STOCK PURCHASE AGREEMENT
By and Among
HEALTHEXTRAS, INC.
(Buyer)
And
PHARMACY NETWORK NATIONAL CORPORATION TRUST
(Seller)
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement"), dated as of this 1st day
of December, 2002, is entered into by and among HealthExtras, Inc., a Delaware
corporation ("Buyer") and the Pharmacy Network National Corporation Trust, a
North Carolina Trust established on September 19, 2000 (the "Seller).
WHEREAS, Buyer wishes to purchase from or through Seller, and Seller wishes
to sell or cause to be sold to Buyer, all of the issued and outstanding capital
stock of Pharmacy Network National Corporation, a North Carolina business
corporation (the "Company").
NOW, THEREFORE, in consideration of the premises and subject to the
representations, warranties, covenants, and conditions contained herein, the
parties agree as follows:
DEFINITIONS
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"ACT" means the North Carolina Business Corporation Act.
"AFFILIATE" means any individual, partnership, corporation, limited
liability company, trust or other entity or association which, directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, a party.
"AGREEMENT" means this Stock Purchase Agreement.
"AUDITED FINANCIAL STATEMENTS" means the audited financial statements of
the Company as of December 31, 1999, 2000 and 2001, including the balance sheet
and the related statements of income, shareholders' equity, cash flows and
changes in financial position of the Company for the years then ended, with an
unqualified report thereon from an independent certified public accounting firm.
"BUYER" means HealthExtras, Inc.
"CLAIMS" means any action or proceeding, judicial or administrative
(including arbitration and other alternative dispute resolution mechanisms),
instituted by any third party (including federal, state or local governmental
units) against a party hereto.
"CLASS A SHAREs" means Thirty Thousand (30,000) shares of Class A Voting
Common Stock of the Company owned by the Seller and constituting all of the
issued and outstanding Class A Voting Common Stock of the Company.
"CLASS B SHARES" means Seven Thousand Two Hundred Two (7,202) shares of
Class B Non-Voting Common Stock of the Company constituting all of the issued
and outstanding Class B Non-Voting Common Stock of the Company.
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"CLOSING" shall have the meaning set forth in Section 1.3.1 below.
"CLOSING DATE" shall have the meaning set forth in Section 1.3.1, below.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMPANY" means Pharmacy Network National Corporation, a North Carolina
business corporation.
"COMPANY 2003 MEMBERS" means those individuals who are Members on January
1, 2003, except those whose membership is through any of the entities set forth
in Schedule 1.
"EFFECTIVE TIME" means 12:01 a.m. (Eastern Standard Time), December 1, 2002
"EMPLOYEE BENEFIT PLAN" shall have the meaning set forth in Section 2.21
below.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ESCROW AGREEMENT" means the Escrow Agreement entered into by all parties
thereto, in a form mutually acceptable to such and
delivered at the Closing.
"ESCROW ACCOUNT" shall have the meaning ascribed to it in Section 1.5,
below.
"ESCROW AMOUNT" means two million dollars ($2,000,000).
"FINANCIAL STATEMENTS" means, collectively, the Audited Financial
Statements and the Unaudited Financial Statements of the
Company.
"GAAP" means Generally Accepted Accounting Principles, consistently
applied, as in effect from time to time.
"INDEMNIFIED PARTY" and "INDEMNIFYING PARTy" shall have the meanings
ascribed to them in Section 8.3.1 below.
"INTELLECTUAL PROPERTY" means all patents, patent rights, patent
applications, trademarks, trademark applications, service marks, service mark
applications, trade names and copyrights, formulae and know-how, and all
applications for such, which are in the process of being prepared, are owned by,
or are registered in the name of, the Company, or of which the Company is a
licensor or licensee, or in which the Company has any right.
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"INSURANCE POLICIES" means all fire, theft, casualty, general liability,
reinsurance, stop-loss, workers compensation, professional liability, business
interruption, product liability, automobile and other insurance policies
maintained by the Company, and all life insurance policies maintained by the
Company on the lives of any of its employees.
"LETTER OF INTENT" means the letter of intent signed by Buyer and the
Company dated October 24, 2002.
"LOSS" OR "LOSSES" means any loss, liability, deficiency, damage, expense
or cost (including reasonable attorneys' fees)
incurred by a party.
"MEASUREMENT DATE MEMBERS" means those Company 2003 Members who are Members
on January 1, 2004., except those whose
membership is through any of the entities set forth in Schedule 1.
"MEMBERS" means those individuals covered by, and entitled to receive the
benefits of, a group pharmacy benefit plan managed by the Company pursuant to a
contract between the Company and the sponsor of the group pharmacy benefit plan,
excluding any card discount plans or other cash discount programs.
"NET PURCHASE PRICE" means the Purchase Price less the Escrow Amount
allocated equally among all Shares and fractions
thereof.
"PBGC" means the Pension Benefit Guaranty Corporation.
"PURCHASE PRICE" means five hundred forty-two dollars and fifty-seven cents
($542.57) per share for the Shares, or twenty million one hundred eighty-five
thousand seven hundred sixty-nine dollars ($20,185,769.00) for all Shares in the
aggregate.
"SELLER'S KNOWLEDGE" means the knowledge of each of the current Trustees of
Seller, in their respective fiduciary capacity, after due inquiry of management
and support staff of the Company. The Trustees, in their capacity as Trustees,
shall have no individual personal liability under this Agreement, except in the
case of breach of fiduciary duty or fraud.
"SHARES" means all of the Class A Shares, and all of the Class B Shares,
which together constitute all of the capital stock and represent one hundred
percent (100%) of the ownership of the Company.
"RETURNS" means any returns, reports or statements (including any
information returns) required to be filed for purposes of a particular Tax.
"SELLER" means Pharmacy Network National Corporation Trust.
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"TAX" or "TAXES" means all federal, state, county or local net or gross
income, gross receipts, net proceeds, sales, use, ad valorem, value added,
franchise, bank shares, withholding, payroll, employment, excise, property,
deed, stamp, alternative or add-on minimum, environmental or other taxes,
assessments, duties, fees, levies or other governmental charges of any nature
whatsoever, together with any interest, penalties, additions to tax or
additional amounts with respect thereto.
"TRUSTEES" means the (6) individuals who constitute all of the Trustees of
Seller and who have signed this Agreement, below on behalf of Seller.
"UNAUDITED FINANCIAL STATEMENTS" means the unaudited interim financial
statements of the Company for the monthly periods from January 1, 2002 through
October 31, 2002.
"WELFARE PLAN" means any employee welfare benefit plan as described in
Section 3(1) of ERISA.
1. THE TRANSACTION; STOCK PURCHASE AND CLOSING
-------------------------------------------
1.1. PURCHASE OF THE SHARES
The Seller agrees to sell, or cause to be sold to Buyer, and Buyer
agrees to purchase from or through Seller, the Shares for the
Purchase Price to be paid in accordance with and subject to the terms
and conditions herein contained. The Shares shall be free and clear
of any and all liens, pledges, or encumbrances of any kind, nature,
or description whatsoever, whether legal or equitable, and shall be
validly issued, fully paid and non-assessable when transferred to
Buyer. The Buyer shall have no obligation to purchase fewer than all
of the Shares.
1.2. The Effective Time: Upon the Closing, the transactions
contemplated by this Agreement shall be deemed effective as of 12:01
a.m. (Eastern Standard Time), December 1, 2002.
1.3. THE CLOSING; ABANDONMENT.
1.3.1. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place, at the offices of
Paul E. Castelloe, or at such other location as the parties
may mutually agree, at 10:00 A.M. (Eastern Standard Time) on
the 6th day of December, 2002 (the "Closing Date"), or at
such other date and time as the parties may mutually agree.
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1.3.2 Notwithstanding anything herein contained to the contrary, if
the Closing does not occur before December 31, 2002, each
party shall have the right to terminate this Agreement
without the consent of any of the other party hereto. The
foregoing shall not be construed to terminate or otherwise
affect any claims either party may have against the other
party for breach of any obligation arising out of this
Agreement, subject to the survival provisions of Sections 8.5
and 10.10 of this Agreement.
1.4. PAYMENT OF PURCHASE PRICE AT THE CLOSING, At the Closing:
1.4.1. Seller shall assign and transfer, or cause to be
assigned and transferred, to Buyer good and valid title in
the Shares, free and clear of all liens, encumbrances,
covenants, restrictions, voting trust agreements, charges,
Taxes or other adverse claims, and shall do so by delivering
to Buyer certificates representing the Shares accompanied by
duly executed stock powers endorsed in blank for transfer;
1.4.2. Buyer shall, by cashier's or certified check or by
wire transfer, deposit the Escrow Amount in the Escrow
Account;
1.4.3. Buyer shall deliver the Net Purchase Price to the
individuals, entities and accounts, and in the amounts, all
as set forth in a written schedule to be provided to Buyer by
Seller at least one (1) day before the Closing Date, and to
be signed by the Trustees for Seller;
1.4.4. Buyer shall make all Net Purchase Price payments by
cashiers' or certified check(s) or wire transfers(s).
1.4.5. The parties shall deliver and exchange all other
instruments, documents, certificates, and opinions required
by this Agreement.
1.5. ESCROW. Pursuant to the Escrow Agreement and this Agreement, the
Escrow Amount shall, at the Closing, be deposited by Buyer into the
Escrow Account, to be used and disbursed as follows:
1.5.1. On or before January 15, 2004, the Buyer shall present
"Sellers" (as defined in the Escrow Agreement), or such
individual(s) as Sellers shall designate as their
representative(s), with a statement of the Measurement Date
Members as a percentage of the Company 2003 Members, and the
reasonable supporting data (the "2004 Report"). If the
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Sellers do not agree with the 2004 Report, Sellers shall so
notify the Buyer within five (5) days of receipt, along with
a brief explanation of the basis for disagreement. If the
parties are unable to resolve the disagreement to their
mutual satisfaction within ten (10) days following Sellers'
notice, then Buyer and Sellers shall select a mutually
acceptable independent accounting firm of regional or
national recognition within five (5) days, and shall share
equally the cost of such firm preparing a final 2004 Report
to be delivered within thirty (30) days thereafter. The 2004
Report prepared by such accounting firm shall be conclusive
and binding on all parties to the Escrow Agreement.
