Execution Copy
ASSET PURCHASE AGREEMENT
BETWEEN
CONTINENTAL MANAGED PHARMACY SERVICES, INC.
AND
COMMUNITY PRESCRIPTION SERVICE, INC.
AND
ITS STOCKHOLDERS
April 4, 2001
ASSET PURCHASE AGREEMENT
Agreement entered into as of April 4, 2001, by and between Continental
Managed Pharmacy Services, Inc., an Ohio corporation (the "Buyer"), and
Community Prescription Service, Inc., a Delaware corporation (the "Target"). The
Buyer and the Target are referred to collectively herein as the "Parties."
This Agreement contemplates a transaction in which the Buyer will
purchase all of the assets of the division of the Target that conducts the
business of marketing, soliciting and promoting mail order pharmacy products and
services primarily to individuals afflicted with hepatitis C and HIV/AIDS (the
"Business").
Now, therefore, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, the Parties agree as follows.
1. Definitions.
"Acquired Assets" shall be all of the assets owned by Target and used
in operating and conducting the Business, including those assets listed on
Schedule 1 hereto. The Acquired Assets shall not include the Excluded Assets.
"Adverse Consequences" means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, reasonable
amounts paid in settlement, liabilities, obligations, taxes, liens, losses,
expenses, and fees, including court costs and reasonable attorneys' fees and
expenses.
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.
"Annual Gross Profit" has the meaning set forth in ss.2(d) below.
"Broker's Fee" shall mean the broker's transaction fee in the amount of
$236,000 payable to Target's broker, Roundtable Services LLC.
"Buyer" has the meaning set forth in the preface above.
"Business" shall have the meaning set forth in the preamble above.
"Closing" has the meaning set forth in ss.2(a) below.
"Closing Date" shall mean the date the parties consummate the
transaction contemplated in this Agreement.
"COBRA" means the requirements of Part 6 of Subtitle B of Title I of
ERISA and Code ss.4980B and of any similar state law.
"Code" means the Internal Revenue Code of 1986, as amended.
"Confidential Information" means any information concerning the
businesses and affairs of the Target in connection with the operation of the
Business that is not already generally available to the public.
"Determination Period" has the meaning set forth in ss.2(d) below.
"Determination Period Gross Profit Computation" has the meaning set
forth in ss.2(e) below.
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"Disclosure Schedule" has the meaning set forth in ss.3 below.
"Division" means the Target's division engaged in the business of
marketing, soliciting and promoting mail order pharmacy products and services to
individuals afflicted with hepatitis C and HIV/AIDS.
"Employee Benefit Plan" means any "employee benefit plan" (as such term
is defined in ERISA ss.3(3)) and any other benefit plan, program or arrangement
of any kind.
"Employee Pension Benefit Plan" has the meaning set forth in ERISA
ss.3(2).
"Employee Welfare Benefit Plan" has the meaning set forth in ERISA
ss.3(1).
"Environmental, Health, and Safety Requirements" shall mean all
federal, state, local and foreign statutes, regulations, ordinances and similar
provisions having the force or effect of law, all judicial and administrative
orders and determinations, and all common law concerning public health and
safety, worker health and safety, and pollution or protection of the
environment, including without limitation all those relating to the presence,
use, production, generation, handling, transportation, treatment, storage,
disposal, distribution, labeling, testing, processing, discharge, release,
threatened release, control, or cleanup of any hazardous materials, substances
or wastes, chemical substances or mixtures, pesticides, pollutants,
contaminants, toxic chemicals, petroleum products or byproducts, asbestos,
polychlorinated biphenyls, noise or radiation.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" means each entity which is treated as a single
employer with the Target for purposes of Code ss.414.
"Excluded Assets" means (i) any insurance contract or trust used to
provide benefits to employees of Target and (ii) those assets of Target used
primarily in operating Target's educational or database divisions (excluding any
such assets listed on Schedule 1), including, without limitation, those assets
that are listed on Schedule 2 hereto.
"Fiduciary" has the meaning set forth in ERISA ss.3(21).
"GAAP" means United States generally accepted accounting principles as
in effect from time to time.
"Gross Profit" has the meaning set forth on Schedule 3 hereto.
"Indemnified Party" has the meaning set forth in ss.8(d) below.
"Indemnifying Party" has the meaning set forth in ss.8(d) below.
"Intellectual Property" means (a) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements thereto,
and all patents, patent applications, and patent disclosures, together with all
reissuances, continuations, continuations-in-part, revisions, extensions, and
reexaminations thereof, (b) all trademarks, service marks, trade dress, logos,
trade names, domain names, and corporate names, together with all translations,
adaptations, derivations, and combinations thereof and including all goodwill
associated therewith, and all applications, registrations, and renewals in
connection therewith, (c) all copyrightable works, all copyrights, and all
applications, registrations, and renewals in connection therewith, (d) all mask
works and all applications, registrations, and renewals in connection therewith,
(e) all trade secrets and confidential business information (including ideas,
research and development, know-how,
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formulas, compositions, manufacturing and production processes and techniques,
technical data, designs, drawings, specifications, customer and supplier lists,
pricing and cost information, and business and marketing plans and proposals),
(f) all computer software (including data and related documentation), (g) all
other proprietary rights, and (h) all copies and tangible embodiments thereof
(in whatever form or medium).
"Knowledge" means actual knowledge after reasonable investigation.
"Most Recent Fiscal Year End" means December 31, 2000.
"Multiemployer Plan" has the meaning set forth in ERISA ss.3(37).
"1994 Agreement" has the meaning set forth inss.7(a)(vii) of this
Agreement.
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice.
"Party" has the meaning set forth in the preface above.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Penalty Rate" shall mean, for any day, the rate publicly quoted from
time to time by The Wall Street Journal as the "Prime Rate" plus 100 basis
points per annum.
"POZ Loan" means any amounts loaned by Target to POZ Publishing LLC
under that certain letter of credit in an amount not to exceed $250,000, dated
as of August 29, 2000, between Target and POZ Publishing LLC.
"Preliminary Purchase Price" has the meaning set forth in ss.2(b)
below.
"Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization, or a governmental entity (or any department, agency, or political
subdivision thereof).
"Prohibited Transaction" has the meaning set forth in ERISA ss.406 and
Code ss.4975.
"Quarterly Earn-Out Payment" has the meaning set forth ss.2(d) below.
"Reportable Event" has the meaning set forth in ERISA ss.4043.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Security Interest" means any mortgage, pledge, lien, encumbrance,
charge, or other security interest, other than (a) mechanic's, materialmen's,
and similar liens, (b) liens for taxes not yet due and payable or for taxes that
the taxpayer is contesting in good faith through appropriate proceedings, (c)
purchase money liens and liens securing rental payments under capital lease
arrangements, and (d) other liens arising in the Ordinary Course of Business and
not incurred in connection with the borrowing of money.
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"Subsidiary" means any corporation with respect to which a specified
Person (or a Subsidiary thereof) owns a majority of the common stock or has the
power to vote or direct the voting of sufficient securities to elect a majority
of the directors.
"Target" has the meaning set forth in the preface above.
"Target Share" means any share of the Common Stock, par value $0.01 per
share, of the Target.
"Target Stockholder" means any person who or which holds any Target
Shares on the date hereof.
"Tax" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise severance, stamp, occupation,
premium, windfall, profits, environmental, customs duties, capital stock,
franchise, profits, withholding, social security (or similar), unemployment,
disability, real property, personal property, sales, use, transfer,
registration, value-added, alternative or add-on minimum, estimated or other
tax, including any interest, penalty, or addition thereto, whether disputed or
not.
"Tax Return" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"Third Party Claim" has the meaning set forth in ss.8(d) below.
2. Basic Transaction.
(a) Purchase and Sale of Assets. (i) Subject to the terms and
conditions of this Agreement, the Buyer agrees to purchase from the Target, and
the Target agrees to sell, transfer, convey, and deliver to the Buyer, all of
the Acquired Assets at the closing of the transactions contemplated in this
Agreement (the "Closing") for the consideration specified below in this ss.2.
(ii)The Closing. Subject to ss. 9 of this Agreement, the closing of
the transactions contemplated by this Agreement (the "Closing") shall take
place at the offices of MIM Corporation in Elmsford, New York commencing at
9:00 a.m. local time on the second business day following the satisfaction
or waiver of all conditions to the obligations of the Parties to consummate
the transactions contemplated hereby (other than conditions with respect to
actions the respective Parties will take at the Closing itself) or such
other date on or prior to May 1, 2001 as the Parties may mutually determine
(the "Closing Date").
(iii) Deliveries at the Closing. At the Closing, (i) the Target will
deliver to the Buyer the various certificates, instruments, and documents
referred to in ss.7(a) below; (ii) the Buyer will deliver to the Target the
various certificates, instruments, and documents referred to in ss.7(b)
below; and (iii) the Buyer will deliver to the Target the Preliminary
Purchase Price (defined below).
(b) Preliminary Purchase Price. The Buyer agrees to pay to the Target
at the Closing One Million Five Hundred Thousand Dollars ($1,500,000.00) (the
"Preliminary Purchase Price") by delivery of cash payable by wire transfer or
delivery of other immediately available funds. The Preliminary Purchase Price is
subject to adjustment as set forth in ss. 2(d) below.
