EXHIBIT - 2
STOCK PURCHASE AGREEMENT
AMONG
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AND
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BIO PARTNERS IN CARE, INC.
AND
ACCREDO HEALTH, INCORPORATED
DATED AS OF DECEMBER 20, 2001
TABLE OF CONTENTS
ARTICLE 1 PURCHASE OF SHARES BY THE COMPANY FROM SELLERS;
ADJUSTMENT TO PURCHASE PRICE; CLOSING DATE......................1
1.1 Definitions.....................................................1
1.2 Purchase and Sale of Shares.....................................1
1.3 Closing Date....................................................1
1.4 Calculation of the Purchase Price...............................1
1.5 Payment of Purchase Price.......................................4
1.6 Contingent Purchase Price Payment...............................4
1.7 Deliveries......................................................6
ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF SELLER PARTIES................6
2.1 Organization, Authority and Capacity; Subsidiaries..............6
2.2 Authorization and Validity......................................7
2.3 Absence of Conflicting Agreements or Required Consents..........7
2.4 Governing Documents.............................................7
2.5 Capitalization; Ownership of Capital Stock......................7
2.6 Financial Statements............................................8
2.7 Absence of Certain Changes or Events............................9
2.8 Absence of Undisclosed Liabilities.............................10
2.9 Litigation, etc................................................10
2.10 No Violation of Law............................................10
2.11 Real and Personal Property.....................................10
2.12 Contracts and Commitments......................................12
2.13 Employment and Labor Matters...................................12
2.14 Employee Benefit Matters.......................................13
2.15 Insurance Policies.............................................15
2.16 Environmental Matters..........................................16
2.17 Taxes..........................................................16
2.18 Licenses, Authorizations and Provider Programs.................17
2.19 Inspections and Investigations.................................18
2.20 Certain Relationships..........................................18
2.21 ▇▇▇▇▇; Fraud and Abuse; False Claims...........................19
2.22 Rates and Reimbursement Policies...............................20
2.23 Changes in Laws................................................20
2.24 Patients and Orders............................................20
2.25 Controlled Substances..........................................20
2.26 Inventories....................................................20
2.27 Business Relationships.........................................20
2.28 Absence of Certain Business Practices..........................21
2.29 Accounts Receivable............................................21
2.30 Related Party Transactions.....................................21
2.31 Places of Business.............................................21
2.32 Eligibility Under Section 338(h)(10)...........................22
2.33 Statements True and Correct....................................22
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF BUYER........................22
3.1 Organization, Authority and Capacity...........................22
3.2 Authorization and Validity.....................................22
3.3 Absence of Conflicting Agreements or Required Consents.........22
3.4 Statements True and Correct....................................23
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ARTICLE 4 ADDITIONAL AGREEMENTS..........................................23
4.1 Access to Seller and BPC Information...........................23
4.2 No Shop........................................................23
4.3 Affirmative Covenants of Sellers and BPC.......................23
4.4 Negative Covenants of Sellers..................................25
4.5 Public Announcements...........................................26
4.6 RESERVED.......................................................26
4.7 Use of Names...................................................26
4.8 Conditions to Closing..........................................27
4.9 Reserved.......................................................27
4.10 Tax Matters....................................................27
4.11 Title Search; Discharge of Liens...............................30
4.12 Transfer Taxes.................................................30
4.13 Caremark Litigation............................................31
4.14 Partners in Care...............................................31
ARTICLE 5 CONDITIONS TO OBLIGATIONS OF BUYER.............................31
5.1 Representations and Warranties.................................31
5.2 Performance; Covenants.........................................31
5.3 Necessary Consents and Approvals...............................32
5.4 Confidentiality Agreement......................................32
5.5 No Injunction, Etc.............................................32
5.6 Escrow Agreement...............................................32
5.7 Legal Opinion..................................................32
5.8 Non-Competition Agreements.....................................32
5.9 Employment Agreements..........................................32
5.10 Audited Financial Statements...................................33
5.11 Share Certificates; Stock Powers...............................33
5.12 Resignations and Releases......................................33
5.13 Insurance......................................................33
5.14 Phantom Stock..................................................33
5.15 Seller Stock Agreements........................................33
ARTICLE 6 CONDITIONS TO OBLIGATIONS OF SELLERS...........................33
6.1 Representations and Warranties.................................33
6.2 Performance; Covenants.........................................33
6.3 No Injunction, Etc.............................................34
6.4 Purchase Price.................................................34
6.5 Escrow Agreement...............................................34
6.6 Employment Agreements..........................................34
ARTICLE 7 TERMINATION....................................................34
7.1 Right of Termination...........................................34
7.2 Effect of Termination..........................................35
ARTICLE 8 INDEMNIFICATION................................................35
8.1 Survival of Representations and Warranties.....................35
8.2 Tax Indemnity..................................................35
8.3 Sellers General Indemnity......................................37
8.4 Ownership and Regulatory Indemnity.............................37
8.5 Conditions of Indemnification..................................38
8.6 General Provisions Relating to Indemnification.................39
8.7 Exclusive Remedies.............................................39
8.8 Escrow Agreement...............................................39
8.9 Overall Limit..................................................39
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8.10 General Buyer Indemnity........................................40
8.11 Sellers Litigation Indemnity...................................40
ARTICLE 9 CERTAIN DEFINITIONS............................................41
ARTICLE 10 SELLER REPRESENTATIVE..........................................44
10.1 Appointment of Seller Representative...........................44
10.2 Indemnification of Seller Representative.......................44
10.3 Buyer's Reliance on Seller Representative......................44
ARTICLE 11 MISCELLANEOUS PROVISIONS.......................................44
11.1 Notices........................................................44
11.2 Expenses.......................................................45
11.3 Further Assurances.............................................45
11.4 Waiver.........................................................45
11.5 Assignment.....................................................46
11.6 Binding Effect.................................................46
11.7 Headings.......................................................46
11.8 Entire Agreement...............................................46
11.9 Governing Law; Severability....................................46
11.10 Counterparts...................................................46
11.11 Brokers........................................................46
11.12 No Intention to Benefit Third Parties..........................46
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STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as of December 20, 2001 among ▇▇▇▇▇
▇▇▇▇ ("▇▇▇▇"), ▇▇▇ ▇▇▇▇ ("▇▇▇▇"), ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇▇▇▇"), ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇"), ▇▇▇▇ ▇▇▇▇▇ ("▇▇▇▇▇"), ▇▇▇▇ ▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇"), and ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇▇▇"), ACCREDO HEALTH, INCORPORATED, a Delaware Corporation
(referred to as the "Buyer"), and BIO PARTNERS IN CARE, INC., a Missouri
Corporation ("BPC"). ▇▇▇▇, Oddi, Timmermann, Bingham, Sloan, ▇▇▇▇▇▇▇ and
▇▇▇▇▇▇▇▇▇ are sometimes referred to herein individually as "Seller" and
collectively as "Sellers".
WHEREAS, Sellers collectively as of the Closing Date (as hereafter
defined) will own all of the issued and outstanding capital stock of BPC;
WHEREAS, Sellers wish to sell to the Buyer, and the Buyer wishes to
purchase from Sellers, all of the shares of capital stock of BPC owned by
Sellers for cash on the terms and conditions hereinafter set forth (the
"Acquisition"); and
NOW THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
ARTICLE 1
PURCHASE OF SHARES BY BUYER FROM SELLERS;
ADJUSTMENT TO PURCHASE PRICE; CLOSING DATE
1.1 Definitions. Certain terms used in this Agreement are defined
in Article 9.
1.2 Purchase and Sale of Shares. Subject to the terms and
conditions hereinafter set forth, on the Closing Date, the Sellers shall sell,
assign, transfer and deliver to Buyer, or it's designee, all of the issued and
outstanding shares of capital stock of BPC (consisting of 999,997 shares of no
par value Common Stock (the "Shares")), and Buyer shall purchase the Shares from
the Sellers for the Purchase Price, payable as provided in Section 1.5 hereof.
1.3 Closing Date. The closing (the "Closing") will take place on a
date not later than two business days following the satisfaction of the
conditions set forth in Articles 5 and 6 hereof (the "Closing Date"). The place
of Closing shall be at the offices of Buyer in Memphis, Tennessee, or such other
place as may be mutually agreed upon by the Parties. The Parties agree that the
Closing shall be deemed effective for all purposes as of 11:59 p.m. on November
30, 2001 (the "Effective Date"). The parties acknowledge that from and after the
Effective Date BPC has been operated for the account of Buyer.
1.4 Calculation of the Purchase Price.
(a) Subject to the adjustment described in Section 1.4(b)
below, the total consideration to be paid by Buyer for the Shares shall be an
aggregate of Thirty Seven Million One Hundred Thousand Dollars ($37,100,000),
plus the Initial Adjustment Amount (as defined below), and plus the Earnout
Amount, if any, as determined in accordance with Section 1.6 below (such amount,
as adjusted, the "Purchase Price")).
(b) The Purchase Price shall be adjusted as follows:
(i) The Purchase Price will be increased by the
amount, if any, by which the Effective Date
Net Asset Value (as defined in subsection
1.4(b)(iv)(D) hereof) exceeds the sum of (A)
Three Million Two Hundred Seventy-Six
Thousand Four Hundred Sixty-One Dollars
($3,276,461.00), plus (B) the Initial
Adjustment Amount. Buyer will pay any such
excess amount within fifteen (15) days after
the Purchase Price Adjustment Determination
Date (as defined in subsection 1.4(b)(iv)(C)
hereof) by wire transfer of immediately
available funds to such account or accounts
as Sellers' Representative shall designate.
(ii) The Purchase Price will be decreased by the
amount, if any, by which the Effective Date
Net Asset Value is less than the sum of (A)
Three Million Two Hundred Seventy-Six
Thousand Four Hundred Sixty-One Dollars
($3,276,461.00), plus (B) the Initial
Adjustment Amount.. Sellers will pay any
such amount (the "Repayment") within fifteen
(15) days after the Purchase Price
Adjustment Determination Date by wire
transfer of immediately available funds to
such account as Buyer shall designate. Each
Seller shall be responsible only for a pro
rata portion of the Repayment based on his
percentage interest in BPC, as set forth on
Schedule 8.9 hereto. Buyer shall have the
right to elect, but not the obligation, to
recover the Repayment by setting off against
the funds in escrow under the Escrow
Agreement.
(iii) The "Initial Adjustment Amount" equals Four
Hundred Eighty-Nine Thousand Dollars
($489,000). The parties acknowledge that the
Initial Adjustment Amount represents their
initial estimate of how much the
stockholders equity of BPC as of the
Effective Date exceeds Three Million Two
Hundred Seventy-Six Thousand Four Hundred
Sixty-One Dollars ($3,276,461.00).
(iv) The final amount of the adjustment provided
for in subsection (i) or (ii) above shall be
determined in the following manner:
(A) As soon as practicable after the Closing
Date, Buyer shall deliver to Sellers'
Representative a balance sheet of BPC as of
November 30, 2001, (the "Preliminary
Effective Date Balance Sheet") prepared,
based upon good faith estimates, in
accordance with GAAP applied in a manner
consistent with the preparation of the
audited Financial Statements for the nine
month period ending September 30, 2001.
(B) In the event that Sellers either have no
objections to the Preliminary Effective Date
Balance Sheet and, therefore, do not deliver
a Statement of Objection (as hereinafter
defined) or otherwise fail to deliver a
Statement of Objection within the period
required by the immediately following
sentence, the Preliminary Effective Date
Balance Sheet prepared by Buyer
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shall be deemed to be the Final Effective
Date Balance Sheet and shall be used to
determine the Purchase Price adjustment
provided for in subsections (i) and (ii)
above. In the event that Sellers do not
believe that the Preliminary Effective Date
Balance Sheet properly reflects all or any
portion of BPC's Assets and/or Liabilities
as of November 30, 2001, or that the
Preliminary Effective Date Balance Sheet was
not prepared in the manner provided for
herein, Sellers' Representative shall,
within fifteen (15) days of the date on
which Buyer delivers the Preliminary
Effective Date Balance Sheet to Sellers'
Representative, prepare and deliver to Buyer
a written statement of objection (the
"Statement of Objection") specifying in
reasonable detail the Sellers' objections to
the Preliminary Effective Date Balance
Sheet.
(C) If Buyer and the Sellers' Representative are
unable to agree in writing upon adjustments
to the Preliminary Effective Date Balance
Sheet to address objections thereto
identified in the Statement of Objection
within fifteen (15) days of the date on
which Sellers' Representative delivers the
Statement of Objection to Buyer, the dispute
shall be submitted to KPMG (the "Independent
Accounting Firm") for resolution in the
manner provided for herein. In the event
that any dispute relating to the Preliminary
Effective Date Balance Sheet is submitted to
the Independent Accounting Firm for
resolution, the Independent Accounting Firm
shall determine whether the position
advanced by Sellers or by Buyer most closely
approximates the proper resolution of such
dispute and such position shall be employed
to prepare the Final Effective Date Balance
Sheet. The decisions of the Independent
Accounting Firm shall be final and binding
on all parties to this Agreement. Following
resolution of each dispute concerning the
Preliminary Effective Date Balance Sheet in
the manner provided for above, the
Independent Accounting Firm shall deliver a
new balance sheet reflecting the resolution
of each disputed item to each of Buyer and
Sellers' Representative. The Preliminary
Effective Date Balance Sheet as revised in
accordance with the written agreement of
Sellers' Representative and Buyer or as
revised by the Independent Accounting Firm,
as the case may be, shall be deemed to be
the Final Effective Date Balance Sheet and
shall be used to determine the Purchase
Price adjustment provided for in subsections
(i) and (ii) above. In the event any dispute
is submitted to the Independent Accounting
Firm for resolution as provided above, the
cost of engaging the Independent Accounting
Firm for such purpose shall be shared
equally by Buyer and the Sellers. The date
on which the Final Effective Date Balance
Sheet is either agreed upon between Buyer
and the Sellers (which shall be presumed to
be the sixteenth (16th) day following the
date on which Buyer delivers the Preliminary
Effective Date Balance Sheet to Sellers'
Representative, if Sellers' Representative
does not deliver a Statement of Objection
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to Buyer within the fifteen (15) day period
provided for above) or is delivered by the
Independent Accounting Firm to both Buyer
and Sellers' Representative is hereinafter
referred to as the "Purchase Price
Adjustment Determination Date."
(D) For purposes of this Section 1.4, "Effective
Date Net Asset Value" shall mean an amount
equal to stockholder equity as shown on the
Final Effective Date Balance Sheet.
1.5 Payment of Purchase Price. The Purchase Price shall be paid as
follows:
(a) At Closing, a cash payment shall be made by wire
transfer of immediately available funds to such account or accounts as Sellers'
Representative shall designate in the aggregate amount of Thirty-Three Million
Four Hundred Thousand ($33,400,000.00) Dollars plus the Initial Adjustment
Amount (the "Closing Cash Payment").
(b) At Closing, Three Million Seven Hundred Thousand
($3,700,000.00) Dollars shall be placed in escrow to be disbursed pursuant to
the Escrow Agreement which is attached hereto as Exhibit 5.6.
(c) Any adjustment to the Purchase Price shall be
calculated and payable in the manner provided in Section 1.4.
(d) Any amount calculated and due in accordance with
Section 1.6 (the "Earnout Amount") shall be payable in the manner provided in
Section 1.6.
1.6 Contingent Purchase Price Payment.
(a) The Earnout Amount (if any) shall be payable as
specified below by wire transfer of immediately available funds to such account
or accounts as Sellers' Representative shall specify. Payment of the Earnout
Amount shall be subject to setoff and reduction for any claims that Buyer or its
Affiliates may have against Sellers, including any claims for indemnification
under Article 8 hereof. The Earnout Amount shall only be paid if actual EBIT of
BPC for the twelve months ended December 31, 2002 (the "Actual EBIT") equals or
exceeds Six Million One Hundred Thousand ($6,100,000.00) Dollars ("Target"). If
Actual EBIT is less than the Target, the Earnout Amount shall be zero. If the
Target is achieved, the Earnout Amount shall equal the product of Actual EBIT
multiplied by 2; provided, however, that, if the product of Actual EBIT
multiplied by 2 is greater than Sixteen Million ($16,000,000.00) Dollars (the
"Earnout Cap"), then the Earnout Amount shall equal the Earnout Cap.