1.5.2. If the 2004 Report shows that Measurement Date Members
are (i) less than or equal to seventy percent (70%) of
Company 2003 Members, then Buyer shall be entitled to a
$2,000,000 distribution from the Escrow Account; (ii) greater
than seventy percent (70%), but less than seventy-five
percent (75%) of Company 2003 Members, then Buyer shall be
entitled to a $1,500,000 distribution from the Escrow
Account; (iii) equal to or greater than seventy-five percent
(75%) but less than eighty percent (80%) of Company 2003
Members, then Buyer shall be entitled to a $500,000
distribution from the Escrow Account; and (iv) equal to or
greater than eighty percent (80%) of Company 2003 Members,
then Buyer shall be entitled to no distribution from the
Escrow Account.
1.5.3. All distributions due Buyer under Sections 1.5.2,
above, shall be paid from the Escrow Account on or before the
later of (i) February 1, 2004 or (ii) when a Sellers' notice
of disagreement has been delivered under Section 1.5.1,
above, within fifteen (15) days following the issuance of a
final 2004 Report that is issued either by mutual agreement
or an independent accounting firm.
1.5.4. If amounts remain in the Escrow Account following the
distribution, if any, to Buyer required by Section 1.5.1,
above, and Buyer has made any Claims on or before February 1,
2004 pursuant to the indemnification provisions of Section
8.1 of this Agreement, then all Losses due Buyer pursuant to
such Claim shall be paid from the Escrow Account to the
extent sufficient funds are available before any amounts are
distributed from the Escrow Account to Sellers. Seller shall
remain liable to Buyer when Seller is the Indemnifying Party
for all Losses for which sufficient funds are not available
in the Escrow Account following the distributions, if any,
made under Section 1.5.2, above. The Escrow Account shall
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remain in place until all such outstanding Claims made by
Buyer are settled or otherwise satisfied, regardless of the
fact that Losses cannot be known with certainty at the time
the Claim is made. If no such Claims have been made by Buyer
as of February 1, 2004, then the amounts remaining in the
Escrow Account after the satisfaction of obligations under
Section 1.5.2, above, including all amounts remaining therein
that constitute earned income, shall be distributed pursuant
to written instructions from Seller. Buyer or the Company
shall be responsible for the payment of all taxes owed on the
income earned by the Escrow Account.
1.6. FURTHER ASSURANCES
If, at any time after the Closing, the Buyer or Company shall
consider or be advised that any deeds, bills of sale, assignments or
assurances or any other acts are necessary, desirable or proper (i)
to vest, perfect or confirm, of record or otherwise, in the Buyer or
Company, its right, title or interest in, to or under any of the
rights, privileges, powers, franchises, properties or assets to which
the Company or Buyer is entitled under this Agreement or (ii)
otherwise to carry out the purposes of this Agreement, Seller and its
Trustees shall cooperate reasonably with the Buyer and the Company to
execute and deliver (or cause to be executed and delivered), all such
deeds, bills of sale, assignments and assurances, and do (or cause to
be done) all other acts and things necessary, desirable or proper to
accomplish the foregoing.
2. REPRESENTATIONS AND WARRANTIES OF SELLER
----------------------------------------
As an inducement to Buyer to enter into this Agreement, Seller represents
and warrants to Buyer that, except as set forth in the disclosure schedules
referenced below and delivered to Buyer by Seller, and accepted in writing
by Buyer, prior to Closing:
2.1. ORGANIZATION, QUALIFICATION AND POWER OF SELLER. Seller is a
Trust, duly stablished, validly existing and in good standing under
the laws of the State of North Carolina, and is duly licensed or
qualified to transact business, and is in good standing, in each
jurisdiction in which the nature of the business to be transacted by
it, or the character of the properties owned by it or leased by it,
requires such licensing or qualification. Seller has all the
requisite power and authority to perform all of its obligations
under, and comply with all of the conditions of, this Agreement. The
copy of Seller's Trust Indenture, dated September 19, 2000, that has
been furnished to Buyer prior to the Closing, reflects all amendments
made thereto and is correct and complete as of the Closing Date, and
there are no other documents determinative of the powers,
organization or qualifications of Seller.
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2.2 ORGANIZATION, QUALIFICATION AND CORPORATE POWER OF THE COMPANY. The
Company is duly incorporated, validly existing and in good standing
under the laws of the State of North Carolina, and is duly licensed
or qualified to transact business as a foreign corporation, and is in
good standing, in each jurisdiction in which the nature of the
business to be transacted by it, or the character of the properties
owned by it or leased by it, requires such licensing or
qualification. The Company has all the requisite corporate power and
authority to perform all of its obligations under, and comply with
all of the conditions of, this Agreement. The copies of the Company's
Articles of Incorporation and Bylaws that have been furnished to
Buyer prior to the Closing reflect all amendments made thereto and
are correct and complete as of the Closing Date.
2.3. SUBSIDIARIES. The Company does not (i) own of record or beneficially,
directly or indirectly, any shares of capital stock or securities
convertible into capital stock of any other corporation or have any
participating interest in any partnership, limited liability company,
joint venture or other business enterprise; or (ii) control, directly
or indirectly, any other entity.
2.4. AUTHORIZED CAPITAL. The authorized capital stock of the Company
consists of One Hundred Thousand (100,000) shares of Class A Voting
Common Stock, no par value, and One Hundred Thousand (100,000) shares
of Class B Non-Voting Common Stock, no par value, of which, as of the
date hereof, Thirty Thousand (30,000) shares of Class A Voting Common
Stock (the "Class A Shares") and Seven Thousand Two Hundred Two
(7,202) shares of Class B Non-Voting Common Stock (the "Class B
Shares") are duly and validly issued and outstanding, fully paid and
non-assessable. Seller is the sole owner, beneficially and of record,
of all of the Class A Shares, and has good and marketable title to
the Class A Shares, free and clear of all liens, encumbrances,
security agreements, equities, options, rights to acquire, claims,
charges or restrictions on transfer. The Class B Shares to be
delivered at Closing are owned beneficially and of record by the
individuals who have executed stock powers therefor, and such
individuals have good and marketable title to the Class B Shares free
and clear of all liens, encumbrances, security agreements, equities,
options, rights to acquire claims, charges or restrictions on
transfer. There are no stock appreciation rights, subscriptions,
warrants, options, convertible securities or other rights (contingent
or otherwise) to purchase or otherwise acquire equity securities of
the Company. The Company has no other equity securities or securities
containing any equity features authorized, issued or outstanding. No
shares of the Common Stock of the Company are in escrow or held as
security for any obligation of the Company or any beneficial owner
thereof. None of the securities of the Company are subject to any
voting trusts, nor has the Company or Seller received notice of any
other agreements pertaining to the voting of such securities, and no
8
Company shareholder has any preemptive right or rights of first
refusal with respect to the issuance of any common stock, debt
instruments or other securities of the Company.
2.5. VALIDITY. Seller and the Company have the full legal power and
authority to execute and deliver this Agreement and all other
agreements and documents necessary to consummate the contemplated
transactions, and all corporate action of the Company and Seller
necessary for such execution and delivery and the performance hereof
and thereof have been duly taken. This Agreement has been duly
executed and delivered by Seller and constitutes the legal, valid and
binding obligation of Seller, enforceable in accordance with its
terms (subject as to enforcement of remedies to the discretion of
courts in awarding equitable relief and to applicable bankruptcy,
reorganization, insolvency, fraudulent conveyance, moratorium and
similar laws affecting the rights of creditors generally). Any other
agreement contemplated to be entered into by Seller in connection
with this transaction, when duly executed and delivered by Seller and
the other parties thereto, will constitute the legal, valid and
binding obligation of Seller, enforceable in accordance with its
terms (subject as to enforcement of remedies to the discretion of
courts in awarding equitable relief and to applicable bankruptcy,
reorganization, insolvency, fraudulent conveyance, moratorium and
similar laws affecting the rights of creditors generally).
2.6. NO BREACH. None of the execution and delivery of this Agreement and
related agreements contemplated herein, compliance with their
respective terms, or performance of any obligation hereunder or
thereunder will result in the breach or violation of the Articles of
Incorporation or Bylaws of the Company or the Trust Indenture or any
other organizational governing documents, if any, of Seller, of any
provision of law, or of any provision of any agreement, indenture,
mortgage, lease or other obligation or instrument, any judgment, or
any order or decree of any court or other agency of government, or
cause any acceleration thereof, to which the Company or any Seller(s)
or any of their respective properties or assets are bound, or
conflict with, result in a breach of or constitute (with due notice
or lapse of time or both) a default under any such indenture,
agreement or other instrument, or result in the creation or
imposition of any lien, charge, restriction, claim or encumbrance of
any nature whatsoever upon any of the properties or assets of the
Company or Seller.
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2.7. TITLE TO PROPERTIES. The Company has good and marketable title to its
properties and assets reflected on the Financial Statements furnished
pursuant to Section 2.12 or acquired since the date of such Financial
Statements (other than properties and assets disposed of in the
ordinary course of business since the date of such Financial
Statements), and all such properties and assets are free and clear of
any and all mortgages, pledges, security interests, liens, charges,
claims, restrictions and other encumbrances, except for liens for
current taxes not yet due and payable, and minor imperfections of
title, if any, which liens are not material in nature or amount and
not materially detracting from the value or impairing the use of the
property subject thereto or impairing the operations or proposed
operations of the Company. Attached hereto as Schedule 2.7 is a list
of all material items of real and personal property owned by the
Company having a net book value of approximately twenty five thousand
dollars ($25,000) or more.
2.8. COMPLIANCE WITH LAW.
2.8.1. Schedule 2.8.1(A) contains a list and brief description of
all licenses, permits, franchises, certificates,
authorizations, approvals, accreditations, consents and
rights, including those granted or derived from governmental
sources, issued or granted to the Company. The Company and
Seller have delivered to Buyer true and correct copies of all
such licenses, permits, certificates and authorizations.
