EXHIBIT 2(b)
STOCK PURCHASE AGREEMENT dated 2 April 1999
among
CHARTER MEDICAL INTERNATIONAL, S.A., INC., a company incorporated in Nevada
whose principal office is at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ (the "Seller"),
MAGELLAN HEALTH SERVICES, INC. a company incorporated in Delaware whose
principal office is at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇ ("Magellan"),
GROGRUNDEN 515 AB a company incorporated in Sweden with registered number
[556561-0390] whose principal office is at ▇/▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ (the "Buyer"),
and
INVESTMENT AB BURE a company incorporated in Sweden whose principal office is at
▇▇ ▇▇▇ ▇▇▇▇, ▇-▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ("Bure")
concerning
SOCIETE ANONYME DE LA METAIRIE ("the Company").
RECITALS
This is the Swiss Sale Agreement referred to in the share purchase agreement of
the same date (the "Charter Medical Agreement") made among Charter Medical
International S.A., Inc., Magellan Health Services, Inc., Investment AB Bure and
CMEL Holding Limited.
The Company, whose seat is at ▇▇▇▇▇▇ ▇▇ ▇▇▇▇-▇▇▇▇▇ ▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇,
is a Swiss company incorporated as a limited company with a fully paid-up share
capital of CHF 300'000.- (three hundred thousand Swiss Francs) divided into 300
(three hundred) registered shares having a par value of CHF 1'000.- (one
thousand) each.
The Seller is the beneficial owner of the entire share capital of the Company.
The Seller is willing to sell to the Buyer and the Buyer is willing to purchase
from the Seller the entire share capital of the Company on the terms and
conditions of this Agreement.
THE PARTIES AGREE AS FOLLOWS :
1. Purchase and Sale of Shares
1.1. Purchase and Sale
1
Upon the terms and subject to the conditions of this Agreement (the
"Agreement"), the Seller agrees to sell to the Buyer and the Buyer
agrees to purchase from the Seller the entire share capital of the
Company of 300 (three hundred) registered shares having a par value of
CHF 1'000.- each (one thousand Swiss Francs) (the "Sale Shares") free
and clear of all liens, charges, pledges, security interests,
encumbrances, restrictions and claims of any kind whatsoever including
all rights to dividends or other distributions declared after the date
of execution of this Agreement.
1.2. Purchase Price
The purchase price (the "Purchase Price") for the Sale Shares shall be
US$23,364,000 together with an extension payment equal to interest on
US$23,364,000 calculated at the rate of 2% per annum above the base
rate from time to time of the Royal Bank of Scotland from 31 March 1999
to the Closing Date and subject to such increase or decrease (if any)
as may be required pursuant to Schedule 1 of this Agreement.
2. Conditions and Closing
2.1 The completion of the transaction contemplated herein (the "Closing")
is conditional upon the simultaneous closing of the Charter Medical
Agreement. In the event of any termination of the Charter Medical
Agreement prior to Closing, this Agreement shall automatically
terminate.
2.2. Place and date
Closing shall take place on the date and at the time and place at which
the Closing occurs under the Charter Medical Agreement.
2.3. Closing Documents
(a) Upon Closing, the Seller shall deliver to the Buyer :
(i) the certificates representing the Sale Shares duly endorsed in
blank;
(ii) a resolution of the Company's Board of Directors authorising
the Buyer's registration in the Company's share register;
(iii) the Company's share register, evidencing the registration of
the Buyer as shareholder for the Sale Shares;
(iv) unconditional and irrevocable resignation letters from the
Company's board of directors, with effect as of the date of
Closing, each containing a statement of the resigning director
that he has been fully compensated for his services rendered
to the Company and that he has no claim of whatever nature
against the Company; and
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(v) a written confirmation as of the Closing of the accuracy of
the Pension Fund Certificate attached as Exhibit A.
(vi) a legal opinion of ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ Pidoux & Associes in
a form reasonably acceptable to the Buyer as to the non
applicability of the statutes referred to in Clause 3.1.11.
(vii) evidence, reasonably satisfactory to the Buyer, of the
discharge of the two mortgages on the property owned by the
Company registered in the extract of the Land Registry of
Nyon.
(b) Upon Closing, the Buyer shall deliver to the Seller the Purchase Price
in immediately available funds to a dollar account with a UK bank in
London designated by the Seller not less than three days prior to the
Closing Date.
2.4 The Buyer shall not be obliged to close the sale and purchase of the
Sale Shares unless all requirements of clauses 2.1 and 2.3 are complied
with.
3. Representations and Warranties
3.1. The Buyer is entering into this Agreement in reliance upon the
representations and warranties contained in this Clause 3. The Buyer
confirms that it has no actual knowledge as of the date hereof of any
matter which constitutes a breach of any representation or warranty of
the Seller.
The Seller makes the following representations and warranties to the
Buyer as of the date of signature of this Agreement and the Seller
warrants that the following representations and warranties shall be
accurate on the date of Closing as if restated on such date.
The Seller undertakes to disclose in writing to the Buyer anything
which is a breach of any warranty immediately after it comes to the
Seller's notice after Closing.
3.1.1 Organisation of the Seller and Magellan
The Seller is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of
Nevada. Magellan is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of
Delaware.
3.1.2 Authority
Each of Magellan and the Seller has the requisite power and
authority to sign this Agreement and to consummate the
transactions contemplated herein. This Agreement has been duly
authorised, executed and delivered by each of Magellan and the
Seller and constitutes a valid and binding obligation of each
of Magellan and the Seller, enforceable in accordance with its
terms.
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No consent is required to authorise the execution and
performance of this Agreement or the consummation of any of
the transactions contemplated thereby.
3.1.3 Organisation of the Company
The Company is a Swiss company duly incorporated, validly
existing and in good standing under the laws of Switzerland.
The extract from the Commercial Registry and the Articles of
Association of the Company which are attached hereto as
Exhibits B and C are true, correct and complete as of the date
hereof.
3.1.4 Consequences of Sale
The execution, delivery and performance of this Agreement will
not (i) conflict with or violate any provision of the Articles
of Association of the Company, or (ii) violate, conflict with
or result in a breach of any provision of, or constitute a
default under, or accelerate the performance of any agreement
to which the Company is a party , or (iii) result in the
creation of any lien, security interest, charge, claim or
encumbrance upon any of the properties or assets of the
Company, or (iv) conflict with, violate or result in a breach
of any law, regulation, order, decree or writ applicable to
the Company or to the Seller, or (v) violate any judgement,
order, or award of any court, arbitrator or any governmental
administrative or regulatory authority, or (vi) result in any
present indebtedness of the Company becoming due and payable
or capable of being declared due and payable prior to its
stated maturity, or (vii) entitle any person to receive from
the Company any finder's fee brokerage or other commission.
3.1.5 Capitalisation
(i) The issued share capital of the Company consists of
300 registered shares having a par value of CHF
1'000.- each;
(ii) All the Sale Shares and all the share certificates
relating to the Sale Shares are duly and validly
authorised and issued on 2 July 1985 and the Sale
Shares are fully paid;
(iii) There are not any options, warrants, calls, rights of
conversion, or other rights, commitments, agreements
of any character to which the Seller or the Company
is a party or by which any of them is bound,
obligating the Seller or the Company to issue,
deliver, sell or cause to be issued, delivered or
sold, additional shares of the Company to extend or
enter into any such option, warrant, call, right,
commitment or agreement;
(iv) The Seller has good, legal, beneficial and valid
title to the Sale Shares, free and clear of all
liens, charges, security interests, claims and other
encumbrances; and
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(v) Since 30 September 1998, the Company has not declared
any distributions to shareholders.
3.1.6 Financial Statements
The Seller has previously delivered to the Buyer true and
complete copies of the Company's audited financial statements
(balance sheets and profit and loss statements, including the
explanatory notes related thereto) as at 30 September, 1998,
1997, and 1996, which are attached hereto as Exhibit D (the
"Financial Statements"). The Financial Statements have been
prepared according to Swiss accounting principles.