(b) For purposes of the foregoing, Actual EBIT shall be
determined based upon the books and records of BPC in accordance with GAAP with
(i) no allocation of corporate overhead expenses to BPC that exceed the cost of
those same services (i.e., legal, accounting, services) currently being paid by
BPC, and (ii) disregarding (A) any amortization expenses associated with
intangible assets resulting from the acquisition referenced herein and (B) any
consent, authorization, application, transfer or similar fees incurred by BPC
solely as a result of the Acquisition in order for BPC to continue to have the
benefit of those licenses, permits, authorizations and payment program
certificates set forth on Schedule 2.18(a) after the Closing and any related
fees and expenses (including attorneys fees). All direct expenses of BPC will be
accrued to BPC (for example, all bonuses, COBRA benefits, salary and benefits,
including salary and benefits to Sellers). Unless otherwise agreed by Sellers'
Representative, the calculation of
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Actual EBIT shall exclude (i) monthly telephone, facsimile, electronic mail and
similar communication expense and data processing expenses in excess of the
average of such monthly charges for the six month period preceding the Effective
Date, unless such increases are necessary due to increased volume; and (ii) any
compensation of additional personnel hired by Buyer without consent of Sellers
(such consent not to be unreasonably withheld) unless such personnel are hired
due to increased volume.
(c) Within 60 days after December 31, 2002, Buyer shall
submit to Sellers' Representative a calculation, with reasonable detail, of the
Earnout Amount and Sellers shall have 60 days to dispute such calculation by
having Sellers' Representative submit a written notice to Buyer. Buyer shall
make the books and records of account, budgets, forecasts and capital expense
forecasts of BPC reasonably available to Sellers during the period of the
Earnout and the determination thereof solely for use in verifying and
calculating the Earnout Amount. Failure to provide Buyer written notice of such
dispute within such 60 days shall be deemed acceptance by Sellers of Buyer's
calculation. If Sellers do not dispute Buyer's calculation or Sellers'
Representative earlier accepts Buyer's calculation in writing, then Buyer shall
promptly remit the Earnout Amount to Sellers. If Sellers dispute the calculation
by written notice from Sellers' Representative to Buyer within such 60 days,
then Buyer and Sellers shall have 30 days to negotiate in good faith to resolve
the dispute. If such parties do not reach a mutual resolution from such
negotiations, then the dispute shall be submitted to a nationally recognized
public accounting firm agreeable to each such party and with whom neither such
party (or any of its Affiliates) has had a relationship within the past 24
months. Such accounting firm and Sellers shall be given reasonable access to all
relevant records to calculate the Earnout Amount, which calculation shall be
submitted by the accounting firm to Buyer and Sellers' Representative within 45
days. Each of Buyer and Sellers shall have 30 days thereafter to submit to each
other and the independent accountant written comments on such calculation and an
additional 30 days to similarly submit to each other and the independent
accountant written rebuttal comments to each other's initial comments. Within 15
days after the rebuttal comment period, the independent accountant shall submit
its final calculation to each of Buyer and Sellers' Representative, which shall
be final and binding on the parties hereto, and after which Buyer shall promptly
remit the Earnout Amount (if any) as so calculated. Buyer and Sellers shall
share equally the fees and expenses of such accounting firm, provided if the
amount of the EBIT shown in the calculation of the Earnout Amount by such
accounting firm is more than twenty-five percent (25%) in excess of the EBIT
calculated by Buyer, all of such fees and expenses shall be paid by Buyer.
Interest shall accrue on any unpaid portion of the Earnout Amount commencing on
the date Sellers' Representative gives notice of dispute of the calculation,
provided, however, that Buyer shall remit such amount as Buyer deems not in
dispute and interest shall thereupon accrue only on the difference, if any,
ultimately determined in accordance with this Section 1.6. The rate of interest
shall be that rate of interest then published by Bank of America, New York, New
York, as its "prime" lending rate for commercial borrowers.
(d) Buyer agrees to operate BPC in good faith and in the
normal course of its and its Affiliates' operation of similar businesses on a
basis consistent with its and its Affiliates' prior practices and will use
reasonable efforts to achieve profitability of BPC from the Closing Date until
December 31, 2002 (the "Earnout Period"). During the Earnout Period, Buyer shall
(i) permit Sellers to take such actions as Buyer reasonably deems beneficial to
the business and operations of BPC during such period, (ii) refrain from causing
or requiring BPC to enter into material transactions with Buyer or Affiliates of
the Buyer unless such transactions are on terms and conditions no less favorable
(when all aspects of the transactions are considered) to BPC than could be
obtained from non-related parties, (iii) dispose of or acquire any Assets of BPC
only on
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commercially reasonable economic terms, and (iv) refrain from intentionally
taking any action to avoid or diminish any payment owing or to become owing
under this Section 1.6.
(e) In order to protect the Earnout Amount provided for
herein:
(i) Buyer agrees to provide BPC with such
working capital and permit BPC to engage and
retain such personnel prior to December 31,
2002, as are reasonably necessary to support
its business during such period, subject to
reasonable adjustments for changing business
volume, industry and economic conditions;
(ii) During such period, neither Buyer nor any of
its Affiliates will require BPC to pay any
dividend, redeem any stock, or make any loan
to Buyer or any of its Affiliates as would
reduce BPC's working capital below a level
reasonably required for the conduct of the
business of BPC; and
(iii) During such period, Buyer will not take any
action or suffer any inaction, whether
related to budgeting, access to working
capital or otherwise, which is intended to
or which could reasonably be expected to
impair materially Sellers' ability to earn
the maximum payments they may be entitled to
earn under this Section 1.6.
(f) The failure to generate an Earnout Amount shall not
affect the remainder of the Purchase Price and such failure in and of itself
shall not give rise to an indemnity claim by Buyer under this Agreement.
1.7 Deliveries. All deliveries, payments and other transactions
and documents relating to the Closing (a) shall be independent and none shall be
effective unless and until all are effective (except to the extent that the
party entitled to the benefit thereof has waived satisfaction or performance
thereof as a condition precedent to Closing), and (b) shall be deemed to be
consummated simultaneously.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF SELLER PARTIES
The Sellers jointly and severally represent and warrant to Buyer that
on and as of the Closing Date the statements in the following sections are true,
accurate and complete:
2.1 Organization, Authority and Capacity; Subsidiaries.
(a) BPC is a corporation duly organized, validly existing
and in good standing under the laws of Missouri, and has the full power and
authority necessary to (i) execute, deliver and perform its obligations under
the Acquisition Documents and (ii) carry on its business as it has been and is
now being conducted and to own and lease the Assets which it now owns or leases.
BPC is duly qualified to do business and is in good standing in every
jurisdiction in which the failure to be so qualified or in good standing would
have a material adverse effect on (i) its ability to perform its obligations
under the Acquisition Documents or (ii) its condition (financial
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or otherwise), Assets, Liabilities, business or operations. Set forth on
Schedule 2.1 is a list of all jurisdictions in which BPC is qualified as a
foreign corporation.
(b) ▇▇▇▇ is a resident of Ohio, Oddi is a resident of
Illinois, ▇▇▇▇▇▇▇▇▇▇ is a resident of Missouri, ▇▇▇▇▇▇▇ is a resident of Kansas,
▇▇▇▇▇ is a resident of Kansas, ▇▇▇▇▇▇▇ is a resident of Missouri and ▇▇▇▇▇▇▇▇▇
is a resident of Illinois, and each of the Sellers has the power and authority
to own the Shares and to execute, deliver and perform the Acquisition Documents
to which he is a party and to consummate the transactions contemplated hereby
and thereby. To the extent required by the community property Laws (or other
similar Laws) of any state, each Seller's spouse has consented to and otherwise
authorized such Seller's execution, delivery and performance of the Acquisition
Documents.
(c) Except as set forth on Schedule 2.1(c), neither BPC
nor any Seller (i) owns any shares of any corporation or other equity interest,
either of record, beneficially or equitably, in any Person (excluding shares in
publicly traded companies held by any Seller), or have any commitment to acquire
any such interest or (ii) has not made, or have any commitment to make, any
loans or capital contributions to any such entity.
2.2 Authorization and Validity. The execution, delivery and
performance of the Acquisition Documents by BPC have been duly authorized by all
necessary corporate action by BPC. The Acquisition Documents to be executed and
delivered by the Sellers or BPC have been or will be, as the case may be, duly
executed and delivered by the Sellers and BPC and constitute or will constitute
the legal, valid and binding obligations of the Sellers and BPC, enforceable in
accordance with their respective terms, except as the enforceability hereof or
thereof may be limited by bankruptcy, insolvency, or other laws affecting
creditors' rights generally, or by general principles of equity whether
considered in a proceeding in law or in equity.
2.3 Absence of Conflicting Agreements or Required Consents. Except
as set forth on Schedule 2.3, the execution, delivery and performance by the
Sellers and BPC of the Acquisition Documents to be executed and delivered by the
Sellers and BPC: (a) do not and will not (i) require the consent of or notice to
any Regulatory Authority or any other third party; and (ii) conflict with any
provision of the articles of incorporation or bylaws of BPC; and (b) do not and
will not (i) conflict with or result in a violation of any Law, ruling,
judgment, order or injunction of any court or Regulatory Authority to which any
Seller or BPC is subject or by which Sellers, BPC or any of their Assets are
bound; (ii) conflict with, constitute grounds for termination of, result in a
breach of, constitute a default under, require any notice or consent under, or
accelerate or permit the acceleration of any performance required by the terms
of any agreement, instrument, license or permit to which any Seller or BPC is a
party or by which any Seller, BPC or any of their respective Assets are bound
(including without limitation all of the Seller Agreements); or (iii) create any
Lien upon the Assets of any Seller or BPC.
2.4 Governing Documents. True and correct copies of the articles
of incorporation and all amendments thereto and bylaws of BPC have been provided
to Buyer. Buyer has previously been provided with access to BPC's minute books
and records and minutes, and such minutes accurately reflect in all material
respects the proceedings of the board of directors (and all committees thereof)
and shareholders of BPC. The books and records of BPC, including without
limitation, the books of account, are complete and correct in all material
respects and there have been no transactions involving BPC which properly should
have been set forth therein and which have not been so set forth.
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2.5 Capitalization; Ownership of Capital Stock.
(a) The authorized capital stock of BPC consists of
3,000,000 shares of no par value common stock of which 999,997 shares of stock
have been duly and validly issued and are outstanding and fully paid and
non-assessable.
(b) The Shares are owned (beneficially and of record) by
Sellers free and clear of all Liens. Each Seller owns that number of Shares set
forth opposite his name on Schedule 2.5(b) hereto. All right, title and interest
in and to the Shares is being sold, assigned, transferred and delivered to the
Buyer, and the Buyer will receive at Closing valid title thereto, free and clear
of any and all Liens effective as of the Effective Date.
(c) Except as otherwise set forth in Schedule 2.5(c)
hereto (i) no subscription, warrant, option, convertible security or other right
(contingent or other) to purchase or acquire any shares of any class of capital
stock of BPC is authorized or outstanding, (ii) BPC has no commitment to issue
any shares, warrants, options or other such rights or to distribute to holders
of any class of its capital stock any evidences of indebtedness or Assets, and
(iii) BPC has no obligation (contingent or other) to purchase, redeem or
otherwise acquire any shares of its capital stock or any interest therein or to
pay any dividend or make any other distribution in respect thereof.
(d) Except as otherwise set forth in Schedule 2.5(d)
hereto, none of the Sellers are parties to any shareholders agreement or other
document relating in whole or in part to the ownership of the Shares and/or the
corporate governance of BPC, and, except as contemplated by this Agreement, none
of the Sellers has any commitment to buy or sell any Shares, or warrants,
options or other such rights in respect of any security of BPC (collectively the
"Seller Stock Agreements").
2.6 Financial Statements.
(a) Attached hereto as Schedule 2.6(a) are the unaudited
financial statements of BPC as of and for the years ended December 31, 1999 and
December 31, 2000 and audited interim financial statements as of and for the
nine month period ending September 30, 2001, which reflect the results of
operations and financial condition of BPC for such periods and at such dates
(collectively, the "Financial Statements"). The Financial Statements have been
prepared in accordance with generally accepted accounting principles
consistently applied ("GAAP"), except as set forth on Schedule 2.6(a), and, with
respect to the interim financial statements as of and for the nine month period
ending September 30, 2001, except for the fact that interim Financial Statement
are subject to normal and customary year-end adjustments which will not, in the
aggregate, be material and such other exceptions, if any, that may be indicated
in the notes to such Financial Statements. The Financial Statements present
fairly in all material respects the financial position of BPC as of the dates
indicated and present fairly in all material respects the results of the
operations of BPC for the periods then ended, and are in accordance with the
books and records of BPC, which have been properly maintained and are complete
and correct in all material respects.
(b) None of Sellers or BPC have admitted in writing its
inability to pay its debts, generally as they become due; filed or consented to
the filing against it respectively of a petition in bankruptcy or a petition to
take advantage of an insolvency act; made an assignment for the benefit of its
creditors; consented to the appointment of a receiver for itself respectively or
for the whole or any substantial part of its property; had a petition in
bankruptcy filed against it; been adjudged a bankrupt or filed a petition or
answer seeking reorganization or arrangement
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under the federal bankruptcy laws or any law or statute of the United States of
America or any other jurisdiction.
2.7 Absence of Certain Changes or Events. Except (i) as otherwise
set forth in Schedule 2.7 hereto, or (ii) as otherwise expressly contemplated in
this Agreement, since September 30, 2001, BPC has been operated only in the
ordinary course, and BPC has not:
(a) suffered any material adverse change in its ,
condition (financial or otherwise), Assets,
Liabilities, business or operations;
(b) paid, discharged or satisfied any material Liability
other than in the ordinary course of business;
(c) written off as uncollectable any account receivable
other than in the ordinary course of business;
(d) compromised any debts, claims or rights other than in
the ordinary course of business;
(e) entered into any commitments or transactions not in
the ordinary course of business involving aggregate
value in excess of $25,000 or made aggregate capital
expenditures or commitments in excess of $25,000;
(f) made any material change in any method of accounting
or accounting practice;
(g) sold, assigned or transferred any of its Assets,
including, but not limited to, any patents,
trademarks, trade names, copyrights or other
intangible assets, other than in the ordinary course
of business;
(h) subjected any of its Assets, tangible or intangible,
to any Lien or restriction of any nature whatsoever,
except for Liens for current property taxes not yet
due and payable;
(i) increased any salaries, wages or employee benefits or
made any arrangement for payment of any bonus or
special compensation for any employee of BPC other
than in the ordinary course of business;
(j) hired, committed to hire or terminated any employee
other than in the ordinary course of business;
(k) terminated or amended any material contract, license
or other instrument or suffered any loss or
termination or threatened loss or termination of any
existing material business arrangement or supplier,
the termination or loss of which, individually or in
the aggregate, could reasonably be expected to have a
material adverse effect on BPC's condition (financial
or otherwise), Assets, Liabilities, business or
operations;
(l) from and after the Effective Date declared or paid
any dividend or other distribution or payment in
respect of shares of capital stock; or
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(m) agreed, whether in writing or otherwise, to take any
action described in this Section 2.7.
2.8 Absence of Undisclosed Liabilities. Except as and to the
extent accrued or reserved for and disclosed in the Financial Statement as of
and for the period ended September 30, 2001, BPC does not have any Liabilities,
other than those incurred in the ordinary course of business consistent with
past practice since September 30, 2001, and not exceeding $5,000 individually
and $25,000 in the aggregate.
2.9 Litigation, etc. Except as listed on Schedule 2.9 hereto,
there are no claims, lawsuits, actions, arbitrations, administrative or other
proceedings pending against BPC. Except as listed on Schedule 2.9, (i) no such
matter described in the previous sentence is threatened, and (ii) there are no
governmental or administrative investigations or inquiries pending that involve
BPC. Except as listed on Schedule 2.9, there are no judgments against or consent
decrees binding on BPC or, to the Knowledge of the Sellers, any licensed
professional providing services in connection with the operation of BPC. Sellers
represent and warrant that any and all claims, lawsuits, actions, arbitrations
or other proceedings pending or threatened against, or Liabilities of, BPC and
any of the Sellers arising out of, related to or in connection with the
activities of Sellers and BPC in dispute in the action filed on or about July
20, 1998 by Caremark Inc. in the Circuit Court of the Thirteenth Judicial
District La Salle County, Illinois, as Case ▇▇. ▇▇ ▇▇ ▇▇▇ against BPC, Partners
in Care ("PIC"), Timmermann, Berg, Oddi and ▇▇▇▇▇▇▇▇▇ (the "Caremark
Litigation") have been finally and completely settled, released and discharged
in full pursuant to the terms of that certain Confidential Settlement Agreement
dated December __, 2001 among Caremark Inc., BPC, PIC, Timmermann, Berg, Oddi
and ▇▇▇▇▇▇▇▇▇ (the "Settlement Agreement"), subject to the injunction entered
against the Sellers on July 31, 1998, as modified on November 8, 1999 by Judge
▇▇▇▇▇▇▇▇▇, and as further modified by the terms and conditions of the Settlement
Agreement.
2.10 No Violation of Law.
(a) Neither any Seller nor BPC have been or is currently
in violation of any applicable local, state or federal Law, order, injunction or
decree, or any other requirement of any Regulatory Authority or court binding on
it, or relating to its Assets or business or its advertising, sales or pricing
practices.
