Common Stock, (C) pursuant to subscriptions, warrants, options,
convertible securities, or other rights which are listed in Schedule 3.2 as
being outstanding on the date of this
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36
Agreement, including without limitation warrants for the purchase of up to
1,006,490 shares of Common Stock issued prior to or after the date hereof to
Meditrust Mortgage Investments, Inc. (the "Meditrust Warrants") (D) solely in
consideration for the acquisition (whether by merger or otherwise) by BCC or
any of its subsidiaries of all or substantially all of the stock or assets of
any other entity, (E) pursuant to a firm commitment underwritten public
offering, (F) pursuant to the exercise of options to purchase Common Stock
granted to directors, officers, employees or consultants of BCC in connection
with their service to BCC, not to exceed in the aggregate 750,000 shares
(appropriately adjusted to reflect stock splits, stock dividends, combinations
of shares and the like with respect to the Common Stock) less the number of
shares (as so adjusted) issued pursuant to stock options outstanding on the
date of this Agreement and listed in Schedule 3.2 (the shares exempted by this
clause (F) being hereinafter referred to as the "Reserved Employee Shares"),
and (G) upon the exercise of any right which was not itself in violation of the
terms of this Section 6.1. BCC's written notice to the Investors shall describe
the securities proposed to be issued by BCC and specify the number, price and
payment terms. Each Investor may accept BCC's offer as to the full number of
securities offered to it or any lesser number, by written notice thereof given
by it to BCC prior to the expiration of the aforesaid thirty (30) day period,
in which event BCC shall promptly sell and such Investor shall buy, upon the
terms specified, the number of securities agreed to be purchased by such
Investor. Notwithstanding the foregoing, if the Investors agree, in the
aggregate, to purchase more than the full number of securities offered by BCC,
then each Investor accepting BCC's offer shall first be allocated the lesser of
(i) the number of securities which such Investor agreed to purchase and (ii)
the number of securities as is equal to the full number of securities offered
by BCC multiplied by a fraction, the numerator of which shall be the number of
shares of Common Stock held by such Investor as of the date of BCC's notice of
offer (treating such Investor, for the purpose of such calculation, as the
holder of the number of shares of Common Stock which would be issuable to such
Investor upon conversion, exercise or exchange of all securities (including but
not limited to the Purchased Shares and any Option Shares) held by such
Investor on the date such offer is made that are convertible, exercisable or
exchangeable into or for (whether directly or indirectly) shares of Common
Stock) and the denominator of which shall be the aggregate number of shares of
Common Stock (calculated as aforesaid) held on such date by all Investors who
accepted BCC's offer, and the balance of the securities (if any) offered by BCC
shall be allocated among the Investors accepting BCC's offer in proportion to
their relative equity ownership interests in BCC (calculated as aforesaid),
provided that no Investor shall be allocated more than the number of securities
which such Investor agreed to purchase and provided further that in cases
covered by this sentence all Investors shall be allocated among them the full
number of securities offered by BCC. BCC shall be free at any time prior to
ninety (90) days after the date of its notice of offer to the Investors, to
offer and sell to any third party or parties the number of such securities not
agreed by the Investors to be purchased by them, at a price and on payment
terms no less favorable to BCC than those specified in such notice of offer to
the Investors. However, if such third party sale or sales are not consummated
within such ninety (90) day period, BCC shall not sell such securities as shall
not have been purchased within such period without again complying with this
Section 6.1.
In the event that Meditrust (or any affiliate thereof) does not
purchase shares of Series B Stock pursuant to the Agreement, the Investors'
rights of first refusal in this Section 6 shall be
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37
subject to Meditrust's rights of first refusal contained in capital stock
purchase warrants for the purchase of up to 1,000,000 shares of BCC Common
Stock.
SECTION 7 MISCELLANEOUS.
7.1 Modification or Waiver. Except as otherwise provided herein, this
Agreement may be amended, modified or superseded and any of the terms,
covenants, representations or warranties hereof may be waived, but only by a
written instrument executed by BCC and holders of a majority of the shares of
the Series B Stock, or, in the case of a waiver, by the party waiving
compliance. The failure of a party at any time or times to require performance
of any provision hereof shall in no manner affect the right of such party at a
later time to enforce the same.