The Financial Statements:
(i) gave a fair view of the assets, liabilities and state
of affairs of the Company as at 30 September, 1998,
1997 and 1996 and of the profits and losses for the
financial periods ended on these dates;
(ii) were prepared in accordance with all applicable
accounting principles and practices generally
accepted at the date of this Agreement in Switzerland
and are true and accurate in all material aspects;
(iii) complied with the requirements of Swiss law; and
(iv) include appropriate provision for bad and doubtful
debts and for taxation on profits (whether of an
income or capital nature) relating to any period on
or before the date to which they relate.
As of 30 September, 1998, the Company had no liabilities or
obligations of any nature which were required by Swiss
generally accepted accounting principles to be disclosed in
the Financial Statements other than those reflected in the
1998 Financial Statements (as defined in clause 3.1.9).
The accounts receivable shown on the balance sheet for the
year ended 30 September, 1998 have been collected or are
collectable in amounts which are consistent with the provision
for bad debts made in such balance sheet. Each of such
accounts receivable exists without setoff and is not subject
of a pledge or assignment to secure debt.
3.1.7 Absence of Change
Since 30 September, 1998, the Company has conducted its
business in the ordinary course, consistent with prior
practice, and since such date, there has not been any material
adverse change in the business, assets, liabilities, financial
condition or results of operations of the Company.
3.1.8 Records and books
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The Company is in possession of all documents and records
required for the conduct of its activities.
All accounts, books, ledgers, and other financial records of
the Company:
(i) have been properly maintained and contain accurate
records of all material matters required to be
entered in them by applicable law; and
(ii) correctly state, in all material respects, the
matters which ought to appear in them consistently
with past accounting practices of the Company.
The Company does not carry on businesses under names other
than its corporate name.
3.1.9 Assets
The Company has good, legal, beneficial and valid title to all
assets reflected in the Financial Statements as at 30
September, 1998 (the "1998 Financial Statements") and all
assets acquired since that date are free and clear of any
lien, security interest and encumbrance not reflected in the
1998 Financial Statements. These assets allow the Company to
conduct its business as currently conducted. All such assets
which are capable of possession are in the possession of the
Company.
The Company has not agreed to acquire any asset on terms that
title in it does not pass until full payment is made.
3.1.10 Intellectual property rights
The Company has no registered trademarks or trade names. The
Company has used TRIMS software provided by arrangement with
Magellan. The Company uses software pursuant to licences with
third party licensors and the Company is not in default under
any such licence which is material to the business of the
Company. So far as the Seller is aware, the Company is not in
breach of any intellectual property rights of any third party.
The Seller has disclosed to the Buyer its plans (the "Plans")
designed to address the operational issues of the computers
and computer systems used in connection with the Company's
business (including software and hardware, referred to in this
case as the "IT System") which are expected to arise in
connection with the change in year from 1999 to 2000,
including any related change in the field configuration
containing date information within the IT System ("Y2K
Matters").. The Seller has no reason to believe that if the
Company continues to implement the Plans in the same manner as
it has done prior to the date of this Agreement (and assuming
no material change is made in the present IT System), there
will be any material adverse effect on the Company's business
resulting from Y2K Matters.
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The Company has complied with all data protection laws in
Switzerland in all material respects.
3.1.11 Real estate
The Company legally and beneficially owns and has good title
to a parcel of land registered with the Land Registry of Nyon
under N(degree) 1174. This parcel of land has a surface of
81'640 sqm. The relevant extract from the Land Registry of
Nyon, which is attached hereto as Exhibit E, is a true,
correct and complete copy thereof.
Such real estate is free and clear of any lien, security
interest and encumbrance not mentioned in such extract. There
are no material agreements, instruments, rights or obligations
relating to such real estate, including but not limited to,
agreements to sell or lease such real estate, or rights of
first refusal or occupation rights. The Seller is not aware of
any encumbrances which would have any material adverse impact
on the value or use of such real estate other than any which
are disclosed in Exhibit E. There are no restrictions under
any Swiss laws governing a transfer of land in Switzerland
which would prevent the lawful transfer of such real estate
and, in particular, the sale of the Sale Shares and the
transfer of such real estate resulting therefrom, will not in
any way be affected by the "LOI FEDERALE SUR L'ACQUISITION
D'IMMEUBLES PAR DES PERSONNES A L'ETRANGER" or the "LOI
FEDERALE SUR LE DROIT FONCIER RURAL". The Seller does not own
any other real property other than that details of which are
attached hereto as Exhibit E.
There has been no material breach of any regulations relating
to the use of the real estate.
3.1.12 No undisclosed liabilities
, Since30 September 1998, the Company has not incurred any
material liability or obligation of any nature (absolute,
accrued, contingent or otherwise) other than trade creditors
payable in the ordinary course of business and has not entered
into any material financial commitment, conditional or
unconditional or actual which is material to the condition of
the Company.
3.1.13 Subsidiary and branch
The Company does not have any subsidiary or any branch in or
outside Switzerland.
3.1.14 Contracts
All contracts to which the Company is a party have been duly
performed in all material respects.
Exhibit F contains a list of all material contracts entered
into by the Company.
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The Company is not a party to any contract which can be
terminated or which would be breached in the event of any
change in the ownership or control of the Company.
There has been disclosed to the Buyer full details of all
discounts, overrides, rebates, allowances and other special
terms or similar arrangements which are material to the
business of the Company as a whole and offered or granted to
the Company or by the Company in respect of hospitals,
insurers or any other person obtained within the period of 12
months preceding the date of this Agreement.
So far as the Seller is aware not having made enquiry of
suppliers or customers, no material supplier or customer of
the Company has during the period of 12 months preceding the
date of this Agreement indicated an intention to cease trading
with or materially alter the terms, on which it trades with
the Company.
3.1.15 Related Party Contracts
Except for the purchase of shares of Magellan by the Company
the particulars of which are set out in the Notes to the
Financial Statements for the period ended 30 September 1997
and for the TRIMS Software referred to in Clause 3.1.10, the
Company has not entered into any contract, arrangement or
agreement through which the Seller derives any direct or
indirect benefit.
Except as set out in the preceding paragraph, there will not
be outstanding at Closing:
(i) any indebtedness or other liability (actual or
contingent) owing by the Company to the Seller, any
affiliate of the Seller, or any director or related
person of the Seller, or owing to the Company by the
Seller, any affiliate of the Seller, or by any
director or any related person of the Seller; or
(ii) any guarantee or security for any such indebtedness
or liability as aforesaid.
3.1.16 Taxes
(i) All material tax returns or reports of the Company
that are required to be filed by or with respect to
the Company [ have been filed punctually;
(ii) So far as the Seller is aware, there is no dispute,
or any facts or circumstances likely to give rise to
any dispute, with any tax authority as regards either
the liability to tax (whether actual or contingent
and including the amount of any fine, penalty or
interest) of the Company or the availability of any
relief or right to repayment of tax to the Company.
(iii) The taxation affairs of the Company have not during
the period of seven years prior to the date of this
Agreement been the subject of any
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investigation or enquiry by any tax authority (other
than routine questions), the Company has not received
notice from any tax authority that it intends to
investigate the taxation affairs of the Company and
so far as the Seller is aware there are no
circumstances which are likely to give rise to any
such investigation.
(iv) no taxing authority is now asserting any deficiency
or claim for additional taxes (or interest thereon or
penalties in connection therewith); and
(v) to the extent taxes relate to any period prior to
Closing such taxes have either been paid or full
provision has been made for them in the 1998
Financial Statements.
For the purposes of this Agreement, the term "taxes"
shall mean all income, profits, capital gains,
withholding taxes, stamp duties and other taxes
relating to the Company levied by any national,
cantonal, municipal or foreign taxing authority,
together with any interest and any penalty imposed by
any such taxing authority with respect thereto.