Except as otherwise disclosed in Schedule 2.8.1(B): (i) the
Company has the lawful authority and all state, federal,
special or local governmental authorizations, licenses or
permits required to conduct its businesses, and such
businesses presently are being conducted in compliance with
all applicable laws, ordinances, rules and regulations of all
governmental authorities related to its businesses; (ii)
there are no pending or threatened actions, notices or
proceedings by any state, federal, special or local
government or any subdivision thereof or any public or
private group which would have the effect of changing the
operation of such businesses; (iii) neither the Company's
operations, nor any of the assets owned, leased, occupied or
used by the Company in the operation of its businesses
violates or fails to comply in any material respect with
applicable federal, state or local laws, regulations or
ordinances; (iv) the Company's activities (as currently
conducted), the conduct of its businesses, the use of its
properties and assets and all premises occupied by it, are in
compliance in all material respects with all requirements of
all governmental bodies or agencies having jurisdiction over
it; (v) there is no act or omission on the part of the
Company which would subject the Company to the likelihood of
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any fine or suspension; and (vi) neither Seller nor the
Company have received any notice, from any federal, state or
other governmental authority or agency having jurisdiction
over their properties or activities, or any insurance or
inspection body, that the Company's operations or any of its
properties, facilities or equipment (whether leased or owned)
or business procedures or practices fail to materially comply
with any applicable law, ordinance or regulation or
requirement of any public authority or body.
2.8.2. Except as otherwise disclosed on Schedule 2.8.1(B), to the
best of Seller's knowledge, each pharmacy and pharmacist
contracting with the Company has all required licenses,
permits, certificates and other credentials required to be
maintained by such health care provider, and no such provider
is now or has been the subject of any sanction or
disciplinary action by an organization which monitors or
regulates such providers.
2.9. GOVERNMENTAL AUTHORITIES; CONSENTS. Except as set forth on Schedule
2.9 attached hereto, neither the Company nor the Seller, nor any of
their respective Affiliates, is required to obtain any approval,
consent, qualification, order or authorization, or to submit any
notice, report or other filing with any governmental authority in
connection with the execution or delivery by Seller of this Agreement
or the consummation of the transactions contemplated by this
Agreement.
2.10. ENVIRONMENTAL MATTERS. There are no hazardous or toxic substances,
materials, waste or regulated medical waste at the Company's
facilities. The Company has complied in all material respects with
all applicable federal and state laws regarding hazardous or toxic
substances, materials, waste or regulated medical waste. No pending
claims have been made against the Company, no currently outstanding
citations or notices have been issued against the Company, and the
Company has no obligations or liabilities, matured or not matured,
absolute or contingent, assessed or un-assessed, which, in the case
of any of the foregoing, have been or are imposed by reason of or
based upon any provision of any environmental law.
2.11. PAYMENT OF TAXES. The Company has timely filed all Returns it is
required to file, and such Returns have been duly prepared and filed
and were true, correct and complete in all material respects. All
Taxes due by reason of the operations conducted by the Company have
been paid, including, without limitation, all Taxes that the Company
is obligated to withhold from accounts owing to employees, creditors
and third parties. All such Taxes for which any such party has become
obligated pursuant to elections made in accordance with GAAP have
been paid, and adequate reserves have been established for all Taxes
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accrued but not yet payable. The federal income tax returns of the
Company have never been audited by the Internal Revenue Service. No
deficiency assessment with respect to any proposed adjustment of the
Company's federal, state, county or local taxes is pending or, to the
best of Seller's knowledge, threatened. There is no Tax lien, whether
imposed by any federal, state, county or local taxing authority
outstanding against the assets, properties or businesses of the
Company. There is no pending examination or proceeding by any
authority or agency relating to the assessment or collection of any
such Taxes, interest or penalties thereon, nor do there exist any
facts that would provide a basis for any such assessment. The Company
has not executed or filed any consent or agreement to extend the
period for assessment or collection of any such Taxes.
2.12. FINANCIAL STATEMENTS. The Company has furnished to Buyer (i) the
Audited Financial Statements, including any management letters
regarding the internal operations of the Company with respect the
years ended December 31, 1999, 2000 and 2001, and (ii) the Unaudited
Financial Statements. The Financial Statements have been prepared in
accordance with GAAP, consistently applied (except, in the case of
the Unaudited Financial Statements, for the absence of footnotes and
year end adjustments which will not be material, individually or in
the aggregate) and fairly present in all material respects the
financial position of the Company and the results of operations and
changes in financial position as of the dates and for the periods
specified. Except as set forth in the Financial Statements, the
Company has not incurred any liability other than in the ordinary
course of business. Since the most recent Financial Statements, (a)
there has been no material change in the assets, liabilities or
financial condition of the Company from that reflected in the
Financial Statements, other than the payments described in Schedule
2.14, except for changes in the ordinary course of business and
consistent with past practice which, in the aggregate, have not been
materially adverse to the business, prospects, financial condition,
operations, property or affairs of the Company, and (b) none of the
business, prospects, financial condition, operations, property or
affairs of the Company has been materially adversely affected by any
occurrence or development, individually or in the aggregate, whether
or not insured against.
2.13. ABSENCE OF UNDISCLOSED LIABILITIES. Except as set forth in Schedule
2.13 the Company has not incurred any liability of any nature
(whether absolute, accrued, contingent or otherwise) including,
without limitation, liabilities for federal, state, local or foreign
taxes and liabilities to customers or suppliers, other than (i)
liabilities for which full provision has been made on the Financial
Statements of the Company, and (ii) other liabilities arising since
the date of the Financial Statements and prior to the Closing Date in
the ordinary course of business and consistent with past practice
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which are not inconsistent with the representations, warranties and
covenants of Seller or any other provision of this Agreement or
related agreements and instruments.
2.14. SUBSEQUENT EVENTS. Since the date of the most recent Financial
Statements, the Company has not: (i) issued any stock (other than the
Class B Shares), bond or other corporate security; (ii) borrowed any
amount or incurred or become subject to any liability (absolute,
accrued or contingent), except current liabilities incurred and
liabilities under contracts entered into in the ordinary course of
business which do not have an adverse effect upon the business or
finances of the Company; (iii) discharged or satisfied any lien or
encumbrance or incurred or paid any obligation or liability
(absolute, accrued or contingent) other than current liabilities
shown on the Financial Statements and current liabilities incurred
since the date of the Financial Statements in the ordinary course of
business; (iv) declared or made any payment or distribution to
shareholders or purchased or redeemed any share of its capital stock
or other security; (v) mortgaged, pledged or subjected to lien any of
its assets, tangible or intangible, other than liens which arise by
operation of law or liens of current real property taxes not yet due
and payable; (vi) sold, assigned or transferred any of its tangible
assets, except in the ordinary course of business, or cancelled any
debt or claim; (vii) sold, assigned, transferred or granted any
exclusive license with respect to any patent, trademark, trade name,
service mark, copyright, trade secret or other intangible asset;
(viii) suffered any loss of property or waived any right, whether or
not in the ordinary course of business; (ix) made any change in
officer compensation; (x) made any change in the manner of business
or operations including any change in accounting principles and
practices; (xi) entered into any transaction except in the ordinary
course of business or as otherwise contemplated hereby; or (xii)
entered into any commitment (contingent or otherwise) to do any of
the foregoing; except to the extent expressly authorized or required
by this Agreement, which authorization includes payments under the
Company's Dissolution Plan, Profit Sharing Plan and Bonus Plan,
Non-Competition Payments, and the Company's expenses in connection
with the transactions contemplated by this Agreement, all specified
in Schedule 2.14.
2.15. OUTSTANDING DEBT. Except as set forth in the Audited Financial
Statements or in any Schedule to this Agreement, the Company has not
incurred any outstanding indebtedness for borrowed money nor is it
either a guarantor or otherwise contingently liable for any such
indebtedness. There exists no default under the provisions of any
instrument evidencing any indebtedness or otherwise of any agreement
relating thereto. The Company has no outstanding loans or advances to
any person and is not obligated to make any such loans or
advances.
13
2.16. CONTRACTS AND OTHER COMMITMENTS. Schedule 2.16 attached hereto lists
all material written agreements and all material oral understandings,
including, but not limited to, all pharmacy contracts,
client/customer agreements, management agreements, employment
agreements and services contracts, to which the Company will be
subject on the Closing Date. The Company has delivered or made
available to Buyer a correct and complete copy of each written
agreement listed in Schedule 2.16 (as amended to date) and a written
summary setting forth the terms and conditions of each oral agreement
referred to in Schedule 2.16. With respect to each such agreement:
(i) the agreement is legal, valid, binding, enforceable in accordance
with its terms (subject to bankruptcy, insolvency, reorganization,
moratorium and other laws affecting creditors' rights generally and
except for limitations upon the availability of equitable remedies,
including specific performance) and in full force and effect; (ii) no
party is in material breach or default, and no event has occurred
which, with notice or lapse of time, would constitute a material
breach or default or permit termination, modification or
acceleration, under the agreement; (iii) no party has repudiated any
material provision of the agreement; and (iv) none of the
transactions contemplated by this Agreement creates in any party to
such agreement the right to revise the terms of, to terminate, to
accelerate any obligation of the Company or otherwise declare that
such agreement has been breached.
2.17. LEASEHOLD INTERESTS. Schedule 2.17 attached hereto sets forth a true,
correct and complete list of all leases to which the Company is a
party to which the Company will be subject as of the Closing. Seller
has delivered to Buyer true, correct and complete copies of all such
leases and all amendments, modifications and supplements thereto. The
leases are in full force and effect and are binding and enforceable
against each of the parties thereto in accordance with their
respective terms. Neither Seller nor the Company has received written
notice from any party to any lease claiming that the Company is in
default thereunder or that such default remains uncured. There has
not occurred any event which would constitute a breach of or a
default in the performance of any covenant, agreement or condition
contained in any lease, nor has there occurred any event which, with
the passage of time or the giving of notice, or both, would
constitute such a breach or default. None of the transactions
contemplated by this Agreement creates in any party to such lease the
right to revise the terms of or to terminate such lease, as
applicable, or to accelerate any obligation of the Company or
otherwise declare that such lease has been breached.