7.2 Notices. Whenever this Agreement requires or permits any consent,
approval, notice, request or demand from one Party to another, such consent,
approval notice, request or demand must be in writing to be effective and shall
be deemed to be delivered and received (i) if personally delivered or if
delivered by telex or telecopy with telephonic confirmation, when actually
received by the party to whom notice is sent, (ii) if delivered by mail
(whether actually received or not), at the close of business on the third
business day next following the day when placed in the United States mail,
postage prepaid, or (iii) if delivered by overnight mail the next business day
after mailing to the parties at the following addresses:
If to BCC, to:
Balanced Care Corporation
0000 Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxxxxxx. XX 00000
Attention: Xxxx X. Xxxxxxxxx, Chairman and CEO
Telecopier No.: 000 000-0000
with a copy to:
Xxxxxxxxxxx & Xxxxxxxx LLP
0000 Xxxxxx Xxxxxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxx X. Xxxxxx, Esq.
Telecopier No.: 000 000-0000
and if to an Investor to: at the address
set forth on Schedule l.l to this Agreement.
with a copy to:
Xxxxx XxXxxxx, Esq.
Xxxxx, Xxxxxxx & Xxxxxxxxx, LLP
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38
000 Xxxx Xxxxxx
Xxxxxx, XX 00000
Telecopier: 000 000-0000
A party may change the persons or addresses to which notices or other
communications are to be sent to it by giving written notice to the other
parties of any such change in the manner provided herein for giving notice.
7.3 Binding Effect and Assignment. This Agreement shall be binding
upon and inure to the benefit of the successors and assigns of the parties
hereto; provided, however, that no assignment of any rights or delegation of
any obligations provided for herein may be made by a party hereto without the
prior express written consent of the other parties hereto, which consent shall
not be unreasonably withheld.
7.4 Exhibits, Schedules and Entire Agreement. All Exhibits and
Schedules attached hereto and the documents and instruments referred to herein
or required to be delivered simultaneously herewith are expressly made a part
of this Agreement as fully as though completely set forth herein, and all
references to this Agreement herein or in any such Exhibits, Schedules,
documents or instruments shall be deemed to refer to and include all such
Exhibits, Schedules, documents and instruments. Unless otherwise specified
herein, all references to sections herein shall refer to the sections of this
Agreement. This Agreement, together with all such Exhibits, Schedules,
documents and instruments, contains the entire agreement between the parties
hereto with respect to the subject matter hereof, and there are no
representations, warranties covenants, conditions, understandings or agreements
other than those expressly set forth herein or therein.
7.5 Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws applicable to agreements made and to be performed
entirely within the State of Delaware.
7.6 Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed to be an original, but which together shall constitute
one and the same instrument.
7.7 Section Headings. The section headings contained in this Agreement
are inserted for convenience of reference only and shall not affect the meaning
or interpretation of this Agreement.
7.8 Survival of Agreement. All covenants, agreements, representations
and warranties made herein, the Registration Rights Agreement and the Stock
Restriction Agreement, or any certificate or instrument delivered to the
Investors pursuant to or in connection with this Agreement, the Registration
Rights Agreement and the Stock Restriction Agreement, shall survive the
execution and delivery of this Agreement, the Registration Rights Agreement and
the Stock Restriction Agreement, the issuance, sale and delivery of the
Purchased Shares, the Option Shares and the issuance and delivery of the
Conversion Shares, and all statements contained in
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39
any certificate or other instrument delivered by BCC hereunder or thereunder or
in connection herewith or therewith shall be deemed to constitute
representations and warranties made by BCC.
7.9 Brokerage. Each party hereto will indemnify and hold harmless the
others against and in respect of any claim for finders' fees, brokerage or
other commissions relative to this Agreement or to the transactions
contemplated hereby, based in any way on agreements, arrangements or
understandings made or claimed to have been made by such party with any third
party.
7.10 Parties in Interest. All representations, covenants and
agreements contained in this Agreement by or on behalf of any of the parties
hereto shall bind and inure to the benefit of the respective successors and
assigns of the parties hereto whether so expressed or not. Without limiting the
generality of the foregoing, all representations, covenants and agreements
benefiting the Investors shall inure to the benefit of any and all subsequent
holders from time to time of Purchased Shares, Option Shares or Conversion
Shares.
7.11 Severability. If any provision of this Agreement shall be
declared void or unenforceable by any judicial or administrative authority, the
validity of any other provision and of the entire Agreement shall not be
affected thereby.