To the knowledge of the Seller, there are no facts or
circumstances existing or having arisen prior to to
the date of this Agreement which have or may lead to
a reassessment of taxes by any taxing authority.
3.1.17 Employment matters
(i) There is no collective bargaining agreement to which
the Company is a party or by which it is bound, or
which is currently negotiated.
(ii) Exhibit G contains an exhaustive list as of 30 March,
1999 of all employment contracts and details thereof
entered into by the Company which are still in
effect. There have been no material changes to such
contracts or any additional contracts with employees
other than as set out in Exhibit G.
(iii) Since 30 September, 1998, no material change has been
made in the rate of remuneration or pension benefits
of any officer or executive of the Company.
(iv) There are no outstanding pay negotiations in
connection with any of the Company's employees and
the Company is not obliged to increase the amount
payable to its directors and employees by more than
5% since 30 September 1998.
(v) There are no amounts owing to present or former
directors or employees other than for one months
arrears of remuneration accrued or due or for
reimbursement of business expenses incurred within
three months of the date hereof.
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(vi) To the knowledge of the Seller, no employee of the
Company nor the Company is in breach of any material
terms of an employee's employment agreement.
(vii) All employee vacation entitlement (other than one
months entitlement accruing to ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇) has
been or will have been taken as of Closing or will be
provided for in the Closing balance sheet.
3.1.18 Swiss Social Security
(i) Any and all returns and reports related to Social
Security Contributions that are required to be filed
by or with respect to the Company prior to the
Closing have been punctually and properly filed;
(ii) the Company has paid in full any and all Social
Security Contributions as and when due;
(iii) no competent Swiss social security authority is now
asserting any deficiency or claim for additional
Social Security Contributions (or interests thereon
or penalties in connection therewith); and
(iv) any and all Social Security Contributions which
(although not due) have accrued on the basis of the
salaries to be paid until the Closing, have been or
will be fully provided for in the Closing Accounts.
For the purpose of this Agreement, the term "Social
Security Contributions" shall mean the mandatory
contributions to the old-age pension insurance scheme
(AVS), invalidity insurance (AI), loss of salary
insurance (allocations pour perte de gain) and
unemployment insurance (assurance-chomage), together
with any interest or any penalty imposed by any
Social Security Authority with respect thereto.
(v) The agreement concerning the employee pension fund of
the Company and the regulations relating thereto are
attached as Exhibit H (the "Pension Fund"). The
Company has complied with all its obligations under
the Pension Fund and specifically has paid or will
pay (or made or will make provision for) all
contributions required prior to Closing as stipulated
by the regulations of the Pension Fund.
Performance of these obligations is reflected in the
Pension Fund Certificate attached hereto as Exhibit
A. Upon Closing, the Seller shall deliver to the
Buyer a confirmation of the Pension Fund that the
statement contained in such Pension Fund Certificate
is still accurate and truthful as of the Closing. To
the knowledge of the Seller, all payments required by
Winterthur - Columna Foundation LPP to be made to
fund the Pension Fund have been made. The Company is
not required to contribute to any pension fund other
than the Pension Fund.
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3.1.19 Insurance
The Company currently has in effect the insurance policies
listed on Exhibit I, copies of which have previously been
provided to the Buyer (the "Policies"). The Company is not in
any respect in material breach of the terms of any Policies.
Except in connection with claims made by ▇▇ ▇▇▇▇, Mr Dubuis,
Mrs Rime and ▇▇▇ ▇▇▇▇▇▇▇ (as disclosed in Exhibit J), there
are no claims currently outstanding under such Policies.
The Seller has maintained adequate insurance cover against
risks normally insured against by companies carrying on a
similar business and has maintained all insurance required by
law.
The Company has not done or omitted to do anything which might
result in an increase in the premium payable under any
insurance policy of the Company.
3.1.20 Compliance with applicable law
The Company holds all licenses and authorisations (referred to
in this warranty as "Authorisations") necessary for the
conduct of its business and all conditions applicable to any
Authorisations have been and are being complied with in all
material aspects. There are no facts or circumstances known to
the Seller indicating that the Company is not conducting its
business in material compliance with all applicable laws and
regulations. The Company is registered with the appropriate
health authorities in accordance with the provisions of all
applicable laws and regulations.
Each Authorisation is in force and subject only to
requirements that have been satisfied (and nothing more
remains to be done under these requirements). There is no
indication that any Authorisation might be revoked, suspended,
cancelled, varied or not renewed. No Authorisation and no
condition to which any Authorisation is subject is personal to
the Seller.
Each action required for the renewal or extension of each
Authorisation has been taken.
No Authorisation will be revoked, suspended, cancelled, varied
or not renewed as a result of the execution or performance of
this Agreement.
The Licence pursuant to which the Company is authorised to
manage a hospital in Nyon is set out in Exhibit K.
3.1.21 Consent
No consent, waiver, approval, authorisation, exemption,
registration, license or declaration is required to be made or
obtained by the Seller in connection with (i)
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the execution, delivery or performance of this Agreement or
(ii) the consummation of any of the transactions provided for
hereby.
3.1.22 Environmental matters
The Company complies and has at all times complied with all
applicable environmental laws and regulations in all material
respects and has obtained and is in compliance in all material
respects with all permits, licenses and other authorisations
required under any such environmental laws and regulations in
the conduct of its business. So far as the Seller is aware,
there are no damages, fines or other liabilities threatened,
due or owing by the Company as a result of past or present
failure to comply with such environmental laws and
regulations.
So far as the Seller is aware, there are no facts or
circumstances existing or having arisen prior to Closing which
constitute a material breach of any applicable environmental
laws and regulations.
3.1.23 Legal proceedings
Except for the litigation described in Exhibit J, there is no
dispute, claim, action, arbitration, proceedings or
investigations by any person or by or before any governmental
authority or regulatory agency, court, or arbitral body, by or
against the Company pending or, to the knowledge of the Seller
threatened against the Company or any of the Company's
employees for whose actions it is responsible which would
result in a liability of the Company in excess of CHF10,000 or
would have a material adverse effect on the liabilities,
operations or financial condition of the Company.
As of the date hereof, no order has been made, petition
presented, resolution passed or meeting convened for the
winding-up of the Company, nor has any distress, execution or
other process been levied against the Company or action taken
to repossess goods in the Company's possession. The Company is
not subject to enforcement proceedings under the LOI
FEDERALE SUR LA POURSUITE POUR DETTES ET LA
FAILLITE.
As of the date hereof, no receiver (including an
administrative receiver or receiver and/or manager), or
administrator has been appointed of the whole or any part of
the assets or undertakings of the Company, and the Seller is
not aware of any circumstances likely to give rise to the
appointment of any such receiver or administrator. No petition
has been presented for an administration order in respect of
the Company.
3.1.24 Equipment
All supplies, machinery and equipment of the Company are in
reasonable operating condition (fair wear and tear excepted
and having regard to its age) and
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conform in all material respects with all applicable laws,
ordinances and regulations.
3.1.25 Minutes of general meetings of shareholders and board of
directors meetings
True, correct and complete copies of the minutes of all
general meetings of shareholders of the Company for the period
commencing January 1984 to the Closing are available at the
seat of the Company.
3.2. Representations and warranties of the Buyer
The Buyer represents and warrants to the Seller as follows:
a) it is entitled to purchase the Sale Shares on the terms of
this Agreement without the consent of any third party;
b) it has full power to enter into and perform this Agreement,
and such documents will, when executed, constitute binding
obligations of the Buyer in accordance with its terms subject
to the operation of law as regards the availability of
equitable remedies and matters of public policy and the
application of the relevant statutory provisions, including
those regarding limitation periods, insolvency and competition
matters.
3.3. Definition of Knowledge
Where any representation or warranty is qualified by reference to the
knowledge of the Seller or the Company, such representation or warranty
shall be deemed to be given to the best of the knowledge, information
and belief of the Seller or the Company as the Seller or the Company
would have obtained after making reasonable inquiries of ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇.