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(c) Assumed Liabilities. The Buyer will not assume or have any
responsibility with respect to any liability or obligation of the Target,
including, but not limited to liability arising under (i) any agreement
including those listed in ss.3(n) of the Disclosure Schedule and (ii) any
Employee Benefit Plan.
(d) Adjustment to Preliminary Purchase Price. The Preliminary Purchase
Price will be adjusted as follows: For each of the quarterly periods commencing
with the quarter ending March 31, 2001 (Gross Profit calculations for each
quarter shall include revenues from the full quarterly period and shall not be
adjusted to take into account any advances by Buyer or its Affiliates to Target
under the 1994 Agreement for any month, or portion thereof, prior to the Closing
Date) and ending with the quarter ending December 31, 2004 (each such quarterly
period being hereafter referred to as a "Determination Period"), Buyer, subject
to its right of offset pursuant to ss.8(f), shall, within 7 days after the
delivery by Buyer of each Determination Period Gross Profit Computation pursuant
to Section 2(e) below, pay to the Target an aggregate amount equal to 20% of the
Division's Gross Profit earned during such Determination Period (a "Quarterly
Earn-out Payment"). Notwithstanding the foregoing, in the event that the
aggregate Gross Profit for any fiscal year ending on or prior to December 31,
2004 ("Annual Gross Profit") exceeds $2,500,000, the Target will be entitled to
receive, subject to the Buyer's right of offset pursuant to 8(f), an amount
equal to 35% of the Annual Gross Profit of the Business in excess of $2,500,000
(the "Bonus Amount"). Any such Bonus Amount shall be paid within 7 days after
the delivery by Buyer of the Determination Period Gross Profit Computation for
the last fiscal quarter of a year pursuant to ss.2(e) below. In the event that
Buyer fails to pay to Target when due (as determined by this ss.2(d) or ss.2(e),
as appropriate) a Quarterly Earn-out Payment or Bonus Amount, as the case may
be, earned by Target, such overdue amount (including any amounts owed to Target
as determined by the Accounting Firm in ss.2(e)) shall bear interest from the
date such payment was originally due until paid in full at the Penalty Rate (as
measured from the date such amounts were originally due).
(e) Preparation of Determination Period Gross Profit Computation.
Within 45 days after the end of each Determination Period, the Buyer will
prepare and deliver to the Target detailed calculation of the Gross Profit
Computation sheet (the "Determination Period Gross Profit Computation ") for
such Determination Period (determined utilizing the accounting policies of Buyer
prior to the consummation of the transaction contemplated by this Agreement)
including a statement of each of the components of the calculation of Gross
Profit for such determination. The components of Gross Profit shall be
calculated in accordance with generally accepted accounting principles applied
on a basis consistent with the Buyer's consolidated financial statements. In the
event Target disagrees with Buyer's calculation of Annual Gross Profit, Target
shall notify Buyer, and Target and Buyer shall seek in good faith to resolve any
differences. The Target and its accountants will be permitted to review the
working papers of the Buyer and its accountants and any financial records
relating to the calculation of Annual Gross Profit. Buyer and its accountants
will also be available at reasonable times to discuss questions raised by Target
and its accountants. In the event the Parties cannot resolve their differences
within 30 days of Target's notification to Buyer, the Parties shall promptly
submit to a Big Five accounting firm (the "Accounting Firm") (other than ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ or any other firm that has audited the books of MIM Corporation, the
shareholder of Buyer, within the last five years) mutually acceptable to the
Parties for review and resolution of the disputed Annual Gross Profit
Computation. The Accounting Firm shall render a decision resolving the matter
submitted to it within 30 days of submission. The decision of the Accounting
Firm shall be final and binding on the Parties absent manifest error. The cost
of the audit shall be borne by Target, provided, however, that (i) in the event
that Annual Gross Profit as determined by the Accounting Firm exceeds the Annual
Gross Profit as determined by Buyer by greater than 5%, but by less than 15%,
then the cost of any submission to an Accounting Firm shall be borne 50% by each
of the Parties or (ii) in the event that the Annual Gross Profit as determined
by the Accounting Firm exceeds the Annual Gross Profit as determined by Buyer by
15% or greater, then the cost of any submission to an Accounting Firm shall be
borne entirely by Buyer. Target shall be entitled to exercise the foregoing
audit rights no more than once per year to review the Annual Gross Profit
calculation of Buyer for up to the two most recently completed fiscal years of
Buyer beginning on or after January 1, 2001; provided, however, that the Annual
Gross Profit for any fiscal year may not reviewed more than once. Any dispute as
to the interpretation or effectuation of the provisions
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of this ss.2(e) shall be resolved promptly in accordance with the arbitration
provisions set forth in ss.10(q) hereof; provided however, that in no event
shall the decision of the Accounting Firm be subject to review or appeal absent
manifest error.
3. Representations and Warranties of the Target. The Target represents
and warrants to the Buyer that the statements contained in this ss.3 are correct
and complete as of the date of this Agreement except as set forth in the
disclosure schedule accompanying this Agreement and initialed by the Parties
(the "Disclosure Schedule"). The Disclosure Schedule will be arranged in
paragraphs corresponding to the lettered and numbered paragraphs contained in
this ss.3.
(a) Organization and Standing of the Target. The Target is a
corporation duly organized, validly existing, and in good standing under the
laws of the jurisdiction of its incorporation. The Target is qualified to do
business as a foreign corporation in each jurisdiction in which the failure to
be so qualified would have a material adverse effect on its business or
properties.
(b) Authorization of Transaction. The Target has full power and
authority (including full corporate power and authority) to execute and deliver
this Agreement and to perform its obligations hereunder. Without limiting the
generality of the foregoing, the board of directors of the Target and the Target
Stockholders have duly authorized the execution, delivery, and performance of
this Agreement by the Target. This Agreement constitutes the valid and legally
binding obligation of the Target, enforceable in accordance with its terms and
conditions.
(c) Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby
(including the assignments referred to in ss.2 above), will (i) violate any
constitution, statute, regulation, rule, injunction, judgment, order, decree,
ruling, charge, or other restriction of any government, governmental agency, or
court to which the Target or any of its assets are subject or any provision of
the charter or bylaws of the Target or (ii) conflict with, result in a breach
of, constitute a default under, result in the acceleration of, create in any
party the right to accelerate, terminate, modify, or cancel, or require any
notice under any agreement, contract, lease, license, instrument, or other
arrangement to which the Target is a party or by which it is bound or to which
any of its assets are subject (or result in the imposition of any Security
Interest upon any of its assets). The Target does not need to give any notice
to, make any filing with, or obtain any authorization, consent, or approval of
any government or governmental agency in order for the Parties to consummate the
transactions contemplated by this Agreement (including the assignments referred
to in ss.2 above).
(d) Brokers' Fees. Other than the Broker's Fee, neither the Target
Stockholders nor the Target has any liability or obligation to pay any fees or
commissions to any broker, finder, or agent with respect to the transactions
contemplated by this Agreement for which the Buyer could become liable or
obligated.
(e) Title to Assets. Except with respect to Intellectual Property which
is addressed in ss.3(k) below, the Target has good and marketable title to all
of the Acquired Assets, free and clear of any Security Interest or restriction
on transfer. The Target does not have any subsidiaries that own any of the
Acquired Assets used in the Business.
(f) Events Subsequent to Most Recent Fiscal Year End. Since the Most
Recent Fiscal Year End, there has not been any material adverse change in the
business, financial condition, operations, results of operations, or future
prospects of the Target with respect to the Business. Without limiting the
generality of the foregoing, since that date:
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(i) the Target, in connection with the operation of the Business, has
not sold, leased, transferred, or assigned any material assets, tangible or
intangible, outside the Ordinary Course of Business;
(ii) the Target, in connection with the operation of the Business, has
not entered into any material agreement, contract, lease, or license
outside the Ordinary Course of Business;
(iii) Target has not received any notice that any party (including the
Target in connection with the operation of the Business) has accelerated,
terminated, made material modifications to, or cancelled any material
agreement, contract, lease, or license to which the Target in connection
with the operation of the Business is a party or by which any of its assets
is bound;
(iv) the Target in connection with the operation of the Business has
not made any capital expenditures in excess of a $10,000 outside the
Ordinary Course of Business;
(v) the Target in connection with the operation of the Business has
not made any capital investment in, or any material loan to, any other
Person, other than the POZ Loan, in excess of $10,000 outside the Ordinary
Course of Business;
(vi) the Target in connection with the operation of the Business has
not granted any license or sublicense of any material rights under or with
respect to any Intellectual Property;
(vii) other than those losses in August 1999, in the amount of
approximately $50,000 due to water damage, the Target in connection with
the operation of the Business has not experienced any material damage,
destruction, or loss (whether or not covered by insurance) in excess of
$5,000 to its property;
(viii) the Target has not made any loan to, or entered into any other
transaction with, any of the directors, officers, and employees of the
Target or Affiliates, other than the POZ Loan, outside the Ordinary Course
of Business;
(ix) the Target has not granted any increase in the base compensation
of any of the directors, officers, and employees of the Target working
primarily in the Business outside the Ordinary Course of Business; and
(x) the Target in connection with the operation of the Business has
not committed to any of the foregoing.