7.12 Expense Reimbursement. Each party hereto will pay its own
expenses in connection with the transactions contemplated hereby, whether or
not consummated, provided that BCC shall pay the Investors up to $50,000, in
the aggregate, for their reasonable legal expenses associated with the sale of
the Purchased Shares upon the presentment of invoices for such expenses to BCC.
[Signature pages follow immediately.]
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40
IN WITNESS WHEREOF the parties hereto, intending to be legally bound
as set forth above, have executed this Series B Stock Purchase Agreement, or
have caused this Series B Stock Purchase Agreement to be executed, the day and
year first above written.
BALANCED CARE CORPORATION
By: /s/ Xxxx X. Xxxxxxxxx
-----------------------------------
XXXX X. XXXXXXXXX, Chairman and CEO
INVESTORS:
OMEGA VENTURES II, L.P.,
By: Omega Ventures II Management, L.L.C.
Its General Partner
By: /s/ Xxxxxxx X. Xxxxx
---------------------------------
Authorized Signatory
OMEGA VENTURES II CAYMAN, L.P.
By: Omega Ventures II Management, L.L.C.
Its Administrative General Partner
By: /s/ Xxxxxxx X. Xxxxx
---------------------------------
Authorized Signatory
CROSSOVER FUND II, L.P.
By: Crossover Investment Management, L.L.C.
Its General Partner
By: /s/ Xxxxxxx X. Xxxxx
---------------------------------
Authorized Signatory
CROSSOVER FUND IIA, L.P.
By: Crossover Investment Management, L.L.C.
Its General Partner
By: /s/ Xxxxxxx X. Xxxxx
---------------------------------
Authorized Signatory
41
BAYVIEW INVESTORS, LTD.
By: Xxxxxxxxx, Xxxxxxxx & Company
Private Equity Group, L.L.C.,
Its General Partner
By: /s/ Xxxxxxx X. Xxxxx
---------------------------------
Authorizing Signatory
XXXXX X. XXXXXXXXX AND XXXXX X.
XXXXXXXXX, TRUSTEES, XXXXXXXXX
FAMILY TRUST 3/29/85
By: /s/ Xxxxx X. Xxxxxxxxx
------------------------------------
XXXXX X. XXXXXXXXX, Trustee
By: /s/ Xxxxx X. Xxxxxxxxx
------------------------------------
XXXXX X. XXXXXXXXX, Trustee
BOSTON SAFE DEPOSIT AND TRUST
COMPANY AS TRUSTEE FOR U S WEST
PENSION TRUST
By: /s/ Xxxxx X. Xxxxxxxx
---------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Trust Officer
BOSTON SAFE DEPOSIT AND TRUST
COMPANY AS TRUSTEE FOR U S WEST
BENEFIT ASSURANCE TRUST
By: /s/ Xxxxx X. Xxxxxxxx
---------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Trust Officer
HCO PARTNERS IV-BCC
By: /s/ F. Xxxxx Xxxx
------------------------------------
F. XXXXX XXXX
Managing Partner
42
NOTICE TO PENNSYLVANIA RESIDENTS: Section 2.07(m) of the Pennsylvania
Securities Act (the "Pennsylvania Act") provides that, each person who accepts
an offer to purchase securities in Pennsylvania which is exempted from
registration under Section 2.03(d) of the Pennsylvania Act shall have the right
to withdraw acceptance and to receive a full refund of all moneys paid within
two business days after the date of receipt by BCC of his/her or its written
binding contract of purchase, or if there is no written binding contract of
purchase, within two business days after he/she or it makes the initial payment
for the shares. Such withdrawal will be without any further liability to any
person. An Investor who is a Pennsylvania resident may withdraw acceptance
within two business days of the applicable event by giving telephone, telegram
or letter notice of the Investor's intention to withdraw to BCC as designated
in Section 8.3 herein. Any telegram or letter should be sent or postmarked
prior to the end of the second business day. Any such letter should be sent by
certified mail, return receipt requested, to ensure its receipt and to evidence
the time of mailing. Any oral requests should include a request for written
confirmation. Any of the Investors below who are Pennsylvania residents
confirms by its signature below that it has been informed of its right pursuant
to Section 2.07(m) of the Pennsylvania Securities Act to withdraw its
subscription for shares within two business days after the date of receipt by
BCC of his/her or its written binding contract of purchase or if there is no
such contract, within two business days after he/she or it makes the initial
payment for the shares. Any Investor below who is a Pennsylvania resident,
also confirms by its signature below that it also hereby agrees that it will
not sell, transfer, exchange or otherwise dispose of its Purchased Shares or
any Option Shares, within twelve months after the date of purchase and also
agrees to the placement on the shares of a legend restricting transferability
of such shares.