3.4 In the event that prior to the Closing Date
(i) there occurs any act or omission which would constitute a
breach of any of the Warranties (whether or not such breach is
material) or which would make any of the Warranties inaccurate
or misleading and such act or omission becomes known to the
Buyer, or
(ii) it becomes apparent that the Seller is in breach of any of the
Warranties (whether or not such breach is material.
the Buyer shall not be entitled to rescind this Agreement and shall
proceed to Closing but without prejudice to its rights to claim for
breach of the Warranties.
4. Covenants
4.1 Conduct of the business prior to Closing
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4.1.1 The Seller undertakes to the Buyer that between the date of
this Agreement and Closing:-
a) no increase shall be made in the authorised, allotted
or issued share capital of the Company;
b) no option, right of conversion, or right of
pre-emption shall be offered or granted by the
Company over the whole or any part of its share
capital whether issued or unissued; and
c) no dividends or other distributions shall be
declared, made or paid by the Company.
4.1.2 The Seller further undertakes to the Buyer that between the
date of this Agreement and Closing (save with the previous
written consent of the Buyer):-
a) the business of the Company shall be carried on in
the ordinary course;
b) the Company shall take all reasonable steps to
preserve and protect its business and assets; and
c) all existing insurance policies relating to the
Company shall be maintained in full force and effect
and shall not be allowed to lapse, expire or be
forfeited or otherwise terminated.
d) no encumbrance (other than liens arising in the
ordinary course of business) shall be created or
extended over any of the Company's assets;
e) no capital commitment with an individual contract
value in excess of CHF 24,000 shall be entered into
by the Company except in the ordinary course of
business;
f) the Company shall not dispose of or grant or agree to
dispose of or grant any option in respect of any
assets valued in excess of CHF 24,000 except in the
ordinary course of business;
g) the Company shall not enter into, amend or terminate
any individual contract or commitment which involves
payments in excess of CHF 24,000 except in the
ordinary course of business;
h) the Company shall not increase the compensation or
benefits paid or to become payable to any of its
officers or employees or agreed to do the same;
i) the Company shall not appoint or terminate the
employment of or make any material variation to the
terms of employment of any director or senior
employee;
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j) the Company shall not make or propose a material
change to any benefit of any kind which is payable on
a person's retirement, death or disability to or in
respect of any of the directors or employees or to
any pension scheme (other than a change required by
law) or, without limiting the foregoing, carry out
any action in relation to any scheme other than in
the ordinary course of operating such scheme;
k) no amendment shall be made to the Company's articles
of association and no resolutions which are
inconsistent with the Company's articles of
association shall be made or proposed;
l) no change shall be made in the date to which the
Company's audited financial statements are prepared;
m) the Company shall not initiate, compromise or settle
any litigation, arbitration or mediation proceedings
other than debt collection conducted in the ordinary
course of business;
n) the Company shall not make any commitment to do any
of the foregoing
provided that the Seller shall not be in breach of any
provisions contained in this clause 4.12 where the intention
of the Company to carry out any action which would otherwise
place the Seller in breach of this clause 4.12 has already
been disclosed to the Buyer in writing on the date of this
Agreement.
4.1.3 The Seller shall procure the Company to cancel the Company
Stock Certificate No. 3 for one share and reissue a new and
valid Share Certificate for one share prior to Closing.
4.2 Restrictive Covenant
4.2.1 For the purpose of assuring to the Buyer the full benefit of
the Company and in consideration for the Buyer agreeing to buy
the Sale Shares on the terms of this Agreement, each of the
Seller and Magellan, (referred to together in this Clause as
the "Covenantors") undertake to the Buyer that, except as
provided below, they will not, and will procure that no
subsidiary of the Seller or Magellan will, without the prior
written consent of the Buyer, whether directly or indirectly,
at any time within three years following Closing within
Denmark, Finland, Germany, Norway, Poland, Sweden, Switzerland
and the United Kingdom ("Restricted Territory"), whether alone
or in conjunction with, or on behalf of, any other person and
whether as principal, shareholder (other than solely as an
investor with no management function or controlling influence
of the Company in question), agent, consultant, partner or
otherwise, construct, own, lease, operate or manage, any of:
(i) an acute care psychiatric hospital, (ii) an acute care
psychiatric unit as part of an acute care general hospital,
(iii) a psychiatric residential
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treatment center, (iv) a part of a facility operating a
psychiatric residential treatment center, (v) any facility
providing 24-hour psychiatric healthcare (vi) a psychiatric
daycare facility or (vii) any facility providing psychiatric
outpatient services (a "Competitive Business") provided,
however, that Magellan and the Seller, and the Subsidiaries of
Magellan and the Seller, may provide psychiatric outpatient
services required by or in connection with a contract to
provide utilisation management, network management, care
management and employee assistance programme services not
involving the transfer of intellectual property or know how to
any of the Company's competitors in the United Kingdom or
Switzerland provided that if any outpatient services are to be
provided within Switzerland, Magellan or any of the
subsidiaries shall use its reasonable endeavours to offer the
Buyer the opportunity to provide such outpatient services
substantially the same terms that Magellan or its relevant
subsidiary would be providing such services PROVIDED FURTHER,
that if the Buyer declined to provide such services pursuant
to any offer, then Magellan would be permitted to provide such
services (collectively "Managed Contract Services") for and on
behalf of a healthcare plan or entity (including self-assured
plans). Magellan agrees that neither it nor its subsidiaries
shall contribute capital to CBHS for the purpose of operating
or owning a Competitive Business in the Restricted Territory.
4.2.2 Each of the Covenantors undertake to the Buyer that they will
not, and they will procure that no Subsidiary of the
Covenantors will, for a period of three years immediately
following Closing, solicit or endeavour to solicit away from
the Company any person employed by, or who is a consultant to,
the Company at Closing.
4.2.3 The Covenantors acknowledge that each of them has information
in respect of the business and financing of the Company and
its dealings, transactions, affairs, plans and proposals, all
of which information is, or may be, secret or confidential and
important to the Company. In this Clause 4, "Confidential
Information" means information, other than information
referred to in Clause 4.2.4, relating to the Company's
finances, prices, business plans, marketing plans, development
plans, manpower plans, sales targets, sales statistics,
customers lists, customer relationships, suppliers lists,
sales statistics, survey reports and market share data. The
Covenantors further acknowledge that the disclosure of
Confidential Information (whether directly or indirectly) to
actual or potential competitors of the Company would place the
Company at a competitive disadvantage and would do damage
(whether financial or otherwise) to its business. Each of the
Covenantors accordingly agrees to enter into the restrictions
contained in Clause 4.2.5.
4.2.4 For the avoidance of doubt nothing contained in this Agreement
shall prevent Magellan or any of its Subsidiaries from
licensing to third parties for use in jurisdictions other than
Switzerland and the United Kingdom an operating system
referred to as the "Charter System", which is presently
licensed by a Magellan Subsidiary to third parties.
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4.2.5 Each of the Covenantors undertakes that they will not, and
will procure that none of their Affiliates (as used herein
"affiliate" or "Affiliate" shall have the meaning ascribed to
"Affiliate" in the Charter Medical Agreement) will, at any
time during the said three year period after Closing:
4.2.5.1 disclose Confidential Information to any person
except (i) to their professional advisors or officers
or employees and, in each case, whose province it is
to know the same, (ii) to those authorised by the
Company to know; or (iii) insofar as they are
compelled by law or competent authority so to do;
4.2.5.2 use Confidential Information for their own purposes
or for any purpose other than those of the Company;
or
4.2.5.3 through any failure to exercise all due care and
diligence, cause or permit any unauthorised
disclosure of any Confidential Information of the
Company;
provided that these restrictions on the Covenantors will cease
to apply to information which (otherwise than through the
default of the Seller or Magellan) becomes available to the
public generally.
4.2.6 The parties agree that each of the undertakings set out in
this Clause 4 is separate, severable and enforceable.
