Exhibit 10.33
VISTACARE, INC.
STOCK PURCHASE AGREEMENT
Dated as of December 23, 1999
Table of Contents
SECTION 1 AUTHORIZATION; AGREEMENT TO SELL AND PURCHASE...........................................................2
1.1 Authorization of Shares, Bridge Warrant and Bridge Warrant Shares...............................2
1.2 Sale and Purchase at Closing....................................................................3
SECTION 2 CLOSING, DELIVERY AND PAYMENT...........................................................................3
2.1 Closing.........................................................................................3
2.2 Deliveries......................................................................................3
SECTION 3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY...........................................................3
3.1 Organization, Qualification and Corporate Power.................................................4
3.2 Subsidiaries....................................................................................4
3.3 Authorization of Agreements, etc................................................................4
3.4 Validity........................................................................................5
3.5 Capitalization..................................................................................5
3.6 Financial Statements; Certain Reports; Liabilities..............................................8
3.7 Certain Events..................................................................................9
3.8 Litigation, Compliance with Law.................................................................9
3.9 Proprietary Information of Third Parties.......................................................13
3.10 Title to Properties............................................................................13
3.11 Leasehold Interests............................................................................14
3.12 Taxes..........................................................................................14
3.13 Intellectual Property..........................................................................15
3.14 Material Contracts.............................................................................15
3.15 Compliance with Governing Documents and Material Contracts.....................................17
3.16 Loans and Advances.............................................................................17
3.17 Assumptions and Guaranties of Indebtedness of Other Persons....................................17
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3.18 Significant Suppliers..........................................................................18
3.19 Employees......................................................................................18
3.20 Transactions with Affiliates...................................................................19
3.21 Governmental Approvals.........................................................................19
3.22 Offering of the Shares and the Bridge Warrant..................................................20
3.23 Environmental and Safety Laws..................................................................20
3.24 Insurance......................................................................................20
3.25 Qualified Small Business Stock.................................................................20
3.26 Year 2000 Matters..............................................................................21
3.27 Knowledge Qualification........................................................................21
SECTION 4 REPRESENTATIONS AND WARRANTIES OF THE ACQUIRERS........................................................21
4.1 Requisite Power and Authority..................................................................22
4.2 Consents.......................................................................................22
4.3 Investment Representations.....................................................................22
SECTION 5 CONDITIONS TO CLOSING..................................................................................24
5.1 Conditions to Acquirers' Obligations at the Closing............................................24
5.2 Conditions to Obligations of the Company at the Closing........................................26
SECTION 6 COVENANTS OF THE COMPANY...............................................................................27
SECTION 7 PREEMPTIVE RIGHTS; KEYMAN REDEMPTION...................................................................27
SECTION 8 MISCELLANEOUS..........................................................................................28
8.1 Expenses.......................................................................................28
8.2 Confidentiality................................................................................28
8.3 Publicity......................................................................................28
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8.4 Brokerage......................................................................................28
8.5 Parties in Interest............................................................................28
8.6 Notices........................................................................................29
8.7 Governing Law..................................................................................29
8.8 Entire Agreement...............................................................................29
8.9 Counterparts...................................................................................30
8.10 Amendments and Waivers.........................................................................30
8.11 Severability...................................................................................30
8.12 Titles and Subtitles...........................................................................30
8.13 No Waiver, Cumulative Remedies.................................................................31
8.14 Further Assurances.............................................................................31
8.15 Survival.......................................................................................31
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VISTACARE, INC.
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is entered into as of
December 23, 1999, by and among VISTACARE, INC., a Delaware corporation (the
"Company"), Bessemer Venture Partners III, L.P., a Delaware limited partnership
("Bessemer") and each of the entities and individuals, severally and not
jointly, whose names are set forth on Exhibit A hereto (which entities and
individuals are hereinafter collectively referred to as the "Purchasers" and
each individually as a "Purchaser"). Bessemer and the Purchasers are sometimes
hereinafter collectively referred to as the "Acquirers."
WHEREAS, the Purchasers wish to purchase, and the Company wishes to
sell, (a) 3,291,854 shares of the Company's Class C Common Stock, $.01 par value
per share (the "Class C Common Stock"), and (b) 65,000 shares of the Company's
Series D Convertible Preferred Stock, $.01 par value per share (the "Series D
Preferred Stock"), on the terms and conditions set forth herein;
WHEREAS, Bessemer has loaned $1,000,000 to the Company (the "Bridge
Loan"), as evidenced by a Promissory Note dated as of July 26, 1999 (the "Bridge
Note");
WHEREAS, as consideration for Bessemer having made the Bridge Loan, the
Company has agreed to issue a warrant (the "Bridge Warrant") to Bessemer to
purchase 50,000 shares (the "Bridge Warrant Shares") of the Company's Class A
Common Stock, $.01 par value per share, for $.01 per share; and
WHEREAS, the Company, for itself and as successor to Vista Hospice
Care, Inc. ("Vista"), and certain of the Company's shareholders are parties to
certain agreements relating to the Company's shares and its shareholders, as
follows:
1. Registration Rights Agreement dated as of August 29, 1997 (as
amended, the "Registration Rights Agreement");
2. Stockholders' Voting Agreement dated as of August 29, 1997;
3. Stockholder Rights Agreement dated as of August 29, 1997;
4. Stock Purchase Agreement dated as of August 29, 1997 (as
amended, the "1997 Purchase Agreement");
5. Preferred Stock Purchase Agreement dated as of July 17, 1998
(as amended, the "July 1998 Purchase Agreement"); and
6. Preferred Stock Purchase Agreement dated as of December 30,
1998 (the "December 1998 Purchase Agreement"),
which agreements, as amended, are collectively referred to herein as the
"Shareholder Agreements").
THE PARTIES HEREBY AGREE AS FOLLOWS:
SECTION 1 AUTHORIZATION; AGREEMENT TO SELL AND PURCHASE
1.1 Authorization of Shares, Bridge Warrant and Bridge Warrant Shares.
On or prior to the Closing (as defined in Section 2.1 below), the Company shall
have authorized (a) the sale and issuance to the Purchasers of 3,291,854 shares
of Class C Common Stock (the "Class C Shares") and 65,000 shares of Series D
Preferred Stock (the "Series D Shares" and, together with the Class B Shares,
the "Shares"), having the rights, preferences, privileges and restrictions set
forth in the Third Amended and Restated Certificate of Incorporation of the
Company, in the form attached as Exhibit B hereto (the "Charter"), (b) the
issuance of the shares of the Company's Class A Common Stock, $.01 par value per
share (the "Class A Common Stock"), issuable upon conversion of the Shares, (c)
the issuance to Bessemer of the Bridge Warrant, and (d) the sale and issuance of
the Bridge Warrant Shares upon exercise of the Bridge Warrant.
1.2 Sale and Purchase at Closing. Subject to the terms and conditions
hereof and in reliance upon the representations, warranties and agreements
contained herein, at the Closing the Company shall (a) issue and sell to each
Purchaser, and each Purchaser shall purchase from the Company, the number of
Shares set forth opposite such Purchaser's name on Exhibit A hereto, at a
purchase price of one cent ($.01) per Class C Share and fifty dollars ($50.00)
per Series D Share, and (b) issue to Bessemer the Bridge Warrant substantially
in the form attached as Exhibit C hereto.