14
2.18. INTELLECTUAL PROPERTY. Set forth in Schedule 2.18 is a list and brief
description of the Intellectual Property, and in each case a brief
description of the nature of each such property and right, which is
necessary or desirable to the conduct of the Company's business as
conducted and as proposed to be conducted. No claim is pending or
threatened to the effect that the operations of the Company infringe
upon or conflict with the asserted rights of any other person under
any Intellectual Property, and, to the best of Seller's knowledge,
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 the Company or which
the Company otherwise has the right to use, is invalid or
unenforceable by the Company, and there is no known basis for any
such claim (whether or not pending or threatened). The Company has
not granted or assigned to any other person or entity any right to
sell or produce the products or proposed products or provide the
services or proposed services of the Company. No officer, director,
shareholder, employee or Affiliate of the Company has an ownership
interest in any of the trademarks, patents, or other rights set forth
in Schedule 2.18.
2.19. LITIGATION AND INVESTIGATIONS. Except as set forth in Schedule 2.19,
there is no: (i) action, suit, claim, proceeding or investigation
pending or threatened against or affecting the Company or any of the
Company's employees, officers or directors by any private party or
any federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality, domestic or
foreign; or, to the best of Seller's knowledge, pending, threatened
against or affecting persons or entities who perform professional
services under agreement with the Company before any professional
self-governance, oversight or regulatory body; (ii) arbitration
proceeding relating to the Company pending under collective
bargaining agreements or otherwise; or (iii) governmental or
professional inquiry pending or threatened, against or directly or
indirectly affecting the Company (including without limitation any
inquiry as to the qualification of the Company to hold or receive any
license or permit), and there is no basis for any of the foregoing as
to the Company, its officers, directors or employees or, to the best
of Seller's knowledge, other entities or persons who perform
professional services for the Company. The Company has not received
any opinion, memorandum or legal advice from legal counsel to the
effect that the Company may have exposure, from a legal standpoint,
to any liability related to the past or present conduct of the
business of the Company. The Company is not in default with respect
to any order, writ, injunction or decree known to or served upon it
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
the Company pending or threatened against others.
15
2.20. FRAUD AND ABUSE. The Company, its officers and directors and, to the
best of Seller's knowledge, all persons who provide professional
services under agreements with the Company, have not engaged in any
activities which are prohibited under federal Medicare and Medicaid
statutes, 42 U.S.C. ss.ss. 1320a-7, 1320a-7a and 1320a-7b, 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:
(i) 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; (ii) 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; (iii) presenting or causing to be presented a claim for
reimbursement for services under Medicare, Medicaid or other federal
or state health care program that is for an item or service that is
known or should be known to be (a) not provided as claimed, or (b)
false or fraudulent; (iv) 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;
or (v) 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 (a) in return for referring an individual to a person for the
furnishing or arranging for the furnishing of any item or service for
which payment may be made in whole or in part by , Medicare,
Medicaid, or other federal or state health care program, or (b) in
return for purchasing, leasing or ordering or arranging for or
recommending purchasing, leasing or ordering any good, facility,
service or item for which payment may be made in whole or in part by
Medicare, Medicaid or other federal or state health care program.
Neither the Company nor, to the best of Seller's knowledge, persons
who provide professional services under agreements with the Company,
have been excluded from the Medicare program or any state health care
program under 42 U.S.C. ss.1320a-7, and there is no pending or
threatened exclusion action against the Company or, to the best of
Seller's knowledge, against any such professional persons.
2.21. LABOR RELATIONS. The names of all employees of the Company, together
with the title or job classification of each such person, the total
compensation, including any deferred or bonus compensation,
anticipated to be paid to or accrued for each such person in the
years 2002 and 2003 by the Company, and the date of hire, is set
forth in Schedule 2.21(A). All oral or written employment agreements
that are or will be applicable to such employees are specified in
Schedule 2.21(B). Except as set forth in Schedule 2.21(C), no
employee of the Company has advised the Company orally or in writing
that he or she intends to terminate employment with the Company. The
Company has complied in all respects with all applicable laws
relating to the employment of its employees, including provisions
16
relating to wages, hours, equal opportunity, collective bargaining
and the payment of Social Security and other taxes, and, except as
set forth in Schedule 2.21(D), no employee or former employee has
filed any pending claim nor has the Company been notified to the
contrary. The Company has not entered into any collective bargaining
agreement, and the Company has not received notice that any of its
employees are represented by a collective bargaining agent.
2.22. EMPLOYEE BENEFIT PLANS.
2.22.1. Schedule 2.22.1 contains a list setting forth each employee
benefit plan or arrangement of the Company, including but not
limited to employee pension benefit plans, as defined in
Section 3(2) of ERISA, Multiemployer Plans, if any, as
defined in Section 3(37) of ERISA, employee welfare benefit
plans, as defined in Section 3(1) of ERISA, deferred
compensation plans, stock option plans, bonus plans, stock
purchase plans, hospitalization, disability and other
insurance plans, severance or termination pay plans and
policies, whether or not described in Section 3(3) of ERISA,
in which employees, their spouses or dependents, of the
Company participate ("Employee Benefit Plans") (true and
accurate copies of which, together with the most recent
annual reports on Form 5500 and summary plan descriptions
with respect thereto, have been furnished to Buyer).
2.22.2. With respect to each Employee Benefit Plan: (i) each has been
administered in all respects in compliance with its terms and
with all applicable laws, including, but not limited to,
ERISA and the Code; (ii) no actions, suits, claims or
disputes, other than routine benefit claims, are pending or
threatened; (iii) no audits, inquiries, reviews, proceedings,
claims or demands are pending with any governmental or
regulatory agency; (iv) there are no facts which could give
rise to any liability in the event of any such investigation,
claim, action, suit, audit, review or other proceeding; (v)
except as set forth on Schedule 2.22.2, all reports, returns
and similar documents required to be filed with any
governmental authority or distributed to any plan participant
have been duly or timely filed or distributed; and (vi) no
"prohibited transaction" has occurred under Section 406 of
ERISA or Section 4975 of the Code.
2.22.3. The Company does not contribute to a Multiemployer Plan as
described in Section 4001(a)(3) of ERISA or a defined benefit
plan.
17
2.22.4. (i) Except as otherwise provided by applicable state or
federal law, the Company is not obligated under any Welfare
Plan to provide medical or death benefits with respect to any
employee or former employee of the Company or its
predecessors after termination of employment; (ii) no
violations of the notice and continuation coverage
requirements of Section 4980B of the Code or Sections 601
through 608 of ERISA have occurred with respect to any
Welfare Plan that is a group health plan within the meaning
of Section 5000(b)(1) of the Code; and (iii) there are no
reserves, assets, surplus or prepaid premiums under any
Welfare Plan which is an Employee Benefit Plan.
2.22.5. The Company (i) has never terminated or withdrawn from an
Employee Benefit Plan under circumstances resulting (or
expected to result) in liability to PBGC (other than routine
claims for benefits); (ii) has no assets subject to (or
expected to be subject to) a lien for unpaid contributions to
any employee benefit plan; (iii) has not failed to pay
premiums to the PBGC when due; (iv) is not subject to (or
expected to be subject to) an excise tax under Code Section
4971; (v) has not engaged in any transaction which would give
rise to liability under Section 4069 or Section 4212(c) of
ERISA; and (vi) has not violated Code Section 4980B or
Section 601 through 608 of ERISA.
2.22.6. Except as set forth on Schedules 2.22.6 or 2.14, (i) the
Company is not obligated to pay separation, severance,
termination or similar benefits or to vest any person, in
whole or in part, solely as a result of any transaction
contemplated by this Agreement or solely as a result of a
"change of control" (as such term is defined in Section 280G
of the Code); and (ii) none of the Employee Benefit Plans has
any unfunded liabilities which are not reflected on the
Financial Statements.
2.23. INSURANCE.
2.23.1. Schedule 2.23.1 attached hereto sets forth a true, correct
and complete list of all Insurance Policies, specifying the
type of coverage, the amount of coverage, the premium, the
insurer and the expiration date of each such policy. True,
correct and complete copies of all Insurance Policies have
been previously delivered by the Company to Buyer.
2.23.2. The Insurance Policies are in full force and effect. All
premiums due on the Insurance Policies or renewals thereof
have been paid or will be paid through the Closing Date, and
there is no default by the Company under the Insurance
Policies nor any default by any other party to the Insurance
18
Policies. There are no outstanding recommendations by any
issuer of the Insurance Policies or by any Board of Fire
Underwriters or other similar body exercising similar
functions or by any governmental authority exercising similar
functions which requires or recommends any changes in the
conduct of the business of, or any repairs or other work to
be done on or with respect to any of the properties or assets
of, the Company.
2.24. BOOKS AND RECORDS. The books of account, ledgers, order books,
records and documents of the Company accurately and completely
reflect all material information relating to the business of the
Company, the location and collection of its assets, and the nature of
all transactions giving rise to the obligations or accounts
receivable of the Company.
2.25. ACTIVITIES OF PROVIDERS. To the best of Seller's knowledge, No
providers of pharmacy services to the Company are organized or
attempting to organize any entity (whether or not incorporated) for
the purpose of bargaining or otherwise dealing with the Company on a
collective basis except with respect to individual pharmacists who
have formed professional corporations or partnerships for the purpose
of providing pharmacy services.
2.26. INSIDER INTERESTS. Except as disclosed on Schedule 2.26, no present
officer, director, shareholder, employee or, to the best of Seller's
knowledge, contracting health care provider of the Company: (i) owns,
directly or indirectly, in whole or in part, any of the properties
used in the business of the Company; (ii) has received a loan or
advance from the Company which is currently outstanding; (iii) has
any obligation to make any loan to the Company; or (iv) has any other
business relationship with the Company other than in his or her
capacity as an officer, director, shareholder, employee or health
care provider. No present officer, director, shareholder or employee
of the Company owns (except for a passive ownership interest of one
percent (1%) or less of the securities of a competitor that is traded
on a recognized national exchange), in whole or in part, directly or
indirectly, any interest in, or controls, or is an employee, officer,
director or partner of, any corporation, association, partnership,
limited partnership, joint venture or other entity which is a
competitor of the Company.
2.27. FEES AND COMMISSIONS. Except as disclosed to Buyer, neither Seller
nor the Company has agreed to pay or become liable to pay any
broker's, finder's or originator's fees or commissions by reason of
services alleged to have been rendered for, or at the instance of,
the Seller or the Company in connection with this Agreement and the
transactions contemplated hereby.