(g) Undisclosed Liabilities. The Target does not have any material
liability (whether known or unknown, whether asserted or unasserted, whether
absolute or contingent, whether accrued or unaccrued, whether liquidated or
unliquidated, and whether due or to become due, including any liability for
taxes) (i) with respect to the agreements listed on ss.3(n) of the Disclosure
Schedule, other than the obligations of Target in accordance with the terms of
such agreements) or (ii) that would adversely affect the value of the Acquired
Assets or Shared Assets or the right to use the Shared Assets free and clear of
any Security Interest or restriction on transfer.
(h) Legal Compliance. The Target in connection with the operation of
the Business has complied with all applicable laws (including rules,
regulations, codes, plans, injunctions, judgments, orders, decrees, rulings, and
charges thereunder) of federal, state, local, and foreign governments (and all
agencies thereof), and no action, suit, proceeding, hearing, investigation,
charge, complaint, claim, demand, or notice has been filed
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or commenced against a in connection with its operation of the Business alleging
any failure so to comply, except where the failure to comply would not have a
material adverse effect on the business, financial condition, operations,
results of operations, or future prospects of the Buyer in connection with the
operation of the Business.
(i) Tax Matters. The Target has filed all Tax Returns that it was
required to file. All such Tax Returns were correct and complete in all material
respects. All Taxes owed by the Target in connection with the operation of the
Business (whether or not shown on any Tax Return) have been paid. There are no
liens on any of the assets of the Target that arose in connection with any
failure (or any alleged failure) to pay any Tax.
(j) Real Property.
(i) The Target in connection with the operation of the Business does
not own any real property.
(ii) ss.3(j)(ii) of the Disclosure Schedule lists and describes
briefly all real property leased or subleased to the Target in connection
with the operation of the Business. The Target has delivered to the Buyer
correct and complete copies of the leases and subleases listed in
ss.3(j)(ii) of the Disclosure Schedule (as amended to date). With respect
to each material lease and sublease listed in ss.3(j)(ii) of the Disclosure
Schedule:
(A) the lease or sublease is a legal, valid, binding, and
enforceable obligation of Target, and in full force and effect in all
material respects;
(B) Target is not in material breach or default under the lease
or sublease, and no event has occurred which, with notice or lapse of
time, would constitute a material breach or default by Target or
permit termination, modification, or acceleration thereunder by any
other party thereto;
(C) Target has not, nor has it, received any notice that any
party to the lease or sublease has repudiated any material provision
thereof;
(D) there are no material disputes, oral agreements, or
forbearance programs in effect as to the lease or sublease;
(E) the Target in connection with the operation of the Business
has not assigned, transferred, conveyed, mortgaged, deeded in trust,
or encumbered any interest in the leasehold or subleasehold; and
(F) all facilities leased or subleased thereunder by Target have
received all approvals of governmental authorities (including material
licenses and permits) required in connection with the operation
thereof, and have been operated and maintained in accordance with
applicable laws, rules, and regulations in all material respects.
(k) Intellectual Property.
(i) Except as set forth on Part I of ss.3(k)(i) of the Disclosure
Schedule, the Target owns or has the right to use pursuant to license,
sublicense, agreement, or permission all Intellectual Property necessary
for the operation of the Business as presently conducted and each such item
of Intellectual Property is identified on Part II of ss.3(k)(i) of the
Disclosure Schedule. Each item of Intellectual
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Property owned or used by the Target in connection with the operation of
the Business immediately prior to the Closing hereunder will be owned or
available for use by the Buyer on identical terms and conditions
immediately subsequent to the Closing hereunder. Target has taken all
reasonable steps to maintain and protect each material item of Intellectual
Property that it owns or uses in connection with the operation of the
Business.
(ii) The Target has not, and to the Knowledge of any of the Target
Stockholders or any director of the Target, the Target has not received in
connection with the operation of the Business (i) any notice of any claim
of infringement or conflict with any Intellectual Property right of any
third party or (ii) any notice or claim (whether written, oral or
otherwise) challenging Target's ownership or rights in the Intellectual
Property or claiming that any other person or entity has any legal or
beneficial ownership with respect thereto(including any claim that Target
must license or refrain from using any Intellectual Property rights of any
third party). To the Knowledge of any of the Target Stockholders and the
directors of the Target, none of the Target Stockholders, directors,
officers, employees or any third party has interfered with, infringed upon,
misappropriated, or violated any material Intellectual Property rights of
the Target in connection with Target's operation of the Business.
With respect to each item of Intellectual Property required to be
identified in ss.3(k)(i) of the Disclosure Schedule:
(A) Except as otherwise disclosed on such Disclosure Schedule,
Target possesses all right, title, and interest in and to the item,
free and clear of any Security Interest, license, or other
restriction;
(B) the item is not subject to any outstanding injunction,
judgment, order, decree, ruling, or charge;
(C) no action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand is pending or, to the Knowledge of any of
the Target Stockholders and the directors and officers of the Target
and its Subsidiaries, is threatened which challenges the legality,
validity, enforceability, use, or ownership of the item; and
(D) Target has not ever agreed to indemnify any Person for or
against any interference, infringement, misappropriation, or other
conflict with respect to the item.
(iii) ss.3(k)(iii) of the Disclosure Schedule identifies each material
item of Intellectual Property that any third party owns and that Target
uses pursuant to license, sublicense, agreement, or permission in
connection with the Business. The Target has delivered to the Buyer correct
and complete copies of all such licenses, sublicenses, agreements, and
permissions (as amended to date). With respect to each item of Intellectual
Property required to be identified in ss.3(k)(iii) of the Disclosure
Schedule:
(A) the license, sublicense, agreement, or permission covering
the item is legal, valid, binding and enforceable against Target, and
in full force and effect in all material respects;
(B) the license, sublicense, agreement, or permission will
continue to be legal, valid, binding and enforceable against Target,
and in full force and effect on identical terms following the
consummation of the transactions contemplated hereby (including the
assignments and assumptions referred to in ss.8 below);
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(C) Target has not received any notice that any party to the
license, sublicense, agreement, or permission is in material breach or
default, or that any event has occurred which with notice or lapse of
time would constitute a material breach or default or permit
termination, modification, or acceleration thereunder;
(D) Target has not received any notice that any party to the
license, sublicense, agreement, or permission has repudiated any
material provision thereof;
(E) the Target in connection with the operation of the Business
has not granted any sublicense or similar right with respect to the
license, sublicense, agreement, or permission; and.
(F) to the Knowledge of any of the Target Stockholders and the
directors and officers (and employees with responsibility for
Intellectual Property matters) of the Target, no action, suit,
proceeding, hearing, investigation, charge, complaint, claim, or
demand is pending or threatened which challenges the legality,
validity, or enforceability of the underlying item of Intellectual
Property used in the Business.
(iv) None of the Target Stockholders or any director or officer (or
employee with responsibility for Intellectual Property matters) of the
Target has received any notice that any new product, invention, or
procedure has been developed which reasonably could be expected to
supersede or make obsolete any product or process used in the Business.
(l) Tangible Assets. The tangible Acquired Assets are free from
material defects (patent and latent), have been maintained in accordance with
normal industry practice, and are in good operating condition and repair
(subject to normal wear and tear).
(m) Scope of Business. As of the Closing Date, other than its
Educational Division, the Target's primary business is conducting the business
of marketing, soliciting and promoting mail order pharmacy products and services
to individuals afflicted with hepatitis C and HIV/AIDS and Target does not
direct such marketing, solicitation or promoting activities to any other disease
state. Neither Target nor any of the Target Stockholders conducts any retail
pharmacy operations.
(n) Contracts.ss.3(n) of the Disclosure Schedule lists the following
contracts and other agreements to which the Target, in connection with the
operation of the Business, is a party:
(i) any agreement (or group of related agreements) for the lease of
personal property to or from any Person providing for lease payments in
excess of $10,000 per annum;
(ii) any agreement (or group of related agreements) for the purchase
or sale of raw materials, commodities, supplies, products, or other
personal property, or for the furnishing or receipt of services, the
performance of which will extend over a period of more than one year, or
require expenditures consideration in excess of $10, 000;
(iii) any agreement concerning a profit sharing, partnership, joint
venture or other similar arrangement;
(iv) any agreement (or group of related agreements) under which it has
created, incurred, assumed, or guaranteed any indebtedness for borrowed
money, or any capitalized lease obligation, in excess of $10,000 or under
which it has imposed a Security Interest on any of its assets, tangible or
intangible;
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(v) any material agreement concerning confidentiality,
non-solicitation of employees or customers or noncompetition;
(vi) any material agreement involving any of the Target Stockholders
and their Affiliates;
(vii) any agreement for the employment of any individual on a
full-time, part-time, consulting, or other basis;
(viii) any agreement under which it has advanced or loaned any amount
to any of the directors, officers, and employees of the Target outside the
Ordinary Course of Business;
(ix) any agreement under which the consequences of a default or
termination could reasonably be expected to have a material adverse effect
on the business, financial condition, operations, results of operations, or
future prospects of the Business as a whole; or
(x) any other agreement (or group of related agreements) the
performance of which involves consideration in excess of $10,000.