(b) Neither any Seller nor BPC is currently subject to
any fine, penalty, liability or disability as the result of a failure to comply
with any requirement of Law, nor has any Seller or BPC received any notice of
such noncompliance.
2.11 Real and Personal Property.
(a) Schedule 2.11(a) sets forth a list and location of
all Assets of BPC (including without limitation items of personal and mixed,
tangible and intangible property), having an original or replacement cost or
value greater than $500 Except as set forth on Schedule 2.11(a), BPC (i) has
good and valid title to all of the Assets which it purports to own, and (ii)
owns such Assets free and clear of all Liens (except for current year ad valorem
taxes). All of the Assets, whether owned or leased, are in the possession and
control of BPC, and, if leased, are leased subject to valid and binding leases
listed on Schedule 2.12. No Affiliate of the Sellers has any claim or interest
in any of the Assets that are used or useful in the business conducted by BPC or
in any operations that are similar to or competitive with that business, even if
geographically distant.
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(b) BPC does not own any real property. Schedule 2.11(b)
contains a true and correct description of all real property leased by BPC,
including all improvements located thereon. BPC has valid and binding leases for
each such property, and (i) BPC is current with respect to all payments due
under such leases; (ii) BPC has complied in all material respects with its
obligations under such leases, and (iii) there are no defaults under any such
lease that remain uncured and no condition exists which, with the lapse of time
or giving of notice, or both, would give rise to a material default under any
such lease. Buyer has been furnished with true, correct and complete copies of
all leases, deeds, easements and other documents and instruments concerning the
matters listed on Schedule 2.11(b). No condemnation or similar actions are
currently in effect or pending or, to the Knowledge of the Sellers, threatened
against any part of any real property leased by BPC. To the Knowledge of the
Sellers, there are no encroachments, leases, easements, covenants, restrictions,
reservations or other burdens of any nature which might impair in any material
respect the use of any such leased real property in a manner consistent with
past practices nor does any part of any building structure or any other
improvement thereon encroach on any other property.
(c) To the Knowledge of Sellers, the present zoning,
subdivision, building and other ordinances and regulations applicable to the
leased real property listed on Schedule 2.11(b) permit the continued operation,
use, occupancy and enjoyment of such real property consistent with past
practices, and, with respect to such leased real property, BPC is in compliance
with, and has received no notices of violations of, any applicable zoning,
subdivision or building regulation, ordinance or other Law. BPC has all rights
and easements necessary for public ingress thereto and egress therefrom and for
the provision of all utility services thereto, including any required curb cut
or street opening permits or licenses for vehicular access over presently
existing roads and driveways. No portion of the leased real property listed on
Schedule 2.11(b), or any building, structure, fixture or improvement thereon, is
the subject of, or affected by, any condemnation, taking, eminent domain or
inverse condemnation proceeding currently instituted or pending, and, to the
Knowledge of the Sellers, none of the foregoing are, or will be, the subject of,
or affected by, any such proceedings.
(d) The Assets of BPC (including all buildings and
improvements in connection therewith) are in good operating condition and
repair, ordinary wear and tear excepted, and such Assets include all rights,
properties, interests in properties (leaseholds or otherwise), and other Assets
necessary to permit BPC to continue its business after the Closing Date as
presently conducted. BPC has only conducted its business under such names and at
such locations as are identified on Schedule 2.11(d) and all of the its Assets
are currently located at those locations identified on Schedule 2.11(d).
(e) Schedule 2.11(e) contains a complete and correct list
of all trademarks, trade names, service marks, service names, brand names,
copyrights, technology rights and licenses, know-how, software (including, but
not limited to, operating and applications software and databases) and patents,
registrations thereof and applications therefor, and any other intellectual
property (collectively, the "Intellectual Property Rights") used by BPC,
together with a complete list of all licenses granted by or to any Seller and/or
BPC with respect to any of the foregoing. BPC holds valid licenses to all copies
of software material to its business and, upon consummation of the Acquisition,
will continue to hold all such licenses free and clear of all other Liens and
Liabilities. None of the Sellers and BPC are in receipt of any notice of any
violation of, and neither Sellers nor BPC have a reason to believe that the
operations of BPC is violating, the Intellectual Property Rights of any third
party.
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2.12 Contracts and Commitments.
(a) Schedule 2.12 contains a complete and accurate list
of all contracts, agreements, commitments, instruments and obligations (whether
written or oral, contingent or otherwise) of, or otherwise binding the Assets
and/or the business of, BPC concerning the following matters (the "Seller
Agreements"):
(i) the lease, as lessee or lessor, or license, as
licensee or licensor, of any real or personal
property (tangible or intangible);
(ii) the employment or engagement of any officer,
director, employee, consultant or agent, other than
those terminable at will without severance
obligation, and any covenant not to compete with any
former employees;
(iii) any relationship or arrangement that requires
financial payments in excess of $25,000.00, or
performance over a period of more than 30 days;
(iv) any arrangement limiting the freedom of the Sellers
or BPC to compete in any manner in any line of
business or requiring the Sellers or BPC to share
profits;
(v) any arrangement that could reasonably be anticipated
to have a material adverse effect on BPC's condition
(financial or otherwise), Assets, Liabilities,
business or operations;
(vi) any material arrangement not in the ordinary course
of business;
(vii) any power of attorney, whether limited or general,
granted by BPC; and
(viii) any arrangement with customers, patients, managed
care organizations, third party payors, pharmacy
benefit managers or drug suppliers.
(b) The Sellers have delivered to Buyer true and complete
copies of all of the Seller Agreements. Except as indicated on Schedule 2.12,
the Seller Agreements are valid and binding in accordance with their terms, and
there is not under any of such Seller Agreements (i) any existing or claimed
default by BPC or event which, with the notice or lapse of time, or both, would
constitute a material default by BPC, or (ii) to the Knowledge of the Sellers,
any existing or claimed default by any other party or event which with notice or
lapse of time, or both, would constitute a material default by any such party.
There is no actual or, to the Knowledge of the Sellers, threatened termination,
cancellation or limitation of any Seller Agreements that would have a material
adverse effect on BPC's condition (financial or otherwise), Assets, Liabilities,
business or operations. To the Knowledge of the Sellers, there is no pending or
threatened bankruptcy, insolvency or similar proceeding with respect to any
other party to the Seller Agreements.
2.13 Employment and Labor Matters.
(a) Schedule 2.13(a) sets forth a list of all current and
former (within the last 12 months) full-time and part-time employees or
consultants of BPC, broken down by location
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and which includes the name, title or position, years in service with BPC,
salary, bonus and benefits information for each such person (the "Business
Employees").
(b) BPC is in compliance in all material respects with
all applicable Laws respecting employment and employment practices, terms and
conditions of employment, wages and hours, occupational safety and health,
including laws concerning unfair labor practices within the meaning of Section 8
of the National Labor Relations Act, and the employment of non-residents under
the Immigration Reform and Control Act of 1986.
(c) Except as disclosed on Schedule 2.13(c),
(i) there are no charges, governmental audits,
investigations, administrative proceedings or
complaints concerning the employment practices of BPC
pending or, to the Knowledge of the Sellers,
threatened before any federal, state or local agency
or court that could reasonably be expected to have a
material adverse effect on BPC's condition (financial
or otherwise), Assets, Liabilities, business or
operations , and, to the Knowledge of the Sellers, no
basis for any such matter exists;
(ii) to the Knowledge of the Sellers, there are no
inquiries, investigations or monitoring of activities
of any licensed, registered, or certified
professional personnel employed by, credentialed or
privileged by, or otherwise affiliated with BPC
pending or threatened by any state professional board
or agency charged with regulating the professional
activities of health care practitioners;
(iii) BPC is not a party to any union or collective
bargaining agreement, and, to the Knowledge of the
Sellers, no union attempts to organize the Business
Employees have been made, nor are any such attempts
now threatened;
(iv) BPC has not experienced any organized slowdown, work
interruption, strike, or work stoppage by any of the
Business Employees; and
(v) BPC will not incur any Liability to any Business
Employees or violate any applicable laws respecting
employment and employment practices as a result of
the Acquisition.
2.14 Employee Benefit Matters.
(a) BPC currently maintains or contributes to, and the
Business Employees receive benefits or are eligible under, only the employee
pension benefit plans, as defined in Section 3(2) of ERISA, as are listed on
Schedule 2.14(a) (the "Pension Plans"). Sellers and BPC have never maintained or
contributed to any other employee pension benefit plan, as defined in Section
3(2) of ERISA.
(b) BPC currently maintains or contributes to, and the
Business Employees receive benefits or are eligible under, only the employee
welfare benefit plans, as defined in Section 3(1) of ERISA (including but not
limited to, life insurance, medical, hospitalization, holiday, vacation,
disability dental and vision plans) as are listed on Schedule 2.14(b) (the
"Welfare Plans").
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(c) Other than the Pension and Welfare Plans, BPC
currently maintains, or contributes to, and the Business Employees receive
benefits or are eligible under, only the compensation programs and/or employment
arrangements, (including but not limited to, any written or unwritten incentive
compensation, fringe benefit, payroll or employment practice, bonus, option,
stock purchase, severance, sick pay, salary continuation, deferred compensation,
supplemental executive compensation plans, employment agreements and consulting
agreements for the benefit of their officers, directors, employees, former
employees, or independent contractors) as are listed on Schedule 2.14(c) (the
"Compensation Programs").
(d) Neither BPC nor an ERISA Affiliate contributes or has
contributed within the last five years to any multi-employer plan, as defined by
Section 3(37) of ERISA.
(e) Each Pension Plan and Welfare Plan has been operated
and administered in substantial compliance with ERISA and the Code; each Pension
Plan which is intended to be qualified under Section 401(a) of the Code has been
determined by the IRS to be so qualified or a request for such determination has
been timely filed with the IRS (and neither Seller nor BPC has any Knowledge
that any event has occurred between the date of the last such determination and
the Closing Date that would cause the IRS to revoke such determination).
(f) Each Pension Plan and Welfare Plan designed to
satisfy the requirements of Section 125, Section 401, Section 401(k), Section
409, Section 501(c)(9), Section 4975(e)(7), and/or Section 4980B of the Code,
satisfies such section.
(g) No accumulated funding deficiency, as defined in
Section 302(a)(2) of ERISA, exists (whether or not waived) with respect to any
Pension Plan as of the date hereof.
(h) All amounts required to be paid by BPC with respect
to each Pension Plan, Welfare Plan and Compensation Program on or before the
Closing Date have been paid.
(i) Neither the execution and delivery of this Agreement
nor the consummation of any of the transactions contemplated hereby will (i)
result in any payment (including, without limitation, severance, unemployment
compensation, golden parachute or otherwise) becoming due to any current or
former Business Employee, (ii) increase any benefits otherwise payable under any
Pension Plan, Welfare Plan or Compensation Program to any Business Employee, or
(iii) result in any acceleration of the time of payment or vesting of any such
benefits.
(j) Neither the execution and delivery of this Agreement
nor the consummation of any of the transactions contemplated hereby will result
in a material increase in the premium costs of any Welfare Plan for which
benefits are insured or a material increase in benefit costs of any Welfare Plan
which provides self-insured benefits for which any Business Employee is a
beneficiary.
(k) No Pension Plan is subject to a lien (or expected to
be subject to a lien) under Code Section 412(n) or ERISA Section 302(f) or to
tax under Code Section 4971. No Pension Plan has a "liquidity shortfall" as
defined in Code Section 412(m)(5). No event has occurred in connection with a
Pension Plan that could result in Liability under Title IV of ERISA. BPC has not
incurred any liability to the Pension Benefit Guaranty Corporation in connection
with any Pension Plan.
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(l) The assets of each Pension Plan are sufficient to
provide all "benefit liabilities" (as defined in ERISA Section 4001(a)(16))
under such Pension Plan if such Pension Plan is terminated, and are also
sufficient to provide all other benefits due under the Pension Plan (including,
but not limited to, ancillary, disability, shutdown, early retirement and
welfare benefits).
(m) None of the Pension Plans nor BPC nor any party in
interest or disqualified person has engaged in any non-exempt "prohibited
transactions" as defined in Section 406 of ERISA or Section 4975 of the Code.
(n) Except as disclosed in Schedule 2.14(n), no Pension
Plan or Welfare Plan provides benefits, including without limitation death or
medical benefits (whether or not insured), with respect to any Business Employee
beyond their retirement or other termination of service other than (i) coverage
mandated by applicable law, (ii) retirement benefits under a Pension Plan, (iii)
death benefits under a Welfare Plan, (iv) deferred compensation accrued on the
books of BPC, or (v) benefits the full cost of which is borne by the Business
Employee (or his or her beneficiary).
(o) No "leased employee," as that term is defined in
Section 414(n) of the Code, is included among the Business Employees.
(p) No Liability has been, or is expected to be, incurred
by BPC under Section 4062 of ERISA with respect to any Pension Plan.
(q) No reportable event within the meaning of Title IV of
ERISA has occurred with respect to any Pension Plan.
(r) Sellers have furnished Buyer with correct and
complete copies of each Pension Plan, Welfare Plan, and Compensation Program,
together with any trust agreements, summary plan descriptions, employee
informational material, IRS Forms 5500, the most recent actuarial valuation for
any Pension Plan, financial statements relating thereto and participant
listings.
(s) BPC has complied with the continuation coverage
requirements of Section 1001 of the Consolidated Omnibus Budget Reconciliation
Act of 1985, as amended, and ERISA Sections 601 through 608.
2.15 Insurance Policies.
(a) All of the Assets and the operations of BPC of an
insurable nature and of a character usually insured by companies of similar size
and in similar businesses are insured by BPC in such amounts and against such
losses, casualties or risks as is required by any contract or agreement entered
into by BPC. Schedule 2.15(a) contains a complete and accurate list of all
insurance policies held or owned by BPC and now in force and such Schedule
indicates the name of the insurer, the type of policy, the risks covered
thereby, the amount of the premiums, the term of each policy, the policy number,
the amounts of coverage, the deductible in each case and all outstanding claims
thereunder. Correct and complete copies of certificates of insurance for all
such policies have been delivered to Buyer by the Sellers on or before the date
of this Agreement. All such policies are in full force and effect and
enforceable in accordance with their terms. BPC is not in default regarding the
provisions of any such policy, including, without limitation, failure to make
timely payment of all premiums due thereon, it has not failed to file any notice
or present
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any claim thereunder in due and timely fashion. BPC has never been refused, or
denied renewal of, any insurance coverage by insurance companies offering such
insurance. Schedule 2.15(a)also discloses all risks that are self-insured by BPC
that in the ordinary course of business could be insured and contains copies of
all insurance audit reports, loss prevention reports, all claims made and loss
history reports in respect of any insurance maintained by BPC or any predecessor
of BPC during the past five (5) years.
(b) To the Knowledge of the Sellers, licensed
professional employees of BPC (i) have not, in the last seven (7) years, filed a
written application for professional malpractice insurance coverage which has
been denied by an insurance agency or carrier; (ii) have been continuously
insured for professional malpractice claims during the same period; and (iii)
are not in default with respect to any provision contained in any such policy
and none of them has failed to give any notice or present any claim under any
such policy in due and timely fashion.
(c) Since its incorporation, BPC has continuously
maintained general professional liability (including completed operations hazard
endorsement), insurance coverage on an occurrence basis at a level equal to or
greater than that shown on the certificate of insurance attached hereto as
Schedule 2.15(c).
2.16 Environmental Matters. Except as set forth in Schedule 2.16,
there are no present or past Environmental Conditions relating to or which could
in any way adversely affect BPC's condition (financial or otherwise), Assets,
Liabilities, business or operations. For the purposes of this Agreement,
"Environmental Condition" means (a) the introduction into the environment of any
pollution, including without limitation any contaminant, irritant or pollutant
or other toxic or hazardous substance, in violation of any federal, state or
local law, ordinance or governmental rule or regulations, as a result of any
spill, discharge, leak, emission, escape, injection, dumping or release of any
kind whatsoever of any substance or exposure of any type in any work places or
to any medium, including without limitation air, land, surface waters or ground
waters, or from any generation, transportation, treatment, discharge, storage or
disposal of waste materials, raw materials, hazardous materials, toxic materials
or products of any kind or from the storage, use or handling of any hazardous or
toxic materials or other substances, and (b) any noncompliance with any federal,
state or local environmental Law or order as a result of or in connection with
any of the foregoing.
2.17 Taxes.
(a) There does not exist any Liability for Taxes which
may be asserted by any Taxing authority against, and no Lien or other
encumbrance for Taxes attaches to or will attach to, BPC, its business or any of
the Assets other than Taxes due in respect of periods for which Tax Returns are
not yet due and for which adequate accruals have been made in the Financial
Statements. All Tax Returns required to be filed prior to the date hereof by BPC
have been filed (other than Tax Returns for which valid and currently unexpired
extensions to file have been granted) with the appropriate governmental agencies
in all jurisdictions in which such Tax Returns are required to be filed, all of
which are true, correct and complete; all Taxes related to periods covered by
such Tax Returns, whether or not shown as owing thereon, have been timely paid
in full.