19
2.28. DISCLOSURE. No representation or warranty by Seller in this
Agreement, and no exhibit, schedule or certificate furnished or to be
furnished by Seller or the Company pursuant hereto, contains any
untrue statement of a fact or omits to state a fact required to be
stated herein or therein or necessary to make the statements
contained herein or therein not misleading. There is no fact of which
Seller is aware which has not been disclosed in writing to Buyer
which adversely affects, or would tend to adversely affect, the
businesses, prospects, financial condition, operations, properties or
affairs of the Company.
2.29. PROPRIETARY INFORMATION OF THIRD PARTIES. To the Seller's knowledge,
no third party has claimed or has any reason to claim that any person
employed by or affiliated with the Company has: (i) violated or may
be violating any of the terms or conditions of his or her employment,
non-competition, or non-disclosure agreement with such third party;
(ii) disclosed or may be disclosing or utilized or may be utilizing
any trade secret or proprietary information or documentation of such
third party; or (iii) interfered or may be interfering in the
employment relationship between such third party and any of its
current or former employees. No third party has requested information
from the Company that suggests that such a claim might be
contemplated. No person employed by or affiliated with the Company
has employed or proposes to employ any trade secret or any
information or documentation proprietary to any former employer, and
no person employed by or affiliated with the Company has violated any
confidential relationship which such person may have had with any
third party in connection with the development or sale of any product
or proposed product or the development or sale of any service or
proposed service of the Company, and the Company has no reason to
believe there will be any such employment or violation. None of the
execution, delivery or performance of this Agreement, or the carrying
on of the business of the Company as officers, employees, or agents
by any officer, director, or key employee or affiliated person of the
Company, or the conduct or proposed conduct of the business of the
Company, 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.
2.30. SUFFICIENCY OF ASSETS. The assets of the Company now owned, and to be
owned by the Company as of the Closing Date, constitute all assets
reasonably necessary to enable the Buyer and the Company to conduct
the business and operations of the Company after the Closing on
substantially the same terms as such business has historically been
conducted, except with respect to future working capital
requirements.
20
2.31. SECURITIES LAWS. All of the issued and outstanding shares of common
stock of the Company have been offered, sold, issued, and delivered
by the Company in compliance with all applicable federal and state
securities laws. The Company has complied with all applicable
periodic reporting and disclosure requirements of the Securities
Exchange Act of 1934 and applicable state securities laws.
3. REPRESENTATIONS AND WARRANTIES OF BUYER
---------------------------------------
As an inducement to Seller to enter into this Agreement, Buyer represents
and warrants to Seller that, except as set forth in the disclosure
schedules to be delivered to Seller by Buyer, and accepted in writing by
Seller, prior to Closing:
3.1. ORGANIZATION, QUALIFICATION AND CORPORATE POWER. Buyer is duly
incorporated, validly existing and in good standing under the laws of
the State of Delaware, and is duly licensed or qualified to transact
business as a foreign corporation and is in good standing in each
jurisdiction in which the nature of the business to be transacted by
it, or the character of the properties owned by it or leased by it,
requires such licensing or qualification. Buyer has all the requisite
corporate power and authority to perform all of its obligations
under, and comply with all of the conditions of, this Agreement.
3.2. VALIDITY. Buyer has the full legal power and authority to execute and
deliver this Agreement and all other agreements and documents
necessary to consummate the contemplated transactions, and all
corporate action of Buyer necessary for such execution and delivery
and the performance hereof and thereof have been duly taken. This
Agreement has been duly executed and delivered by Buyer and, when
duly executed by the other parties hereto, constitutes the legal,
valid and binding obligation of Buyer, enforceable in accordance with
its terms (subject as to enforcement of remedies to the discretion of
courts in awarding equitable relief and to applicable bankruptcy,
reorganization, insolvency, moratorium and similar laws affecting the
rights of creditors generally). Any other agreement contemplated to
be entered into by Buyer in connection with this transaction, when
duly executed and delivered by Buyer and the other parties thereto,
will constitute the legal, valid and binding obligation of Buyer,
enforceable in accordance with its terms (subject as to enforcement
of remedies to the discretion of courts in awarding equitable relief
and to applicable bankruptcy, reorganization, insolvency, fraudulent
conveyance, moratorium and similar laws affecting the rights of
creditors generally).
21
3.3. NO BREACH. None of the execution and delivery of this Agreement and
related agreements contemplated herein, compliance with their
respective terms, or performance of any obligation hereunder or
thereunder will result in the breach or violation of the Articles of
Incorporation or Bylaws of Buyer, of any provision of law, or of any
provision of any agreement, indenture, mortgage, lease or other
obligation or instrument, any judgment, or any order or decree of any
court or other agency of government, or cause any acceleration
thereof, to which Buyer or any of its properties or assets are bound,
or conflict with, result in a breach of or constitute (with due
notice or lapse of time or both) a default under any such indenture,
agreement or other instrument, or result in the creation or
imposition of any lien, charge, restriction, claim or encumbrance of
any nature whatsoever upon any of the properties or assets of Buyer.
The execution of this Agreement and any other agreements contemplated
hereby and, upon receipt of required state, local and/or federal
governmental approvals, the consummation of the transactions provided
herein, will not result in a violation by Buyer of any federal, state
or local laws or regulations.
3.4. COMPLIANCE WITH LAW. Buyer is not in violation of any applicable
federal, state or local laws or regulations, or the requirements of
any public authority or body, which will prevent Buyer from paying
the Purchase Price at Closing or from performing the covenants and
complying with the conditions of this Agreement.
3.5. GOVERNMENTAL AUTHORITIES; CONSENTS. Except for reporting obligations
under the Securities Exchange Act of 1934, Buyer is not required to
obtain any approval, consent, qualification, order or authorization,
or to submit any notice, report or other filing with any governmental
authority in connection with the execution or delivery by Buyer of
this Agreement or the consummation of the transactions contemplated
by this Agreement.
3.6. FEES AND COMMISSIONS. Buyer has not agreed to pay or become liable to
pay any broker's, finder's or originator's fees or commissions by
reason of services alleged to have been rendered for, or at the
instance of, Buyer in connection with this Agreement and the
transactions contemplated hereby, that would affect the Purchase
Price paid for the Shares.
22
3.7. DISCLOSURE. No representation or warranty by Buyer in this Agreement,
and no exhibit, schedule or certificate furnished or to be furnished
by Buyer pursuant hereto, contains any untrue statement of a fact or
omits to state a fact required to be stated herein or therein or
necessary to make the statements contained herein or therein not
misleading. There is no fact of which Buyer is aware which has not
been disclosed in writing to Seller, which materially adversely
affects the ability of Buyer to close upon the transactions
contemplated by this Agreement, to pay the Purchase Price or to
perform the covenants and comply with the conditions of this
Agreement.
3.8. EMPLOYEE PROFIT SHARING BONUSES. Buyer shall cause the Company to its
employees on March 1, 2003, the Employee Profit Sharing Bonuses
totaling three hundred nine thousand and four hundred and seventy
five dollars ($309,475.00) as set forth in Schedule 3.8
4. CONDITIONS TO THE OBLIGATIONS OF BUYER
--------------------------------------
4.1. REPRESENTATIONS AND WARRANTIES TO BE TRUE AND CORRECT. The
representations and warranties of Seller contained in Article 2 shall
be true, complete and correct on and as of the Closing Date with the
same effect as though such representations and warranties had been
made by Seller on and as of such date, and Seller shall have
certified to such effect to Buyer in writing.
4.2. PERFORMANCE. The Company and Seller shall have performed
and complied with all agreements contemplated herein that are
required to be performed or complied with by them prior to or at the
Closing Date. The Company and Seller shall have obtained any consents
or waivers necessary to execute and deliver this Agreement and the
other agreements and instruments executed and delivered by the
Company and Seller in connection herewith. All corporate and other
action and governmental filings necessary to effectuate the terms of
this Agreement and the other agreements and instruments executed and
delivered by the Company and Seller in connection herewith shall have
been made or taken.
4.3. ALL PROCEEDINGS TO BE SATISFACTORY. All corporate and other
proceedings to be taken by the Company and Seller in connection with
the transactions contemplated hereby and all documents incident
thereto shall be reasonably satisfactory in form and substance to
Buyer and its counsel, and Buyer and its counsel shall have received
all such counterpart originals or certified or other copies of such
documents as they reasonably may request.
23
4.4. ABSENCE OF MATERIAL ADVERSE CHANGE. There shall have been no material
adverse change in the business, assets, financial condition or
operations of the Company, including any material adverse change in
the pharmacy network of the Company, or any other event that would,
with the passage of time or otherwise, impair or otherwise affect the
accuracy of any of the representations and warranties of Seller or
the ability of Seller to perform any applicable covenants or
indemnification obligations set forth in this Agreement. Prior to
Closing, each of the Company and Seller shall have promptly notified
Buyer in writing of any event of which the officers or directors of
either have knowledge or, after due inquiry, should have knowledge,
that occurred, or was likely to occur, and which would tend to result
in a material adverse change in the business, assets, financial
condition or operations of the Company and of any other event that
would, with the passage of time or otherwise, impair or otherwise
affect the accuracy of any of the representations and warranties of
Seller or the ability of the Seller to perform any applicable
covenants or indemnification obligations contained herein on and as
of the Closing Date.
4.5. NON-COMPETITION AGREEMENTS. Buyer shall have received duly executed
non-competition agreements containing terms and conditions
satisfactory to Buyer between the Company and certain individuals as
shall be satisfactory to Buyer.
4.6. EXECUTED EMPLOYMENT AGREEMENTS. Buyer shall have received duly
executed employment agreements between the Company and certain
individuals and containing terms and conditions, all of which shall
be satisfactory to Buyer.
4.7. OPINION OF COUNSEL FOR SELLER. Buyer shall have received from counsel
for Seller an opinion dated as of the Closing Date in form and
substance satisfactory to Buyer.
4.8. OPINION OF SPECIAL COUNSEL FOR BUYER. Buyer shall have received from
Buyer's North Carolina counsel an opinion or other written advice
satisfactory to Buyer to the effect that no regulatory or other
governmental approvals, reviews or filings are required in connection
with any of the transactions contemplated by this Agreement.
4.9. APPROVALS. All necessary corporate and regulatory approvals for the
transactions contemplated by this Agreement shall have been
obtained.