The Target has delivered to the Buyer a correct and complete copy of each
written agreement listed in ss.3(n) of the Disclosure Schedule (as amended to
date). With respect to each such agreement: (A) the agreement is legal, valid,
binding and enforceable obligation of Target, and in full force and effect in
all material respects, and after giving effect to the transfer, assignment and
conveyances of the Acquired Asset contemplated hereby at the Closing, will
continue to be in full force and effect in all material respects; (B) Target is
not in material breach or default, and no event has occurred which with notice
or lapse of time would constitute a material breach or default by Target, or
permit termination, modification, or acceleration by any other party thereto,
under the agreement; and (C) Target has not received any notice that any party
has repudiated any material provision of the agreement.
(o) Litigation. ss.3(o) of the Disclosure Schedule sets forth each
instance in which the Target in connection with the operation of the Business
(i) is subject to any outstanding injunction, judgment, order, decree, ruling,
or charge or (ii) is a party or, to the Knowledge of any of the Target
Stockholders and the directors and officers of the Target and its Subsidiaries,
is threatened to be made a party to any action, suit, proceeding, hearing, or
investigation of, in, or before any court or quasi-judicial or administrative
agency of any federal, state, local, or foreign jurisdiction or before any
arbitrator. Since June 29, 2000, other than as disclosed on ss.3(o) of the
Disclosure Schedule, Target has not received any notice of any new claim,
action, suit, proceeding, hearing, or investigation, and Target Stockholders,
have no Knowledge of any threatened new claim, action, suit, proceeding,
hearing, or investigation, in each case arising from or related to the marketing
or operation of the financial hardship waiver program described in that certain
letter dated June 29,2000 from MIM Corporation to Target.
(p) Employees. Except as set forth on ss.3(p) of the Disclosure
Schedule. none of the Target Stockholders and the directors and officers of the
Target and its Subsidiaries has any Knowledge of (i) any organizational effort
presently being made or threatened by or on behalf of any labor union with
respect to employees of the Target in connection with the operation of the
Business or (ii) an agreement with any employee of Target that has a severance
payment provision that would be triggered by the transactions contemplated by
this Agreement.
(q) Employee Benefits.
(i) ss.3(q) of the Disclosure Schedule lists each Employee Benefit
Plan that the Target maintains or to which the Target contributes or has
any obligation to contribute in connection
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with the Business. The requirements of COBRA have been met in all material
respects with respect to each such Employee Benefit Plan that is maintained
or sponsored by Target or any ERISA Affiliate which is an Employee Welfare
Benefit Plan subject to COBRA.
(ii) With respect to each Employee Benefit Plan that the Target or any
ERISA Affiliate maintains, to which any of them contributes, or has an
obligation to contribute to, or within the last 6 years has maintained or
has had an obligation to contribute to, in connection with any employee of
the Business the Target has no material liability (whether known or
unknown, whether asserted or unasserted, whether absolute or contingent,
whether accrued or unaccrued, whether liquidated or unliquidated, and
whether due or to become due) to the PBGC (other than with respect to PBGC
premium payments not yet due) or otherwise under Title IV of ERISA
(including any withdrawal liability as defined in ERISA ss.4201) or under
the Code with respect to any such Employee Benefit Plan which is an
Employee Pension Benefit Plan, or under COBRA with respect to any such
Employee Benefit Plan which is an Employee Welfare Benefit Plan.
(iii) Neither the Target nor any ERISA Affiliate contributes to, has
any obligation to contribute to, or has any material liability (whether
known or unknown, whether asserted or unasserted, whether absolute or
contingent, whether accrued or unaccrued, whether liquidated or
unliquidated, and whether due or to become due), including withdrawal
liability (as defined in ERISA ss.4201), under or with respect to any
Multiemployer Plan.
(iv) The Target does not maintain, contribute to or have an obligation
to contribute to, or has any material liability or potential liability with
respect to, any Employee Welfare Benefit Plan providing medical, health, or
life insurance or other welfare-type benefits for retirees or terminated
employees working primarily in the Business, their spouses, or their
dependents (other than in accordance with COBRA).
(r) Environmental, Health, and Safety Matters The Target in connection
with the operation of the Business has complied and is in compliance, in each
case in all material respects, with all material Environmental, Health, and
Safety Requirements.
(s) Certain Business Relationships with the Division and the Division
Subsidiaries. None of the Target Stockholders and their Affiliates owns any
material asset, tangible or intangible, which is used primarily in the Business.
(t) Customers of Target. Based on a review of the top 70 clients
(ranked by dollar value of prescriptions ordered during 2000) on the client list
attached to a letter from MIM Corporation to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, dated as of March
20, 2001, as of February 28, 2001, no more than 3 of the top 70 clients are
employees of POZ Publishing LLC or Target.
(u) Disclosure. The representations and warranties contained in this
ss.3 do not knowingly contain any untrue statement of a material fact and Target
has not knowingly omitted to state any material fact necessary in order to make
the statements and information contained in this ss.3 not misleading, which
untrue statement or omitted fact, as the case may be, materially and adversely
affects Buyer's operation of the Business after the date hereof.
4. Representations and Warranties of the Buyer. The Buyer represents
and warrants to the Target that the statements contained in this ss.4 are
correct and complete as of the date of this Agreement except as set forth in the
Disclosure Schedule. The Disclosure Schedule will be arranged in paragraphs
corresponding to the lettered and numbered paragraphs contained in this ss.4.
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(a) Organization of the Buyer. The Buyer is a corporation duly
organized, validly existing, and in good standing under the laws of the
jurisdiction of its incorporation. The Buyer is qualified to do business as a
foreign corporation in each jurisdiction in which the failure to be so qualified
would have a material adverse effect on its business or properties.
(b) Authorization of Transaction. The Buyer has full power and
authority (including full corporate power and authority) to execute and deliver
this Agreement and to perform its obligations hereunder. Without limiting the
generality of the foregoing, the board of directors of the Buyer has duly
authorized the execution, delivery and performance of this Agreement by the
Buyer. This Agreement constitutes the valid and legally binding obligation of
the Buyer, enforceable in accordance with its terms and conditions.
(c) Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby
(including the assignments referred to in ss.2 above), will (i) violate any
constitution, statute, regulation, rule, injunction, judgment, order, decree,
ruling, charge, or other restriction of any government, governmental agency, or
court to which the Buyer or any of its assets are subject or any provision of
its charter or bylaws or (ii) conflict with, result in a breach of, constitute a
default under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
agreement, contract, lease, license, instrument, or other arrangement to which
the Buyer is a party or by which it is bound or to which any of its assets is
subject, (or result in the imposition of any Security Interest upon any of its
assets) except where the violation, conflict, breach, default, acceleration,
termination, modification, cancellation, failure to give notice, or Security
Interest would not have a material adverse effect on the ability of the Buyer to
operate the Business after the Closing Date. The Buyer does not need to give any
notice to, make any filing with, or obtain any authorization, consent, or
approval of any government or governmental agency in order for the Parties to
consummate the transactions contemplated by this Agreement (including the
assignments referred to in ss.2 above), except where the failure to give notice,
to file, or to obtain any authorization, consent, or approval would not have a
material adverse effect on the ability of the Buyer to operate the Business
after the Closing Date.
(d) Brokers' Fees. The Buyer has no liability or obligation to pay any
fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which the Target could become
liable or obligated, including the Broker's Fee.
(e) No New Hardship Program Claims. Since June 29, 2000, Buyer has not
received any notice of any new claim, action, suit, proceeding, hearing, or
investigation, and Buyer has no Knowledge of any new threatened claim, action,
suit, proceeding, hearing, or investigation, arising from or related to the
marketing or operation of the financial hardship waiver program described in
that certain letter, dated June 29, 2000, from MIM Corporation to Target.
5. Pre-Closing Covenants. The Parties agree as follows with respect to
the period between the execution of this Agreement and the Closing.
(a) General. Each of the Parties will use its reasonable best efforts
to take all action and to do all things necessary, proper, or advisable in order
to consummate and make effective the transactions contemplated by this Agreement
(including satisfaction, but not waiver, of the closing conditions set forth in
ss.7 below).
(b) [RESERVED]
(c) Operation of Business. The Target will not engage in any practice,
take any action, or enter into any transaction of the sort described in ss.3(f)
above.
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(d) Preservation of Business. The Target will use its reasonable best
efforts to keep its business and properties substantially intact, including its
present operations, physical facilities, working conditions, and relationships
with lessors, licensors, suppliers, customers, and employees.
(e) Full Access and Cooperation. The Target will permit representatives
of the Buyer to have full access at all reasonable times and in a manner so as
not to interfere with the normal business operations of the Business (except
with respect to allowing representatives of Buyer to participate on phone calls
with clients) to all premises, properties, personnel, books, records, contracts,
and documents of or pertaining to the Business. Each of the Target, ▇▇▇▇ ▇▇▇▇▇
and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ will also otherwise assist Buyer in any commercially
reasonable manner in order to assist Buyer to develop and provide their own
stand alone services to replace the services currently performed by Target
employees, including, allowing representatives of Buyer to participate on phone
calls with clients of the Business. Buyer shall, in accordance with the MIM
Corporation's reimbursement procedures applicable to consultants of MIM
Corporation, reimburse any reasonable out of pocket expenses incurred by ▇▇▇▇▇
and ▇▇▇▇▇▇▇ as a result of their assistance pursuant to this ss.5(e).