Accordingly, if any one or more of such undertakings or part
of any undertaking is held to be against the public interest
or unlawful or in any way an unreasonable restraint of trade,
the remaining undertakings or remaining part of the
undertakings will continue in full force and effect and will
bind the Covenantors.
4.2.7 Nothing in this Clause 4 shall prevent Magellan or its
affiliates from acquiring the whole or any part of a body
corporate or business or any direct or indirect interest in
the whole or any part of a body corporate or business, the
acquisition, holding or carrying on of which would otherwise
amount to a breach of this Clause 4, except where more than
10% of the turnover of the business of the body corporate or
business directly or indirectly acquired in the 12 months
prior to such acquisition consists of any of the Competitive
Business referred to in Clause 4.2.1, in which case Magellan
or its affiliates shall use reasonable efforts to dispose of
that part of the business which, but for this provision, would
cause it to be a breach of this Clause 4 as soon as reasonably
practicable.
4.3 Tax
The following provisions shall govern the allocation of responsibility
between the Buyer and the Seller for certain tax matters following the
Closing Date:
(a) The Seller shall prepare or cause to be prepared and file or
cause to be filed all tax returns for the Company for all
periods ending on or prior to the Closing Date,
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including tax returns which are required to be filed after the
Closing Date. Such tax returns shall be prepared in accordance
with the Company's past custom and practice. In preparing the
Company's tax returns, the Seller shall consult with the Buyer
in good faith and shall provide the Buyer with drafts of such
tax returns (together with the relevant back-up information)
for review at least ten days prior to filing. After the
Closing, the Buyer shall not prepare or cause to be prepared
to file or cause to be filed any tax return for the Company
for any period ending on or prior to the Closing Date without
the prior written consent of the Seller.
(b) The Buyer shall prepare or cause to be prepared and file or
cause to be filed any tax returns of the Company for the tax
periods which end after the Closing Date, including tax
returns for the tax periods that begin before the Closing
Date. Such tax returns shall be prepared in accordance with
the Company's past custom and practice. In preparing such tax
returns, the Buyer shall consult with the Seller in good faith
and shall provide the Seller with drafts of such tax returns
(together with the relevant back-up information) for review at
least ten days prior to filing.
(c) The Buyer and the Seller shall co-operate fully, as and to the
extent reasonably requested by the other party, in connection
with the filing of tax returns pursuant to this Clause 4.3 and
any audit, litigation, or other proceeding with respect to
taxes. Such co-operation shall include the retention and (upon
the other party's request) the provision of records and
information which are reasonably relevant to any such audit,
litigation, or other proceeding and making employees available
on a mutually convenient basis to provide additional
information and explanation of any material provided
hereunder. The Buyer and the Seller agree (A) to retain all
books and records with respect to tax matters pertinent to the
Company relating to any taxable period beginning before the
Closing Date until the expiration of the statute of
limitations (and, to the extent notified by the Buyer or the
Seller, any extensions thereof) of the respective taxable
periods, and to abide by all record retention agreements
entered into with any taxing authority, and (B) to give the
other party reasonable written notice prior to transferring,
destroying or discarding any such books and records and, if
the other party so requests, the Buyer or the Seller, as the
case may be, shall allow the other party to take possession of
such books and records to the extent they would otherwise be
destroyed or discarded.
(d) the Buyer and the Seller further agree, upon request to use
commercially reasonable efforts to obtain any certificate or
other document from any governmental authority or any other
such person as may be necessary to mitigate, reduce or
eliminate any tax that could be imposed (including taxes with
respect to the transactions contemplated hereby).
(e) All tax sharing agreements or similar agreements with respect
to or involving the Company shall be terminated as of the
Closing Date and, after the Closing Date, the Company shall
not be bound thereby or have any liability thereunder.
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(f) All taxes relating to any period prior to 31 March 1999shall
be paid by the Seller. With respect to any such taxes which
have not been paid prior to31 March 1999, the Company has made
a full accrual in respect of them in the Closing Accounts. The
Seller undertakes to hold the Buyer harmless and indemnify it
from and against any taxes payable with respect to any period
prior to 30 September, 1998 to the extent to which such taxes
have not been paid or full provision has not been made for
them in the 1998 Financial Statements.
(g) If in respect of or in connection with any breach of any of
the warranties or any facts or matters warranted not being
true any amount payable to the Buyer by the Seller (or by
Magellan under the guarantee set out in Clause 6 is subject to
taxation, such amounts shall be increased to such extent as
may be necessary to procure that the net amount received by
the Buyer is equal to the full amount payable to the Buyer
under this Agreement.
5. Indemnification
5.1 Indemnification of the Buyer
5.1.1 Subject to the limitations set forth in this Agreement, the
Seller hereby agrees to indemnify and hold harmless the Buyer
from and against any losses, damages, liabilities,
obligations, claims, judgements, costs and expenses including,
without limitation, reasonable attorneys' fees properly
incurred by the Buyer by reason, or resulting from a breach of
the Seller's representations and warranties or covenants
hereof.
5.1.2 In addition, the Seller covenants with the Buyer that it will
pay to the Buyer an amount equal to the amount necessary to
indemnify the Buyer and the Company from and against all
actions, proceedings, claims, demands and reasonable costs and
expenses which may be suffered or incurred by the Buyer or the
Company arising out of or in respect of any claims, legal
action, proceedings, suit, litigation, prosecution,
investigation, enquiry or arbitration involving the Company
and relating to claims made by ▇▇ ▇▇▇▇, Mr Dubuis, Mrs Rime
and ▇▇▇ ▇▇▇▇▇▇▇ (Exhibit J).
5.2 Limitations on Liability of Seller
The parties agree that Article 201 of the Swiss Code of Obligations is
not applicable to any claim arising out of or in connection with this
Agreement.
(i) The aggregate liability of the Seller in respect of all claims
("Relevant Claims") for damages, for breach of the
representations and warranties in this Agreement other than
those set out in Clause 4.3(f) and 5.1.2 together with all
Relevant Claims (as defined in the Charter Medical Agreement)
shall not exceed the aggregate amount of the consideration
payable in respect of the sale of the Shares pursuant to this
Agreement, the sale of the Shares (as defined in the Charter
-19-
Medical Agreement) pursuant to the Charter Medical Agreement
and the Sale of the Charter St Louis Property (as defined in
the Charter Medical Agreement) as set forth in Clause 3.1 of
the Charter Medical Agreement.
(ii) The Seller will be under no liability to make any payment in
respect of any liability pursuant to a Relevant Claim unless
and to the extent the amount of its liability in respect of
any such Relevant Claim is, when aggregated with the Seller's
liability in respect of any other Relevant Claim, Relevant
Claims (as defined in the Charter Medical Agreement) and
claims in respect of the breach of any warranty in the Charter
Medical Agreement assigned to the purchaser of the Charter St
Louis Property or which would have been made but for the
provisions of this Clause 5.2(ii), in excess of US$500,000.
(iii) The Seller will be under no liability in respect of any
Relevant Claim, where the amounts for which the Seller would
be liable under such Relevant Claim is less than US$45,000 and
the amount of such Relevant Claim shall be disregarded for the
purposes of aggregation of Relevant Claims pursuant to Clause
5.2(ii) provided that, for the purposes of this Clause
5.2(iii), any Relevant Claims arising out of the same event,
act, default or omission or any sequence of related events,
acts, defaults or omissions shall be aggregated together.
(iv) The limitations contained in this Clause 5.2 shall not apply
in case of fraud or gross negligence by the Seller.
(v) The Buyer agrees with the Seller that it shall not be entitled
to recover damages or obtain payment, reimbursement,
restitution or indemnity more than once in respect of any one
shortfall, damage, deficiency, breach or other set of
circumstances which give rise to one or more Relevant Claim.