(b) Neither Seller nor BPC has received notice of any Tax
claims being asserted or any proposed assessment by any Taxing authority and no
Tax Returns of BPC have been audited by the Internal Revenue Service (the "IRS")
or the appropriate state agencies or Tax
-16-
authorities for any fiscal year or period ended prior to the date hereof, and
BPC is not presently under, nor has it received notice of any, contemplated
investigation or audit by the IRS or any state agency or Tax authority
concerning any fiscal year or period ended prior to the date hereof. BPC has not
executed any extension or waivers of any statute of limitations on the
assessment or collection of any Tax due that is currently in effect.
(c) Each of BPC and any of its predecessors in interest
that has employed a Business Employee has withheld or collected from each
payment made to each of their employees the amount of all Taxes required to be
withheld or collected therefrom and BPC and any of its predecessors in interest
has paid the same to the proper tax depositories or collecting authorities.
(d) During the five-year period ending on the date
hereof, BPC was not a distributing corporation or a controlled corporation in a
transaction intended to be governed by Section 355 of the Code.
(e) BPC is not and has not been a United States real
property holding corporation within the meaning of Code Section
897(c)(1)(A)(ii).
2.18 Licenses, Authorizations and Provider Programs.
(a) BPC holds all valid licenses and other rights,
accreditations, permits and authorizations required by Law or ruling of any
Regulatory Authority necessary to operate its business. BPC is certified for
participation and reimbursement under Titles XVIII and XIX of the Social
Security Act (the "Medicare and Medicaid programs") (Medicare and Medicaid
programs and such other similar federal, state or local reimbursement or
governmental programs for which BPC is eligible are hereinafter referred to
collectively as the "Government Programs") and have current provider agreements
for such Government Programs and with such private non-governmental programs,
including without limitation any private insurance program, under which BPC
directly or indirectly is presently receiving payments (such non-governmental
programs herein referred to as "Private Programs"). Set forth on Schedule
2.18(a) is a correct and complete list of such licenses, accreditations, permits
and other authorizations, and provider agreements under all Government and
Private Programs, complete and correct copies of which have been provided to
Buyer. True, complete and correct copies of all surveys of BPC or its
predecessors in interest and conducted in connection with any Government
Program, Private Program or licensing or accrediting body during the past two
(2) years have been provided to Buyer.
(b) No violation, default, order or deficiency exists
with respect to any of the items listed on Schedule 2.18(a). Neither Sellers or
BPC have received any notice of any action pending or recommended by any
Regulatory Authority having jurisdiction over the items listed on Schedule
2.18(a), either to revoke, withdraw or suspend any license, right or
authorization, or to terminate the participation of BPC in any Government or
Private Program. No event has occurred which, with the giving of notice, the
passage of time, or both, would constitute grounds for a material violation,
order or deficiency with respect to any of the items listed on Schedule 2.18(a)
or to revoke, withdraw or suspend any such license, or to terminate or modify
the participation of BPC in any Government or Private Program. To the Knowledge
of Seller, there has been no decision not to renew any provider or third-party
payor agreement of BPC.
(c) BPC has timely filed all reports and ▇▇▇▇▇▇▇▇
required to be filed by it prior to the date hereof with respect to the
Government and Private Programs, all fiscal intermediaries and other insurance
carriers and all such reports and ▇▇▇▇▇▇▇▇ are complete and
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accurate in all material respects and have been prepared in compliance with all
applicable laws, regulations, and principles governing reimbursement and payment
claims. True and complete copies of such reports and ▇▇▇▇▇▇▇▇ for the most
recent year have heretofore been made available to Buyer. BPC has paid or caused
to be paid all known and undisputed refunds, overpayments, discounts or
adjustments which have become due pursuant to such reports and ▇▇▇▇▇▇▇▇ and has
no Liability under any Government or Private Program for any refund,
overpayment, discount or adjustment. Except as set forth on Schedule 2.18(c),
(i) there are no pending appeals, adjustments, challenges, audits, litigation,
or notices of intent to audit such prior reports or ▇▇▇▇▇▇▇▇, and (ii) during
the last two years BPC has not been audited, or otherwise examined by any
Government or Private Program. There are no other reports required to be filed
by BPC in order to be paid under any Government or Private Program for services
rendered in connection with its business, except for cost reports not yet due.
2.19 Inspections and Investigations. Except as set forth and
described in Schedule 2.19, (a) neither the right of BPC, nor, to the Knowledge
of the Sellers, the right of any licensed professional or other individual
affiliated with BPC, to receive reimbursements pursuant to any Government or
Private Program has been terminated or otherwise adversely affected as a result
of any investigation or action, whether by any Regulatory Authority or other
third party, (b) neither BPC, nor, to the Knowledge of the Sellers, any licensed
professional or other individual affiliated with BPC or who has provided
services to BPC during the past three (3) years, has been the subject of any
inspection, investigation, survey, audit, monitoring or other form of review by
any Regulatory ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ association, professional review organization,
accrediting organization or certifying agency based upon any alleged improper
activity on the part of such individual, nor has any Seller or BPC received any
notice of deficiency during the past three years in connection with the
operations of BPC's business, (c) there are not presently, and at the Closing
Date there will not be, any outstanding deficiencies or work orders of any
Regulatory Authority having jurisdiction over BPC, its business or Assets, or
requiring conformity to any applicable agreement, Law or bylaw, including but
not limited to, the Government and Private Programs, and (d) there is not any
notice of any claim, requirement or demand of any licensing or certifying agency
or other third party supervising or having authority over BPC, its business or
Assets to rework or redesign any part thereof or to provide additional
furniture, fixtures, equipment, appliances or inventory so as to conform to or
comply with any existing Law or standard. Attached as part of Schedule 2.19 are
copies of all reports, correspondence, notices and other documents relating to
any matter described or referenced therein.
2.20 Certain Relationships. Except as set forth on Schedule 2.20,
neither BPC nor any Seller has:
(a) offered, paid, solicited or received anything of
value, paid directly or indirectly, overtly or
covertly, in cash or in kind ("Remuneration") to or
from any physician, family member of a physician, or
an entity in which a physician or physician family
member has an ownership or investment interest,
including, but not limited to:
(i) payments for personal or management services
pursuant to a medical director agreement,
consulting agreement, management contract,
personal services agreement, or otherwise;
(ii) payments for the use of premises leased to
or from a physician, a family member of a
physician or an entity in which a physician
or family member has an ownership or
investment interest;
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(iii) payments for the acquisition or lease of
equipment, goods or supplies from a
physician, a family member of a physician or
an entity in which a physician or family
member has an ownership or investment
interest; or
(b) offered, paid, solicited or received any Remuneration
(excluding fair market value payments for services,
equipment or supplies) to or from any healthcare
provider, pharmacy, drug or equipment supplier,
distributor or manufacturer, including, but not
limited to:
(i) payments or exchanges of anything of value
under a warranty provided by a manufacturer
or supplier of an item to BPC; or
(ii) discounts, rebates, or other reductions in
price on a good or service received by BPC;
(c) offered, paid, solicited or received any Remuneration
to or from any person or entity in order to induce
business, including, but not limited to, payments
intended not only to induce referrals of patients,
but also to induce the purchasing, leasing, ordering
or arrangement for any good, facility, service or
item;
(d) entered into any joint venture, partnership,
co-ownership or other arrangement involving any
ownership or investment interest by any physician, or
family member of a physician, or an entity in which a
physician or physician family member has an ownership
or investment interest, directly or indirectly,
through equity, debt, or other means, including, but
not limited to, an interest in an entity providing
goods or services to BPC;
(e) entered into any joint venture, partnership,
co-ownership or other arrangement involving any
ownership or investment interest by any person or
entity including, but not limited to, a hospital,
pharmacy, drug or equipment supplier, distributor or
manufacturer, that is or was in a position to make or
influence referrals, furnish items or services to, or
otherwise generate business for BPC; or
(f) entered into any agreement providing for the referral
of any patient for the provision of goods or services
by BPC, or payments by BPC as a result of any
referrals of patients to BPC.
2.21 ▇▇▇▇▇; Fraud and Abuse; False Claims. Neither BPC nor persons
and entities providing professional services to BPC have engaged in any
activities which are prohibited under 42 U.S.C. ss. 1320a-7b, 42 U.S.C. ss.
1395nn or 31 U.S.C. ss. 3729-3733 (or other federal or state statutes related to
false or fraudulent claims) or the regulations promulgated thereunder pursuant
to such statutes, or related state or local statutes or regulations, or which
are prohibited by rules of professional conduct, including but not limited to
the following: (a) knowingly and willfully making or causing to be made a false
statement or representation of a fact in any application for any benefit or
payment; (b) knowingly and willfully making or causing to be made any false
statement or representation of a fact for use in determining rights to any
benefit or payment; (c)
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failing to disclose knowledge by a claimant of the occurrence of any event
affecting the initial or continued right to any benefit or payment on its own
behalf or on behalf of another, with intent to fraudulently secure such benefit
or payment; and (d) 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 or receive such
remuneration (i) in return for referring an individual to a person for the
furnishing or arranging for the furnishing of any item or service for which
payment may be made in whole or in part by Medicare or Medicaid, or (ii) in
return for purchasing, leasing, or ordering or arranging for or recommending
purchasing, leasing, or ordering any good, facility, service or item for which
payment may be made in whole or in part by Medicare or Medicaid.
2.22 Rates and Reimbursement Policies. To the Knowledge of the
Sellers, except for ethical limitations, the jurisdictions in which BPC conducts
business do not currently impose any restrictions or limitations on rates which
may be charged to private pay patients receiving services provided by BPC. BPC
has no rate appeal currently pending before any Regulatory Authority or any
administrator of any Private Programs. None of the Sellers have Knowledge of any
applicable Law, which has been enacted, promulgated or issued within the
eighteen (18) months preceding the date of this Agreement of any such legal
requirement proposed or currently pending in the jurisdictions in which BPC does
business, which would have a material adverse effect on BPC or may result in the
imposition of additional Medicaid, Medicare, charity, free care, welfare, or
other discounted or government assisted patients or require BPC to obtain any
necessary authorization which it does not currently possess.
2.23 Changes in Laws. To the Knowledge of the Sellers there are no
pending changes in applicable Law that would prevent BPC from conducting its
business in substantially the same manner as its business is currently conducted
prior to the Closing Date.
2.24 Patients and Orders. A list of all patients or customers of
BPC during the last twelve months and a list of all outstanding orders from such
customers or patients have been made available to Buyer.
2.25 Controlled Substances. Neither BPC nor its officers,
directors, and employees and, to the Knowledge of Sellers, persons who provide
professional services to BPC have, in connection with their activities directly
or indirectly related to BPC, engaged in any activities which are prohibited
under the Federal Controlled Substances Act, 21 U.S.C. ss. 801 et seq. or the
regulations promulgated pursuant to such statute or any related state or local
statutes or regulations concerning the dispensing and sale of controlled
substances.
2.26 Inventories. All items of inventory of BPC consist, and will
consist of items of a quality and quantity usable and saleable in the ordinary
course of business and conform to generally accepted standards in the industry.
Except as set forth on Schedule 2.26, since September 30, 2001, no inventory
items have been sold or disposed of, except through sales in the ordinary course
of business, and in no event at prices less than book value of such inventory
items as of September 30, 2001.
2.27 Business Relationships.
(a) Except as disclosed on Schedule 2.27(a), the
relationships between BPC and all customers, clients, third party payors,
patients, Business Employees and vendors who receive goods and services from or
provide goods and services to BPC are satisfactory, and the Sellers have no
Knowledge of (i) any facts or circumstances which could reasonably be expected
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to materially alter, negate, impair or in any way adversely affect the
continuity of any such relationships or (ii) any complaints, claims, threats,
plans or intentions to discontinue or curtail relations under any such
relationships. BPC has no obligation to obtain the return of goods in the
possession of customers or patients.
(b) Except as disclosed on Schedule 2.27(b), the Sellers
have no Knowledge of any present or future condition or state of facts or
circumstances which would prevent BPC from carrying on its business after the
Closing Date in the same manner as it is presently being carried on.
2.28 Absence of Certain Business Practices. Except as set out on
Schedule 2.28, neither BPC, nor any Seller, officer, director, employee or agent
of BPC, nor any other person or entity acting on behalf of BPC, acting alone or
together, has (i) received, directly or indirectly, any rebates, payments,
commissions, promotional allowances or any other economic benefits, regardless
of their nature or type, from any customer, governmental employee or other
person or entity with whom BPC has done business directly or indirectly, or (ii)
directly or indirectly, given or agreed to give any gift or similar benefit to
any customer, governmental employee or other person or entity who is or may be
in a position to help or hinder BPC (or assist BPC in connection with any actual
or proposed transaction) which, in the case of either clause (i) or clause (ii)
above, would reasonably be expected to subject BPC to any damage or penalty in
any civil, criminal or governmental litigation or proceeding. Neither BPC, nor,
to the Knowledge of the Sellers, any officer thereof has used any funds for
unlawful contributions, gifts, entertainment or other expenses relating to
political activity or otherwise, or has made any direct or indirect unlawful
payment to governmental officials or employees from the entities' funds or been
reimbursed from the entities' funds for any such payment, or is aware that any
other person associated with or acting on behalf of BPC has engaged in any such
activities.
2.29 Accounts Receivable. The accounts receivable reflected in the
most recent balance sheet for BPC, separately included in the Financial
Statements referred to in Section 2.6 hereof, and all accounts receivable
arising between December 31, 2000 and the date hereof, arose from bona fide
transactions in the ordinary course of business. The accounts receivable
reflected on such balance sheet, have been in all material respects properly
recorded and reserved against consistent with GAAP and past practice. No such
account receivable has been assigned or pledged to any other person, firm or
corporation or, to the Knowledge of the Sellers, is subject to any right of
set-off. Reasonable provision has been made in the Financial Statements for
collection losses, contractual discounts and other adjustments from third party
payers.
2.30 Related Party Transactions. Except as set forth in Schedule
2.30 hereto, there are no existing arrangements or proposed transactions between
BPC, and (a) any Seller or any officer or director of BPC or any member of the
immediate family of any of the foregoing persons (such Sellers, officers,
directors and family members being hereinafter individually referred to as a
"Related Party"), (b) any business (corporate or otherwise) which a Related
Party owns, or controls directly or indirectly, or in which a Related Party has
an ownership interest, or (c) between any Related Party and any business
(corporate or otherwise) with which BPC regularly does business. True, complete
and correct copies of all such arrangements and proposed transactions set forth
on Schedule 2.30 have been provided to Buyer.
2.31 Places of Business. Since its formation, BPC has conducted its
business only at those offices and warehouses identified on Schedule 2.31, and
maintains inventory only at those locations identified on Schedule 2.31.
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2.32 Eligibility Under Section 338(h)(10). Sellers represent that:
(a) BPC made a valid election under Section 1362 of the
Code to be treated as an S corporation as defined in Code Section 1361, which
election was acknowledged by the IRS. The election has remained in effect since
that date without revocation, cessation or termination, and BPC has qualified to
be taxed under the provisions of Subchapter S of the Code and under applicable
similar provisions of state income tax law for all periods. BPC is eligible to
make an election under Section 338(h)(10) of the Code (and any comparable
election under state, local or foreign tax law) (the "338(h)(10) Election") with
respect to BPC.
(b) BPC does not own any Assets the transfer or
disposition of which would result in the imposition of Taxes under Section 1374
of the Code.
2.33 Statements True and Correct. No representation or warranty
made herein by any Seller, nor in any statement, certificate or instrument to be
furnished to Buyer by BPC or any Seller pursuant to any Acquisition Document,
contains or will contain any untrue statement of material fact or omits or will
omit to state a material fact necessary to make these statements contained
herein and therein not misleading.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to the Sellers as follows:
3.1 Organization, Authority and Capacity. Buyer is a corporation,
duly organized, validly existing and in good standing under the laws of the
State of Delaware. Buyer has the full power and authority necessary to (i)
execute, deliver and perform its obligations under the Acquisition Documents to
be executed and delivered by it, and (ii) carry on its business as it has been
and is now being conducted and to own and lease the Assets which it now owns or
leases. Buyer is duly qualified to do business and is in good standing in each
jurisdiction in which a failure to be so qualified or in good standing would
have a material adverse effect on its ability to perform its obligations under
the Acquisition Documents.
3.2 Authorization and Validity. The execution, delivery and
performance of the Acquisition Documents to be executed and delivered by Buyer
have been duly authorized by all necessary corporate action by Buyer. The
Acquisition Documents to be executed and delivered by Buyer have been or will
be, as the case may be, duly executed and delivered by Buyer and constitute or
will constitute the legal, valid and binding obligations of Buyer, enforceable
in accordance with their respective terms, except as the enforceability hereof
and thereof may be limited by bankruptcy, insolvency, or other laws affecting
creditors' rights generally, or by general principles of equity whether
considered in a proceeding in law or in equity.