SECTION 2 CLOSING, DELIVERY AND PAYMENT
2.1 Closing. The sale and purchase of the Shares and the issuance of
the Warrant shall take place at a closing (the "Closing") to be held at the
offices of ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇, Exchange Place, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ at 10:00 a.m. on December 27, 1999 or at such other time and
place as the Company and the Acquirers may mutually agree (such date is
hereinafter referred to as the "Closing Date").
2.2 Deliveries. At the Closing, subject to the terms and conditions
hereof, the Company will deliver (a) to the Purchasers certificates representing
the Shares to be purchased by each Purchaser, against payment of the purchase
price therefor by wire transfer or check made payable to the order of the
Company, provided that $1,000,000 of the Purchase Price payable by Bessemer
shall be paid by cancellation and discharge of the principal amount of the
Bridge Note, and (b) to Bessemer the Bridge Warrant and all accrued and unpaid
interest on the Bridge Note.
SECTION 3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to each Purchaser that except as
otherwise set forth on Exhibit D hereto, with specific reference to the
subsection of this Section 3 so affected:
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3.1 Organization, Qualification and Corporate Power. The Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware. The Company and each of the Subsidiaries (as
hereinafter defined) is duly licensed or qualified to transact business in all
jurisdictions in which the nature of the business transacted by the Company and
the Subsidiaries or the character of the properties owned or leased by the
Company and the Subsidiaries requires that the Company and the Subsidiaries
qualify to do business as a foreign corporation, except where the failure to be
so licensed or qualified would not have a material adverse effect on the
business, operations or financial condition of the Company and the Subsidiaries,
taken as a whole. The Company and each of the Subsidiaries has the corporate
power and authority to own and hold its properties and to carry on its business
as now conducted, and the Company has the corporate power and authority to
execute, deliver and perform this Agreement, the Registration Rights Amendment,
the Stockholders' Voting Agreement Consent and the Stockholder Rights Amendment
(as such terms are hereinafter defined; the Registration Rights Amendment, the
Stockholders' Voting Agreement Consent and the Stockholder Rights Amendment are
referred to herein collectively as the "Ancillary Agreements"); to issue, sell
and deliver the Shares; to issue and deliver the Bridge Warrant; to issue and
deliver the Bridge Warrant Shares; and to issue and deliver the shares of Class
A Common Stock, issuable upon conversion of the Shares (the "Conversion
Shares").
3.2 Subsidiaries. Except for the subsidiaries shown on the organization
chart attached to Exhibit D hereto (the "Subsidiaries"), the Company has no
subsidiaries and does not own or control, directly or indirectly, any shares of
capital stock of any other corporation or any interest in any partnership, joint
venture or other non-corporate business enterprise. The Company or one of the
Subsidiaries owns all of the issued and outstanding capital stock of each
Subsidiary.
3.3 Authorization of Agreements, etc.
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(a) The execution and delivery by the Company of this
Agreement and the Ancillary Agreements and the performance by the Company of its
obligations hereunder and thereunder, and the issuance, sale and delivery of the
Shares and the Bridge Warrant pursuant hereto and the Bridge Warrant Shares and
Conversion Shares have been duly authorized by all requisite corporate action
and will not violate any provision of any law applicable to the Company, any
order of any court or other governmental agency applicable to the Company, the
Charter, or the By-laws of the Company, as amended, or any provision of any
indenture, agreement or other instrument to which the Company or any of its
properties or assets is bound, or conflict with, result in a breach of or
constitute (with due notice or lapse of time or both) a default under any such
indenture, agreement or other instrument, or result in the creation or
imposition of any lien, charge, restriction, claim or encumbrance of any nature
whatsoever upon any of the properties or assets of the Company.
(b) The Shares have been duly authorized and, when issued in
accordance with this Agreement, will be validly issued, fully paid and
nonassessable with no personal liability attaching to the ownership thereof and
will be free and clear of all liens, charges, restrictions, claims and
encumbrances, except as provided in the Shareholder Agreements. The Bridge
Warrant Shares and Conversion Shares have been duly reserved for issuance upon
exercise of the Bridge Warrant and conversion of the Shares, as the case may be,
and, when so issued, will be duly authorized, validly issued, fully paid and
nonassessable with no personal liability attaching to the ownership thereof and
will be free and clear of all liens, charges, restrictions, claims and
encumbrances, except as provided in the Shareholder Agreements. Neither the
issuance, sale or delivery of the Shares nor the issuance or delivery of the
Bridge Warrant, the Bridge Warrant Shares or the Conversion Shares is subject to
any preemptive right of stockholders of the Company or to any right of first
refusal or other right in favor of any person which has not been effectively
waived.
3.4 Validity. This Agreement has been duly executed and delivered by
the Company and constitutes the legal, valid and binding obligation of the
Company, enforceable in accordance with its terms. The Ancillary Agreements,
when executed and delivered in accordance with this Agreement, will constitute
the legal, valid and binding obligations of the Company, enforceable against the
Company in accordance with their respective terms.
3.5 Capitalization.
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(a) The authorized capital stock of the Company immediately
after the Closing will consist of (i) 35,000,000 shares of Class A Common Stock,
of which 9,454,606 will be issued and outstanding; (ii) 1,000,000 shares of
Class B Common Stock, $.01 par value per share ("Class B Common Stock") and,
together with the Class A Common Stock and the Class C Common Stock, the "Common
Stock"), of which none will be issued and outstanding; (iii) 3,300,000 shares of
Class C Common Stock, of which 3,291,854 will be issued and outstanding; and
(iv) 2,000,000 shares of Preferred Stock, $.01 per value per share (the
"Preferred Stock"), (A) 404,500 of which are designated Series A-1 Preferred
Stock, $.01 par value per share (the "Series A-1 Preferred Stock"), of which
375,000 will be issued and outstanding, (B) 29,500 of which are designated
Series A-2 Preferred Stock, $.01 par value per share (the "Series A-2 Preferred
Stock" and together with Series A-1 Preferred Stock, the "Series A Preferred
Stock"), of which 29,500 will be issued and outstanding, (C) 485,000 of which
are designated Series B Convertible Preferred Stock, $.01 par value per share
("Series B Preferred Stock") of which 485,000 will be issued and outstanding,
(D) 402,500 of which are designated Series C Convertible Preferred Stock, $.01
par value per share ("Series C Preferred Stock"), of which 402,500 will be
issued and outstanding, and (E) 65,000 of which are designated Series D
Preferred Stock, of which 65,000 will be issued and outstanding; and no other
shares of Common Stock or Preferred Stock will be outstanding. At the Closing,
all issued and outstanding shares of the Company's capital stock (i) will have
been duly authorized and validly issued, (ii) will be fully paid and
nonassessable, and (iii) will have been issued in compliance with all applicable
state and federal laws concerning the issuance of securities. All outstanding
options and warrants to purchase capital stock of the Company have been duly
authorized and were issued in compliance with all applicable securities laws.