4.10. THIRD PARTY CONSENTS. The Company and Seller shall have obtained or
caused to be obtained all requisite consents and approvals of third
parties whose consent or approval is required in order for the
Company and Seller to consummate the transactions contemplated by
this Agreement, including, without limitation, any consent to the
change of ownership of the Company that may be required by a lessor
24
under a lease set forth in Schedule 2.17 hereto or of any other
party relating to the contracts set forth in Schedule 2.16 hereto.
4.11. ABSENCE OF REGULATORY PROCEEDINGS. No proceeding, regulatory action
or litigation shall have been instituted, threatened or proposed, and
no order shall have been issued by any governmental body, to enjoin,
restrain or prohibit the transactions contemplated herein or to
materially adversely affect the business, assets, financial condition
or operations of the Company.
4.12. EMPLOYEE ADVANCES. All financial advances made by the Company to any
of its employees, officers, directors, shareholders or option holders
shall have been collected and eliminated, and such shall be reflected
in the Financial Statements.
4.13. SUPPORTING DOCUMENTS. Buyer and its counsel shall have received
copies of the following documents:
4.13.1. such certificates of the Company's officers and the Seller's
Trustees and such other documents evidencing satisfaction by
the Company and Seller of the conditions specified in this
Article 4 as Buyer shall reasonably request;
4.13.2. certificates of the Secretary of State of the State of North
Carolina as to the legal existence and good standing
(including tax) of the Company in North Carolina;
4.13.3. copies of the Articles of Incorporation of the Company, duly
certified by the Secretary of State of the State of North
Carolina;
4.13.4. certificates of the Secretary of the Company attesting to the
incumbency of the Company's Officers, the authenticity of the
resolutions of the Company authorizing the transactions
contemplated by this Agreement, and the authenticity and
continuing validity of the charter documents of the Company;
4.13.5. certificate of the Trustees of the Seller, attesting to their
incumbency and to the authenticity and continuing validity of
the Declaration of Trust of September 19, 2000, which shall
be annexed thereto;
4.13.6. the minute books, stock transfer records, corporate seal and
other materials related to the corporate administration of
the Company;
4.13.7. the resignation (effective as of the Closing Date) of the
current directors and officers of the Company;
25
4.13.8. a stock power duly executed in blank by the Seller, with
signatures witnessed, together with the stock certificates
representing the Class A Shares being surrendered by the
Seller;
4.13.9. stock powers duly executed in blank by the owners (or by
their duly appointed attorney in fact), with their signatures
witnessed, together with the stock certificates representing
the Class B Shares being surrendered;
4.13.10.the Escrow Agreement executed by all parties thereto; and.
4.13.11.such additional supporting documents and other information
with respect to the operations and affairs of the Company as
Buyer or its counsel reasonably may request.
4.14. DUE DILIGENCE. Buyer shall have completed, to its satisfaction, a
complete business, financial and legal due diligence review of the
Company. All requested documents pursuant to Buyer's due diligence
review of the Company have been delivered to Buyer and its counsel
and all documents that are to be provided to Buyer hereunder shall
have been delivered to Buyer and its counsel at least five (5)
business days prior to the Closing Date.
5. CONDITIONS TO THE OBLIGATIONS OF THE SELLER
----------------------------------------------
The obligations of Seller to consummate this Agreement and any other
transaction contemplated by this Agreement are, at its option, subject to
the satisfaction, on or before the Closing Date, of the following
conditions:
5.1. REPRESENTATIONS AND WARRANTIES TO BE TRUE AND CORRECT. The
representations and warranties contained in Article 3 shall be true,
complete and correct on and as of the Closing Date with the same
effect as though such representations and warranties had been made by
Buyer on and as of such date, and Buyer shall have certified to such
effect to the Seller and the Company in writing.
5.2. PERFORMANCE. Buyer shall have performed and complied with all
agreements contemplated herein that are required to be performed or
complied with by it prior to or at the Closing Date. Buyer shall have
obtained any consents or waivers necessary to execute and deliver
this Agreement and the other agreements and instruments executed and
delivered by Buyer in connection herewith. All corporate and other
action and governmental filings necessary to effectuate the terms of
this Agreement and the other agreements and instruments executed and
delivered by Buyer in connection herewith shall have been made or
taken.
26
5.3. ALL PROCEEDINGS TO BE SATISFACTORY. All corporate and other
proceedings to be taken by Buyer in connection with the transactions
contemplated hereby and all documents incident thereto shall be
reasonably satisfactory in form and substance to Seller and its
counsel, and Seller and its counsel shall have received all such
counterpart originals or certified or other copies of such documents
as they reasonably may request.
5.4. APPROVALS. All necessary corporate and regulatory approvals for the
transactions contemplated by this Agreement shall have been
obtained.
5.5. ABSENCE OF REGULATORY PROCEEDINGS. No proceeding, regulatory action
or litigation shall have been instituted, threatened or proposed, and
no order shall have been issued by any governmental body to enjoin,
restrain or prohibit the transactions contemplated herein.
5.6. THIRD PARTY CONSENTS. Buyer shall have obtained or caused to be
obtained all requisite consents and approvals of third parties whose
consent or approval is required in order for Buyer to consummate the
transactions contemplated by this Agreement.
5.7. SUPPORTING DOCUMENTS. Seller and its counsel shall have received
copies of the following documents:
5.7.1. such certificates of Buyer's officers and such other
documents evidencing satisfaction by Buyer of the conditions
specified in this Article 5 as Seller shall reasonably
request;
5.7.2. a certificate of the Secretary of State of Delaware as to the
legal existence and good standing (including tax) of Buyer in
the State of Delaware;
5.7.3. a certificate of the Secretary of Buyer attesting to the
incumbency of its officers, the authenticity of the
resolutions of Buyer authorizing the transactions
contemplated by this Agreement and the authenticity and
continuing validity of the charter documents of Buyer; and
5.7.4. such additional supporting documents and other information
with respect to the operations and affairs of Buyer as the
Seller or its counsel reasonably may request.
6. INTERIM COVENANTS BETWEEN THE DATE OF THIS AGREEMENT AND THE CLOSING DATE
--------------------------------------------------------------------------
Seller, as indicated below, makes the following covenants to Buyer for the
period from the date of this Agreement through the Closing Date:
27
6.1. MAINTENANCE OF PROPERTIES AND BUSINESS. Seller shall cause the
Company to conduct its business so as to maintain the properties and
business of the Company and to preserve the business organization and
the goodwill of customers and suppliers of the Company. Except as
otherwise herein provided, without the prior written consent of Buyer
(which consent shall not unreasonably be withheld), Seller shall
cause the Company to not:
6.1.1. make any capital expenditure greater than twenty-five
thousand dollars ($25,000) singly or in the aggregate;
6.1.2. sell, lease or otherwise dispose of any asset or assets,
other than in the ordinary course of business and with
replacement of an asset of equivalent value;
6.1.3. encumber any asset or assets other than in the ordinary
course of business and provided such encumbrance(s) shall not
exceed twenty-five thousand dollars ($25,000) singly or in
the aggregate;
6.1.4. execute, amend or terminate any contract or lease to which
the Company is a party, except if the annual payments or
receipts under any such lease or contract do not exceed
twenty-five thousand dollars ($25,000) singly or in the
aggregate;
6.1.5. make any material change in the Company's business or
operations, including, but not limited to, making any changes
in its fees, charges, rebate arrangements or terms or other
revenues, or its accounting practices, or fail to use
reasonable care to (i) maintain the assets of the Company in
their present condition, normal wear and tear excepted, and
(ii) comply with all laws and regulations of governmental
agencies or authorities applicable to the Company;
6.1.6. declare or pay any dividends or make any distribution to
shareholders;
6.1.7. fail to maintain in effect the insurance coverage referred to
in Section 2.23 herein;
6.1.8. fail to maintain compliance with any and all requirements
imposed upon the Company by all applicable state and federal
laws and regulations;
6.1.9. engage in any activity or enter into any material
transactions that would cause any of the representations or
warranties set forth in Article 2 hereof to be inaccurate if
made as of a date subsequent to such activity or transaction;
28
6.1.10. except as set forth in Schedule 2.14, increase the
compensation payable or to become payable to any director,
officer or employee, except for increases in salary or wages
that in either case are payable or are to become payable in
the ordinary course of business and are consistent with past
practice;
6.1.11. except as set forth in Scheduled 2.14, grant any severance or
termination pay to, or enter into or amend any severance
agreement with, any director, officer or employee; enter into
or amend any employment agreement with any director, officer
or employee that would extend beyond the Closing except on an
at-will basis; or establish, adopt, enter into or amend any
Employee Benefit Plan, except as may be required to comply
with applicable law or the Code;
6.1.12. permit any accounts payable owed to trade creditors to remain
outstanding more than ninety (90) days;
6.1.13. amend the Articles of Incorporation or Bylaws of the Company,
except as otherwise required by this Agreement;
6.1.14. acquire (by merger, exchange, consolidation, acquisition of
stock or assets or otherwise) any corporation, partnership,
joint venture or other business or interest therein or
material assets of any such entity;
6.1.15. issue or sell any additional shares of, or grant any options,
warrants, conversion privileges or rights of any kind to
acquire any share of, any of its capital stock;
6.1.16. create any stock option or other stock based incentive plan;
6.1.17. settle or compromise any pending or threatened litigation or
proceeding relating to the Company, including any
administrative agency matter, unless such settlements or
compromises are for cash payment of five thousand dollars
($5,000) or less, individually and in the aggregate;
6.1.18. enter into any new client/customer agreement or renew any
existing client/customer agreement;
6.1.19. incur any indebtedness or make any loans other than in the
ordinary cause of business, except in accordance with this
Agreement; or
6.1.20. agree to do any of the foregoing.
29
6.2. ACCESS TO BOOKS AND RECORDS. Prior to Closing, Seller shall cause the
Company to permit Buyer and its counsel, accountants and other
representatives reasonable access during normal business hours to all
of the properties, books, contracts, commitments and records of the
Company, and to furnish such statements (financial and otherwise),
records, reports, documents and other information concerning the
Company's operations as Buyer and its counsel reasonably request from
time to time. To the extent requested by Buyer, Seller shall cause
the Company to request its accountants, attorneys and other
representatives to cooperate with the representatives of Buyer in
connection with the right of access granted herein. No information
provided to or obtained by Buyer shall affect any representation or
warranty in this Agreement; however, Buyer has a duty to mitigate the
amount of any potential indemnification claim by notifying Seller
before Closing of any facts which to Buyer's actual knowledge would
constitute a breach of any of Seller's representations or warranties
after Closing.