3.3 Absence of Conflicting Agreements or Required Consents. The
execution, delivery and performance by Buyer of the Acquisition Documents to be
executed and delivered by it: (a) do not and will not (i) require the consent of
or notice to any Regulatory Authority or any other third party, and (ii)
conflict with any provision of Buyer's charter or bylaws; and (b) do not and
will not (i) conflict with or result in a violation of any Law, ruling,
judgment, order or injunction of any court or Regulatory Authority to which
Buyer is a party or by which Buyer or any of its Assets are bound; and (ii)
conflict with, constitute grounds for termination of, result in a breach of,
constitute a default under, require any notice or consent under, or accelerate
or permit
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the acceleration of any performance required by the terms of any agreement,
instrument, license or permit to which Buyer is a party or by which any of
Buyer's Assets are bound.
3.4 Statements True and Correct. No representation or warranty
made herein by Buyer, nor in any statement, certificate or instrument to be
furnished to the Sellers by Buyer pursuant to any Acquisition Document contains
or will contain any untrue statement of material fact or omits or will omit to
state a material fact necessary to make these statements contained therein not
misleading.
ARTICLE 4
ADDITIONAL AGREEMENTS
4.1 Access to Seller and BPC Information. At such times prior to
the Closing as shall be mutually agreeable, Sellers and BPC will afford the
officers and authorized representatives of Buyer access upon reasonable notice
to all of the Assets, books and records of BPC and will furnish such parties
with such additional financial, operating and other information as to the
business and Assets of BPC as such parties may from time to time reasonably
request. Buyer shall also be allowed access, upon reasonable notice and as shall
be mutually agreeable, to consult with the officers, employees, accountants,
counsel and agents of BPC in connection with such investigation. No such
investigation shall diminish or otherwise affect any of the representations,
warranties, covenants or agreements of any party under this Agreement.
4.2 No Shop. From the date of this Agreement until the Closing,
(a) none of the Sellers nor BPC or any of its subsidiaries, officers, directors,
or the directors and officers of its subsidiaries, nor any of their respective
Affiliates shall, and each of them shall cause each of their respective (and,
with respect to BPC, its subsidiaries') employees, agents and representatives
(including, without limitation, any investment banking, legal or accounting firm
retained by BPC and any or all of the Sellers or any of BPC's subsidiaries and
any individual member or employee of the foregoing) not to, directly or
indirectly (i) initiate, solicit or seek, any inquiries or the making or
implementation of any proposal or offer (including, without limitation, any
proposal or offer to its shareholders) with respect to a merger, acquisition,
consolidation, recapitalization, liquidation, dissolution or similar transaction
involving any equity securities of BPC or any of its subsidiaries, or any
purchase of all or a substantial portion of the assets of BPC (any such proposal
or offer being hereinafter referred to as an "Acquisition Proposal"), or (ii)
engage in any negotiations concerning, or provide any confidential information
or data to, or have any discussions with, any person relating to an Acquisition
Proposal, or (iii) otherwise cooperate in any effort or attempt to make,
implement or accept an Acquisition Proposal; (b) BPC will cease any current
discussions regarding any Acquisition Proposal or similar transaction and (c)
BPC will promptly notify Buyer in the event that BPC receives any unsolicited
indication of interest or proposal concerning an Acquisition Proposal.
4.3 Affirmative Covenants of Sellers and BPC. From the date hereof
until the earlier of the Closing Date or the termination of this Agreement,
unless the prior written consent of Buyer shall have been obtained, and except
as otherwise expressly contemplated herein, BPC and Sellers shall:
(a) operate the business of BPC only in the usual,
regular, and ordinary course of business, consistent
with past practices;
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(b) use reasonable commercial efforts (i) to preserve
intact its business organization, licenses, permits,
Government Programs and Private Programs of BPC and
(ii) maintain BPC's present relationship with
suppliers and customers;
(c) use reasonable commercial efforts to retain the
services of its employees, agents and consultants on
terms and conditions not less favorable than those
existing prior to the date hereof;
(d) keep and maintain BPC's Assets in their present
condition, repair and working order, except for
normal depreciation and wear and tear, and maintain
its insurance, rights and licenses;
(e) pay all accounts payable of BPC in accordance with
past practice and collect all accounts receivable in
accordance with past practice;
(f) confer on a regular and frequent basis with one or
more designated representatives of Buyer to report
material operational matters and to report the
general status of ongoing business operations of BPC;
(g) make available to Buyer true and correct copies of
all internal management and control reports
(including aging of accounts receivable, listings of
accounts payable, and inventory control reports) and
financial statements related to BPC;
(h) cause all Tax Returns to be prepared and filed on or
before the date such Tax Return is required to be
filed (taking into account any extensions of the
filing deadlines granted); provided, however, that
any such Tax Return shall not be filed without a
reasonable opportunity for prior review and comment
by Buyer;
(i) as soon as reasonably practicable after they become
available, but in no event more than thirty (30) days
following the end of each calendar month, deliver to
Buyer true and complete copies of monthly financial
statements of BPC for each calendar month ending
subsequent to the date hereof in the format
historically utilized by BPC;
(j) perform in all material respects all obligations
under agreements relating to or affecting its Assets,
except for the failure of which performance would not
have a material adverse effect on BPC's condition
(financial or otherwise), Assets, Liabilities,
business or operations;
(k) keep in full force and effect present insurance
policies or other comparable insurance coverage; and
(l) notify Buyer of (i) any event or circumstance which
is reasonably likely to have a material adverse
effect on BPC's condition (financial or otherwise),
Assets, Liabilities, business or operations or would
cause or constitute a breach of any of Sellers'
representations, warranties or covenants contained
herein; or (ii) any unexpected change in the normal
course of business or in the operation of the Assets
of BPC, and of any
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governmental complaints, investigations or hearings
(or communications indicating that the same may be
contemplated), adjudicatory proceedings, budget
meetings or submissions involving any material Asset
or aspect of BPC's business. Sellers shall keep Buyer
fully informed of such events and permit Buyer's
representatives prompt access to all materials
prepared in connection therewith.
4.4 Negative Covenants of Sellers.
(a) From the date hereof until the earlier of the Closing
Date or the termination of this Agreement, Sellers and BPC will not do any of
the following without the prior written consent of Buyer:
(i) take any action which would (a) adversely affect the
ability of any party to the Acquisition Documents to
obtain any consents required for the transactions
contemplated thereby, or (b) adversely affect the
ability of any party hereto to perform its covenants
and agreements under the Acquisition Documents;
(ii) amend any of its organizational or governing
documents, except as provided herein or for the
purpose of accomplishing the transactions
contemplated by this Agreement;
(iii) allow any material Asset of BPC to become subject to
any Lien not in existence as of the date of this
Agreement;
(iv) other than pursuant to the Acquisition Documents,
sell, pledge or encumber, or enter into any contract
to sell, pledge or encumber, any interest in the
Assets of BPC;
(v) purchase or acquire any Assets of BPC, or sell or
dispose of any Assets of BPC, except in the ordinary
course of business and consistent with past
practices;
(vi) except for the employment agreements contemplated
herein, grant any increase in compensation or
benefits to the employees or officers of BPC, except
in accordance with past practice; pay any severance
or termination pay or any bonus other than pursuant
to written policies or written contracts in effect as
of the date hereof and disclosed on the Schedules
hereto; enter into or amend any severance agreements
with officers of BPC; or grant any material increase
in fees or other increases in compensation or other
benefits to directors of BPC except in accordance
with past practice;
(vii) except for the employment agreements contemplated
herein, enter into or amend any employment contract
between BPC and any Person (unless such amendment is
required by Law) that BPC does not have the
unconditional right to terminate without Liability
(other than liability for services already rendered),
at any time on or after the Closing Date;
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(viii) adopt any new employee benefit plan or make any
material change in or to any existing employee
benefit plans other than any such change that is
required by Law or that, in the opinion of counsel,
is necessary or advisable to maintain the tax
qualified status of any such plan;
(ix) make any significant change in any Tax or accounting
methods or systems of internal accounting controls,
except as may be appropriate to conform to changes in
Tax Laws or regulatory accounting requirements or
GAAP;
(x) commence any litigation other than in accordance with
past practice, settle any litigation involving any
Liability of BPC for material money damages or
restrictions upon the operations of its business;
(xi) except in the ordinary course of business and which
is not material, modify, amend or terminate any
material contract or waive, release, compromise or
assign any material rights or claims;
(xii) except in the ordinary course of business and, even
if in the ordinary course of business, then not in an
amount to exceed $25,000 in the aggregate, make or
commit to make any capital expenditure, or enter into
any lease of capital equipment as lessee or lessor,
related to BPC;
(xiii) take any action, or omit to take any action, which
would cause any of the representations and warranties
contained in Article 2 to be untrue or incorrect; or
(xiv) make any loan to any Person or increase the aggregate
amount of any loan currently outstanding to any
Person.
4.5 Public Announcements. Each party hereto agrees (i) not to
disclose any aspect of the discussions, negotiations, terms, status or
conditions relating to the transactions contemplated herein to any third party
other than their respective officers, directors, authorized employees and
authorized representatives and then only on a need to know basis and shall cause
and require all such persons to whom such information is disclosed to abide by
the provisions of this Section 4.5, and (ii) not to issue any press release or
other general public announcement (including in any trade journal or other
publication) of the transaction, in either case, without the prior written
consent of each of the parties hereto, except to the extent that disclosure may
be required by law, in which case the party required to made such disclosure
will give the other party prior written notice, and except that Sellers
acknowledge that Buyer shall issue a press release promptly upon the execution
of this Agreement.
4.6 RESERVED..
4.7 Use of Names. On and after the Closing Date, each Seller shall
cease to use any names and marks listed on Schedule 2.11(e) or any derivation
thereof or other name confusingly similar thereto for any commercial or other
public purpose except on behalf of BPC and in accordance with his employment
agreement with BPC.
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4.8 Conditions to Closing. BPC, Sellers and Buyer agree to use
their commercially reasonable efforts to satisfy the closing conditions set
forth in Articles 5 and 6 of this Agreement by January 15, 2002, and if not by
such time, as soon thereafter as possible.
4.9 RESERVED.
4.10 Tax Matters.
(a) Tax Returns.
(i) Except for Tax Returns required pursuant to Section
4.10(e) below, Sellers shall prepare (or cause to be
prepared) and BPC shall timely file for all taxable
periods ending on or before the Effective Date (a
"Pre-Effective Period") all Tax Returns required to
be filed after the Effective Date by or on behalf of
BPC (the "Pre-Effective Period Tax Returns"). The
preparation of such Tax Returns and the positions
taken thereon shall be consistent in all respects
with BPC's past tax accounting principles and
practices.
(ii) BPC shall prepare and timely file (or cause to be
prepared and timely filed) for all taxable periods
beginning before and ending after the close of the
Effective Date (a "Straddle Period"), all Tax Returns
required to be filed after the Effective Date by BPC.
For purposes of this Agreement, the portion of the
Straddle Period ending on and including the Effective
Date shall be referred to as the "Pre-Effective
Straddle Period" and the portion of the Straddle
Period beginning after the Effective Date shall be
referred to as the "Post-Effective Straddle Period".
(iii) All Tax Returns referred to in Section 4.10(a)(i)
shall be subject to review and approval by the Buyer,
and all Tax Returns referred to in Section
4.10(a)(ii) which affect the Liability of Sellers for
Taxes pursuant to this Agreement or otherwise shall
be subject to review and approval by Sellers, in each
case prior to filing, and such approval shall not be
unreasonably withheld or delayed by either such
party. The party charged with responsibility to
prepare a Tax Return subject to review (the
"Preparing Party") shall present such Tax Return to
the other party (the "Reviewing Party") no less than
thirty (30) days prior to the due date (including
extensions) for filing the Tax Return. The parties
shall cooperate with one another by making available
for review all related work papers and analyses
utilized in preparing the Tax Return and all related
books, records and personnel for this purpose without
cost. Within fifteen (15) days after receipt of the
Tax Return, the Reviewing Party shall communicate to
the Preparing Party as to whether it concurs with the
Tax Return or, if not, stating its exceptions
thereto, together with the reasons and supporting
information relating to such exceptions. If there are
no such exceptions or such exceptions are resolved by
the parties, then such resolution shall be the final
determination. If such exceptions cannot be resolved
by the parties within ten (10) business days after
delivery of the list of exceptions, the dispute shall
be submitted to an independent tax consultant who
shall make a final determination in accordance with
the terms of this Agreement within
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fifteen (15) days after submission to such
independent tax consultant. The independent tax
consultant shall be one of the "Big Five" public
accounting firms or a law firm with a nationally
recognized tax practice with no material relationship
to the parties or their Affiliates, and such
independent tax consultant shall be chosen by
agreement of the parties, or if they are unable to
agree, chosen by lot from an equal number of nominees
submitted by each party. The fees and expenses of the
independent tax consultant shall be allocated by it
in inverse proportion to the adjustment granted the
Reviewing Party. For example, if such tax consultant
grants a portion of the exceptions proposed by the
Reviewing Party that results in an adjustment to the
amount of Taxes owed that is 25% of the total
adjustment to the amount of Taxes owed that would
have occurred had all of the Reviewing Party's
proposed exceptions been granted, it shall assess the
Reviewing Party with 75% of its fees and expenses.
The independent tax consultant's decision shall be
final and binding upon, and non-appealable by, the
parties.
(b) Refunds. The Buyer agrees to, and shall cause BPC to,
cooperate in obtaining any refunds of Taxes for Pre-Effective Period Tax Returns
and the Pre-Effective Straddle Periods and to promptly remit to Sellers any such
refunds received by the Buyer or BPC net of any Taxes incurred by the Buyer or
BPC provided that such refunds were not reflected on the Final Effective Date
Balance Sheet. Any reasonable out-of-pocket costs or expenses incurred by the
Buyer or BPC in obtaining such refunds shall be borne by Sellers. In no event
shall Sellers be entitled to file an amended return or otherwise make a claim
for refund (or have such an amended return filed or such claim made on its
behalf) without the prior approval of the Buyer.
(c) Tax Characterization. Any payments made pursuant to
(i) this Section 4.10, (ii) the indemnity provisions of Article 8, or (iii) the
purchase price adjustment provisions of this Agreement, shall be treated by each
of the parties hereto as an adjustment to the Purchase Price paid by the Buyer
for the Shares for all Tax and financial accounting purposes. The parties hereto
agree to account for the transactions contemplated herein in a manner consistent
with all the provisions of this Agreement when filing their respective Tax
Returns and the Tax Returns of BPC.
(d) Post-Closing Audits and Other Proceedings.
(i) Sellers, on the one hand, and Buyer on the other
hand, each agree, at its own expense (except to the
extent such expense, incurred to third parties, is
subject to indemnification pursuant to Section 8), to
furnish or cause to be furnished to each other, upon
request, as promptly as practicable, such information
and assistance (including access to books and
records) relating to BPC as is reasonably necessary
or is reasonably requested for the preparation of any
return for Taxes, any claim for refund or any audit,
and the prosecution or defense of any claim, suit or
proceeding relating to any proposed adjustment.
(ii) Sellers on the one hand, and the Buyer, on the other
hand, each agree to give prompt notice to each other
of any written inquiry by a Tax authority, scheduling
of an examination or proposed adjustment with respect
to Taxes involving BPC for any Pre-Effective Period
or any Pre-Effective Straddle Period. Sellers and the
Buyer shall cooperate with
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each other in the conduct of any Tax audit or other
Tax proceedings involving BPC for such periods and
each may participate at its own expense; provided,
however, that Sellers shall have the right to control
the conduct of any such audits or proceedings to the
extent such audits or proceedings relate to a
proposed adjustment that could adversely affect the
Liability of Sellers for Taxes pursuant to this
Agreement or otherwise. The Buyer also may, at its
own expense, be present in any such audit or
proceeding and, if Sellers do not assume the defense
of any such audit or proceeding, the Buyer or BPC may
defend the same in such manner as it may deem
appropriate, including, but not limited to, settling
such audit or proceeding after giving forty-five (45)
days' prior written notice to Sellers setting forth
the terms and conditions of settlement, provided that
Sellers have not objected within thirty (30) days of
receipt of such notice and assumed control of the
audit. In the event that a potential adjustment is
present in an audit or proceeding (otherwise
controlled by Sellers) for which the Buyer or BPC
would be liable and not entitled to indemnification
hereunder, the Buyer and BPC shall have the right, at
its expense, to control the audit or proceeding with
respect to such proposed adjustment. With respect to
a proposed adjustment which could adversely affect
the liability of Sellers for Taxes pursuant to this
Agreement or otherwise, on the one hand, and the
Liability of the Buyer or BPC for Taxes pursuant to
this Agreement or otherwise, on the other hand, (i)
Sellers and the Buyer and BPC each may participate in
the audit or proceeding, and (ii) any issues with
respect to the proposed adjustment or otherwise
pertaining to the audit or proceeding shall be
decided jointly by Sellers and the Buyer.