(f) Notice of Developments. Each Party will give prompt written notice
to the other Party of any material adverse development causing a breach of any
of its own representations and warranties in ss.3 and ss.4 above, in any
material respect. No disclosure by any Party pursuant to this ss.5(f), however,
shall be deemed to amend or supplement the Disclosure Schedule or to prevent or
cure any misrepresentation, breach of warranty, or breach of covenant.
(g) Exclusivity. The Target will not (i) solicit, initiate, or
encourage the submission of any proposal or offer from any Person relating to
the acquisition of any capital stock or other voting securities, or any
substantial portion of the assets, of the Business (including any acquisition
structured as a merger, consolidation, or share exchange) (each, an
"Acquisition") or (ii) participate in any discussions or negotiations regarding,
furnishing any information with respect to, assist or participate in, or
facilitate in any other manner any effort or attempt by any Person to do or seek
any of the foregoing
6. Post-Closing Covenants. The Parties agree as follows with respect to
the period following the Closing.
(a) General. In case at any time after the Closing any further action
is necessary to carry out the purposes of this Agreement, each of the Parties
will take such further action (including the execution and delivery of such
further instruments and documents) as the other Party reasonably may request,
all at the sole cost and expense of the requesting Party (unless the requesting
Party is entitled to indemnification therefore under ss.8 below). The Target
acknowledges and agrees that from and after the Closing the Buyer will be
entitled to possession of all documents, books, records (but not tax records)
and agreements, constituting the Acquired Assets.
(b) Litigation Support. In the event and for so long as any Party
actively is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand (each, an "Action")
in connection with (i) any transaction contemplated under this Agreement or (ii)
any fact, situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction on or prior
to the Closing Date involving the Business, the other Party will provide
reasonable cooperation with the contesting or defending Party and its counsel in
the contest or defense, make available, at reasonable times, its personnel and
its officers and directors and provide such access to its books and records as
shall be reasonably necessary in connection with the contest or defense, all at
the sole cost and expense of the contesting or defending Party (unless the
contesting or defending Party is entitled to indemnification therefore under
ss.8 below).
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(c) Transition. The Target will not take any action that is designed or
intended to discourage any lessor, licensor, customer, supplier, or other
business associate of Target in connection with the operation of the Business
from maintaining the same business relationships with the Buyer after the
Closing as it maintained with the Target in connection with the operation of the
Business.
(d) Confidentiality. The Target will treat and hold as confidential all
of the Confidential Information, refrain from using any of the Confidential
Information except in connection with this Agreement, and deliver promptly to
the Buyer or destroy, at the request and option of the Buyer, all tangible
embodiments (and all copies) of the Confidential Information which are in its
possession. In the event that the Target is requested or required (by oral
question or request for information or documents in any legal proceeding,
interrogatory, subpoena, civil investigative demand, or similar process) to
disclose any Confidential Information, the Target will notify the Buyer promptly
of the request or requirement so that the Buyer may seek an appropriate
protective order or waive compliance with the provisions of this ss.6(d). If, in
the absence of a protective order or the receipt of a waiver hereunder, the
Target is, on the advice of counsel, compelled to disclose any Confidential
Information to any tribunal or else stand liable for contempt, the Target may
disclose the Confidential Information to the tribunal; provided, however, that
the Target shall use its best efforts to obtain, at the request of the Buyer, an
order or other assurance that confidential treatment will be accorded to such
portion of the Confidential Information required to be disclosed as the Buyer
shall designate.
(e) Covenant Not to Compete.
(i) For a period commencing on the Closing Date and ending on the
earlier of (A) December 31, 2004 and (B) the 30th day following the failure
of Buyer to pay to Target the properly calculated Quarterly Earn-Out
Payment (as determined by ss.2(d) or ss.2(e), as appropriate), less any
amount offset under ss.8(f) below, when due under ss.2(d) or ss.2(e), as
appropriate, neither Target nor any of the Target Stockholders, officers or
directors of Target, will engage directly or indirectly in any business of
marketing, soliciting and promoting mail order pharmacy products and
services to individuals in the gay, lesbian population or individuals
afflicted with hepatitis C and HIV/AIDS in the United States; provided,
however, that no termination of this non-competition covenant by reason of
the breach by Buyer of its payment obligations under ss.2 above shall
prejudice any rights Target may have to enforce its rights under ss.2(d)
and (e); provided, further however, that no owner of less than 1% of the
outstanding stock of any publicly traded corporation shall be deemed to
engage in such prohibited activities solely by reason thereof in any of its
businesses. If the final judgment of a court of competent jurisdiction
declares that any term or provision of this ss.6(e)(i) is invalid or
unenforceable, the Parties agree that the court making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration, or area of the term or provision, to delete specific words or
phrases, or to replace any invalid or unenforceable term or provision with
a term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision,
and this Agreement shall be enforceable as so modified after the expiration
of the time within which the judgment may be appealed.
(ii) For a period commencing on the Closing Date and ending on the
earlier of (A) December 31, 2004 and (B) the continuance of a material
breach (for 30 days after receipt of notice from Buyer of such breach) of
Target's obligations under ss.6(b),ss.6(c),ss.6(d),ss.6(e)(i) or ss.6(f) of
this Agreement or the CPS License Agreement, neither Buyer nor any of its
Affiliates will publish and sell, independent of any other service or
product that it provides, any educational or informational publications or
materials related to either of the HIV/AIDS or Hepatitis-C disease states;
provided, however, that the Parties understand and agree that such
restriction shall not, and is in no way intended to, prohibit Buyer's or
any of its Affiliates' (x) publication or use of materials related to the
marketing of their respective products and services (as such materials are
used as of the Closing Date), (y) publication on a website controlled by
Buyer or any of its Affiliates of clinical pharmaceutical
-15-
information related to the use of pharmaceuticals or pharmaceutical related
products or services of Buyer or any of its Affiliates or (z) publication
of clinical pharmaceutical information that is sent to a customer of Buyer
or its Affiliates in connection with the use by such customer of
pharmaceutical related products or services provided to such customer by
Buyer or its Affiliates. If the final judgment of a court of competent
jurisdiction declares that any term or provision of this ss.6(e)(ii) is
invalid or unenforceable, the Parties agree that the court making the
determination of invalidity or unenforceability shall have the power to
reduce the scope, duration, or area of the term or provision, to delete
specific words or phrases, or to replace any invalid or unenforceable term
or provision with a term or provision that is valid and enforceable and
that comes closest to expressing the intention of the invalid or
unenforceable term or provision, and this Agreement shall be enforceable as
so modified after the expiration of the time within which the judgment may
be appealed.
(f) Advertising in POZ. For each of the four years after the Closing
Date, Target agrees that it will obtain advertising to be directed by Buyer with
a value of up to $100,000 per year on behalf of the Buyer in "POZ" magazine for
the business, products and services of the Business, such value to be based on
the advertised rate cards of POZ, in effect from time to time; provided, however
that, in the event that at any time during the four years after the Closing
Date, "POZ" is offering to any of its pharmaceutical, diagnostical and
laboratory clinical companies that are its advertisers rates that are lower than
the rates reflected on the advertised rate cards, Buyer shall be entitled to the
benefit of such lower rates.
(g) Severance Obligations. Except as described on Schedule 6(g) hereto,
the parties agree that Buyer shall not be responsible for severance pay or any
similar benefit, if any, with respect to any employee of Target that is
terminated as a result of or in connection with the transaction contemplated by
this Agreement or otherwise. Target agrees that it shall be responsible to
comply with and be liable for any noncompliance with any requirements under
COBRA with respect to any employee or former employee of Target or any other
qualified beneficiary (as defined under COBRA) who is terminated by Target.
(h) Guaranty of Buyer's Performance. In order to induce the Target to
execute and deliver this Agreement on the terms and conditions set forth herein,
and in consideration thereof, MIM Corporation (the "Guarantor") hereby
unconditionally and irrevocably guarantees to the Target the full and prompt
performance by the Buyer of the Buyer's obligations under this Agreement
including, without limitation, the timely payment of the Quarterly Earn-out
Payment, in accordance with the terms of this Agreement. The Guarantor hereby
covenants and agrees that if Buyer shall at any time fail to make any payments
under this Agreement or perform any of the covenants or provisions contained in
this Agreement, the Guarantor will forthwith pay such sums to Target, and any
arrears thereof, and will forthwith faithfully perform and fulfill all of such
covenants and provisions. The guaranty contained in this ss.6(h) is a
continuing, absolute and unconditional guaranty of payment and of performance.
Guarantor's obligations under this Section shall remain in full force and effect
notwithstanding (i) any exercise, non-exercise or waiver by Target of any right,
power or remedy under or in respect of this Agreement, or (ii) any bankruptcy,
insolvency, reorganization, arrangement, adjustment, composition, liquidation,
receivership, assignment for the benefit of creditors or the like of Buyer; or
the discharge or release of Buyer in any such bankruptcy proceeding. Guarantor's
obligations under this ss.6(h) shall continue in full force and effect until all
of the payment and other obligations of Buyer under this Agreement have been
fully paid and performed. Guarantor agrees that it is directly and primarily
liable to the Target, that the obligations of the Guarantor are independent of
the obligations of the Buyer, and that a separate action or actions may be
brought and prosecuted against the Guarantor whether or not an action is brought
against the Buyer, and whether or not the Buyer is joined in any such action or
actions. Guarantor hereby waives any and all rights to require the Target to
prosecute or seek to enforce any remedies against the Buyer or any other person,
and the Target shall not be required to prosecute any such action or seek to
enforce any such remedies against the Buyer or any other person as a condition
to performance by the Guarantor of the obligations guaranteed hereunder.