Immediately after the Closing, (a) 10,972,850 shares of Class A Common Stock
will be reserved for issuance upon conversion of the Series B Preferred Stock
then outstanding, (b) 498,452 shares of Class A Common Stock will be reserved
for issuance upon conversion of the Series C Preferred Stock then outstanding,
(c) 1,911,765 shares of Class A Common Stock will be reserved for issuance upon
conversion of the Series D Preferred Stock then outstanding, (d) 3,291,854
shares of Class A Common Stock will be reserved for issuance upon conversion of
the Class C Common Stock then outstanding, (e) 50,000 shares of Class A Common
Stock will be reserved for issuance upon exercise of the Bridge Warrant, (f)
2,000,000 shares of Class A Common
6
Stock will be reserved for issuance under the Company's 1998 Stock Option Plan,
and (g) 840,000 shares of Class B Common Stock will be reserved for issuance
upon exercise of an outstanding warrant. The stockholders of record and holders
of subscriptions, warrants, options, convertible securities, and other rights
(contingent or other) to purchase or otherwise acquire from the Company any
equity securities of the Company, and the number of shares of Common Stock or
Preferred Stock and the number of such subscriptions, warrants, options,
convertible securities, and other such rights held by each, are as set forth on
Exhibit D hereto. The designations, powers, preferences, rights, qualifications,
limitations and restrictions in respect of each class and series of authorized
capital stock of the Company are as set forth in the Charter.
(b) Except as set forth on Exhibit D hereto or provided for in
the Shareholder Agreements, (i) there is no commitment by the Company to issue
shares, subscriptions, warrants, options, convertible securities, or other such
rights or to distribute to holders of any of its equity securities any evidence
of indebtedness or asset and (ii) there exist no preemptive rights with respect
to the future issuances of securities by the Company. Except as provided for in
the Charter, the Company has no obligation (contingent or other) to purchase,
redeem or otherwise acquire any of its equity securities or any interest therein
or to pay any dividend or make any other distribution in respect thereof. Except
as described in Exhibit D hereto or provided in the Registration Rights
Agreement, no registration rights under the Securities Act of 1933, as amended
(the "Securities Act"), have been granted by the Company with respect to shares
of its capital stock.
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3.6 Financial Statements; Certain Reports; Liabilities. The Company has
furnished to the Purchasers (i) an audited balance sheet of the Company as of
December 31, 1998 and the related audited statements of operations,
shareholders' equity and cash flows for the year then ended, including the
footnotes thereto, and (ii) attached as Exhibit E-1 hereto, a consolidated,
unaudited balance sheet of the Company and its Subsidiaries as of November 30,
1999 (the "November 1999 Balance Sheet") and related statements of operations,
shareholders' equity and cash flows for the ten months then ended (collectively,
the "Financial Statements"). The Financial Statements (a) are complete and
correct in all material respects, (b) are in accordance with the books and
records of the Company and the Subsidiaries, (c) present fairly the financial
position of the Company and its Subsidiaries for the periods and as of the dates
indicated and (d) have been prepared in conformity with generally accepted
accounting principles consistently applied throughout the periods indicated,
subject only to, in the case of unaudited portions of the Financial Statements,
the absence of footnotes and normal recurring year-end audit adjustments (which
will not be material). The "Monthly Financial Operating Analysis" with respect
to each of the Company's business regions and sites furnished to the directors
of the Company for the period ended October 31, 1999, a copy of which is
attached hereto as Exhibit E-2, was compiled by the Company's senior management
in good faith and, to their knowledge, there are no inaccuracies in or omissions
from the report which would have a material adverse affect on the Company as a
whole. Neither the Company nor any Subsidiary has any material liabilities or,
to the best of the Company's knowledge, any material contingent liabilities not
disclosed in the Financial Statements, except current liabilities incurred in
the ordinary course of business subsequent to November 30, 1999. The reserves
against accounts receivable established by the Company in the Financial
Statements(i) are computed in accordance with presently accepted industry
standards consistently applied, (ii) meet the requirements of any law, rule,
regulations, license, permit or governmental authorization applicable to such
reserves, the Company or the business or assets, and (iii) are adequate in the
opinion of the Company's senior management. The Company is not aware of any fact
or circumstance which would necessitate, in the good faith application of
prudent reserving practices and policies, any material adverse change in such
reserves above that reflected in the November 1999 Balance Sheet.
8
3.7 Certain Events. Except as set forth in this Agreement and the
Exhibits hereto, and the documents referred to therein, neither the Company nor
any Subsidiary has since November 30, 1999, (i) issued any stock, bond or other
corporate security, (ii) borrowed any amount or incurred or become subject to
any liability (absolute, accrued or contingent), except current liabilities
incurred and liabilities under contracts entered into in the ordinary course of
business, (iii) discharged or satisfied any lien or encumbrance or incurred or
paid any obligation or liability (absolute, accrued or contingent) other than
current liabilities incurred in the ordinary course of business, (iv) declared
or made any payment or distribution to stockholders or purchased or redeemed any
shares of its capital stock or other security, (v) mortgaged, pledged or
subjected to lien any of its assets, tangible or intangible,(vi) sold, assigned
or transferred any of its tangible assets except in the ordinary course of
business, or canceled any debt or claim, (vii) sold, assigned, transferred or
granted any exclusive license with respect to any patent, trademark, trade name,
service ▇▇▇▇, copyright, trade secret or other intangible asset, (viii) suffered
any material loss of property or waived any right of substantial value except in
the ordinary course of business, (ix) made any change in employee compensation
except in the ordinary course of business and consistent with past practice, (x)
made any material change in the manner of business or operations of the Company,
(xi) entered into any material transaction except in the ordinary course of
business or as otherwise contemplated hereby or (xii) entered into any
commitment (contingent or otherwise) to do any of the foregoing. In addition to
the foregoing, except as set forth on Exhibit D hereto, since November 30, 1999,
there has not been (i) any material adverse change in the assets, liabilities,
financial condition or operations of the Company and its Subsidiaries from that
reflected in the Financial Statements, other than changes in the ordinary course
of business; (ii) any material change in any material agreement to which the
Company or any Subsidiary is a party or by which it is bound; or (iii) any other
event or condition of any character that, either individually or cumulatively,
has materially and adversely affected the business, assets, liabilities,
financial condition or operations of the Company and its Subsidiaries.
3.8 Litigation, Compliance with Law.
(a) Except as set forth on Exhibit D hereto, there is no (i)
action, suit, claim or proceeding pending or, to the best
9
of the Company's knowledge, threatened or any investigation pending or, to the
best of the Company's knowledge, threatened against or affecting (A) the Company
or any Subsidiary, (B) any officer, director, employee, or agent of the Company
or any Subsidiary, or (C) to the best of the Company's knowledge, any entity or
person providing services to the Company or any Subsidiary (a "Provider") with
respect to such Provider's services to or relationship with the Company or any
Subsidiary, in each such case, at law or in equity, or before or by any federal,
state, municipal or other governmental department, commission, board, bureau
agency or instrumentality, domestic or foreign, (ii) arbitration proceeding
relating to the Company or any Subsidiary under collective bargaining agreements
or otherwise, or (iii) governmental inquiry or audit pending or, to the best of
the Company's knowledge, threatened against or affecting the Company or any
Subsidiary, any officer, director, employee or agent of the Company or any
Subsidiary or any Provider with respect to its services to or relationship with
the Company or any Subsidiary (including without limitation any focused medical
review or other inquiry or audit as to the qualification of the Company or any
Subsidiary, any officer, director, employee or agent of the Company or any
Subsidiary or any Provider with respect to its services to or relationship with
the Company or any Subsidiary to hold or receive any governmental license or
permit or as to its right to payment or reimbursement from any governmental
agency or instrumentality) and, to the best of the Company's knowledge, there is
no basis for any of the foregoing. Neither the Company nor any Subsidiary is in
default with respect to any order, writ, injunction or decree of any court or of
any federal, state, municipal or other governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign. Neither the
Company nor any Subsidiary is a party or subject to the provisions of any order,
writ, injunction, judgment or decree of any court or government agency or
instrumentality and none of them has entered into any settlement with any third
party of any claim. There is no action, suit, proceeding or investigation by the
Company or any Subsidiary pending or threatened against others. Neither the
Company nor any Subsidiary is in or has been in violation of, or delinquent in
respect to, any statute, rule, regulation, order, restriction, decree,
arbitration award, or any agreement with, or any license or permit from, any
domestic or foreign government or any instrumentality or agency thereof in
respect of the conduct of the Company's or any Subsidiary's business or the
ownership of its properties which violation has or could (following any cure of
any such violation
10
by the Company or any Subsidiary) materially and adversely affect the business,
assets, liabilities, financial condition, operations or prospects of the Company
and its Subsidiaries taken as a whole, including, but not limited to; state or
federal anti-dumping laws; state and federal antitrust laws; laws, rules and
regulations relating to the environment, hospices or other businesses required
to be licensed; or occupational health and safety, employee benefits, wages,
workplace safety, equal employment opportunity and race, religious, sex and age
discrimination laws, rules and regulations. The Company and each Subsidiary
have, and each currently satisfies the conditions to maintain, all material
franchises, permits, licenses and any similar authority necessary for the
conduct of its business as now being conducted by it, and is not aware of any
reason why it cannot obtain, without undue burden or expense, any similar
authority for the conduct of its business as currently planned to be conducted.