6.3. NOTICE OF BREACH. Seller shall, and Seller shall cause the Company
to, promptly give notice to Buyer of the occurrence of any event, or
the failure of any event to occur, which results in a breach of any
representation or warranty of Seller or a failure by it or the
Company to comply with any covenant, condition or agreement contained
herein (provided, however, that, any such disclosure shall not in any
way be deemed to amend, modify or in any way affect the
representations, warranties and covenants made by any party in or
pursuant to this Agreement).
6.4. COMMUNICATIONS. Each party to this Agreement shall, and Seller shall
cause the Company to, promptly advise the other party of all
communications received pertaining to the transactions contemplated
by this Agreement, including such communications as are received from
governmental agencies or authorities.
6.5. ANNOUNCEMENTS. Neither party to this Agreement shall, and Seller
shall cause Company not to, without prior agreement of the other
party (which agreement shall not be unreasonably withheld), make any
announcement to the public concerning the transactions contemplated
by this Agreement, except as Buyer, in its sole judgment, may
determine is needed to comply with any requirements of the Securities
and Exchange Commission.
6.6. COOPERATION. The parties to this Agreement agree to cooperate with
each other and to use their best efforts to ensure that all of the
business of Company is transitioned and implemented to Buyer as
contemplated by this Agreement.
30
6.7. NO SOLICITATION. Seller shall not, and Seller shall cause the Company
and of their Affiliates to not, from the date hereof through the
Closing Date, directly or indirectly, through any officer, director,
agent or otherwise, take any action to solicit, initiate, seek,
entertain, encourage, support or respond to any inquiry, proposal or
offer from, furnish any information to, or participate in any
negotiations with, any third party regarding any acquisition of the
Company, any merger or consolidation with or involving the Company,
or any acquisition of any material portion of the capital stock of
the Company, including the grant of any license to any Intellectual
Property of the Company other than licenses in the ordinary course of
business related to the sale of the Company's products. Seller agrees
that it shall cause any such negotiations (other than negotiations
with Buyer) in progress as of the date hereof to be suspended and
Seller shall not, and Seller shall cause the Company to not, accept
or enter into any agreement, arrangement or understanding regarding
any such third party acquisition transaction prior to the termination
hereof. In the event the Company, Seller or any of their Affiliates,
or any of their or their Affiliates' respective officers, directors,
employees or agents, receives any proposal for a third party
acquisition of the Company or any of its assets, or any request for
nonpublic information in connection with any such proposal, Seller
shall, and shall cause the Company to, immediately notify Buyer,
describing in detail the identity of the third party making such
proposal and the terms and conditions of such proposal, and Seller
shall, and shall cause the Company to, promptly reject such
proposal.
7. ADDITIONAL AGREEMENTS AND POST-CLOSING COVENANTS
---------------------------------------------------
7.1. CONFIDENTIALITY OF BUSINESS INFORMATION. The parties heretofore have
received and hereafter may receive various financial and other
information concerning the activities, businesses, assets and
properties of themselves and their respective Affiliates, including
the Company. The parties agree that:
7.1.1. all such information thus received by the parties shall not
at any time, or in any way or manner, be utilized by the
parties for their respective advantage or disclosed by the
parties to others for any purpose whatsoever;
7.1.2. the parties shall take all reasonable measures to assure that
no employee or agent under their respective control shall at
any time use or disclose any information described in this
Section; and
31
7.1.3. this Section shall not apply to any such information that was
known to the parties prior to its disclosure to the parties
in accordance with this Section or was, is or becomes
generally available to the public other than by disclosure by
the parties or any of their respective employees or agents in
violation of this Section.
7.2. CONFIDENTIALITY OF THIS AGREEMENT. The existence, terms and contents
of this Agreement and its schedules and exhibits and the nature and
status of the transactions described herein and therein are
confidential. Without the prior written consent of the other party,
neither party shall, and prior to Closing Seller shall cause the
Company not to, disclose to any person, other than to its respective
directors, officers and key employees, Affiliates and accounting,
investment banking and legal advisers, any such confidential
information unless, in the written opinion of counsel to the party
seeking to make the disclosure, such a disclosure is required by law.
Subject to Section 6.5, the timing and content of any announcements,
press releases or other public statements concerning the transactions
contemplated by this Agreement will occur upon, and be determined by,
the mutual agreement and consent of the parties.
7.3. COVENANT NOT TO COMPETE. For a period of five (5) years from and
after the Closing Date, Seller shall not, and Seller shall cause its
Affiliates to not, (i) engage, directly or indirectly, in the
business of owning, operating, administering, managing or providing
consulting services or financial assistance to, a pharmacy benefit
management business (whether or not for profit) that competes with
Buyer or any of its Affiliates (including, without limitation, the
Company); or (ii) disrupt or attempt to disrupt, or otherwise
interfere with, the relationship, contractual or otherwise, between
the Buyer or any of its Affiliates (including, without limitation,
the Company) on the one hand, and any of their respective customers,
suppliers, health care providers or employees, on the other hand.
8. INDEMNIFICATION
---------------
8.1. SELLER'S INDEMNIFICATION. Seller agrees to indemnify and hold Buyer
and the Company harmless from and against any and all of the
following:
8.1.1. Any and all Losses incurred by Buyer or the Company or their
respective directors, officers, employees and agents, and
each of their heirs, executors, successors and assigns,
because of any inaccuracy in, or breach or violation of, the
representations, warranties or covenants made by Seller in
this Agreement, including, but not limited to any and all
Losses incurred by Buyer or the Company and each of their
directors, officers, employees and agents, and each of their
heirs, executors, successors and assigns arising from any
32
misrepresentation in or omission from any certificate or
other instrument furnished or to be furnished by Seller or
the Company under this Agreement.
8.1.2. Any and all Losses, including, without limitation, any Losses
arising in connection with a Claim brought against Buyer or
the Company, incurred by Buyer or the Company, their
respective directors, officers, employees and agents, and
each of their heirs, executors, successors and assigns,
arising out of the activities or omissions of the Company or
Seller, or any of their respective officers, directors,
employees, agents or representatives, prior to the Closing,
except for those Losses that are: (i) reserved for on the
Financial Statements; or (ii) covered and reimbursed by
insurance.
8.1.3. All Losses related to or resulting from any actions, suits,
proceedings, demands, assessments and judgments incident to
any of the foregoing.
8.1.4. Seller's obligation under this Section 8.1 shall not be
applicable unless and until Buyer shall incur cumulative and
aggregate losses recoverable hereunder in excess of one
hundred thousand dollars ($100,000).
8.2. BUYER'S INDEMNIFICATION. Buyer agrees to indemnify and hold Seller
harmless from and against any and all of the following:
8.2.1. Any and all Losses incurred by Seller or its directors,
officers, employees and agents, and each of their heirs,
executors, successors and assigns, because of any inaccuracy
in, or breach or violation of, the representations,
warranties and covenants made by Buyer in this Agreement.
including, but not limited to any and all Losses incurred by
Seller or its directors, officers, employees and agents, and
each of their heirs, executors, successors and assigns,
arising from any misrepresentation in or omission from any
certificate or other instrument furnished or to be furnished
by Buyer under this Agreement.
8.2.2. Any and all Losses incurred by Seller or its directors,
officers, employees and agents, and each of their heirs,
executors, successors and assigns, arising out of the
activities of the Company, or any of its officers, directors,
employees, agents or representatives, after the Closing Date.
33
8.2.3. All Losses related to or resulting from any actions, suits,
proceedings, demands, assessments and judgments incident to
any of the foregoing.
8.2.4. Buyer's obligations under this Section 8.2 shall not be
applicable unless an until Seller shall incur cumulative and
aggregate loses recoverable hereunder in excess of one
hundred thousand dollars ($100,000).
8.3. NOTICE OF CLAIM OR LOSS.
8.3.1. Whenever indemnification is sought under this Article 8 with
respect to a Claim, the party seeking indemnification (the
"Indemnified Party") shall notify in writing the party from
whom indemnification is sought (the "Indemnifying Party") of
all information concerning the underlying Claim within thirty
(30) calendar days after the Indemnified Party receives
notice of such Claim; provided, however, that if the
Indemnified Party fails to provide the Indemnifying Party
with written notice of the Claim as aforesaid within thirty
(30) days after the Indemnified Party receives notice of such
Claim, the Indemnifying Party will not be obligated to
indemnify the Indemnified Party with respect to such Claim.
Thereafter, the Indemnifying Party shall have the right and
obligation to defend the Indemnified Party, including the
right to retain counsel on behalf of the Indemnified Party
and to enter into any settlement which includes the
Indemnified Party, so long as such settlement is payable by
the Indemnifying Party. Nothing contained herein shall be
construed as prohibiting the Indemnified Party from retaining
its own counsel at its sole expense.
8.3.2. In the event any Indemnified Party should incur a Loss that
does not involve a Claim instituted by a third party, the
Indemnified Party shall promptly deliver a written notice of
such Loss to the Indemnifying Party. The Indemnifying Party
shall not be responsible for any portion of such Loss that
results from any failure of the Indemnified Party to deliver
promptly the said written notice to the Indemnifying Party.
8.4. PAYMENT OF INDEMNIFICATION OBLIGATION.
8.4.1. Upon a final determination of Losses for which Seller is the
Indemnifying Party, the amount of the Losses agreed to or
awarded, as the case may be, shall be paid to the Indemnified
Party within thirty (30) days of such final determination.
34
8.4.2. Upon a final determination of Losses for which Buyer is the
Indemnifying Party, the amount of the Losses agreed to or
awarded, as the case may be, shall be paid to the Indemnified
Party within thirty (30) days of such final determination.