JULIET CHALLENGER, INC.* *Delaware Resident not a Pennsylvania Resident
By: /s/ Xxxxxxx Xxxxxx
---------------------------
Name: Xxxxxxx Xxxxxx
Title: Vice President
XXXXX X. XXXXXXX, XXXXX XXXXXXXX
XXXXXXX AND X.X. XXXXXXXXXXXX,
TRUSTEES OF THE XXXXX X. XXXXXXX
TRUST U/A DATED NOVEMBER 18, 1985
By: X. X. Xxxxxxxxxxxx
----------------------------
Trustee:
43
NOTICE TO PENNSYLVANIA RESIDENTS: Section 2.07(m) of the Pennsylvania
Securities Act (the "Pennsylvania Act") provides that, each person who accepts
an offer to purchase securities in Pennsylvania which is exempted from
registration under Section 2.03(d) of the Pennsylvania Act shall have the right
to withdraw acceptance and to receive a full refund of all moneys paid within
two business days after the date of receipt by BCC of his/her or its written
binding contract of purchase, or if there is no written binding contract of
purchase, within two business days after he/she or it makes the initial payment
for the shares. Such withdrawal will be without any further liability to any
person. An Investor who is a Pennsylvania resident may withdraw acceptance
within two business days of the applicable event by giving telephone, telegram
or letter notice of the Investor's intention to withdraw to BCC as designated
in Section 8.3 herein. Any telegram or letter should be sent or postmarked
prior to the end of the second business day. Any such letter should be sent by
certified mail, return receipt requested, to ensure its receipt and to evidence
the time of mailing. Any oral requests should include a request for written
confirmation. Any of the Investors below who are Pennsylvania residents
confirms by its signature below that it has been informed of its right pursuant
to Section 2.07(m) of the Pennsylvania Securities Act to withdraw its
subscription for shares within two business days after the date of receipt by
BCC of his/her or its written binding contract of purchase or if there is no
such contract, within two business days after he/she or it makes the initial
payment for the shares. Any Investor below who is a Pennsylvania resident,
also confirms by its signature below that it also hereby agrees that it will
not sell, transfer, exchange or otherwise dispose of its Purchased Shares or
any Option Shares, within twelve months after the date of purchase and also
agrees to the placement on the shares of a legend restricting transferability
of such shares.
XXXXXX X. XXXXXX AND
X.X. XXXXXXXXXXXX, TRUSTEES UNDER
AGREEMENT OF TRUST DATED 12/30/76 FOR
THE CHILDREN OF JULIET XXX XXXXXXX
XXXXXXX
By: /s/ X.X. Xxxxxx
------------------------------
Trustee:
By: /S/ X.X. Xxxxxxxxxxxx
------------------------------
Trustee
44
NOTICE TO PENNSYLVANIA RESIDENTS: Section 2.07(m) of the Pennsylvania
Securities Act (the "Pennsylvania Act") provides that, each person who accepts
an offer to purchase securities in Pennsylvania which is exempted from
registration under Section 2.03(d) of the Pennsylvania Act shall have the right
to withdraw acceptance and to receive a full refund of all moneys paid within
two business days after the date of receipt by BCC of his/her or its written
binding contract of purchase, or if there is no written binding contract of
purchase, within two business days after he/she or it makes the initial payment
for the shares. Such withdrawal will be without any further liability to any
person. An Investor who is a Pennsylvania resident may withdraw acceptance
within two business days of the applicable event by giving telephone, telegram
or letter notice of the Investor's intention to withdraw to BCC as designated
in Section 8.3 herein. Any telegram or letter should be sent or postmarked
prior to the end of the second business day. Any such letter should be sent by
certified mail, return receipt requested, to ensure its receipt and to evidence
the time of mailing. Any oral requests should include a request for written
confirmation. Any of the Investors below who are Pennsylvania residents
confirms by its signature below that it has been informed of its right pursuant
to Section 2.07(m) of the Pennsylvania Securities Act to withdraw its
subscription for shares within two business days after the date of receipt by
BCC of his/her or its written binding contract of purchase or if there is no
such contract, within two business days after he/she or it makes the initial
payment for the shares. Any Investor below who is a Pennsylvania resident,
also confirms by its signature below that it also hereby agrees that it will
not sell, transfer, exchange or otherwise dispose of its Purchased Shares or
any Option Shares, within twelve months after the date of purchase and also
agrees to the placement on the shares of a legend restricting transferability
of such shares.