(vi) The Seller shall not be liable in respect of a Relevant Claim
unless written notice containing, so far as reasonably
practicable, details of the Relevant Claim is served on the
Seller:
(a) in respect of any Relevant Claim relating to a breach
of the warranties set out in Clause 3 other than
those referred to in Sub-clauses (ii) and (iii) of
this Clause on or before the date which is 2 years
after Closing; or
(b) in respect of any Relevant Claim relating to a breach
of the warranties set out in Clause 3.1.22
(Environmental matters) on or before the tenth
anniversary of the Closing Date; or
(c) in respect of a claim under Clause 4.3(f), on or
before the date being five years and one month from
30 September 1998;
(vii) The Seller shall not be liable in respect of a Relevant Claim:
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(a) which would not have arisen but for an act, omission
or transaction carried out after the date of the
Agreement by the Buyer or the Company, their
respective directors, employees or agents or
successors in title;
(b) to the extent that it relates to any loss which is
recovered under any policy of insurance effected by
or for the Company, the Buyer agrees that it will,
and will cause the Company to, use its best efforts
to successfully claim under such policy; provided
always that the Buyer shall not be prejudiced or
prohibited from bringing any claim against the Seller
under the terms of Clause 3 if recovery has not been
successfully made or is still being pursued within 30
days prior to the expiration of the relevant periods
provided for within Clause 5.2. In the event that the
claim is successfully made against the Seller, then
the Buyer shall or shall cause the Company to
continue to seek recovery as aforesaid and in the
event of any subsequent recovery under any such
policy of insurance, the Buyer shall reimburse the
Seller with the amounts recovered under such policy
(after deduction of all proper costs and expenses
(not otherwise reimbursed) incurred by the Buyer or
the Company in relation to such recovery), up to the
amount previously received from the Seller,;
(c) to the extent that allowance, provision or reserve
has been made for such fact, matter, event or
circumstance in the 1998 Financial Statements or the
Closing Accounts or to the extent that payment or
discharge of the relevant matter has been taken into
account therein or to the extent that such matter was
specifically referred to in the notes to the 1998
Financial Statements or the Closing Accounts; or
(d) to the extent that such Relevant Claim is
attributable to, or such Relevant Claim is increased
as a result of, any legislation not in force at the
date hereof or to any change of law, regulation,
directive, requirement or administrative practice or
any change in rates of tax, which in each case is not
in force at the date hereof.
(viii) If the Seller pays to the Buyer or the Company an amount in
respect of any Relevant Claim or a claim under Clause 4.3(f)
or 5.1.2 and the Buyer or the Company subsequently recovers a
sum or credit which is referable to that Relevant Claim or
claims under Clause 4.3(f) or 5.1.2 the Buyer shall (or, as
the case may be, shall procure that the Company shall)
promptly repay to the Seller an amount equal to the lesser of
(i) the amount or value of such benefit recovered less any
reasonable costs, fees and expenses incurred by the Company or
the Buyer in connection with the recovery (and not otherwise
reimbursed) or (ii) the total amount paid by the Seller in
respect of that Relevant Claim.
(ix) Any payment made by the Seller in respect of any Relevant
Claim or a claim under Clause 4.3(f) or 5.1.2 shall be deemed
a reduction in the consideration paid by Buyer hereunder.
-21-
(x) Upon any Relevant Claim being made, or notification from the
Buyer to the Seller pursuant to this article of any third
party claim, potential claim, matter or event which might lead
to a Relevant Claim being made, the Buyer shall, and shall
co-operate to cause the Company to:
(a) make available to accountants and other professional
advisers appointed by the Seller such access to the
personnel of the Company and to any relevant records
and information as the Seller reasonably requests in
connection with such Relevant Claim or third party
claim, potential claim, matter or event; and
(b) use best efforts to cause the auditors (both past and
then current) of the Company to make available their
audit working papers in respect of audits of the
Company's accounts for any relevant accounting period
in connection with such Relevant Claim, matter or
event. Such access shall be required only at
reasonable times and on reasonable notice.
(xi) If the Buyer becomes aware of any third party claim, potential
claim, matter or event hereafter (a "third party claim") which
might lead to a Relevant Claim or a claim under 4.3(f) or
5.1.2 being made, the Buyer:
(a) shall cause notice of such third party claim to be
given promptly to the Seller;
(b) shall not make (or, as appropriate, shall co-operate
to ensure that the Company shall not make) any
admission of liability, agreement or compromise with
any person, body or authority in relation to any such
third party claim UNTIL THE EXPIRATION OF TEN
BUSINESS DAYS ("NOTICE PERIOD") FROM THE DATE OF
SERVICE ON THE SELLER OF THE NOTICE REFERRED TO IN
CLAUSE 5.2(XI)(A). The Buyer shall not take any
action specified in the prior sentence if so
instructed by the Seller in writing during the Notice
Period (subject to it being indemnified to its
reasonable satisfaction against all reasonable out of
pocket expenses incurred by it or the Company;
(c) (subject to it being fully indemnified to its
reasonable satisfaction by the Seller against all
reasonable out of pocket expenses incurred by it or
the Company) shall take (or, as appropriate, shall
co-operate to cause the Company to take) such action
as the Seller may reasonably request in writing to
avoid, dispute, resist, appeal, compromise or defend
such third party claim or any adjudication in respect
of that third party claim; and
(d) (subject to it being indemnified to its reasonable
satisfaction against all reasonable out of pocket
expenses incurred by it or the Company) if so
required by the Seller in writing, shall ensure (or,
as appropriate, shall co-operate to cause the Company
to ensure), at the request in writing of
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the Seller, that the Seller is placed in a position
to take on or take over the conduct of all
proceedings and/or negotiations of whatsoever nature
arising in connection with the third party claim in
question and provide (or, as appropriate, co-operate
to cause the Company to provide) such information and
assistance as the Seller may reasonably require in
connection with the preparation for and conduct of
such proceedings and/or negotiations.
(xii) A breach of any representation or warranty contained in Clause
3 which is capable of remedy shall not entitle the Buyer to
compensation except to the extent that:
(a) the Seller is given written notice of such breach;
and
(b) such breach is not remedied within 30 days after the
date on which such notice is served on the Seller.
(xiii) The Seller shall not be liable to satisfy any Relevant Claim
which shall be made after the Company shall cease to be a
subsidiary company of the Buyer or any holding company or
subsidiary of the Buyer or any subsidiary of a holding company
of the Buyer ("Buyer Affiliate").
(xiv) Where the Company or the Buyer is entitled to recover from
some other person any sum in respect of any liability, loss or
damage which is the subject of a Relevant Claim against the
Seller or for which such a Relevant Claim could be made (and
whether before or after the Seller has made payment
hereunder), the Buyer shall (or, shall ensure that the Company
shall):
(a) promptly notify the Seller and provide such
information as the Seller may reasonably require
relating to such liability or dispute and the steps
taken or to be taken by the Buyer or the Company in
connection with it;
(b) if so required by the Seller (subject to the Buyer
being fully indemnified to its reasonable
satisfaction by the Seller against all reasonable out
of pocket costs and expenses incurred by the Buyer or
the Company) and before seeking to recover any amount
from the Seller under this Agreement, first take all
steps (whether by way of a claim against its insurers
or otherwise, including but without limitation
proceedings) as the Seller may reasonably require to
enforce such recovery; and
(c) keep the Seller informed of the progress of any
action taken and thereafter any claim against the
Seller shall be limited (in addition to the
limitations on the liability of the Seller referred
to in this Agreement) to the amount by which the loss
or damage suffered by the Buyer as a result of such
breach shall exceed the amount so recovered.
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(xv) Without limiting the rights of the Buyer or its ability to
claim damages on any other basis under this Agreement, if any
of the warranties set out in Clause 3.1.22 is untrue by reason
of the Company having committed a breach or non-observance of
any environmental laws, the Seller shall pay to the Buyer an
amount equal to all liabilities incurred by the Company as a
consequence of the breach of such environmental laws
including, without limitation, the cost of all reasonable and
appropriate remedial works required to be carried out at the
relevant property to procure compliance with such
environmental laws; provided any damage claim provided in this
Clause (xv) shall be deemed a Relevant Claim for all purposes
including for purposes of Clause 5.2.