Notwithstanding the foregoing provisions of this
Section, the parties to this Agreement shall endeavor
to agree on a joint representative or representatives
in any proceeding in which each is entitled to and
desires to be represented. Notwithstanding the
foregoing, neither Sellers nor any of the Affiliates
shall be entitled to settle, either administratively
or after the commencement of litigation, any claim
for Taxes which may adversely affect the liability
for Taxes of Buyer, or any subsidiary of Buyer,
without the prior written consent of Buyer.
(e) 338(h)(10) Election -
(i) Buyer and Sellers shall make timely 338(h)(10)
Elections. Buyer and Sellers shall (A) take, and
cooperate with each other to take, all actions
necessary and appropriate (including, without
limitation, the preparation, completion and timely
joint filing by Buyer and Sellers of Form 8023, and
the preparation, completion and timely filing of such
other forms, returns, elections, schedules and other
documents and instruments) to effect, perfect and
preserve a timely 338(h)(10) Election in accordance
with Section 338(h)(10) of the Code and the Treasury
Regulations promulgated thereunder and similar
provisions under state or local law; (B) report the
purchase and sale of the BPC consistent with the
338(h)(10) Elections; and (C) take no position
contrary thereto or inconsistent therewith in any Tax
Return, or in any discussion with our any proceeding
before any Taxing authority or other governmental
body or otherwise.
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(ii) The Consideration and all other items that comprise
the "modified aggregate deemed sale price" (as
defined in, and required to be allocated pursuant to,
Section 338(h)(10) of the Code) with respect to the
stock of BPC (the "Allocable Consideration") shall be
in accordance with the "Allocation Schedule" to be
prepared by Buyer. If Buyer determines that there is
an increase or decrease in the Allocable
Consideration, then the adjusted Allocation
Consideration shall be allocated as shown on a
revised allocation schedule (the "Revised Allocation
Schedule") to be prepared by Buyer. The allocation
set forth in such Allocation Schedule, or the Revised
Allocation Schedule if there is an adjustment to
Allocable Consideration, shall comply with the rules
of Section 338 of the Code and the Treasury
Regulations promulgated thereunder and Buyer and
Sellers agree that such Allocation Schedule shall
allocate Purchase Price among Class I, Class II and
Class III assets as currently defined in the
instructions to IRS Form 8023 (or as revised at the
time of filing) in accordance with the book value of
such assets as shown on the Final Effective Date
Balance Sheet, and any excess shall be allocated as
set forth on Schedule 4.10(e)(ii). Buyer, BPC and the
Sellers agree to be bound by the allocation set forth
in the Allocation Schedule (or the Revised Allocation
Schedule if there has been an adjustment to the
consideration paid) for all purposes of Tax
reporting. The Buyer shall prepare and deliver the
Allocation Schedule to Sellers within ninety (90)
days after the Closing Date. The Buyer shall prepare
and deliver the Revised Allocation Schedule, if
applicable, to Sellers within ninety (90) days after
the adjustment of the consideration paid occurs.
(iii) From the date hereof until the Closing Date, the
Sellers shall take all actions necessary to ensure,
and shall refrain from taking any actions that would
prevent, and will cause BPC to take all actions
necessary to ensure and to refrain from taking any
actions that would prevent, the continuing
qualification of BPC as an S corporation, and the
continuing eligibility of BPC and the Sellers to make
338(h)(10) Elections.
4.11 Title Search; Discharge of Liens. As soon as practicable after
the date hereof, but in no event later than the Closing, Sellers shall (i) each
use commercially reasonable efforts to ascertain all Liens, if any, to which any
of the Assets are subject, (ii) notify Buyer in writing of the nature and extent
thereof, and (iii) on or prior to the Closing, take such actions, or cause BPC
to take such actions, as are necessary to discharge all such Liens. Without
limiting the generality of the foregoing, Sellers shall obtain and provide to
Buyer Uniform Commercial Code searches (conducted as soon as possible after the
date hereof, but in no event later than the Closing) of filings made pursuant to
Article 9 thereof in mutually agreed jurisdictions.
4.12 Transfer Taxes. Sellers and Buyer shall share equally (a) all
transfer and documentary taxes and fees imposed with respect to instruments of
conveyance in the transaction contemplated hereby and (b) all sales, excise and
other transfer or similar taxes on the transfer of the shares contemplated
hereunder, provided that any transfer taxes resulting solely from the 338(h)(10)
Election shall be paid by Buyer. Buyer and Sellers shall cooperate with one
another in promptly making any filings in connection with any such taxes. Buyer
or Seller, as the case may be, shall execute and deliver to each other, at
Closing any certificates or other documents as
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the other may reasonably request to perfect any exemption from any such
transfer, documentary sales, or excise tax.
4.13 Caremark Litigation. Sellers acknowledge and agree that
Buyer's willingness to execute and deliver this Agreement, and consummate the
Acquisition, was expressly contingent upon BPC and Sellers settling the Caremark
Litigation and obtaining the settlement, release and discharge of any and all
claims, lawsuits, actions, arbitrations or other proceedings pending or
threatened against, or Liabilities of, BPC and any of the Sellers arising out
of, related to or in connection with the activities of Sellers and BPC in
dispute in the Caremark Litigation. Buyer agrees and acknowledges that the
settlement of the Caremark Litigation is subject to the terms and conditions of
the Settlement Agreement.
4.14 Partners in Care. Sellers agree that, as soon as reasonably
practicable, they will cause PIC to cease all operations and be permanently
liquidated and dissolved.
ARTICLE 5
CONDITIONS TO OBLIGATIONS OF BUYER
The obligation of Buyer to consummate the Acquisition is subject to the
satisfaction or waiver, at or prior to Closing, of each of the following
conditions:
5.1 Representations and Warranties. The representations and
warranties of Sellers set forth in this Agreement, or any document or instrument
delivered to Buyer hereunder, shall be true and correct as of the Closing Date
with the same force and effect as if such representations and warranties had
been made at and as of the Closing Date, except with respect to any of such
representations and warranties referring to a state of facts existing on a
specified date prior to the Closing Date, it shall be sufficient if at the
Closing Date such representation and warranty continues to describe accurately
the state of facts existing on the date so specified.
5.2 Performance; Covenants. All of the terms, covenants and
conditions of the Acquisition Documents to be complied with or performed by each
of BPC and Sellers at or prior to Closing shall have been complied with and
performed in all material respects including, but not limited to, the delivery
of the following documents:
(a) A certificate of existence regarding BPC certified by
the Secretary of State of its state of incorporation dated within ten (10)
business days of the Closing;
(b) A certificate dated as of the Closing Date signed by
the Sellers and the Chief Executive Officer or President of BPC certifying to
the satisfaction of the conditions in Section 5.1 and that Sellers and BPC have
fulfilled all of the conditions of this Article 5;
(c) Copies of each of the consents or approvals
identified on Schedule 2.3 hereto;
(d) A copy of resolutions duly adopted by BPC authorizing
and approving its performance of the transactions contemplated hereby and the
execution and delivery of the documents described herein, certified as true and
in full force and effect as of Closing by its Secretary or an Assistant
Secretary;
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(e) A certified copy of the Articles of Incorporation,
and all amendments thereto, of BPC from its state of incorporation, dated the
most recent practical date prior to Closing;
(f) A copy of the Bylaws, and all amendments thereto, of
BPC, certified as true and in full force and effect as of Closing by its
Secretary or Assistant Secretary;
(g) Incumbency certificates certifying the identity of
the officers of BPC ;
(h) A certificate from the Missouri Department of
Revenue, and from any other applicable state or local taxing authority stating
that no state corporate, sales or use taxes are owed by BPC;
(i) All books and records pertaining to BPC's business,
including all corporate and other records, books of accounts, contracts,
agreements and such other documents or certificates as shall be reasonably
requested by Buyer including minute books and stock records; and
(j) Payoff letters satisfactory to Buyer with respect to
all indebtedness of BPC for borrowed money.
5.3 Necessary Consents and Approvals. Buyer shall have obtained
all licenses, consents and permits, provided all notices, and all waiting
periods required by Law shall have expired, necessary in order for Buyer to
consummate the Acquisition.
5.4 Confidentiality Agreement. That certain Confidentiality
Agreement entered by and between BPC and Buyer in connection with the
transactions contemplated by this Agreement shall be terminated pursuant to this
Section 5.4 effective as of the Closing Date.
5.5 No Injunction, Etc. No action, proceeding, investigation or
legislation shall have been instituted, threatened or proposed before any court
or Regulatory Body to enjoin, restrain, prohibit or obtain substantial damages
in respect of, this Agreement or the consummation of the Acquisition.
5.6 Escrow Agreement. All of the Sellers shall execute an Escrow
Agreement with Buyer substantially in the form attached hereto as Exhibit 5.6.
5.7 Legal Opinion. Buyer shall have received an opinion of counsel
to Sellers substantially in the form attached hereto as Exhibit 5.7.
5.8 Non-Competition Agreements. ▇▇▇▇, ▇▇▇▇ and ▇▇▇▇▇▇▇▇▇▇ each
shall execute a confidentiality and covenant not to compete agreement with Buyer
in substantially the form attached hereto as Exhibit 5.8(a). Bingham, Sloan,
▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇ each shall execute a confidentiality and covenant not to
compete agreement with Buyer in substantially the form attached hereto as
Exhibit 5.8(b).
5.9 Employment Agreements. BPC shall have entered into an
employment agreement with each Seller in substantially the forms attached hereto
as Exhibits 5.9(a)-(g).
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5.10 Audited Financial Statements. An unqualified accountants audit
opinion shall have been delivered to Buyer following an audit of Sellers for the
9 month period ending September 30, 2001 by Ernst & Young LLP conducted at
Buyer's cost.
5.11 Share Certificates; Stock Powers. Sellers shall deliver
possession of the stock certificates evidencing the Shares in BPC to Buyer at
Closing, together with executed stock powers conveying unencumbered title to
said Shares to Buyer.
5.12 Resignations and Releases. Sellers shall have tendered their
resignations as directors and officers of BPC; and all other directors and
officers shall have tendered their resignations. As part thereof, all Sellers,
officers and directors shall have released all claims against BPC, whether
contingent, known or unknown.
5.13 Insurance. A Certificate from each insurance company providing
coverage to BPC, setting forth all coverages in effect together with the amount
thereof shall be provided to Buyer.
5.14 Phantom Stock. Prior to Closing, that certain Phantom Stock
Agreement by and between BPC and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ shall be terminated and, as
part thereof, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ shall have released all claims against BPC,
whether contingent, known or unknown.
5.15 Seller Stock Agreements. Prior to Closing, all of the Seller
Stock Agreements shall be terminated and any such agreements entered into solely
by and among any or all of BPC and any of the Sellers shall be terminated
pursuant to this Section 5.15 effective as of the Closing Date.
ARTICLE 6
CONDITIONS TO OBLIGATIONS OF SELLERS
The obligations of the Sellers to close the Acquisition are subject to
the satisfaction or waiver, at or prior to Closing, of each of the following
conditions:
6.1 Representations and Warranties. The representations and
warranties of Buyer set forth in this Agreement, or any document or instrument
delivered to any party hereunder, shall be true and correct as of the Closing
Date with the same force and effect as if such representations and warranties
had been made at and as of the Closing Date, except with respect to any of such
representations and warranties referring to a state of facts existing at a
specified date prior to the Closing Date, it shall be sufficient if at the
Closing Date such representation and warranty continues to describe accurately
the state of facts existing on the date so specified.
6.2 Performance; Covenants. All of the terms, covenants and
conditions of this Agreement to be complied with or performed by Buyer at or
prior to the Closing shall have been complied with and performed in all material
respects, including, but not limited to delivery of the following documents:
(a) A certificate dated as of the Closing Date signed by
a duly authorized officer of Buyer certifying the satisfaction of the condition
in Section 6.1 and that Buyer has fulfilled all of the conditions of this
Article 6;
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(b) Resolutions adopted by the Board of Directors of
Buyer in form and substance satisfactory to the Sellers approving the execution,
delivery and performance of this Agreement and the consummation of the
Acquisitions, certified by the Secretary of Buyer;
(c) An incumbency certificate certifying the identity of
the officers of Buyer;
(d) A certificate of existence regarding the Buyer
certified by the Secretary of State of Delaware dated within ten (10) business
days of the Closing;
(e) A certified copy of the Charter and all amendments
thereto of Buyer certified by the Secretary of State of Delaware and dated the
most recent practical date prior to Closing; and
(f) A copy of the Bylaws, and all amendments thereto, of
Buyer certified as true and in full force and effect as of Closing by the
Secretary or Assistant Secretary of Buyer.
6.3 No Injunction, Etc. No action, proceeding, investigation or
legislation shall have been instituted, threatened or proposed before any court
or Regulatory Authority to enjoin, restrain, prohibit or obtain substantial
damages in respect of, or which is related to, arises out of, this Agreement or
the consummation of the Acquisition.
6.4 Purchase Price. Buyer shall pay the portion of the Purchase
Price to be delivered at Closing as specified in Section 1.5.
6.5 Escrow Agreement. Buyer shall execute an Escrow Agreement with
the Sellers in substantially the form attached hereto as Exhibit 5.6.
6.6 Employment Agreements. BPC shall have entered into an
employment agreement with each Seller in substantially the forms attached hereto
as Exhibits 5.9(a)-(g).
ARTICLE 7
TERMINATION
7.1 Right of Termination. This Agreement and the Acquisition may
be terminated at any time prior to the Closing Date:
(a) By the mutual written consent of Buyer and Sellers.
(b) By Buyer in the event that the conditions set forth
in Article 5 of this Agreement shall not have been satisfied or waived by
January 15, 2002, unless such satisfaction shall have been frustrated or made
impossible by any act or failure to act of Buyer.
(c) By Sellers in the event that the conditions set forth
in Article 6 of this Agreement shall not have been satisfied or waived by
January 15, 2002, unless such satisfaction shall have been frustrated or made
impossible by any act or failure to act of any Seller or BPC.
(d) By Sellers or Buyer if the Closing shall not have
occurred by March 15, 2002.
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7.2 Effect of Termination. In the event of termination in
accordance with Section 7.1, this Agreement shall become void and of no further
force or effect, without any liability on the part of any of the parties hereto
or their respective owners, directors, officers or employees, except the
obligations of each party to preserve the confidentiality of documents,
certificates and information furnished to such party pursuant thereto and for
any obligation or liability of any party based on or arising from any breach or
default by such party with respect to its representations, warranties, covenants
or agreements contained in the Acquisition Documents prior to termination.
ARTICLE 8
INDEMNIFICATION
8.1 Survival of Representations and Warranties. All covenants,
representations and warranties made by Sellers and BPC in this Agreement or
pursuant hereto or in any certificate delivered pursuant hereto SHALL SURVIVE
the Closing Date for the time periods indicated in this Article 8. The
representations, warranties, covenants and agreements made by either of the
Sellers or BPC shall not be affected or deemed waived by reason of the fact that
Buyer or its representatives should have known that any such representations,
warranties, covenants or agreements are or might be inaccurate in any respect.
Except as set forth in this Agreement, any furnishing of information to Buyer by
either of the Sellers or BPC, pursuant to, or otherwise in connection with, this
Agreement shall not waive Buyer's right to rely on any representation, warranty,
covenant or agreement made by any of the Sellers or BPC.
8.2 Tax Indemnity.
(a) Sellers jointly and severally agree and shall
indemnify and hold harmless the Buyer and BPC (collectively the "Indemnitees"),
from and against any and all Taxes or related costs (i) imposed on or incurred
by Sellers or BPC for any taxable year or taxable period ending on or prior to
the close of the Effective Date (including any short periods up to and including
the close of the Effective Date and any Pre-Effective Straddle Period (with
Taxes with respect to the Pre-Effective Straddle Period determined on a "closing
of the books basis" by assuming that the books of BPC were closed at the close
of the Effective Date; provided, however that real and personal property taxes
shall be calculated on an annual basis, and apportioned on a daily basis)), (ii)
imposed on or incurred by Buyer or BPC arising out of the purchase contemplated
hereby, (iii) imposed on or incurred by the Indemnities resulting solely as a
result of BPC having been included in any consolidated, combined or unitary Tax
Return for any Taxable period (or portion thereof) ending on or before the
Effective Date pursuant to Treasury Regulation Section 1.1502-6(a) or any
analogous or similar state, local or foreign law or regulations; (iv) imposed on
BPC, or for which BPC may otherwise be liable, resulting from any Section
338(h)(10) Election (including, but not limited to any Taxes under Section 1374
of the Code or any Taxes imposed with respect to the transactions contemplated
by this Agreement by a state, local or foreign jurisdiction that does not have
provisions similar to the election available under Section 338(h)(10) of the
Code), or from BPC ceasing to be a member of any consolidated, combined or
unitary group; (v) arising as a result of a breach of any of the representations
or covenants related to Tax matters contained in this Agreement, and (vi)
imposed on or incurred by the Buyer, or Sellers with respect to reasonable
attorneys' fees and expenses with respect to contesting any of the indemnified
Taxes referred to in clause (i) and (ii), above incurred by the Buyer or BPC, as
well as any applicable interest, penalty or additional charge with respect to
such Taxes. Sellers jointly and severally agree and shall indemnify Indemnitees
from and against any and all sales, transfer and other like taxes and recording
fees payable in connection with this
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Agreement or the transactions contemplated hereby solely to the extent Sellers
have agreed to pay such taxes under Section 4.12.