The Company and its Subsidiaries have taken all necessary actions to obtain
Medicare provider numbers for each of their respective business sites and they
expect to receive all such pending provider numbers in the ordinary course of
business. The Company and each Subsidiary, to the extent requiring any form of
governmental licensure, qualification or authorization, are duly licensed,
qualified or authorized and in good standing under the applicable laws and
regulations, respectively, of each state or territory in which the conduct of
such business requires such licensure, qualification or authorization and have
filed all required filings. The Company is not aware of any existing law, rule,
regulation or order, or any proposed law, rule, regulation or order whether
federal or state, which would prohibit or restrict the Company or any of its
Subsidiaries from, or otherwise materially adversely affect the Company or any
of its Subsidiaries in conducting its business in any jurisdiction in which it
is now conducting business or in which it currently proposes to conduct
business.
(b) To the best of the Company's knowledge, neither the Company nor any
Subsidiary, nor their respective directors, officers, employees or agents nor
any Provider (only with respect to its services to or relationship with the
Company or any Subsidiary) have engaged in any activity which is prohibited
under the Federal Medicare and Medicaid Anti-Kickback Statute, 42 U.S.C. Section
1320a-7b, or the regulations promulgated thereunder, or related state or local
fraud and abuse statutes or regulations or which is prohibited by rules of
professional conduct including, without limitation: (i) knowingly and
11
willfully making or causing to be made a false statement or representation of a
material fact in any application for any benefit or payment; (ii) knowingly and
willfully making or causing to be made any false statement or representation of
a material fact for use in determining rights to any benefit or payment; (iii)
failing to disclose knowledge by a claimant of the occurrence of any event
affecting the initial or continued right to any benefit or payment on its own
behalf or on behalf of another, with intent to secure such benefit or payment
fraudulently; (iv) knowingly and willfully soliciting or receiving any
remuneration (including any kickback, bribe or rebate), directly or indirectly,
overtly or covertly, in cash or in kind or offering to pay such remuneration (A)
in return for arranging for the furnishing of any items or service for which
payment may be made in whole or in part by Medicare, Medicaid or other state
health care programs, or (B) in return for purchasing, leasing, or ordering any
good, facility, service, or item for which payment may be made in whole or in
part by Medicare, Medicaid or other state health care programs; and (v)
presenting or causing to be presented a claim for reimbursement of services
under Medicare, Medicaid or other state health care programs, which claim is for
an item or service that is known or should be known (in the absence of gross
negligence by the Company or its Subsidiaries) to be (A) not provided as claimed
or (B) false or fraudulent. To the best of the Company's knowledge, neither the
Company nor any Subsidiary nor their respective directors, officers, employees,
agents and Providers (only with respect to services provided to the Company or
any Subsidiary) have established or maintain a "financial relationship," as that
term is defined by the so-called "▇▇▇▇▇ Law", 42 U.S.C. Section 1395nn, with a
physician or an immediate family member of a physician if such physician refers
patients to the Company or a Subsidiary of the Company, unless such financial
relationship meets an exception to the ▇▇▇▇▇ Law.
12
3.9 Proprietary Information of Third Parties. No third party has
claimed or, to the best of the Company's knowledge, has reason to claim that any
person employed by the Company or any Subsidiary or any consultant to the
Company or any Subsidiary has (a) violated or may be violating any of the terms
or conditions of his employment, non-competition or nondisclosure agreement with
such third party, (b) disclosed or may be disclosing or utilized or may be
utilizing any trade secret or proprietary information or documentation of such
third party, or (c) interfered or may be interfering in the employment
relationship between such third party and any of its present or former
employees. To the best of the Company's knowledge, no person employed by the
Company or any Subsidiary and no consultant to the Company or any Subsidiary has
utilized or proposes to utilize for the benefit of the Company or any Subsidiary
any trade secret or any information or documentation proprietary to any third
party, and to the best of the Company's knowledge, no person employed by the
Company or any Subsidiary and no consultant to the Company or any Subsidiary has
violated any confidential relationship which such person may have had with any
third party, in connection with the development, manufacture or sale of any
product or proposed product or the development or sale of any service or
proposed service of the Company or any Subsidiary, and the Company has no reason
to believe there will be any such utilization or violation. Except as set forth
on Exhibit D, each employee of and consultant to the Company or any Subsidiary
has executed a confidentiality agreement in the form attached to Exhibit D
hereto and no exceptions have been taken by any such employee or consultant to
the form of such agreement. The Company is not aware that any of its employees
or consultants are in violation thereof.
3.10 Title to Properties. The Company and each Subsidiary have good and
marketable title to their respective properties and assets reflected in the
Financial Statements and all such properties and assets are free and clear of
mortgages, pledges, security interests, liens, charges, claims, restrictions and
other encumbrances, except for (i) liens for current taxes not yet due and
payable and minor imperfections of title, if any, not material in nature or
amount and not materially detracting from the value or impairing the use of the
property subject thereto or impairing the operations or proposed operations of
the Company or such Subsidiary, and (ii) as set forth on Exhibit D hereto.
13
3.11 Leasehold Interests. Each lease or agreement to which the Company
or any Subsidiary is a party under which it is a lessee of any property, real or
personal, is a valid and subsisting agreement without any material default of
the Company or such Subsidiary and, to the best of the Company's knowledge,
without any material default thereunder of any other party thereto. No event has
occurred and is continuing which, with due notice or lapse of time or both,
would constitute a material default or event of default by the Company or such
Subsidiary under any such lease or agreement or, to the best of the Company's
knowledge, by any other party thereto. The Company's or such Subsidiary's
possession of such property has not been disturbed and, to the best of the
Company's knowledge, no claim has been asserted against the Company or such
Subsidiary adverse to its rights in such leasehold interests.