8.5. EXPIRATION OF INDEMNIFICATION. All representations, warranties,
covenants, agreements and indemnities by the parties in this
Agreement, or in any instrument or document furnished in connection
with this Agreement or the transactions contemplated hereby, shall,
unless a different expiration date is expressly referenced therein or
herein, survive the Closing for a period of 550 days following the
Closing Date and the obligations of either party to indemnify the
other party for any losses hereunder shall terminate and expire,
except with respect to Claims already made, at 5:00 p.m. on the 550th
day following the Closing Date. Notwithstanding the foregoing,
Seller's representations and warranties set forth in Sections 2.1
through 2.6, and 2.14(i), Buyer's representations and warranties set
forth in Sections 3.1 through 3.3, the agreements and covenants of
Sections 7.1 through 7.3, and indemnities related to the foregoing,
shall survive the Closing without limitation.
9. TERMINATION
-----------
9.1. TERMINATION. This Agreement may be terminated by mutual consent of
the parties, or by either of the parties by notice to the other:
9.1.1. in the event that any of the conditions precedent to the
performance of the obligations of the party giving such
notice shall not have been fulfilled in all material respects
and cannot be fulfilled on or prior to the Closing Date and
shall not have been waived by such party, or if a material
default shall be made by the other party in the observance or
in the due and timely performance of any of the covenants and
agreements herein contained that cannot be cured on or prior
to the Closing Date and shall not have been waived by the
party giving such notice; or
9.1.2. in the event of the institution or serious threat by any
governmental authority or by any other person of litigation
or proceedings against any of the parties hereto to enjoin,
hinder or delay or to obtain damages or other relief in
connection with this Agreement or the transactions
contemplated herein.
9.2. EFFECT OF TERMINATION. In the event this Agreement is terminated
pursuant to this Article 9, all of the provisions of this Agreement
shall be null and void and of no further force or effect, except for
Sections 7.1 and 7.2 and except as otherwise provided in Section
10.10 herein.
35
10. MISCELLANEOUS
-------------
10.1. AMENDMENT. This Agreement may not be modified, amended, supplemented,
canceled or discharged, except by written instrument executed by all
of the parties hereto or as otherwise provided herein.
10.2. WAIVER. No failure to exercise and no delay in exercising, any right,
power or privilege under this Agreement shall operate as a waiver,
nor shall any single or partial exercise of any right, power or
privilege hereunder preclude the exercise of such or any other right,
power or privilege. No waiver of any breach of any provision shall be
deemed to be a waiver of any preceding or succeeding breach of the
same or any other provision, nor shall any waiver be implied from any
course of dealing between the parties. No extension of time for
performance of any obligations or other acts hereunder or under any
other agreement shall be deemed to be an extension of the time for
performance of any other obligations or any other acts.
10.3. NOTICE. All notices, requests, demands, claims and other
communications hereunder shall be in writing and shall be deemed
given if delivered by certified or registered mail (first class
postage pre-paid), guaranteed overnight delivery or facsimile
transmission, if such transmission is confirmed by delivery by
certified or registered mail (first class postage pre-paid) or
guaranteed overnight delivery, to the following addresses and
telecopy numbers (or to such other addresses or telecopy numbers
which such party shall designate by like notice to the other
parties):
If to Buyer:
-----------
HealthExtras, Inc.
2273 Research Boulevard, 2nd Floor
Rockville, Maryland 20850
Attention: Chief Executive Officer
Facsimile Number: (301) 548-2992
with a copy to the attention of General Counsel
If to the Company:
-----------------
Pharmacy Network National Corporation
3950 Blue Ridge Road
Raleigh, NC 27612
Attention: Jimmy S. Jackson
Facsimile Number: (919) 571-9476
36
If to Seller:
------------
Pharmacy Network National Corporation Trust
3950 Blue Ridge Road
Raleigh, NC 27612
Attn: Jimmy S. Jackson
Facsimile Number (919) 571-9476
With a copy to:
Paul E. Castelloe, Attorney
PO Box 31603
Raleigh, NC 27622
10.4. SEVERABILITY. In the event any provision of this Agreement or portion
thereof is found to be wholly or partially invalid, illegal or
unenforceable in any proceeding, then such provision shall be deemed
to be modified or restricted to the extent and in the manner
necessary to render the same valid and enforceable, or shall be
deemed excised from this Agreement, as the case may require, and this
Agreement shall be construed and enforced to the maximum extent
permitted by law as if such provision had been originally
incorporated herein as so modified or restricted or as if such
provision had not been originally incorporated herein, as the case
may be.
10.5. ENTIRE AGREEMENT. This Agreement (including the Exhibits and
Schedules attached hereto, and other documents delivered at the
Closing pursuant hereto), contains the entire understanding of the
parties in respect of its subject matter and supersedes all prior
agreements and understanding (oral or written) between or among the
parties with respect to such subject matter. The Exhibits and
Schedules constitute a part of this Agreement as though set forth in
full herein.
10.6.BINDING EFFECT; ASSIGNMENT. The rights and obligations of this
Agreement shall bind and inure to the benefit of the parties and
their respective successors and permitted assigns. Nothing expressed
or implied herein shall be construed to give any other individual or
entity any legal or equitable rights hereunder. Except as expressly
provided herein, the rights and obligations of this Agreement may not
be assigned by any party without the prior written consent of the
other parties.
10.7. HEADINGS AND INTERPRETATION. The headings used in this Agreement have
been inserted as a matter of convenience and reference only and shall
not control or affect the meaning or construction of this Agreement.
37
All references to the singular shall include the plural, and vice
versa, where applicable.
10.8. THIRD PARTY BENEFICIARIES. Except as specifically provided herein,
this Agreement does not and is not intended to create any rights in
any person or entity that is not a party to this Agreement.
10.9. EXPENSES. Each party hereto will pay its own legal, accounting and
other fees and expenses incident to the transactions contemplated
hereby, whether or not such transactions shall be consummated. Each
party will be responsible for its own costs relative to the
negotiations of such agreements and the preparation of any schedules
or ancillary documents and agreements applicable to such party and
required by this Agreement.
10.10.SURVIVAL. All covenants, agreements, representations and warranties
made herein or in any other agreement, certificate or instrument
delivered to any party pursuant to or in connection with this
Agreement shall survive the execution and delivery of this Agreement
subject to Section 8.5, above. All statements contained in any
certificate or other instrument delivered by a party hereunder or in
connection herewith shall be deemed to constitute representations and
warranties made by such party. Such representations and warranties
shall survive in full force and effect notwithstanding any
investigation by the other party.
10.11.GOVERNING LAW. This Agreement shall be construed in accordance with
the laws of the State of North Carolina.
38
10.12 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
[Remainder of page intentionally left blank - Signature Pages to follow.]
39
SIGNATURE PAGE TO
STOCK PURCHASE AGREEMENT BY AND AMONG
HEALTHEXTRAS, INC., AND
PHARMACY NETWORK NATIONAL CORPORATION TRUST
INTENDING TO BE LEGALLY BOUND, the parties have duly executed this
agreement on the day and year first above written.
HEALTHEXTRAS, INC. (Buyer)
By: /s/ David T. Blair
-------------------------------
Name: David T. Blair
-------------------------------
Title: Chief Executive Officer
-------------------------------
Page 1 of 7 Signature Pages
SIGNATURE PAGE TO
STOCK PURCHASE AGREEMENT BY AND AMONG
HEALTHEXTRAS, INC., AND
PHARMACY NETWORK NATIONAL CORPORATION TRUST
By its Trustees, who hereby certify that the undersigned constitute all of the
Trustees of Seller.
/s/ Ralph Ashworth /s/ Andrew Barrett
- --------------------- ----------------------------------- (SEAL)
Witness Andrew Barrett, as Trustee for
Pharmacy Network National Corporation Trust
Page 2 of 7 Signature Pages
SIGNATURE PAGE TO
STOCK PURCHASE AGREEMENT BY AND AMONG
HEALTHEXTRAS, INC., AND
PHARMACY NETWORK NATIONAL CORPORATION TRUST
By its Trustees, who hereby certify that the undersigned constitute all of the
Trustees of Seller.
/s/ Robert Lewis /s/ Johnath A. Hill, Sr.
- --------------------- ----------------------------------- (SEAL)
Witness Jonathan A. Hill, Sr., as Trustee for
Pharmacy Network National Corporation Trust
Page 3 of 7 Signature Pages
SIGNATURE PAGE TO
STOCK PURCHASE AGREEMENT BY AND AMONG
HEALTHEXTRAS, INC., AND
PHARMACY NETWORK NATIONAL CORPORATION TRUST
By its Trustees, who hereby certify that the undersigned constitute all of the
Trustees of Seller.
/s/ Paul S. Castelloe /s/ Jimmy S. Jackson
- --------------------- ----------------------------------- (SEAL)
Witness Jimmy S. Jackson, as Trustee for
Pharmacy Network National Corporation Trust
Page 4 of 7 Signature Pages
SIGNATURE PAGE TO
STOCK PURCHASE AGREEMENT BY AND AMONG
HEALTHEXTRAS, INC., AND
PHARMACY NETWORK NATIONAL CORPORATION TRUST
By its Trustees, who hereby certify that the undersigned constitute all of the
Trustees of Seller.
/s/ Paul S. Castelloe s/ Julian E. Upchurch
- --------------------- ----------------------------------- (SEAL)
Witness Julian E. Upchurch, as Trustee for
Pharmacy Network National Corporation Trust
Page 5 of 7 Signature Pages
SIGNATURE PAGE TO
STOCK PURCHASE AGREEMENT BY AND AMONG
HEALTHEXTRAS, INC., AND
PHARMACY NETWORK NATIONAL CORPORATION TRUST
By its Trustees, who hereby certify that the undersigned constitute all of the
Trustees of Seller.
/s/ Robert I. Halperin /s/ Mitchell Watts
- --------------------- ----------------------------------- (SEAL)
Witness Mitchell Watts, as Trustee for
Pharmacy Network National Corporation Trust
Page 6 of 7 Signature Pages
SIGNATURE PAGE TO
STOCK PURCHASE AGREEMENT BY AND AMONG
HEALTHEXTRAS, INC., AND
PHARMACY NETWORK NATIONAL CORPORATION TRUST
By its Trustees, who hereby certify that the undersigned constitute all of the
Trustees of Seller.
/s/ Andrew Barrett /s/ Lloyd Whaley
- --------------------- ----------------------------------- (SEAL)
Witness Lloyd Whaley, as Trustee for
Pharmacy Network National Corporation Trust
Page 7 of 7 Signature Pages