(b) Sellers shall not be required to indemnify the
Indemnitees in respect of any Tax or related costs until there occurs a Final
Determination (as defined below) of the liability of the Indemnitees for the Tax
(and any interest, penalties and additions to the Tax) asserted to be payable as
a result of any proposed adjustment, unless Sellers elect not to contest or
defend against the proposed adjustment of the Tax. A "Final Determination" shall
mean (i) a decision, judgment decree or other order by any court of competent
jurisdiction, which decision, judgment, or decree or other order has become
final after all allowable appeals by either party to the action have been
exhausted or the time for filing such appeal has expired, (ii) a closing
agreement entered into under Section 7121 of the Code or other State authority,
or any other settlement agreement entered into in connection with an
administrative or judicial proceeding with the consent of Sellers, or (iii) the
expiration of the time for instituting a claim for refund, or if such claim was
filed, the expiration of the time for instituting a suit with respect thereto.
If Sellers elect to protest a proposed adjustment and payment is required in
order to contest the adjustment, Sellers shall deposit an amount equal to the
Taxes in dispute with the Indemnitees (a "Tax Deposit"), and the Indemnitees
shall, upon the receipt of such Tax Deposit from Sellers, promptly remit such
Tax Deposit to the tax authority or court, as requested by Sellers, and properly
designate the nature of such amount. Any interest expense which is stopped as a
result of such Tax Deposit shall be for the account of Sellers. If the
Indemnitees subsequently receive a refund, in whole or in part, of the Tax
Deposit or interest, penalties, or additions to Tax paid with funds advanced by
Sellers, the Indemnitees shall within thirty (30) days of such receipt pay to
Sellers the amount of such refund, plus the amount of any additional interest
received from the IRS thereon. Within thirty (30) days after a Final
Determination of, or the election of Sellers not to contest or defend against,
the Liability of the Indemnitees for which Sellers are required to make an
indemnity payment hereunder Sellers shall pay the Indemnitees any excess of such
full amount due over any advances or Tax Deposits previously made by Sellers
(net of any prior return to Sellers of such advances or Tax Deposits) pursuant
to this indemnity and any other payments previously made by Sellers with respect
to such Taxes. The Buyer shall cooperate fully with Sellers in obtaining any
refund or return of any Tax Deposits previously made by Sellers where so
requested by Sellers. In the event that any Tax Deposit made by Sellers has been
applied to any Taxes payable by the Buyer or BPC which are not subject to
indemnification under this Section 8.2, the Buyer or BPC shall pay to Sellers an
amount equal to the portion of the Tax Deposit so applied, together with any
applicable interest savings actually realized by the Buyer or BPC as a result of
such application of the Tax Deposit, within thirty (30) days following the day
on which such Taxes would have otherwise been paid, but for the application of
such Tax Deposit, by the Buyer or BPC as the case may be.
(c) If, as a result of a governmental audit or
examination or adjustment, an item of income is accelerated into a Pre-Effective
Straddle Period or an earlier period from a Post-Effective Straddle Period or
later period, or an item of deduction or credit is disallowed or deferred from a
Pre-Effective Straddle Period or earlier period into a Post-Effective Straddle
Period or later period, such shift in taxable periods shall not give rise to an
indemnifiable claim by Sellers. If, as a result of a governmental audit or
examination or adjustment, an item of income is deferred from a Pre-Effective
Straddle Period or earlier period to a Post-Effective Straddle Period or later
period, or an item of deduction or credit is disallowed or accelerated from a
Post-Effective Straddle Period or later period into a Pre-Effective Straddle
Period or earlier period, the Buyer shall be entitled to file an amended Tax
Return or otherwise claim a refund or credit, and retain all such amounts for
its own account, in respect to any reduction in Taxes in
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such Pre-Effective Straddle Period or earlier period to the extent attributable
to such shift in Tax items.
(d) Anything in this Agreement to the contrary
notwithstanding, the provisions of Section 4.12 and this Section 8.2 shall
survive until sixty (60) days after the expiration of the applicable tax statute
of limitation period (including any extensions thereof provided that BPC will
not consent to the extension of the statute of limitations without Sellers'
consent, such consent not to be unreasonably withheld) for the Taxes referred to
herein, and any Taxes subject to indemnification under this Section 8.2 shall
not be subject to the provisions of Sections 8.3 and 8.4 hereof.
8.3 Sellers General Indemnity. Subject to the terms and conditions
of this Article 8, Sellers jointly and severally agree to and will indemnify,
defend and hold the Buyer and BPC harmless from and against all demands, claims,
actions or causes of actions, assessments, losses, damages (including special
and consequential damages), Liabilities, costs and expenses, including without
limitation, interest, penalties and reasonable attorney fees and expenses
(hereinafter collectively called "Damages"), asserted against, resulting to,
imposed upon or incurred by the Buyer and/or BPC related to, resulting from or
arising out of, (i) a breach of any of the representations and warranties made
by the Sellers herein, (except that those representations and warranties listed
in Section 8.4 shall be excluded from this Section 8.3 and governed instead by
the provisions of Section 8.4), or (ii) the nonfulfillment of any undertaking,
agreement or covenant on the part of the Sellers hereunder. The obligations of
Sellers under this Section 8.3 shall survive and shall terminate at the close of
business on the third anniversary of the Closing Date ("First Indemnity
Period"), except that Sellers shall continue to be responsible after such date
for those specific Damages of which Buyer or BPC shall have given Sellers the
notices required by this Section prior to the end of the First Indemnity Period
referred to herein. In the event that Sellers receive actual notice prior to the
expiration of the above-referenced First Indemnity Period of a claim which
ultimately results in Damage to Buyer or BPC referenced in this Section 8.3,
such notice shall be deemed to constitute the notice required to be given by
Buyer or BPC hereunder, the same as if Buyer or BPC had timely given such notice
to Sellers, Sellers' indemnity obligations shall not be terminated as to those
Damages incurred by Buyer or BPC as a result of said claim and such indemnity
obligation shall survive until such claim shall have been finally resolved and
all damages shall have been fully satisfied.
8.4 Ownership and Regulatory Indemnity. Subject to the terms and
conditions of this Article 8, Sellers jointly and severally agree to and will
indemnify, defend and hold the Buyer and BPC harmless from and against all
Damages asserted against, resulting to, imposed upon or incurred by the Buyer
and/or BPC related to, resulting from or arising out of, a breach of the
representations and warranties made by the Sellers in Sections 2.5, 2.18, 2.19,
2.20, 2.21, 2.25, 2.28 and 2.32 herein. The obligations of Sellers under this
Section 8.4 with respect to Section 2.5 shall survive indefinitely. Except as
provided in the immediately foregoing sentence, the obligations of Sellers under
this Section 8.4 with respect to a particular claim shall survive and shall
terminate at the close of business on the fifth anniversary of the Closing Date
("Second Indemnity Period"), except that Sellers shall continue to be
responsible after such date for those specific claims and losses of which Buyer
or BPC shall have given Sellers the notices required by this Section prior to
the end of the Second Indemnity Period referred to herein. In the event that
Sellers receive actual notice, prior to the expiration of the above-referenced
Second Indemnity Period, of a claim which ultimately results in a loss to Buyer
or BPC referenced in this Section 8.4, such notice shall be deemed to constitute
the notice required to be given by Buyer or BPC hereunder, the same as if Buyer
or BPC had timely given such notice to Sellers, Sellers' indemnity obligations
shall not be terminated as to those Damages incurred by Buyer or BPC as a
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result of said claim and such indemnity obligation shall survive until such
claim shall have been finally resolved and all damages shall have been fully
satisfied.
8.5 Conditions of Indemnification. The obligations and liabilities
of Sellers (herein sometimes called the "indemnifying party"), to the Buyer or
BPC (herein sometimes collectively called the "party to be indemnified") under
Sections 8.2, 8.3, 8.4 and 8.11 hereof with respect to claims resulting from the
assertion of Liability by third parties shall be subject to the following terms
and conditions:
(a) within 20 days after receipt of notice of (i)
commencement of any action or (ii) the assertion of any claim by a third party,
or (iii) the party to be indemnified obtains actual knowledge that an event
giving rise to an indemnity obligation has arisen, the party to be indemnified
shall give the indemnifying party written notice thereof specifying the factual
basis of the claim in reasonable detail to the extent then known to the party to
be indemnified, together with a copy of such claim, process or other legal
pleading, if applicable, and the indemnifying party shall have the right to
undertake the defense thereof by representatives of its own choosing who shall
be reasonably satisfactory to the indemnified party; provided that the failure
to provide such notice will not relieve the indemnifying party of any Liability
under this Article 8 except to the extent that the indemnifying party's defense
of such action is materially prejudiced by such failure;
(b) in the case of a third party claim, in the event that
the indemnifying party, by the 30th day after receipt of notice of any such
claim (or, if earlier, by the tenth day preceding the day on which an answer or
other pleading must be served in order to prevent judgment by default in favor
of the person asserting such claim) does not elect to defend against such claim,
the party to be indemnified will (upon further notice to the indemnifying party)
have the right to undertake the defense through legal counsel reasonably
satisfactory to the indemnifying party, and, with consent of the indemnifying
party (which shall not be unreasonably withheld or delayed), compromise or
settle such claim on behalf of and for the account of the indemnifying party,
subject to the right of the indemnifying party, with the consent of the
indemnified party, to assume the defense of such claim at any time prior to
settlement, compromise or final determination thereof;
(c) anything in this Section 8.5 to the contrary
notwithstanding, (i) if there is a reasonable probability that a claim for
injunction, specific performance or similar equitable remedy other than money
damages which may materially and adversely affect the business or operations of
indemnified party, the indemnified party shall have the right, at its own cost
and expense, to compromise or settle such claim, but (ii) the indemnified party
shall not, without the prior written consent of the indemnifying party, settle
or compromise any claim or consent to the entry of any judgment which does not
include as an unconditional term thereof the giving by the claimant or the
plaintiff to the indemnifying party a release from all liability in respect of
such claim;
(d) in connection with any such indemnification, the
indemnified party will cooperate in all reasonable requests of the indemnifying
party; and
(e) the giving of any notice of any claim or event giving
rise to indemnity shall not excuse the obligation to give notice of any
subsequent claim or event giving rise to indemnity.
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8.6 General Provisions Relating to Indemnification. The party
entitled to indemnification shall take all reasonable steps to mitigate all
indemnifiable Damages upon and after becoming aware of any event which could
reasonably be expected to give rise to any Damages that are indemnifiable
hereunder. No party shall be entitled to indemnification to the extent of any
insurance, federal or state income tax deductions or credits arising from the
indemnifiable event (to the extent that any savings from such deduction or
credit is actually realized); such indemnified party agrees to timely notify the
insurance carrier and diligently prosecute claims against the insurance carrier
without regard to the possibility of indemnification hereunder.
8.7 Exclusive Remedies. The rights of the Sellers on the one hand,
and BPC and the Buyer on the other hand, under Article 1 and Sections 4.10 and
the indemnification rights provided in this Article 8 shall be the exclusive
remedy of these parties pursuant to this Agreement with respect to any dispute
arising out of or related to this Agreement post-Closing, except for (a) the
right to seek specific performance of any of the agreements contained herein, or
(b) in any case where one party has been guilty of fraud in connection with this
transaction. As used herein, fraud shall be construed as actual fraud and deceit
as determined by applicable Law, and shall exclude conduct which would only give
rise to a claim for negligent misrepresentation. No provision contained in this
Article 8 shall apply to a breach of the terms of any other Acquisition
Documents, and the parties to the other Acquisition Documents shall have all
rights and remedies provided to them by law or equity without limitation.
Subject only to those indemnity claims for which notice has been given within
the applicable Indemnity Period, upon expiration of an Indemnity Period,
Sellers' obligations for indemnity under this Agreement for the relevant type of
claims shall be discharged and extinguished. Notwithstanding any provision
herein to the contrary, the obligation of Sellers in Section 11.11 is in
addition to and separate from the indemnity obligations in this Article 8 and
Buyer's rights and remedies for a breach of Sellers' obligations under Section
11.11 are not limited in any respects by the provisions of this Article 8.
8.8 Escrow Agreement. The funds held in escrow by the escrow agent
pursuant to the Escrow Agreement are intended to give security to Buyer and BPC
in case any of the Sellers shall become liable, after the Closing Date, for any
amounts for which Buyer or BPC is entitled to indemnification by such Seller
pursuant to Sections 8.2, 8.3, 8.4 and 8.11 hereof and for any amounts owed by
Sellers to Buyer pursuant to Section 1.4(b)(ii). Buyer or BPC may set off the
amount to which it is entitled under Section 1.4(b)(ii) or Article 8 against the
escrowed funds in the Escrow Agreement and by setoff against any Earnout Amount
due under Section 1.6 provided, however, that Buyer or BPC may not set off,
withhold or otherwise retain any amount exceeding the amount reasonably
necessary to satisfy or resolve the claim for which setoff is claimed by Buyer
or BPC. Any escrow funds Buyer or BPC receives in connection with claims under
Article 8 shall count towards the "Indemnity Cap" (as defined below). The rights
and remedies of Buyer and BPC under the Escrow Agreement shall be in addition
to, and not exclusive of, any other rights and remedies that Buyer and BPC may
have against any of the Sellers for a breach of any provision of this Agreement
or with respect to any of the items enumerated above and Buyer may first pursue
set-off against the Earnout Amount prior to seeking recourse through the escrow,
or by first setting off against any other obligations that Buyer or its
Affiliates may owe Sellers or their Affiliates.
8.9 Overall Limit.
(a) Notwithstanding anything in this Agreement to the
contrary, Sellers shall not be liable for any claim or claims against them for
indemnity under Sections 8.2 (excluding
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claims for actual Tax liability, interest and penalties), 8.3 or 8.4 (excluding
claims related to, resulting from or arising out of a breach of the
representations and warranties made by the Sellers in Section 2.5
("Capitalization Claims")) of this Agreement, until the aggregate value of all
such claims, either as asserted or as ultimately determined, equals to or
exceeds Two Hundred Fifty Thousand ($250,000) Dollars, and the maximum liability
of each Seller for any and all claims against him for indemnity under Sections
8.2 (excluding claims for actual Tax liability, interest and penalties), 8.3 and
8.4 (excluding Capitalization Claims) of this Agreement, shall not exceed an
amount equal to the product of (x) the percentage set forth opposite such
Seller's name in Schedule 8.9 hereto, multiplied by (y) the Indemnity Cap. For
purposes of this Section 8.9(a), the "Indemnity Cap" shall mean:
(i) with respect to the first twenty-four (24) months
following the Closing Date, the amount of Sixteen
Million Dollars ($16,000,000.00);
(ii) with respect to the period comprising the
twenty-fifth (25th) month through the thirty-sixth
(36th) month following the Closing Date, the amount
of Thirteen Million Dollars ($13,000,000.00); and
(iii) with respect to the period comprising the
thirty-seventh (37th) month through the sixtieth
(60th) month following the Closing Date, the amount
of Ten Million Dollars ($10,000,000.00);
In determining the aggregate maximum liability under subparts (i), (ii) and
(iii) above, claims for which Sellers are not liable by virtue of the Two
Hundred Fifty Thousand Dollar ($250,000.00) exclusion provided above in this
Section shall not be counted as a claim in determining said maximum liability,
and all claims asserted under Sections 8.2 (excluding claims for actual Tax
liability, interest and penalties), 8.3 and 8.4 (excluding Capitalization
Claims) at any time whether or not during the particular measuring period shall
be cumulative. For example, if a claim totaling Sixteen Million Dollars
($16,000,000.00) is made in the sixth (6th) month following the Closing Date,
the maximum liability cap shall have been met for the remainder of the five (5)
year period for which any claim under Section 8.2 (excluding claims for actual
Tax liability, interest and penalties), 8.3 or 8.4 (excluding Capitalization
Claims) survives. The amount of any Capitalization Claim and, for purposes of
Section 8.2, the amount of any actual Tax liability (including interest and
penalties) shall not be subject to the dollar floor and cap set out herein;
provided, however, that, all other expenses associated with such Tax liability
and subject to Section 8.2, such as attorney fees and costs of defense, shall be
subject to the dollar floor and cap set out in this Section 8.9(a).