3.12 Taxes. The Company and each Subsidiary have filed all tax returns,
federal, state, county and local, required to be filed by them, and the Company
and each Subsidiary have paid all taxes shown to be due by such returns as well
as all other taxes, assessments and governmental charges which have become due
or payable, including without limitation all taxes which the Company or such
Subsidiary is obligated to withhold from amounts owing to employees, creditors
and third parties. The Company and each Subsidiary has established adequate
reserves for all taxes accrued but not yet payable. The federal income tax
statements of the Company and each Subsidiary have never been audited by the
Internal Revenue Service. No deficiency assessment with respect to or proposed
adjustment of the Company's or any Subsidiary's federal, state, county or local
taxes is pending or, to the best of the Company's or knowledge, threatened.
There is no tax lien, whether imposed by any federal, state, county or
local-taxing authority, outstanding against the assets, properties or business
of the Company or any Subsidiary.
14
3.13 Intellectual Property. The Company and each Subsidiary own or
possess adequate licenses or other rights to all material patents, patent
applications, trademarks, trademark applications, service marks, service ▇▇▇▇
applications, trade names, copyrights, manufacturing processes, formulae, trade
secrets, know how or other information or proprietary rights (collectively,
"Intellectual Property") which are necessary to the conduct of their respective
business as conducted and as currently proposed to be conducted or the lack of
which would materially adversely affect the Company or its business. There are
no outstanding options, licenses, or agreements of any kind relating to the
foregoing, nor is the Company or any Subsidiary bound by or a party to any
options, licenses or agreements of any kind with respect to the patents,
trademarks, service marks, trade names, copyrights, trade secrets, licenses,
proprietary rights and processes of any other person or entity other than such
licenses or agreements arising from the purchase of "off the shelf" or standard
products. No claim is pending or, to the best of the Company's or any
Subsidiary's knowledge, threatened to the effect that the operations of the
Company or any Subsidiary infringe upon or conflict with the asserted rights or
any other person under any Intellectual Property, and, to the best of the
Company's knowledge, there is no basis for any such claim (whether or not
pending or threatened). Except as set forth on Exhibit D hereto, no claim is
pending or threatened to the effect that any such Intellectual Property owned or
licensed by the Company or any Subsidiary, or which the Company or any
Subsidiary's otherwise has the right to use, is invalid or unenforceable by the
Company or such Subsidiary, and to the best of the Company's knowledge there is
no basis for any such claim (whether or not pending or threatened). To the best
of the Company's knowledge, all technical information developed by and belonging
to the Company or any Subsidiary which has not been patented has been kept
confidential. Neither the Company nor any Subsidiary has granted or assigned to
any other person or entity any right to provide the services or proposed
services of the Company or such Subsidiary.
3.14 Material Contracts. Except for the agreements identified on
Exhibit D hereto or on Exhibit C to each of the 1997 Purchase Agreement, the
July 1998 Purchase Agreement or the December 1998 Purchase Agreement, the
Company (which term, for purposes of this Section 3.14, includes each
Subsidiary) is not a party to or otherwise bound by any of the following types
of written or oral contracts or instruments:
15
(a) any contract for the employment of any officer, employee
or other person on a full-time or consulting basis which is not terminable on
notice without cost or other liability to the Company;
(b) any contract relating to any severance obligations of the
Company to any officer or employee;
(c) any purchase agreement, letter of intent, memorandum of
understanding or other agreement (i) with any representative of any corporation
or corporations, partnership, limited liability company, association or other
business entity or any individual (each an "Acquisition Party") regarding the
consolidation or merger of the Company, or any proposed subsidiary or affiliate
of the Company with or into any such Acquisition Party or the consolidation or
merger of such Acquisition Party with the Company or any Subsidiary or proposed
subsidiary of the Company, (ii) with any Acquisition Party regarding the sale,
conveyance or disposition of all or substantially all of the assets of the
Company or any Subsidiary or proposed subsidiary of the Company or any
Acquisition Party, or a transaction or series of related transactions in which
more than fifty percent (50%) of the voting power of the Company or any
Subsidiary or proposed subsidiary of the Company or any Acquisition Party is
disposed of, or (iii) regarding any other form of acquisition, liquidation,
dissolution or winding up of the Company or any Acquisition Party;
(d) any material agreement the terms of which are materially
unfavorable to the Company as compared to prevailing market terms and conditions
for the types of goods or services being provided thereunder.
16
3.15 Compliance with Governing Documents and Material Contracts. The
Company and its Subsidiaries and, to the best of the Company's knowledge, each
other party thereto have in all material respects performed all the obligations
required to be performed by them to date under each contract to which the
Company or any Subsidiary, as the case may be, is a party which individually or
in the aggregate would materially affect the business, financial condition,
operations, property or affairs of the Company and its Subsidiaries taken as a
whole (the "Material Contracts"), and have received no notice of default and are
not in default (with due notice or lapse of time or both) under any Material
Contract. Neither the Company nor any Subsidiary has any present expectation or
intention of not fully performing all its obligations under each of its Material
Contracts, and neither the Company nor any Subsidiary has any knowledge of any
breach or anticipated breach by the other party to any of the Material
Contracts. The Company is in full compliance with all of the terms and
provisions of the Charter and its By-laws.
3.16 Loans and Advances. Neither the Company nor any Subsidiary has any
outstanding loans or advances to any person in excess of $1,000 or is obligated
to make any such loans or advances, except, in each case, for advances to
employees of the Company in respect of reimbursable business expenses
anticipated to be incurred by them in connection with their performance of
services for the Company.
3.17 Assumptions and Guaranties of Indebtedness of Other Persons.
Neither the Company nor any Subsidiary has assumed, guaranteed, endorsed or
otherwise become directly or contingently liable on any indebtedness of any
other person (including, without limitation, liability by way of any agreement,
contingent or otherwise, to purchase, to provide funds for payment, to supply
funds to or otherwise invest in the debtor, or otherwise to assure the creditor
against loss), except for guarantees by endorsement of negotiable instruments
for deposit or collection in the ordinary course of business.
17
3.18 Significant Suppliers. To the best of the Company's knowledge,
there is no supplier which is significant to the Company or any Subsidiary (a)
which has one or more due but unpaid invoices to the Company and its
Subsidiaries totalling more than $50,000, or (b) whose relationship with the
Company or any Subsidiary is currently being adversely affected by the
timeliness of the Company's and/or any Subsidiary's payments to such supplier.
3.19 Employees. The Company (which term, for purposes of this Section
3.19, includes each Subsidiary) has complied in all material respects with all
applicable laws relating to the employment of labor, including provisions
relating to wages, hours, equal opportunity, collective bargaining and the
payment of Social Security and other taxes, and with the Employee Retirement
Income Security Act of 1974, as amended. The Company has made available to the
Purchasers information with respect to all employees who have a written or oral
agreement with the Company regarding his or her employment which agreement is
not terminable on notice without cost or other liability to the Company. Such
information includes each employee's name, title, compensation, the term of the
agreement, the amount and timing of any severance arrangements, the amount of
stock or other equity compensation (including the exercise price and vesting
terms of any option) and the employee's time commitment (if less than full
time). The Company is not aware that any officer or key employee, or that any
group of key employees, intends to terminate their employment with the Company,
nor does the Company have a present intention to terminate the employment of any
officer, key employee or group of key employees. The Company's use of volunteer
personnel is and has been in material compliance with all applicable laws, rules
and regulations and has been primarily for non-clinical purposes.