XXXXXX X. XXXXXX AND
X.X. XXXXXXXXXXXX, TRUSTEES UNDER
AGREEMENT OF TRUST DATED 12/30/76 FOR
THE CHILDREN OF XXXXXXX XXXXXXX
XXXXXXX
By: /s/ X. X. Xxxxxx
------------------------------
Trustee:
By: /s/ X. X. Xxxxxxxxxxxx
------------------------------
Trustee:
45
XXXXXX X. XXXXXX AND
X.X. XXXXXXXXXXXX, TRUSTEES UNDER
AGREEMENT OF TRUST DATED 12/30/76 FOR
THE CHILDREN OF XXXXX X. XXXXXXX, XX.
By: /s/ X. X. Xxxxxx
------------------------------
Trustee:
By: /s/ X. X. Xxxxxxxxxxxx
------------------------------
Trustee:
46
NOTICE TO PENNSYLVANIA RESIDENTS: Section 2.07(m) of the Pennsylvania
Securities Act (the "Pennsylvania Act") provides that, each person who accepts
an offer to purchase securities in Pennsylvania which is exempted from
registration under Section 2.03(d) of the Pennsylvania Act shall have the right
to withdraw acceptance and to receive a full refund of all moneys paid within
two business days after the date of receipt by BCC of his/her or its written
binding contract of purchase, or if there is no written binding contract of
purchase, within two business days after he/she or it makes the initial payment
for the shares. Such withdrawal will be without any further liability to any
person. An Investor who is a Pennsylvania resident may withdraw acceptance
within two business days of the applicable event by giving telephone, telegram
or letter notice of the Investor's intention to withdraw to BCC as designated
in Section 8.3 herein. Any telegram or letter should be sent or postmarked
prior to the end of the second business day. Any such letter should be sent by
certified mail, return receipt requested, to ensure its receipt and to evidence
the time of mailing. Any oral requests should include a request for written
confirmation. Any of the Investors below who are Pennsylvania residents
confirms by its signature below that it has been informed of its right pursuant
to Section 2.07(m) of the Pennsylvania Securities Act to withdraw its
subscription for shares within two business days after the date of receipt by
BCC of his/her or its written binding contract of purchase or if there is no
such contract, within two business days after he/she or it makes the initial
payment for the shares. Any Investor below who is a Pennsylvania resident,
also confirms by its signature below that it also hereby agrees that it will
not sell, transfer, exchange or otherwise dispose of its Purchased Shares or
any Option Shares, within twelve months after the date of purchase and also
agrees to the placement on the shares of a legend restricting transferability
of such shares.
DBH SEC IV, L.P.
By: /s/ Xxxxxx X. Xxxxxxx
------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Managing General Partner
47
Counterpart Signature Page to that certain Series B Stock Purchase
Agreement dated as of September 20, 1996 by and between Balanced Care
Corporation and the Investors (as defined therein).
**
MEDITRUST MORTGAGE INVESTMENTS, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
---------------------------------
Name: XXXXXXX X. XXXXXXXX, Esq.
Title: Senior Vice President
**The Declaration of Trust establishing Meditrust, the sole
shareholder of Meditrust Mortgage Investments, Inc. dated August 6, 1985, as
amended (the "Declaration of Trust"), a copy of which, together with all
amendments thereto, is duly filed in the office of the Secretary of State of
the Commonwealth of Massachusetts, provides that the name "Meditrust" refers to
the Trustees under the Declaration of Trust collectively as Trustees, but not
individually or personally; and that no trustee, officer, shareholder, employee
or agent of Meditrust or any of its subsidiaries shall be held to any personal
liability, jointly or severally, for any obligation of, or claims against
Meditrust or any of its subsidiaries. All persons dealing with Meditrust or any
of its subsidiaries, including without limitation Meditrust Mortgage
Investments, Inc., in any way, shall look only to the respective assets of
Meditrust or any of its subsidiaries, including without limitation Meditrust
Mortgage Investments, Inc., for the payment of any sum or the performance of
any obligations. All parties hereto specifically acknowledge and agree that
Meditrust is neither a party to this agreement nor shall Meditrust assume or
have any liability hereunder of any kind or nature whatsoever.