5.4 Currency Conversion
For the purposes of this Agreement, where any sum, or in particular but
without limitation, any liability under the representations and
warranties, is expressed to be in any currency other than US dollars,
such sum shall be converted into US dollars at the Market Rate. "Market
Rate" means the mid market rate for the relevant currency at 4.00 pm on
the weekday (other than a Saturday) when banks are open for a full
range of banking transactions in Switzerland ("Business Day") preceding
the date upon which either such sum is due and payable, or where such
sum relates to a claim under this Agreement, the Business Day preceding
the date upon which notice of such claim is served by the Buyer upon
the Seller in accordance with the provisions of Clause 5.2., as
evidenced by a list of currencies provided by the Union Bank of
Switzerland.
5.5 Indemnification of the Seller
The Buyer hereby agrees to indemnify and hold harmless the Seller from
and against any losses, damages, liabilities, obligations, claims,
judgments, costs and expenses, including without limitation, reasonable
attorneys' fees incurred by Seller by reason or resulting from a breach
of the Buyer's representations and warranties or covenants herein.
6. Guarantee and Indemnity by Magellan
6.1 Magellan hereby unconditionally and irrevocably guarantees to the Buyer
the due and punctual performance and observance by the Seller of all
its obligations under or pursuant to this Agreement arising after
Closing (the "Magellan Guaranteed Obligations") and agrees to indemnify
the Buyer against all loss, damage, costs and expenses which the Buyer
may suffer through or arising from any breach by the Seller of its
obligations under or pursuant to this Agreement. The liability of
Magellan under this Agreement shall not be released or diminished by
any variation of the terms of this Agreement (agreed by Magellan), any
forbearance, neglect or delay in seeking performance of the obligations
imposed under this Agreement or any granting of time for such
performance.
6.2 If and whenever the Seller defaults for any reason whatsoever in the
performance of any of the Magellan Guaranteed Obligations, Magellan
shall upon demand unconditionally perform (or procure performance of)
and satisfy (or procure the satisfaction of) the
-24-
obligation or liability in relation to which such default has been made
in the manner prescribed by this Agreement and so that the same
benefits shall be conferred on the Buyer as it would have received if
such obligation or liability had been duly performed and satisfied by
the Seller.
6.3 The guarantee set out in this Clause 6 is to be a continuing guarantee
and accordingly is to remain in force until all or any of the
obligations of the Seller arising after Closing, shall have been
performed or satisfied. This guarantee is in addition to and without
prejudice to and not in substitution for any rights or security which
the Buyer may now or hereafter have or hold for the performance and
observance of the obligations, commitments, undertakings and warranties
of the Seller under or in connection with this Agreement or any other
agreement pursuant to this Agreement.
6.4 As a separate and independent stipulation Magellan agrees that any of
the Magellan Guaranteed Obligations (including, without limitation, any
moneys expressed to be payable under this Agreement which may not be
enforceable against or recoverable from the Seller by reason of any
legal limitation, disability or incapacity on the Seller or any other
fact or circumstance (other than any limitation imposed by this
Agreement) shall nevertheless be enforceable against and recoverable
from Magellan as though the same had been incurred by Magellan and
Magellan was the sole or principal obligor in respect thereof.
7. Guarantee and Indemnity by Bure
7.1 Bure hereby unconditionally and irrevocably guarantees to the Seller
the due and punctual performance and observance by the Buyer of all its
obligations under or pursuant to clauses 1.1 (sale of shares), 2.3(b)
(payment of Consideration) and 3.2 (Buyer's warranties) (such
provisions being referred to in this clause as the "Guaranteed
Obligations") and agrees to indemnify the Seller against all loss,
damage, costs and expenses which the Seller may suffer through or
arising from any breach by the Buyer of its obligations under or
pursuant to the Guaranteed Obligations. The liability of Bure under
this Agreement shall not be released or diminished by any variation of
the terms of this Agreement (if agreed to by Bure), any forbearance,
neglect or delay in seeking performance of the obligations imposed
under this Agreement or any granting of time for such performance.
7.2 If and whenever the Buyer defaults for any reason whatsoever in the
performance of any of the Guaranteed Obligations, Bure shall upon
demand unconditionally perform (or procure performance of) and satisfy
(or procure the satisfaction of) the obligation or liability in regard
to which such default has been made in the manner prescribed by this
Agreement and so that the same benefits shall be conferred on the
Seller as it would have received if such obligation or liability had
been duly performed and satisfied by the Buyer.
7.3 The guarantee set out in this Clause 7 is to be a continuing guarantee
and accordingly is to remain in force until all of the Guaranteed
Obligations shall have been performed or
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satisfied. This guarantee is in addition to and without prejudice to
and not in substitution for any rights or security which the Seller may
now or hereafter have or hold for the performance and observance of the
obligations, commitments, undertakings and warranties of the Buyer
under or in connection with this Agreement or any other agreement
entered into pursuant to this Agreement.
7.4 As a separate and independent stipulation, Bure agrees that any of the
Guaranteed Obligations (including, without limitation, any moneys
expressed to be payable under this Agreement which may not be
enforceable against or recoverable from the Buyer by reason of any
legal limitation, disability or incapacity of the Buyer or any other
fact or circumstance (other than any limitation imposed by this
Agreement) shall nevertheless be enforceable against and recoverable
from Bure as though the same had been incurred by Bure and Bure were
the sole or principal obligor in respect thereof.
8. Assignment
No party may assign all or any of its rights, obligations or causes of
action arising under or pursuant to this Agreement without the prior
written consent of the other party; provided that nothing herein shall
prevent the Buyer from (i) charging or assigning all of such rights,
obligations or causes of action to an affiliate of the Buyer provided
and for so long as it remains an affiliate and provided further that
the Buyer shall cause its affiliates to comply fully and timeously with
all the Buyer's duties and obligations under this Agreement, (ii)
charging or assigning such rights obligations or causes of action
pursuant to the tax covenant or warranties. In the event that any
affiliate of the Buyer ceases to be such and has had assigned to it all
rights under this Agreement, such affiliate shall reassign such rights
other than rights pursuant to the tax covenant or warranties (which for
the avoidance of doubt may be so reassigned) to the Buyer or another
affiliate of the Buyer. This Agreement will be binding on and will
continue for the benefit of the parties and their respective successors
and assigns. Accordingly references in this Agreement (or any document
entered into pursuant to this Agreement) to the relevant party shall,
following any such assignment and unless the context otherwise
requires, mean the assignee or assignees for the time being.
The Seller and Magellan agree further that, upon the request of the
Buyer or its successors in title or assigns, this Agreement may be
novated (in respect of the tax covenant or warranties) in favour of the
beneficial owner for the time being of the whole or part of the Shares
and the Seller and Magellan shall execute such a novation agreement in
such form as the Buyer may reasonably require. If the Seller or
Magellan fails to execute any such novation agreement within 20
business days of a request by the Buyer to do so, the Buyer may execute
it on behalf of the Seller or Magellan (as the case may be) or both of
them and for such purpose each of the Seller and Magellan hereby
irrevocably appoints the Buyer as their attorney for the purpose of
executing any such Agreement. The Seller and Magellan agree to ratify
and confirm any action taken by the Buyer by virtue of this power of
attorney.
9. Miscellaneous
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9.1. Announcement; confidentiality
(a) Information of the employees
The transactions contemplated by this Agreement shall be
announced by the Company to its employees prior to or
simultaneously with any press release or public announcement
in a form to be agreed upon by the parties.
(b) Press release
No press release or public announcement of the transactions
contemplated by this Agreement shall be made by or on behalf
of one party without the prior approval of the other party.
(c) Confidentiality
The parties agree to keep the terms of this Agreement and any
information acquired during the course of the negotiations
having led to this Agreement strictly confidential until
Closing.
9.2. Costs
Each of the parties shall pay its own legal and accountancy costs,
charges and expenses connected with the negotiation, preparation and
implementation of this Agreement.