18
3.20 Transactions with Affiliates. No director, officer, employee or
stockholder of the Company, or, to the Company's knowledge, any member of the
family of any such person, or any corporation, partnership, trust or other
entity in which any such person, or, to the Company's knowledge, any member of
the family of any such person, has a substantial interest or is an officer,
director, trustee, partner or holder of more than 5% of the outstanding capital
stock or other ownership interest thereof, (i) is a party to any transaction
with the Company or any Subsidiary, including any contract, agreement or other
arrangement providing for the employment or furnishing of services by, rental of
real or personal property from, transfer of any asset (including any
Intellectual Property) from or to, or otherwise requiring payments to any such
person or firm or (ii) to the Company's knowledge, is an officer, director,
trustee, partner or holder of more than 5% of the outstanding capital stock or
other ownership interest in any entity engaged directly or indirectly in
competition with the Company or any Subsidiary.
3.21 Governmental Approvals. Subject to the accuracy of the
representations and warranties of the Acquirers set forth in Section 4, no
registration or filing with, or consent or approval of or other action by, any
federal, state or other governmental agency or instrumentality is or will be
necessary for the valid execution, delivery and performance by the Company of
this Agreement or the issuance, sale and delivery of the Shares, the Bridge
Warrant, the Conversion Shares and the Bridge Warrant Shares, other than the
filing of notice that may be required pursuant to federal and state securities
laws in connection with the sale of the Shares. All such filings and notices
required in connection with previous offerings of the Company's securities have
been properly filed.
19
3.22 Offering of the Shares and the Bridge Warrant. Neither the Company
nor any person authorized or employed by the Company as agent, broker, dealer or
otherwise in connection with the offering or sale of the Shares, the Bridge
Warrant or any security of the Company similar to the Shares or the Bridge
Warrant has offered the Shares, the Bridge Warrant or any such similar security
for sale to, or solicited any offer to buy the Shares, the Bridge Warrant or any
such similar security from, or otherwise approached or negotiated with respect
thereto with, any person or persons, and neither the Company nor any person
acting on its behalf has taken or will take any other action (including, without
limitation, any offer, issuance or sale of any security of the Company under
circumstances which might require the integration of such security with the
Shares and the Bridge Warrant under the Securities Act of 1933, as amended (the
"Securities Act") or the rules and regulations of the Securities and Exchange
Commission (the "Commission") thereunder), in either case so as to subject the
offering, issuance or sale of the Shares or the Bridge Warrant to the
registration provisions of the Securities Act or of any applicable state
securities (Blue Sky) laws or regulations.
3.23 Environmental and Safety Laws. The Company and the Subsidiaries are
not in violation of any applicable statute, law or regulation relating to the
environment or occupational health and safety, and no material expenditures are
or will be required in order to comply with any such existing statute, law or
regulation that will materially or adversely affect the business, assets,
liabilities, financial condition or operations of the Company.
3.24 Insurance. The Company and each Subsidiary have insurance policies
with coverage which the Company believes to be adequate for purposes of
conducting the business of the Company and each Subsidiary as it is presently
conducted.
3.25 Qualified Small Business Stock. The Shares constitute upon issuance
"qualified small business stock" as defined in Section 1202(c) of the Internal
Revenue Code.
20
3.26 Year 2000 Matters. To the best of the Company's knowledge, the
computer systems, including, without limitation, all systems designed to collect
patient data, to ▇▇▇▇ for services, to process payments received and otherwise
to manage the business (collectively, the "Products and Systems") of the Company
and its Subsidiaries and their agents are Year 2000 Compliant. As used herein,
"Year 2000 Compliant" means that neither the performance nor functionality of
the Products and Systems used by the Company or any Subsidiary and their agents
is affected by dates prior to, during, spanning or after January 1, 2000 and
shall include (a) accurately processing (including calculating, comparing and
sequencing) date and time data from, into and between the years 1999 and 2000
and leap year calculations, (b) functioning without error, interruption or
decreased performance relating to such date and time date, (c) accurately
processing such date and time data when used in combination with other
technology, if the other technology properly exchanges date and time data, (d)
accurate date and time data century recognition, (e) calculations that
accurately use the same century and multi-century formulae and date and time
values, (f) date and time interface values which reflect the correct century and
(g) processing, storing, receiving and outputting all date and time date in a
format that accurately indicates the century of the date and time data.
3.27 Knowledge Qualification. Phrases referring to the Company's
knowledge, awareness or belief as used in connection with any representation or
warranty of the Company in this Section 3 mean all facts and matters which are
known or which reasonably should be known through the exercise of due diligence
by the following officers of the Company: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Perry Fine, ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (who is acknowledged to be responsible for and
knowledgeable regarding whether the Products and Systems of the Company and its
Subsidiaries are Year 2000 Compliant) and ▇▇▇▇ ▇▇▇▇▇▇▇▇▇.
SECTION 4 REPRESENTATIONS AND WARRANTIES OF THE ACQUIRERS
Each Purchaser (including Bessemer), severally and not jointly, represents
and warrants to the Company with respect to the Shares, and Bessemer represents
and warrants to the Company with respect to the Bridge Warrant, that:
21
4.1 Requisite Power and Authority. Such Acquirer has all necessary power
and authority under all applicable provisions of law to execute and deliver this
Agreement and the Ancillary Agreements and to carry out their provisions. All
action on such Acquirer's part required for the lawful execution and delivery of
this Agreement and the Ancillary Agreements has been or will be effectively
taken prior to the Closing. Upon their execution and delivery, this Agreement
and the Ancillary Agreements will be valid and binding obligations of such
Acquirer.
4.2 Consents. All consents, approvals, orders, authorizations,
registrations, qualifications, designations, declarations or filings with any
governmental or banking authority on the part of such Acquirer required in
connection with the consummation of the transactions contemplated by this
Agreement or the Ancillary Agreements have been or shall have been obtained
prior to and be effective as of the Closing.
4.3 Investment Representations. Such Acquirer understands that none of the
Shares, the Bridge Warrant, the Bridge Warrant Shares or the Conversion Shares
have been registered under the Securities Act. Such Acquirer also understands
that the Shares or the Bridge Warrant, as the case may be, are being offered and
sold pursuant to an exemption from registration contained in the Securities Act
based in part upon such Acquirer's representations contained in this Agreement.
Such Acquirer hereby represents and warrants as follows:
(a) Acquirer Bears Economic Risk. Such Acquirer has substantial
experience in evaluating and investing in private placement transactions of
securities in companies similar to the Company so that it is capable of
evaluating the merits and risks of its investment in the Company and has the
capacity to protect its own interests. Such Acquirer must bear the economic risk
of this investment indefinitely unless the Shares or the Bridge Warrant (or the
Conversion Shares or the Bridge Warrant Shares) are registered pursuant to the
Securities Act, or an exemption from registration is available. Such Acquirer
understands that the Company has no present intention of registering the Shares,
the Bridge Warrant, the Bridge Warrant Shares, the Conversion Shares or any
shares of its Common Stock. Such Acquirer also understands that there is no
assurance that any exemption from registration under the Securities Act will be
available and that, even if available, such exemption may not allow such
Acquirer to transfer all or any portion of the Shares, the
▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Shares or the Conversion Shares under the
circumstances, in the amounts or at the times the Acquirer might propose.
(b) Acquisition for Own Account. Such Acquirer is acquiring the
Shares or the Bridge Warrant, as the case may be, and upon conversion or
exercise, will acquire the Bridge Warrant Shares and the Conversion Shares, as
the case may be, for such Acquirer's own account for investment only, and not
with a view towards their distribution.