Guarantor hereby waives any defense arising by reason of any claim or defense
based upon an election of remedies by the Target which in any manner affects the
Guarantor's
-16-
rights to proceed against the Buyer. Except for those rights of Buyer set forth
in this Agreement, Guarantor hereby waives any right to require the Target to
make any presentment or demand for performance or to give any notices of
nonperformance, protests, notices of protests or notices of dishonor. The
liability of the Guarantor shall be reinstated and revived with respect to any
amount paid by the Buyer which shall thereafter be required to be returned or
restored by Target upon the bankruptcy, insolvency or reorganization of the
Buyer or for any other reason, all as though such amount had not be paid.
Guarantor hereby waives notice of acceptance of this guaranty. Guarantor
warrants and agrees that each of the waivers set forth above are made with its
full knowledge of their significance and consequence and agrees that, under the
circumstances, the waivers are reasonable and not contrary to public policy or
law. If any of said waivers are determined to be contrary to any applicable law
or public policy, such waivers shall be effective only to the extent permitted
by law. Guarantor represents and warrants that it is informed of the financial
condition of the Buyer and of all other circumstances which a diligent inquiry
would reveal and which bear upon the risk of nonperformance by the Buyer of the
payment and other obligations under this Agreement. Guarantor agrees that it
will continue to keep itself informed of the financial condition of the Buyer
and of all other circumstances which bear upon the risk of nonperformance by the
Buyer.
(i) Buyout in the Event of the Sale of the Business. In the event that,
prior to the payment by Buyer of all required amounts pursuant to ss.2(d) and
(e) hereof, Buyer or any of its Affiliates shall sell or otherwise transfer the
Business, either alone or as part of a sale or transfer of assets (each, a
"Sale"), to a third party, Buyer shall pay to Target at the time of closing of
the Sale, subject to Buyer's right of offset pursuant to ss.8(f), an amount
equal to the amount obtained by multiplying (i) the average of the last three
Quarterly Earn-out Payments earned by Target prior to the closing of the Sale by
(ii) the number of Determination Periods for which Target had not been paid in
accordance with ss.2(d) or (e), as appropriate, at the time of closing of such
Sale (such amount, the "Pay-Off Amount"). Upon payment by Buyer of the Pay-Off
Amount, Buyer shall be relieved of its obligation to make the payments required
by ss.2(d) and (e) hereof. In addition, notwithstanding any provision to the
contrary contained in ss.2(e), in the event of a Sale, Target's audit rights
with respect to the year in which a Sale is consummated shall not be limited to
the Annual Gross Profit calculation of Buyer, but shall extend to Buyer's Gross
Profit computation for each of the past three Determination Periods prior to
such Sale (unless such Determination Periods were already included in period for
which an audit was completed under ss.2(e)).
(j) Enrollment of Customers of Business. Buyer agrees that, other than
those customers who are enrolled through Excluded Programs (as defined on
Schedule 3 hereto), Buyer shall include all individual customers in the gay,
lesbian, HIV/Aids or Hepatitis-C population who were enrolled by Buyer or its
Affiliates as enrollees of the Business for purposes of the Gross Profit
calculation on Schedule 3 hereto and shall code such enrollees as "CPS"
customers when they are enrolled. In addition, Buyer agrees that it shall give
Target notice (in accordance with ss.9(g) hereto) at least 10 days prior to
implementing any material change in the marketing, operations or enrollment
procedures of its HIV/AIDS or Hepatitis-C "Bioscrip" disease management
programs; provided, however, that such material change shall not impact Target's
rights hereunder to the customers enrolled through those programs listed in
items (i)-(ii) on Schedule 3 hereto.
(k) Use of Infopack. Target agrees that for the period from the Closing
Date until the earlier of (i) December 31, 2004 or (ii) 30 days after Buyer or
its Affiliates gives written notice to Target that it no longer desires Target's
services under this ss.6(k), at least once per quarter, Target shall, for a fee
of $0.10 per newsletter or other publication (includes printing, handling and
mailing costs), distribute Target's most recent copy of the "Infopack"
newsletter or other publication to those persons on the list of customers and
prospective customers provided by Buyer to Target, as updated from time to time,
provided that Target has received third party sponsorship for each newsletter or
other publication. Buyer shall be entitled to additional copies, not to exceed
500 unless otherwise agreed to by Target, of such materials from each print run
for its own use and distribution for a fee of $0.10 per newsletter or other
publication. Target agrees that it shall secure all copyrights, licenses and
rights required to distribute the Infopack or other publication.
-17-
7. Conditions to Obligation to Close..
(a) Conditions to Obligation of the Buyer. The obligation of the Buyer
to consummate the transactions to be performed by it in connection with the
Closing on the Closing Date is subject to satisfaction of the following
conditions on or before May 1, 2001:
(i) the representations and warranties set forth in ss.3 above shall
be correct and complete in all material respects at and as of the Closing
Date, except as set forth on the Disclosure Schedule;
(ii) the Target shall have performed and complied with all of its
covenants hereunder, including the Pre-Closing Covenants set forth in ss.5
above, in all material respects through the Closing;
(iii) no action, suit, or proceeding commenced by a Person other than
Buyer or its Affiliates shall be pending before any court or quasi-judicial
or administrative agency of any federal, state, local or foreign
jurisdiction or before any arbitrator wherein an unfavorable injunction,
judgment, order, decree, ruling, or charge would (A) prevent consummation
of any of the transactions contemplated by this Agreement, (B) cause any of
the transactions contemplated by this Agreement to be rescinded following
consummation, or (C) affect adversely the right of the Buyer to own the
Acquired Assets or to operate the Business;
(iv) the Target shall have delivered to the Buyer a certificate to the
effect that each of the conditions specified above in ss.(7)(a)(i)-(iii) is
satisfied in all respects;
(v) the Target shall have executed and delivered each of an Assignment
and ▇▇▇▇ of Sale, an Assignment of Intellectual Property and an Assignment
of Domain Name, in substantially the forms attached hereto as Exhibit ▇-▇,
▇▇▇▇▇▇▇ ▇-▇ and Exhibit A-3, respectively.
(vi) the Target shall have executed and delivered a termination of
that certain agreement, dated December 20, 1994, between Preferred Rx, Inc.
and Target (the "1994 Agreement"), and general release of liability with
respect to the parties relationship prior to the Closing (except for any
liability with respect to the transactions contemplated by this Agreement),
in substantially the form attached hereto as Exhibit B (the "Termination
Letter");
(vii) the Target shall have executed and delivered each of a License
Agreement substantially in the form of Exhibit C-1 attached hereto,
pursuant to which Buyer grants to Target a non-exclusive royalty-free
license to use the names "CPS" and "Community Prescription Service" (the
"CPS License Agreement") and a Content License Agreement substantially in
the form of Exhibit C-2 attached hereto;
(viii) the Target shall have presented evidence that it has delivered
appropriate documentation to the State of Delaware in order to change its
corporate name from Community Prescription Service, Inc. to "Community
Capital Partners, Inc."
(ix) the Target shall have paid to Buyer that amount set forth in the
letter from Buyer to Target, dated as of the date hereof, relating to
certain amounts owed by Target to Buyer.
The Buyer may waive any condition specified in this ss.7(a) if it
executes a writing so stating at or prior to the Closing.
-18-
(b) Conditions to Obligation of the Target. The obligation of the
Target to consummate the transactions to be performed by it in connection with
the Closing on the Closing Date is subject to satisfaction of the following
conditions on or before May 1, 2001:
(i) the representations and warranties set forth inss.4 above shall be
correct and complete in all material respects at and as of the Closing
Date;
(ii) the Buyer shall have performed and complied with all of its
covenants hereunder, including the Pre-Closing Covenants set forth in ss.5
above, in all material respects through the Closing;
(iii) no action, suit, or proceeding commenced by a Person other than
Target or its Affiliates shall be pending before any court or
quasi-judicial or administrative agency of any federal, state, local, or
foreign jurisdiction or before any arbitrator wherein an unfavorable
injunction, judgment, order, decree, ruling, or charge would (A) prevent
consummation of any of the transactions contemplated by this Agreement or
(B) cause any of the transactions contemplated by this Agreement to be
rescinded following consummation (and no such injunction, judgment, order,
decree, ruling, or charge shall be in effect);
(iv) the Buyer shall have delivered to the Target a certificate to the
effect that each of the conditions specified above in ss.7(b)(i)-(iii) is
satisfied in all respects;
(v) the Buyer shall have executed and delivered each of an Assignment
and ▇▇▇▇ of Sale, an Assignment of Intellectual Property and an Assignment
of Domain Name, in substantially the forms attached hereto as Exhibit ▇-▇,
▇▇▇▇▇▇▇ ▇-▇ and Exhibit A-3, respectively;
(vi) the Buyer shall have executed and delivered the Termination
Letter, substantially in the form attached hereto as Exhibit B; and
(vii) the Buyer shall have executed and delivered each of the CPS
License Agreement, substantially in the form of Exhibit C-1 attached
hereto, and the Content License Agreement, substantially in the form of
Exhibit C-2 attached hereto;
The Target may waive any condition specified in this ss.7(b) if it executes a
writing so stating at or prior to the Closing.