(b) This Section 8.9 will not apply to any claim in which
a Seller has been guilty of fraud in connection with this transaction or Section
8.11.
8.10 General Buyer Indemnity. Subject to the terms and conditions
of this Article 8, the Buyer agrees to and will indemnify, defend and hold
Sellers harmless from and against all Damages asserted against, resulting to,
imposed upon or incurred by Sellers, resulting from or arising out of (i) a
breach of the representations, warranties or covenants made by the Buyer in this
Agreement or any document delivered by or for it pursuant to this Agreement, or
(ii) any event, claim or liability occurring or arising out of the operation of
BPC after the Closing Date other than those resulting from the acts or omissions
of Sellers.
8.11 Sellers Litigation Indemnity. Subject to the terms and
conditions of this Article 8, Sellers jointly and severally agree to and will
indemnify, defend and hold the Buyer and BPC
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harmless from and against all Damages asserted against, resulting to, imposed
upon or incurred by the Buyer and/or BPC related to, resulting from or arising
out of
(a) those matters set forth on Schedule 2.9, and
(b) any claims by Caremark Inc. or any other Person based
on or arising in connection with (i) any breach of the terms and conditions of
the Settlement Agreement and/or (ii) any actions or omissions of any Seller,
BPC, PIC and/or Buyer and their respective Affiliates in connection with the
negotiation, execution and performance of the Settlement Agreement; provided,
however, that in no event shall any Seller be liable under this subsection (b)
for (i) acts or omissions by BPC and its Affiliates after the Closing or (ii)
for acts or omissions by a Seller after the Closing solely in his capacity as an
employee of BPC or its Affiliates, to the extent such acts are consistent with
the terms of such Seller's employment.
The obligations of Sellers under this Section 8.11 shall survive the Closing
Date indefinitely and shall not be subject to any dollar floor or cap or any
other similar monetary restriction. For the avoidance of doubt, the term
"Damages" as used in this Section 8.11 expressly includes any and all attorneys
fees and expenses and settlement fees (including, but not limited to, those
relating to, resulting from or arising out of the Settlement Agreement) incurred
by Buyer or BPC after the Closing Date, as well as such attorneys fees and
expenses and settlement fees not paid or accrued by BPC prior to December 1,
2001, relating to, resulting from or arising out of the Caremark Litigation or
those other matters set forth on Schedule 2.9.
ARTICLE 9
CERTAIN DEFINITIONS
9.1 (a) Except as otherwise provided herein, the capitalized
terms set forth below shall have the following meanings:
"Affiliate" of any party shall mean: (i) any other Person
directly, or indirectly through one or more intermediaries, controlling,
controlled by or under common control with such party (provided that each Seller
shall be deemed to control any Person that the Sellers collectively are capable
of controlling); (ii) any officer, director, partner, employer or direct or
indirect beneficial owner of any ten percent (10%) or greater equity or voting
interest of such party; or (iii) any other Person for which a Person described
in clause (ii) above acts in any such capacity. For purposes of the foregoing,
"control" shall have the meaning provided by Rule 405 of the Securities Act of
1933, as amended, or any successor rule thereto.
"Acquisition Documents" shall mean this Agreement and the
other documents and instruments to be delivered pursuant to this Agreement.
"Agreement" shall mean this Stock Purchase Agreement,
including the Exhibits and Schedules delivered pursuant hereto and incorporated
herein by reference.
"Assets" of a Person shall mean all of the assets, properties,
businesses and rights of such Person of every kind, nature, character and
description, whether real, personal or mixed, tangible or intangible, accrued or
contingent, or otherwise relating to or utilized in such Person's business,
directly or indirectly, in whole or in part, whether or not carried on the books
and records of such Person, and whether or not owned in the name of such Person
or any Affiliate of such Person and wherever located.
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"Code" shall mean the Internal Revenue Code of 1986, as
amended, and the rules and regulations promulgated thereunder.
"EBIT" shall mean earnings before interest and tax, excluding
extraordinary or nonrecurring items.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.
"ERISA Affiliate" shall mean, with respect to any entity, any
other entity, which, together with such entity, would be treated as a single
employer (i) under Section 414(b) or (c) of the Code or (ii) for purposes of any
Benefit Plan subject to Title IV of ERISA, under Section 414(b), (c), (m) or (o)
of the Code.
"Exhibits" shall mean the Exhibits so marked, copies of which
are attached to this Agreement. Such Exhibits are hereby incorporated by
reference herein and made a part hereof, and may be referred to in this
Agreement and any other related instrument or document without being attached
hereto.
"Knowledge" of any Seller (or words to that effect) shall
mean, include and refer to, such knowledge as (i) is actually possessed by any
Seller, (ii) which any such Person should be possessed of through the exercise
of reasonable inquiry and diligence, or (iii) is contained in the books and
records of BPC. "Knowledge" of Sellers shall mean knowledge of any one Seller.
"Law" shall mean any code, law, ordinance, regulation,
reporting or licensing requirement, rule, or statute applicable to a Person or
its assets, Liabilities or business, including those promulgated, interpreted or
enforced by any Regulatory Authority.
"Liability" shall mean any direct or indirect, primary or
secondary, liability, indebtedness, obligation, penalty, cost or expense
(including costs of investigation, collection and defense), claim, deficiency,
guaranty or endorsement of or by any Person (other than endorsements of notes,
bills, checks, and drafts presented for collection or deposit in the ordinary
course of business) of any type, whether accrued, absolute or contingent,
liquidated or unliquidated, matured or unmatured, or otherwise.
"Lien" shall mean any conditional sale agreement, default of
title, easement, encroachment, encumbrance, hypothecation, infringement, lien,
mortgage, pledge, reservation, restriction, security interest, title retention
or other security arrangement, or any adverse right or interest, charge, or
claim of any nature whatsoever.
"Person" shall mean a natural person or any legal, commercial
or governmental entity, such as, but not limited to, a corporation, general
partnership, joint venture, limited partnership, limited liability company,
trust, business association, group acting in concert, or any person acting in a
representative capacity.
"Regulatory Authorities" shall mean, collectively, the United
States Federal Trade Commission, the United States Department of Justice, and
all other federal, state, county, local, foreign or other governments or
governmental or regulatory agencies, authorities (including taxing and
self-regulatory authorities), instrumentalities, commissions, boards or bodies,
having jurisdiction over any of the parties or their respective businesses,
assets and/or subsidiaries.
"Sellers' Representative" shall mean ▇▇▇▇▇ ▇▇▇▇.
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"Taxes" shall mean any federal, state, county, local, foreign
or other tax, charge, imposition or other levy (including interest or penalties
thereon) including without limitation, income taxes, estimated taxes, excise
taxes, sales taxes, use taxes, gross receipts taxes, franchise taxes, taxes on
earnings and profits, employment and payroll related taxes, property taxes, real
property transfer taxes, Federal Insurance Contributions Act taxes, any taxes or
fees related to unclaimed property, taxes on value added and import duties,
whether or not measured in whole or in part by net income, imposed by the United
States or any political subdivision thereof or by any jurisdiction other than
the United States or any political subdivision thereof, including any interest,
penalties and additions imposed thereon or with respect thereto.
"Tax Return" shall mean any and all returns, reports, filings,
declarations and statements relating to Taxes that are required to be filed,
recorded, or deposited with any Regulatory Authority, including any attachment
thereto or amendment thereof.
(b) In addition to the terms defined in Section 9.1(a) above, the
terms set forth below shall have the meanings ascribed thereto in the referenced
sections:
338(h)(10) Election - Section 2.32(a) Pension Plans - Section 2.14(a)
Acquisition - Preamble PIC - Section 2.9
Actual EBIT - Section 1.6(a) Pre-Effective Period - Section 4.10(a)(i)
BPC - Preamble Pre-Effective Period Tax Returns -
Business Employees - Section 2.13(a) Section 4.10(a)(I)
Buyer - Preamble Pre-Effective Straddle Period - Section
Capitalization Claims - Section 8.9(a) 4.10(a)(ii)
Caremark Litigation - Section 2.9 Post-Effective Straddle Period - Section
Closing - Section 1.3 4.10(a)(ii)
Closing Date - Section 1.3 Preliminary Effective Date Balance Sheet
Compensation Programs - Section 2.14(c) - Section 1.4(b)(iv)(A)
Consideration - Section 1.1 Private Programs - Section 2.18(a)
Damages - Section 8.3 Purchase Price - Section 1.4(a)
Earnout Amount - Section 1.5(d) Purchase Price Adjustment
Effective Date - Section 1.3 Determination Date - Section 1.4(b)(iv)(C)
Effective Date Net Asset Value - Section 1.4(b)(iv)(D) Remuneration - Section 2.20(a)
Environmental Claim - Section 8.1(c) Seller - Preamble
Environmental Condition - Section 2.16 Seller Agreements - Section 2.12(a)
Final Effective Date Balance Sheet - Section Seller Stock Agreements - Section 2.5(d)
1.4(b)(iv)(C)
Financial Statements - Section 2.6 Settlement Agreement - Section 2.9
GAAP - Section 2.6 Shares - Section 1.2
Government Programs - Section 2.18(a) Statement of Objection - Section
Indemnified Party - Section 8.5 1.4(b)(iv)(B)
Indemnifying Party - Section 8.5 Straddle Period - Section 4.10(a)(ii)
Indemnitees - Section 8.2(a) Welfare Plans - Section 2.14(b)
Indemnity Cap - Section 8.9(a)
Independent Accounting Firm - Section 1.4(b)(iv)(C)
IRS - Section 2.17(b)
Medicare and Medicaid Programs - Section 2.18(a)
(c) Any singular term in this Agreement shall be deemed
to include the plural, and any plural term the singular. Whenever the words
"include," "includes" or "including" are used in this Agreement, they shall be
deemed followed by the words "without limitation."
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ARTICLE 10
SELLER REPRESENTATIVE
10.1 Appointment of Sellers' Representative. Each Seller
constitutes and appoints the Sellers' Representative as his true and lawful
attorney-in-fact (i) to give and receive all notices and communications required
or permitted under this Agreement, (ii) to agree to, negotiate, enter into
settlements and compromises with respect to Article 1 (including the Earnout
Amount), and (iii) in all matters relating to or arising out Article 8 and the
liability or asserted liability of such Seller thereunder, including
specifically, but without limitation, accepting and agreeing to the liability of
such Seller with respect to any indemnification claim made by Buyer and/or BPC,
objecting to any such indemnification claim, disputing the liability of such
Seller, or the amount of such liability, with respect to any indemnification
claim made by Buyer or BPC and prosecuting and resolving such dispute as
provided in Article 8, accepting the defense, compromise and settlement of any
third party claim on behalf of such Seller or refusing to accept the same,
settling and compromising the liability of such Seller as provided in Article 8,
and instituting and prosecuting such actions (including arbitration proceedings)
as the Sellers' Representative shall deem appropriate. The Sellers'
Representative may take all actions necessary or appropriate in the judgment of
the Sellers' Representative for the accomplishment of any of the foregoing,
including retaining counsel, accountants, appraisers and other advisers, all for
the account of each Seller, each Seller agreeing to be fully bound by the acts,
decisions and agreements of the Sellers' Representative taken and done pursuant
to the authority herein granted. Notices and communications to or from the
Sellers' Representative shall constitute notice to or from each of the Sellers.
10.2 Indemnification of Sellers' Representative. Each Sellers'
hereby agrees to indemnify and to save and hold harmless the Sellers'
Representative from any liability incurred by the Sellers' Representative based
upon or arising out of any act, whether of omission or commission, of the
Sellers' Representative pursuant to the authority herein granted, other than
acts, whether of omission or commission, of the Sellers' Representative that
constitute gross negligence or willful misconduct in the exercise by the
Sellers' Representative of the authority herein granted.
10.3 Buyer's Reliance on Sellers' Representative. Buyer may rely
upon any such decision, act, consent or instruction of the Sellers'
Representative as being the decision, act, consent or instruction of each such
Sellers. Buyer is hereby relieved from any liability to any Person for any acts
done by them in accordance with such decision, act, consent or instruction of
the Sellers' Representative.
ARTICLE 11
MISCELLANEOUS PROVISIONS
11.1 Notices.
(a) Any notice sent in accordance with the provisions of
this Section 11.1 shall be deemed to have been received (even if delivery is
refused or unclaimed) on the date which is: (i) the date of proper posting, if
sent by certified U.S. mail or by Express U.S. mail or private overnight
courier; or (ii) the date on which sent, if sent by facsimile transmission, with
confirmation and with the original to be sent by certified U.S. mail, addressed
as follows:
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If to the Sellers or Sellers' Representative: Bio Partners In Care, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone Number: (▇▇▇) ▇▇▇-▇▇▇▇
Copy to Counsel: ▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
If to BPC or Buyer: Accredo Health, Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
Copy to Counsel: ▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇., Esq.
Accredo Health, Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
(b) Any party hereto may change its address specified for
notices herein by designating a new address by notice in accordance with this
Section 11.1.
11.2 Expenses. Each of the parties hereto shall bear and pay all
costs and expenses incurred by it or on its behalf in connection with the
transactions contemplated hereunder, including but not being limited to, the
fees of attorneys, accountants and investment bankers retained by that party
incident to the negotiation, preparation and execution of this Agreement. For
the avoidance of doubt, Sellers shall bear and pay all such costs and expenses
incurred by them or by BPC in connection with the Acquisition and have not
caused, and shall not cause, any such costs or expenses to be paid by BPC.
11.3 Further Assurances. Each party covenants that at any time, and
from time to time, after the Closing, it will execute such additional
instruments and take such actions as may be reasonably requested by the other
parties to confirm or perfect or otherwise to carry out the intent and purposes
of this Agreement including without limitation taking such steps as are
reasonably necessary to document the effectiveness of the Acquisition as of the
Effective Date.
11.4 Waiver. Any failure on the part of any party to comply with
any of its obligations, agreements or conditions hereunder may be waived by any
other party to whom such compliance is owed. No waiver of any provision of this
Agreement shall be deemed, or shall constitute, a waiver of any other provision,
whether or not similar, nor shall any waiver constitute a continuing waiver.
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11.5 Assignment. This Agreement shall not be assignable by any of
the parties hereto without the written consent of all other parties, provided
that Buyer may assign its rights and obligations under this Agreement without
the consent of Sellers to any direct or indirect subsidiary or affiliate of
Buyer or to any party that acquires substantially all of the assets or stock of
Buyer or any successor entity resulting from a merger or consolidation of or
with Buyer or the sole shareholder of Buyer. No such assignment shall relieve
Buyer of its obligations hereunder.
11.6 Binding Effect. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective heirs, legal
representatives, executors, administrators, successors and assigns. This
Agreement shall survive the Closing and not be merged therein.
11.7 Headings. The section and other headings in this Agreement are
inserted solely as a matter of convenience and for reference, and are not a part
of this Agreement.
11.8 Entire Agreement. All Schedules and Exhibits attached to this
Agreement are by reference made a part hereof. This Agreement and the Exhibits,
Schedules, certificates and other documents delivered pursuant hereto or
incorporated herein by reference, contain and constitute the entire agreement
among the parties and supersede and cancel any prior agreements,
representations, warranties, or communications, whether oral or written, among
the parties relating to the transactions contemplated by this Agreement. Neither
this Agreement nor any provision hereof may be changed, waived, discharged or
terminated orally, but only by an agreement in writing signed by the party
against whom or which the enforcement of such change, waiver, discharge or
termination is sought.
11.9 Governing Law; Severability. This Agreement shall be governed
by and construed in accordance with the Laws of the State of Delaware, without
regard to any applicable conflicts of Laws. The provisions of this Agreement are
severable and the invalidity of one or more of the provisions herein shall not
have any effect upon the validity or enforceability of any other provision.
11.10 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
11.11 Brokers. Sellers shall jointly and severally indemnify, hold
harmless and defend Buyer and its affiliates, and Buyer shall indemnify, hold
harmless and defend Sellers from and against the payment of any and all broker's
and finder's expenses, commissions, fees or other forms of compensation which
may be due or payable from or by the indemnifying party, or which may have been
earned by any third party acting on behalf of the indemnifying party in
connection with the negotiation, execution and consummation of the transactions
contemplated hereby. It is specifically agreed that ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Company was
retained by, and shall be paid solely by, Sellers.
11.12 No Intention to Benefit Third Parties. Nothing in this
Agreement is intended to and shall not benefit any Person other than the parties
hereto create any third party beneficiary right in any such other Person.
[SIGNATURES ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf and its corporate seal to be hereunto affixed and
attested by officers thereunto as of the day and year first above written.
BUYER: ACCREDO HEALTH, INCORPORATED
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
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Title: Senior Vice President and
General Counsel
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BPC: BIO PARTNERS IN CARE, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇
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Title: President
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SELLERS: /s/ ▇▇▇▇▇ ▇▇▇▇
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SELLERS' REPRESENTATIVE: /s/ ▇▇▇▇▇ ▇▇▇▇
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