(c) Company Information. Such Acquirer has had an opportunity to
discuss the Company's business, management and financial affairs with directors,
officers and management of the Company and has had the opportunity to review the
Company's operations and facilities. Such Acquirer has also had the opportunity
to ask questions of and receive answers from, the Company and its management
regarding the terms and conditions of this investment.
(d) Rule 144. Such Acquirer acknowledges and agrees that the Shares
or the Bridge Warrant and Bridge Warrant Shares, as the case may be, and the
Conversion Shares must be held indefinitely unless they are subsequently
registered under the Securities Act or an exemption from such registration is
available. Such Acquirer has been advised or is aware of the provisions of Rule
144 promulgated under the Securities Act, which permits limited resale of shares
purchased in a private placement subject to the satisfaction of certain
conditions, including, among other things: the availability of certain current
public information about the Company, the resale occurring not less than one
year after a party has purchased and paid for the security to be sold, the sale
being through an unsolicited "broker's transaction" or in transactions directly
with a market maker (as such term is defined under the Securities Exchange Act
of 1934 as amended) and the number of shares being sold during any three-month
period not exceeding specified limitations.
23
SECTION 5 CONDITIONS TO CLOSING
5.1 Conditions to Acquirers' Obligations at the Closing. Bessemer's
obligation to acquire the Bridge Warrant at the Closing and each of the
Purchasers' obligations to purchase Shares at the Closing are subject to the
satisfaction, at or prior to the Closing, of the following conditions:
(a) Representations and Warranties True; Performance of Obligations.
The representations and warranties made by the Company in Section 3 hereof shall
be true and correct in all material respects as of the Closing with the same
force and effect as if they had been made on the Closing Date, and the Company
shall have performed all obligations and conditions herein required to be
performed or observed by it on or prior to the Closing.
(b) Legal Investment. On the Closing Date, the sale and issuance of
the Shares, the issuance of the Bridge Warrant and the proposed issuance of the
Bridge Warrant Shares and the Conversion Shares shall be legally permitted by
all laws and regulations to which the Acquirers and the Company are subject.
(c) Consents, Permits, and Waivers. The Company shall have obtained
any and all consents, permits and waivers necessary or appropriate for
consummation of the transactions contemplated by this Agreement and the
Ancillary Agreements (except for such as may be properly obtained subsequent to
the Closing).
(d) Filing of Amended and Restated Certificate of Incorporation. The
Charter shall have been filed with the Secretary of State of the State of
Delaware prior to the Closing.
(e) Registration Rights Amendment. Amendment No. 4 to Registration
Rights Agreement in the form of Exhibit F hereto (the "Registration Rights
Amendment") shall have been executed and delivered by the parties thereto, other
than the Acquirers, prior to the Closing.
(f) Stockholders Voting Agreement Consent. The Consent Pursuant to
Section 7 of Amended and Restated Stockholders' Voting Agreement (the
"Stockholders' Voting Agreement Consent"), in the form of Exhibit G hereto,
shall have
24
been executed and delivered by the parties thereto, other than the Acquirers,
prior to the Closing.
(g) Stockholder Rights Amendment. Amendment No. 4 to Amended and
Restated Stockholder Rights Agreement (the "Stockholder Rights Amendment"), in
the form of Exhibit H hereto, shall have been executed and delivered by the
parties thereto, other than the Acquirers, prior to the Closing.
(h) Waiver of Preemptive Rights. The Waiver of Preemptive and
Antidilution Rights (the "Preemptive and Antidilution Rights Waiver"), in the
form of Exhibit I hereto, shall have been executed and delivered by the parties
thereto, other than the Acquirers, prior to the Closing.
(i) Legal Opinion. The Acquirers shall have received from ▇▇▇▇▇▇,
▇▇▇▇ & ▇▇▇▇▇▇▇, counsel to the Company, an opinion addressed to them, dated as
of the Closing, in substantially the form attached hereto as Exhibit J.
(j) Litigation. No action, suit, investigation or proceeding shall
be pending or threatened before any court or governmental agency to restrict,
prohibit, collect damages as a result of or otherwise challenge this Agreement
or any Ancillary Agreement or any transaction contemplated hereby or thereby.
(k) Proceedings and Documents. All corporate and other proceedings
in connection with the transactions contemplated at the Closing hereby and all
documents and instruments incident to such transactions shall be reasonably
satisfactory in substance and form to the Acquirers, and the Acquirers shall
have received all such counterpart originals or certified or other copies of
such documents as they may reasonably request.
(l) HSR Clearance. The Parties shall have made all filings required
by the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended, with
respect to the transactions contemplated hereby or any previous transactions
between the Company and any Acquirer (the "HSR Filings") and the waiting period
with respect to any such HSR Filings shall have expired or been terminated.
25
5.2 Conditions to Obligations of the Company at the Closing. The Company's
obligation to issue and sell the Shares and to issue the Bridge Warrant at the
Closing, is subject to the satisfaction, on or prior to the Closing, of the
following conditions:
(a) Representations and Warranties True. The representations and
warranties made by the Acquirers in Section 4 hereof shall be true and correct
in all material respects as of the Closing with the same force and effect as if
they had been made on and as of such date.
(b) Performance of Obligations. The Acquirers shall have performed
and complied with all agreements and conditions herein required to be performed
or complied with by the Acquirers on or before the Closing.
(c) Registration Rights Amendment. The Registration Rights Amendment
shall have been executed and delivered by the parties thereto, other than the
Company, prior to the Closing.
(d) Stockholders Voting Agreement Consent. The Stockholders Voting
Agreement Consent shall have been executed and delivered by the parties thereto,
other than the Company, prior to the Closing.
(e) Stockholder Rights Amendment. The Stockholder Rights Amendment
shall have been executed and delivered by the parties thereto, other than the
Company, prior to the Closing.
(f) Preemptive and Antidilution Rights Waiver. The Preemptive and
Antidilution Rights Waiver shall have been executed and delivered by the parties
thereto, other than the Company, prior to the Closing.
(g) Consents, Permits, and Waivers. The Company shall have obtained
any and all consents, permits and waivers necessary or appropriate for
consummation of the transactions contemplated by this Agreement or the Ancillary
Agreements (except for such as may be properly obtained subsequent to the
Closing).
(h) HSR Clearance. The parties shall have made any required HSR
Filings and the waiting period with respect to any such HSR Filings shall have
expired or been terminated.
26
(i) Limited Release. The holders of the Company's Series B Preferred
Stock purchasing Class C Shares hereunder shall have executed and delivered to
the Company a Limited Release in the form of Exhibit K hereto.
(j) Banc of America Consent and Waiver. Banc of America Commercial
Finance Corporation ("Banc of America") shall have executed and delivered to the
Company a Consent and Waiver substantially in the form of Exhibit L hereto,
pursuant to which Banc of America shall (i) consent to the sale and issuance of
the Shares and the Bridge Warrant and the other transactions contemplated by
this Agreement, (ii) consent to the payment in cash by the Company to Bessemer
of the accrued interest on the Bridge Note, and (iii) waive any antidilution
adjustment to the exercise price on the number of shares issuable upon exercise
of the warrant presently held by Banc of America that would otherwise result
from the issuance or exercise of the Bridge Warrant.
SECTION 6 COVENANTS OF THE COMPANY
The Company's covenants set forth in Section 6 of the 1997 Purchase
Agreement are incorporated herein by reference for the benefit of each of the
Purchasers, provided that (i) each defined term used therein shall be deemed to
have the meaning ascribed to such defined term in this Agreement, if different,
and (ii) all references to "Initial Closing" shall be deemed to refer to the
"Closing" as defined herein.