8. Remedies for Breaches of This Agreement.
(a) Survival of Representations and Warranties. All of the
representations and warranties of the Target contained in ss.3(a), (c) and (f)
through (u) above, and all of the representations of the Buyer contained in
ss.4(a) and (c), shall survive the Closing (even if the damaged party knew or
had reason to know of any misrepresentation or breach of warranty at the time of
Closing) and continue in full force and effect for a period of fifteen months
thereafter. All of the representations and warranties of the Target contained in
ss.3(b), (d), (e) and (i) above, and the representation of the Buyer contained
in ss.4(b) and (d) above, shall survive the Closing (even if the damaged Party
knew or had reason to know of any misrepresentation or breach of warranty at the
time of Closing) and continue in full force and effect forever thereafter
(subject to any applicable statutes of limitations).
(b) Indemnification Provisions for Benefit of the Buyer.
-19-
(i) In the event the Target breaches any of its representations,
warranties, and covenants contained in this Agreement, and, if there is an
applicable survival period pursuant to ss.8(a) above, provided that the
Buyer makes a written claim for indemnification against the Target pursuant
to ss.10(g) below within such survival period, then each of the Target and
▇▇▇▇ ▇▇▇▇▇, jointly and severally, agrees to indemnify the Buyer from and
against the entirety of any Adverse Consequences the Buyer may suffer
through and after the date of the claim for indemnification (including any
Adverse Consequences the Buyer may suffer after the end of any applicable
survival period) resulting from, arising out of, relating to, in the nature
of, or caused by the breach; provided, however, that (i) there will be a
$1,500,000 aggregate ceiling on the obligation of the Target and ▇▇▇▇ ▇▇▇▇▇
(applicable to Target and ▇▇▇▇ ▇▇▇▇▇ in the aggregate) to indemnify the
Buyer from and against Adverse Consequences under this ss.8 (except for a
breach of a representation contained in ss.8(d) and (e) for which the
aggregate ceiling does not apply to Target but continues to apply to ▇▇▇▇
▇▇▇▇▇) and (ii) neither Target nor ▇▇▇▇ ▇▇▇▇▇ shall have any obligation to
indemnify Buyer under this ss.8 unless and until the aggregate amount which
Buyer is entitled to recover exceeds $25,000, after which point Target and
▇▇▇▇ ▇▇▇▇▇, jointly and severally, will be obligated to indemnify Buyer
only for losses in excess of such amount.
(ii) Each of the Target and ▇▇▇▇ ▇▇▇▇▇, jointly and severally, agrees
to indemnify the Buyer from and against the entirety of any Adverse
Consequences the Buyer may suffer resulting from, arising out of, relating
to, in the nature of, or caused by:
(A) except for the Assumed Liabilities, any liability or
obligation of the Target (including any liability of the Target that
becomes a liability of the Buyer under any bulk transfer law of any
jurisdiction, under any common law doctrine of de facto merger or
successor liability, or otherwise by operation of law), whether
arising before or after the Closing and whether or not relating to the
Acquired Assets;
(B) any liability of the Target that becomes a liability of the
Buyer with respect to the Business for unpaid Taxes with respect to
any tax year or portion thereof ending on or b before the Closing Date
(or for any tax year beginning before and ending after the Closing
Date to the extent allocable to the portion of such period beginning
before and ending on the Closing Date), but excluding any liability
for Taxes with respect to the Business allocable to a tax year or
portion thereof ending after the Closing Date and excluding any
liability for Taxes with respect to the Business attributable to any
transaction or action (other than the asset purchase contemplated by
this Agreement) taken by Buyer on or after the Closing Date; or
(C) any liability of Buyer for the unpaid taxes of the Target
under Reg. ss.1.1502-6 (or any similar provision of state, local, or
foreign law), as a transferee or successor, by contract, or otherwise.
(iii) The Target agrees to indemnify the Buyer from and against the
entirety of any Adverse Consequences the Buyer may suffer resulting from,
arising out of, or caused by any marketing or other business practice of
Target with respect to new customers enrolled by Target after July 1, 2000
relating to the waiver or failure to collect, in whole or in part,
co-insurance payments with respect to prescription pharmaceuticals
dispensed to patients if such waiver or failure to collect was not in
accordance with the enrollment and financial hardship waiver procedures set
forth in that certain letter dated June 29, 2000, from MIM Corporation,
parent of the Buyer, to Target.
(c) Indemnification Provisions for Benefit of the Target. In the event
the Buyer breaches any of its representations, warranties, and covenants
contained in this Agreement, and, if there is an applicable survival period
pursuant to ss.8(a) above, provided that the Target makes a written claim for
indemnification against the
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Buyer pursuant to ss.10(g) below within such survival period, then the Buyer
agrees to indemnify the Target from and against the entirety of any Adverse
Consequences the Target may suffer through and after the date of the claim for
indemnification (including any Adverse Consequences the Target may suffer after
the end of any applicable survival period) resulting from, arising out of,
relating to, in the nature of, or caused by the breach.
(d) Matters Involving Third Parties.
(i) If any third party shall notify any Party (the "Indemnified
Party") with respect to any matter (a "Third Party Claim") which may give
rise to a claim for indemnification against the other Party (the
"Indemnifying Party") under this ss.8, then the Indemnified Party shall
promptly notify the Indemnifying Party thereof in writing; provided,
however, that no delay on the part of the Indemnified Party in notifying
the Indemnifying Party shall relieve the Indemnifying Party from any
obligation hereunder unless (and then solely to the extent) the
Indemnifying Party thereby is prejudiced. The Indemnified Party shall
provide to the Indemnifying Party, promptly upon request, all information
and documentation reasonably necessary to support and verify the facts
giving rise to the Adverse Consequences which the Indemnified Party
believes gives rise to a claim for indemnification hereunder, and shall
give the Indemnifying Party reasonable access to all books, records and
personnel in the possession or under the control of the Indemnified Party
which would have bearing on such claim.
(ii) The Indemnifying Party will have the right to assume the defense
of the Third Party Claim with counsel of its choice reasonably satisfactory
to the Indemnified Party at any time within 30 days after the Indemnified
Party has given notice of the Third Party Claim; provided, however, that
the Indemnifying Party must conduct the defense of the Third Party Claim
actively and diligently thereafter in order to preserve its rights in this
regard; and provided further that the Indemnified Party may retain separate
co-counsel at its sole cost and expense and participate in the defense of
the Third Party Claim.
(iii) The parties agree that, (A) the Indemnifying Party will not
consent to the entry of any judgment or enter into any settlement with
respect to the Third Party Claim without the prior written consent of the
Indemnified Party (not to be withheld unreasonably) unless the judgment or
proposed settlement involves only the payment of money damages by the
Indemnifying Party and does not impose an injunction or other equitable
relief upon the Indemnified Party and (B) the Indemnified Party will not
consent to the entry of any judgment or enter into any settlement with
respect to the Third Party Claim without the prior written consent of the
Indemnifying Party (not to be withheld unreasonably).
(iv) In the event the Indemnifying Party does not assume and conduct
the defense of the Third Party Claim in accordance with ss.8(d)(ii) above,
(A) the Indemnified Party may defend against the Third Party Claim in any
manner it reasonably may deem appropriate (and the Indemnified Party need
not consult with, or obtain any consent from, the Indemnifying Party in
connection therewith), (B) the Indemnified Party will not consent to the
entry of any judgment or enter into any settlement with respect to the
Third Party Claim without the prior written consent of the Indemnifying
Party (not to be withheld unreasonably) and (C) the Indemnifying Party will
remain responsible for any Adverse Consequences the Indemnified Party may
suffer resulting from, arising out of, relating to, in the nature of, or
caused by the Third Party Claim to the fullest extent provided in this
ss.8.
(e) Determination of Adverse Consequences. The Parties shall make
appropriate adjustments for tax consequences and insurance coverage and take
into account the time cost of money (using the Applicable Rate as the discount
rate) in determining Adverse Consequences for purposes of this ss.8. All
indemnification
-21-
payments under this ss.8 shall be deemed adjustments to the Purchase Price. In
no event shall Target be liable for loss of profits or consequential damages
under this ss.8.
(f) Right of Offset. In the event that at any time Target or ▇▇▇▇ ▇▇▇▇▇
is obligated to indemnify Buyer under this ss.8 (as mutually agreed upon by the
Parties or after a final non-appealable decision of the Arbitrator pursuant to
ss.10(q) below), Buyer shall have the option of offsetting any amounts owed to
it by the Target pursuant to this ss.8 against amounts owed to the Target under
ss.2(e) hereof.
(g) Exclusive Remedy. Except for a claim based on fraud, the Buyer and
the Target acknowledge and agree that the indemnification provisions contained
in this ss.8 shall constitute the sole and exclusive recourse and remedy of the
parties for monetary damages with respect to any breach of any of the
representations, warranties and covenants contained in this Agreement.