9.3. Amendment; waiver
Any amendment to this Agreement shall be made in writing. No waiver by
any party of any of the provision hereof shall be effective unless
explicitly set forth in writing and executed by the party so waiving.
Except as provided in the preceding sentence, no action taken pursuant
to this Agreement shall be deemed to constitute a waiver. The waiver,
by any party hereto, of a breach of any provision of this Agreement
shall not operate or be construed as a waiver of any other or
subsequent breach or a waiver of any other provision of this Agreement.
9.4. General
9.4.1 Failure or delay by any party in exercising any right or
remedy under this Agreement will not in any circumstances
operate as a waiver of it, nor will any single or partial
exercise of any right or remedy in any circumstances preclude
any other or further exercise of it or the exercise of any
such right or remedy.
9.4.2 The Buyer may release or compromise the liability of or grant
time or any other indulgence to, any person who is a party to
this Agreement without in any way prejudicing or affecting the
liability of any person in respect of any other liability or
obligation hereunder.
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9.4.3 Except insofar as the same have been fully performed at
Closing, each of the agreements, covenants, obligations,
warranties, indemnities and undertakings contained in the
Agreement will continue in full force and effect
notwithstanding Closing.
9.4.4 No variation of the Agreement or any other documents to be
entered into pursuant to the Agreement shall be effective
unless it is in writing and signed by or on behalf of each of
the parties.
9.5. Post Closing Undertakings
9.5.1 Following Closing, the Buyer undertakes to the Seller and
Magellan that:
(a) it will use all reasonable endeavours to obtain the
release of the Seller, Magellan, any holding company
or subsidiary of the Seller or any subsidiary of a
holding company of the Seller and any Magellan
Affiliate from any guarantees, indemnities, cross
indemnities and letters of comfort given to any third
party by Magellan and any Magellan Affiliate in
respect of the liabilities of the Company which are
in force at the date of this Agreement ("Intra-Group
Guarantees") to which any of them are party and,
pending such release, to indemnify Magellan and any
Magellan Affiliates against all amounts paid by any
of them to any third party pursuant to any
Intra-Group Guarantees in respect of any liability of
the Company (and all costs incurred in connection
with such liability) whether arising before or after
Closing; and
(b) save with the prior written consent of Magellan,
neither the Buyer nor the Company will use the name
"Magellan" or any similar name or names likely to be
confused with them.
9.6 Further Assurance
At any time, each of the parties hereto shall (at its own cost and
expense) do and execute or procure to be done and executed all
necessary acts, documents and things in a form reasonably satisfactory
to the other party reasonably requested of them by the other party to
give effect to this Agreement and the transactions contemplated in or
by it securing to such other party the full benefit of the rights,
powers and remedies conferred upon such other party in this Agreement.
9.7 Invalidity
Each of the provisions of this Agreement is severable. If any provision
in this Agreement is held to be illegal, invalid or unenforceable, in
whole or in part under any enactment or rule of law, such provision or
part shall to that extent be deemed not to form part of this Agreement,
but the legality and enforceability of the remainder of this Agreement
shall not be affected.
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9.8 Entire Agreement
9.8.1 This Agreement sets out the entire agreement and understanding
between the parties in respect of the sale and purchase of the
Sale Shares. It is agreed that:-
(a) no party has entered into this Agreement in reliance
upon any representation, warranty or undertaking of
any other party which is not expressly set out or
referred to in this Agreement;
(b) no party shall have any remedy in respect of
misrepresentation or untrue statement made by any
other party unless and to the extent that a claim
lies for breach of warranty under this Agreement; and
(c) this Clause shall not exclude any liability for
fraudulent misrepresentation.
9.9. Counterparts
The Agreement may be entered into in any number of counterparts, all of
which taken together shall constitute one and the same instrument. Any
party may enter into this Agreement by signing any such counterpart.
9.10 Interest
If any party defaults in the payment when due of any sum payable under
this Agreement (however determined), the liability of such party shall
be increased to include interest on such sum from the date when such
payment is due until the date of actual payment (as well after as
before judgment) at a rate per annum of 2 percent above the base rate
from time to time of Royal Bank of Scotland Plc.
Such interest shall accrue from day to day.
9.11 Notices
9.11.1 Any notice, claim or demand to be given in connection with or
under this Agreement shall be in writing and signed by or on
behalf of the party giving it.
9.11.2 A notice may be served by letter; each letter containing such
notice shall be left or sent by pre-paid recorded delivery or
registered post to:
(a) in the case of the Seller, the Seller's solicitors
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Pidoux & Associes, ▇▇▇▇▇▇▇▇▇ ▇, ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ( the "Seller's Solicitors"),
marked for the attention of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and
copied to Magellan, marked for the attention of
Magellan's General Counsel, sent to the addresses
indicated for the Seller and the Seller's Solicitors
above; and
(b) in the case of the Buyer, at the address stated at
the beginning of this Agreement or at such address as
may from time to time be notified in writing in
accordance with this Clause.
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9.11.3 A notice shall be deemed to have been served in accordance
with the provisions contained in Clause 9.11.2.
9.11.4 Any demand, notice or other communication and any service of
process relating to any proceeding, suit or action arising out
of or in connection with this Agreement, will be validly given
or made to the Seller if given or made to ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Pidoux & Associes, Attention ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Montbenon 2.
1003 Lausanne, Switzerland and copied to Magellan as referred
to in Clause 9.11.2. Notice shall be deemed to have been
served:
(a) if sent by post (unless the contrary is proved)
forty-eight hours from the time of posting;
(b) if delivered by hand at the address referred to in
Clause 9.11.2, at the time of delivery; and
(c) in proving such service it shall be sufficient to
prove that the notice was properly addressed and was
posted in accordance with Clause 9.11.2 or show
delivery was made by hand.
If a notice would have been delivered outside of normal
business hours (being 9:30 a.m to 5:30 p.m. on a Business Day
under the preceding provisions of this Clause, it shall be
deemed to have been delivered or given at 9:30 a.m. on the
next Business Day.
9.12 Remedy, Applicable Law and Jurisdiction
9.12.1 The Seller and Buyer acknowledge and agree in relation to clause 2.2
time is of the essence. The Seller and Buyer also agree that in the
event of either party failing to fulfil its obligations to effect all
necessary steps to close the transaction on the date and in the manner
provided in this Agreement the appropriate remedy in addition to all
other remedies available (at law or equity) will be for the other party
to apply for a decree of specific performance of this Agreement and in
view of the integral relationship between this Agreement and the
Charter Medical Agreement such application will be made in the
exclusive jurisdiction of the English Courts and such applications will
be governed by English law and this Agreement will be construed for all
purposes on an application for specific performance as governed by and
interpreted in accordance with English law
9.12.2 Restricted Remedy
Subject to clause 9.12.1 above - The sole and exclusive remedy of any
party for any misrepresentation or any breach of a warranty or covenant
set forth in or made pursuant to this Agreement shall be a claim for
indemnification under and pursuant to this article 5, provided however
that the Buyer may in addition to any remedy hereunder rescind this
Agreement in case of a breach of any of the warranties set forth in
CLAUSE 3.1.11.
9.12.3 Application Law - Arbitration
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Subject to clause 9.12.1 above - This Agreement shall be governed by
and interpreted in accordance with Swiss law. Subject to Clause 9.12.1 above,
any dispute concerning this Agreement, will be finally settled by arbitration,
under the Rules of Arbitration of the International Chamber of Commerce by one
or more arbitrators appointed in accordance with the said Rules. The seat of
arbitration will be in Geneva, Switzerland, and the language of the arbitration
proceedings, including arguments and briefs, shall be English.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement in ...
originals as of the date first above written.
CHARTER MEDICAL
INTERNATIONAL, S.A., INC.
By :
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MAGELLAN HEALTH SERVICES, INC.,
By:
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CMEL HOLDING AB
By:
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INVESTMENT AB BURE
By:
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