SECTION 7 PREEMPTIVE RIGHTS; KEYMAN REDEMPTION
The provisions of Sections 7.1, 7.2, 7.3, 7.5 - 7.8 and 7A of the 1997
Purchase Agreement are incorporated herein by reference, provided that (i) each
defined term used therein shall be deemed to have the meaning ascribed to such
defined term in this Agreement, if different, and (ii) all rights and
obligations pursuant to such incorporated provisions shall terminate upon the
consummation of a Qualified Initial Public Offering (as defined therein).
27
SECTION 8 MISCELLANEOUS
8.1 Expenses. The Company shall pay, at the Closing, the reasonable
out-of-pocket expenses of the Acquirers and the reasonable fees and expenses of
counsel for the Acquirers incurred in connection with the transactions
contemplated hereby, including without limitation, the filing and preparation
fees relating to any HSR Filings required to be made by Health Care Capital
Partners, L.P. in connection with its investment in the Company.
8.2 Confidentiality. Each Acquirer agrees that it will keep confidential
and will not disclose or divulge any confidential, proprietary or secret
information which such Acquirer may obtain from the Company pursuant to
financial statements, reports and other materials furnished or made available by
the Company to such Acquirer pursuant to this Agreement, unless such information
is known, or until such information becomes known, to the public; provided,
however, that an Acquirer may disclose such information (i) to its attorneys,
accountants, consultants, and other professionals to the extent necessary to
obtain their services in connection with its investment in the Company, (ii) to
any prospective purchaser of any Shares from such Purchaser or the Bridge
Warrant from Bessemer as long as such prospective purchaser agrees in writing to
be bound by the provisions of this Section, (iii) to any affiliate or partner of
such Acquirer, (iv) to any other Acquirer or (v) as required by applicable law.
8.3 Publicity. The Company will not use or display the name of any
Acquirer or identify any Acquirer as an investor in the Company in any publicly
disseminated communication, without such Acquirer's prior written consent.
8.4 Brokerage. Each party hereto will indemnify and hold harmless the
other against and in respect of any claim for brokerage or other commissions
relative to this Agreement or to the transactions contemplated hereby, based in
any way on agreements, arrangements or understandings made or claimed to have
been made by such party with any third party.
8.5 Parties in Interest. All representations, covenants and agreements
contained in this Agreement by or on behalf of any of the parties hereto shall
bind and inure to the benefit of the respective successors and assigns of the
parties hereto whether so expressed or not.
28
8.6 Notices. All notices, requests, consents and other communications
hereunder shall be in writing and shall be deemed delivered (i) when delivered
in person or (ii) five business days after being mailed by certified or
registered mail, return receipt requested, or (iii) one business day after being
sent by a recognized overnight courier service, addressed as follows:
a. if to the Company, at:
VistaCare, Inc.
▇▇▇▇ ▇▇. ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Chief Financial Officer
with a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇, Hall & ▇▇▇▇▇▇▇
Exchange Place, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
b. if to any Acquirer, at:
the address for such Acquirer set
forth on Exhibit A hereto
with a copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Ropes & ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
or in either such case, at such other address or addresses as shall have been
furnished in writing by such party to the others.
8.7 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware.
8.8 Entire Agreement. This Agreement, including the Exhibits hereto,
constitutes the sole and entire agreement of the parties with respect to the
subject matter hereof. All Exhibits hereto are hereby incorporated herein by
reference.
29
8.9 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
8.10 Amendments and Waivers.
(a) This Agreement may be amended or modified only upon the written
consent of the Company and (a) with respect to the Shares, holders of at least a
majority of the Shares issued hereunder (treated as if converted and including
any Conversion Shares into which the Shares have been converted that have not
been sold to the public), and (b) with respect to the Bridge Warrant, the holder
thereof.
(b) With respect to the Shares, the obligations of the Company and
the rights of the holders of the Shares and the Conversion Shares under this
Agreement may be waived (either prospectively or retroactively) only with the
written consent of the holders of at least a majority of the Shares issued
hereunder (treated as if converted and including any Conversion Shares into
which the Shares have been converted that have not been sold to the public).
(c) With respect to the Bridge Warrant, the obligations of the
Company and the rights of the holder thereof under this Agreement may be waived
(either prospectively or retroactively) only with the written consent of such
holder.
8.11 Severability. If any provision of this Agreement shall be declared
void or unenforceable by any judicial or administrative authority, the validity
of any other provision and of the entire Agreement shall not be affected
thereby, unless the effect thereof would be to alter materially the effect of
this Agreement.
8.12 Titles and Subtitles. The titles and subtitles used in this Agreement
are for convenience only and are not to be considered in construing or
interpreting any term or provision of this Agreement.
30
8.13 No Waiver, Cumulative Remedies. No failure or delay on the part of
any party to this Agreement in exercising any right, power or remedy hereunder
shall operate as a waiver thereof; nor shall any single or partial exercise of
any such right, power or remedy preclude any other or further exercise thereof
or the exercise of any other right, power or remedy hereunder. The remedies
herein provided are cumulative and not exclusive of any remedies provided by
law.
8.14 Further Assurances. From and after the date of this Agreement, upon
the request of the Acquirers or the Company, the Company and the Acquirers shall
execute and deliver such instruments, documents and other writings as may be
reasonably necessary or desirable to confirm and carry out and to effectuate
fully the intent and purposes of this Agreement.
8.15 Survival. Except as otherwise provided herein, the representations,
warranties, covenants and agreements made herein shall survive any investigation
made by the Acquirers and the closing of the transactions contemplated hereby
until the fifth anniversary of the Closing Date.
31
IN WITNESS WHEREOF, the Company and the Acquirers have executed this
Agreement as of the date first above written.
VISTACARE, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇, President
BESSEMER VENTURE PARTNERS III, L.P.
By: Deer III & Co., general partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Manager
PURCHASERS:
HEALTH CARE CAPITAL PARTNERS, L.P.
By: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Co.
LLC, its General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
Manager
HEALTH CARE EXECUTIVE PARTNERS, L.P.
By: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Co.
LLC, its General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
Manager
32
BESSEMER VENTURE PARTNERS III, L.P.
By: Deer III & Co., general partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Manager
*
---------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
BRIMSTONE ISLAND CO. L.P.
By: *
-----------------------------
*
---------------------------------
Neill ▇. ▇▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Hardymon Family Limited Partnership
By: *
-----------------------------
*
---------------------------------
▇▇▇▇▇▇▇▇▇▇▇ F. O. Gabrieli
GABRIELI FAMILY FOUNDATION
By: *
-----------------------------
33
*
---------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
*
---------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇
*
---------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
*
---------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
*
---------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
*
---------------------------------
▇▇▇▇ ▇. ▇▇▇▇
*
---------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
*
---------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
*
---------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
BELISARIUS CORPORATION
By: *
-----------------------------
*
---------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
34
*
---------------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
*
---------------------------------
▇▇▇▇▇▇ ▇. ▇. ▇▇▇▇▇▇▇▇
*
---------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇
*
---------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ CORPORATION
By: *
-----------------------------
BVP III SPECIAL SITUATIONS L.P.
By: Deer III & Co. LLC,
general partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
Manager
*By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
attorney-in-fact
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
35