9. Termination.
(a) Termination of Agreement. Certain of the Parties may terminate this
Agreement as provided below:
(i) the Buyer and the Target may terminate this Agreement by mutual
written consent at any time prior to the Closing;
(ii) the Buyer may terminate this Agreement by giving written notice
to the Target at any time prior to the Closing (A) in the event the Target
has breached any material representation, warranty, or covenant contained
in this Agreement in any material respect, the Buyer has notified the
Target of the breach, and the breach has continued without cure for a
period of 15 days after the notice of breach or (B) if the Closing shall
not have occurred on or before May 1, 2001, by reason of the failure of any
condition precedent under ss.7(a) hereof (unless the failure results
primarily from the Buyer itself breaching any representation, warranty, or
covenant contained in this Agreement); and
(iii) the Target may terminate this Agreement by giving written notice
to the Buyer at any time prior to the Closing (A) in the event the Buyer
has breached any material representation, warranty, or covenant contained
in this Agreement in any material respect, the Target has notified the
Buyer of the breach, and the breach has continued without cure for a period
of 15 days after the notice of breach, or (B) if the Closing shall not have
occurred on or before May 1, 2001, by reason of the failure of any
condition precedent under ss.7(b) hereof (unless the failure results
primarily from the Target itself breaching any representation, warranty, or
covenant contained in this Agreement).
(b) Effect of Termination. If any Party terminates this Agreement
pursuant to ss.9(a) above, all rights and obligations of the Parties hereunder
shall terminate without any liability of any Party to the other Party (except
for any liability of any Party then in breach); provided, however, that the
confidentiality provisions contained in ss.5(d) above shall survive termination.
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10. Miscellaneous.
(a) Press Releases and Public Announcements. No Party shall issue any
press release or public announcement relating to the subject matter of this
Agreement without the prior written approval of the other Party; provided,
however, that any Party may make any public disclosure it believes in good faith
is required by applicable law or any listing or trading agreement concerning its
publicly-traded securities (in which case the disclosing Party will use its
reasonable best efforts to advise the other Party prior to making the
disclosure).
(b) No Third-Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns.
(c) Entire Agreement. This Agreement (including the documents referred
to herein) constitutes the entire agreement between the Parties and supersedes
any prior understandings, agreements, or representations by or between the
Parties, written or oral, to the extent they related in any way to the subject
matter hereof.
(d) Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns. No Party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the other Party; provided, however, that the Buyer may (i) assign any or all
of its rights and interests hereunder to one or more of its Affiliates and (ii)
designate one or more of its Affiliates to perform its obligations hereunder (in
any or all of which cases the Buyer nonetheless shall remain responsible for the
performance of all of its obligations hereunder).
(e) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(f) Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(g) Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given on the first
business day after sent by reputable overnight courier service, on the same
business day sent by hand delivery, and the second business day after it is sent
by registered or certified mail, return receipt requested, postage prepaid, and
addressed to the intended recipient as set forth below:
If to the Target: Copy to: Community Prescription Services, Inc.
----------------- --------
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Round Table Services, LLC
▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
-23-
with a copy to:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Buyer: Copy to: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------- --------
Vice President and General Counsel
MIM Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Chief Executive Officer
MIM Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No: (▇▇▇) ▇▇▇-▇▇▇▇
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including telecopy, telex, ordinary mail, or electronic mail), but
no such notice, request, demand, claim, or other communication shall be deemed
to have been duly given unless and until it actually is received by the intended
recipient. Any Party may change the address to which notices, requests, demands,
claims, and other communications hereunder are to be delivered by giving the
other Party notice in the manner herein set forth.
(h) Governing Law. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of New York without giving effect
to any choice or conflict of law provision or rule (whether of the State of New
York or any other jurisdiction) that would cause the application of the laws of
any jurisdiction other than the State of New York.
(i) Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by the
Buyer and the Target. No waiver by any Party of any default, misrepresentation,
or breach of warranty or covenant hereunder, whether intentional or not, shall
be deemed to extend to any prior or subsequent default, misrepresentation, or
breach of warranty or covenant hereunder or affect in any way any rights arising
by virtue of any prior or subsequent such occurrence.
(j) Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
(k) Expenses. Each of the Buyer, the Target, and the Target
Stockholders will bear his or its own costs and expenses (including legal fees
and expenses) incurred in connection with this Agreement and the transactions
contemplated hereby.
(l) Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be
-24-
construed as if drafted jointly by the Parties and no presumption or burden of
proof shall arise favoring or disfavoring any Party by virtue of the authorship
of any of the provisions of this Agreement. Any reference to any federal, state,
local, or foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation.
(m) Incorporation of Exhibits and Schedules. The Exhibits and Schedules
identified in this Agreement are incorporated herein by reference and made a
part hereof.
(n) Tax Matters.
(i) The Target will be responsible for the preparation and filing of
all Income Tax Returns for the Target for all periods as to which Income
Tax Returns are due after the Closing Date (including the consolidated,
unitary, and combined Income Tax Returns for the Target which include the
operations of the Business for any period ending on or before the Closing
Date) ; provided, however, that Buyer will reimburse Target concurrently
therewith to the extent any payment Target makes relates to operations of
the Business for any period ending on or after the Closing Date.
(ii) The Buyer will be responsible for the preparation and filing of
all Income Tax Returns for the Business for all periods as to which Income
Tax Returns are due after the Closing Date (other than for Income Taxes
with respect to income from the operations of the Business that is included
in consolidated, unitary, and combined Income Tax Returns of the Target.
The Buyer will make all payments required with respect to any such Income
Tax Return for Income Taxes with respect to income from the operations of
the Business for periods after the Closing Date; provided, however, that
the Target will reimburse the Buyer concurrently therewith to the extent
any payment the Buyer is making relates to the operations of the Business
for any period ending on or before the Closing Date.
(iii) Buyer and Seller shall provide to each other with the necessary
information to prepare their respective tax returns, and they shall
cooperate with each other in providing each other with the necessary
information in connection with any audit of a tax return by any taxing
authority concerning the Business.
(o) Employee Benefits Matters. To the extent permissible under the Code
and ERISA, each employee of Target who, at the option of Buyer, is offered
employment with Buyer and becomes an employee of Buyer simultaneously with the
Closing shall, upon becoming an employee of Buyer, receive benefits which, in
the reasonable judgment of the Buyer, are substantially comparable in the
aggregate to the benefits provided to them from Target, provided, that the
parties acknowledge that, except as expressly set forth herein or in the
ancillary agreements hereto, Buyer shall have no obligation to offer employment
to any employee of Target or maintain any benefit plan, fund, program or
arrangement for any specific time period.
(p) Bulk Transfer Laws. The Buyer acknowledges that the Target will not
comply with the provisions of any bulk transfer laws of any jurisdiction in
connection with the transactions contemplated by this Agreement.
(q) Arbitration. In the event that there is a dispute among the Parties
to this Agreement (defined for the purpose of this provision to include each
Indemnified Party and each Indemnifying Party), other than a dispute with
respect to the calculation of Annual Gross Profit which dispute shall be
resolved by the Accounting Firm in accordance with ss.2(e) hereof (whose
decision is not subject to this ss.10(q) absent manifest error) arising out of
or in connection with the negotiation, execution, interpretation, performance or
nonperformance of this Agreement and/or the transactions contemplated hereby,
the party with a claim shall
-25-
notify the other parties (the "Dispute Notice") to this Agreement in accordance
with ss.10(g) above and the parties shall attempt to settle the dispute through
good faith negotiation within 30 days of receipt of the Dispute Notice in
accordance with ss.10(g). In the event that the parties are unable to resolve
their dispute within such 30 day period, such dispute shall be solely and
finally settled by arbitration, which shall be conducted in New York City, by a
single attorney arbitrator selected by the parties. If the parties fail to agree
on the arbitrator within 60 days of the date that the Dispute Notice is received
in accordance with ss.10(g), either party may apply to the American Arbitration
Association to make the appointment. The parties agree that the award of the
arbitrator shall be final and subject to no judicial review. The arbitrator
shall conduct the proceedings pursuant to the Commercial Arbitration Rules of
the American Arbitration Association, as now or hereafter amended. Judgment on
the award of the arbitrator may be entered in any court having jurisdiction over
the party against which enforcement of the award is being sought and the parties
hereby irrevocably consent to the jurisdiction of any such court for the purpose
of enforcing any such award. The arbitrator shall divide all costs (other than
fees and expenses of counsel) incurred in conducting the arbitration in the
final award in accordance with what the arbitrator deems just and equitable
under the circumstances.
-26-
*****
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the date first above written.
CONTINENTAL MANAGED PHARMACY SERVICES, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------
Title: Secretary
---------------------
COMMUNITY PRESCRIPTION SERVICE, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------
Title: Secretary
---------------------
/s/ ▇▇▇▇ ▇▇▇▇▇
---------------------------------
▇▇▇▇ ▇▇▇▇▇, a Target Stockholder
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, a Target Stockholder
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, a Target Stockholder
THE ESTATE OF ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
---------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Executor
Acknowledged and Agreed solely with respect
to ss.6(i):
MIM CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------
Title: Vice President and General Counsel
----------------------------------
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