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EXHIBIT 2.1
EXECUTION COPY
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STOCK PURCHASE AGREEMENT
DATED AS OF JUNE 18, 2001
BY AND AMONG
ADVANCEPCS
AS BUYER
AND
THE SEVERAL SELLING SHAREHOLDERS
NAMED ON SCHEDULE I HERETO
AS SELLERS
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TABLE OF CONTENTS
Section Page No.
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ARTICLE I DEFINITIONS...................................................................................1
ARTICLE II SALE AND TRANSFER OF PURCHASE SHARES; PURCHASE PRICE; CLOSING................................8
2.1 Purchase Shares................................................................................8
2.2 Purchase Price; Payment Thereof................................................................8
2.3 Allocation of Purchase Price...................................................................9
2.4 Closing ...................................................................................9
2.5 Closing Obligations............................................................................9
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLERS..................................................10
3.1 Organization and Good Standing................................................................10
3.2 Authority; No Conflict........................................................................10
3.3 Capitalization................................................................................11
3.4 Financial Statements..........................................................................12
3.5 Books and Records.............................................................................13
3.6 Title to Properties; Encumbrances.............................................................13
3.7 Condition and Sufficiency of Assets...........................................................13
3.8 Accounts Receivable...........................................................................14
3.9 Inventory ..................................................................................14
3.10 No Undisclosed Liabilities...................................................................14
3.11 Taxes ..................................................................................14
3.12 No Material Adverse Change...................................................................15
3.13 Employee Benefits............................................................................15
3.14 Compliance with Legal Requirements; Governmental Authorizations..............................16
3.15 Legal Proceedings; Orders....................................................................17
3.16 Absence of Certain Changes and Events........................................................18
3.17 Applicable Contracts; No Defaults............................................................18
3.18 Insurance....................................................................................19
3.19 Environmental Matters........................................................................21
3.20 Employees....................................................................................22
3.21 Labor Relations; Compliance..................................................................22
3.22 Intellectual Property........................................................................23
3.23 Certain Payments.............................................................................23
3.24 Disclosure...................................................................................23
3.25 Brokers or Finders...........................................................................23
3.26 Fraud and Abuse; Self-Referral; False Claims.................................................24
3.27 Debt and Transaction Expenses................................................................24
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER.....................................................25
4.1 Organization and Good Standing................................................................25
4.2 AdvancePCS Stock..............................................................................25
4.3 Authority; No Conflict........................................................................25
4.4 Investment Intent.............................................................................26
4.5 SEC Documents; Material Adverse Effect........................................................26
4.6 Compliance with Legal Requirements; Governmental Authorities..................................26
4.7 Certain Proceedings...........................................................................26
4.8 Brokers or Finders............................................................................26
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Section Page No.
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ARTICLE V COVENANTS OF SELLERS PRIOR TO CLOSING DATE...................................................27
5.1 Access and Investigations.....................................................................27
5.2 Operation of the Businesses of the Acquired Companies.........................................27
5.3 Negative Covenants............................................................................27
5.4 Required Approvals............................................................................28
5.5 Notification..................................................................................28
5.6 No Negotiation................................................................................28
5.7 Reasonable Efforts............................................................................28
ARTICLE VI COVENANTS OF BUYER PRIOR TO CLOSING DATE....................................................29
6.1 Approvals of Governmental Bodies..............................................................29
6.2 Reasonable Efforts............................................................................29
ARTICLE VII CONDITIONS PRECEDENT TO BUYER'S OBLIGATION
TO CLOSE..........................................................................29
7.1 Accuracy of Representations...................................................................29
7.2 Sellers' Performance..........................................................................29
7.3 Consents ..................................................................................29
7.4 Additional Documents..........................................................................29
7.5 No Claim Regarding Stock Ownership or Sale Proceeds...........................................30
7.6 No Prohibition................................................................................30
7.7 Authority ..................................................................................30
ARTICLE VIII CONDITIONS PRECEDENT TO SELLERS' OBLIGATION TO CLOSE......................................30
8.1 Accuracy of Representations...................................................................30
8.2 Buyer's Performance...........................................................................30
8.3 Consents ..................................................................................30
8.4 Additional Documents..........................................................................30
8.5 No Prohibition................................................................................31
8.6 Personal Guaranties...........................................................................31
ARTICLE IX TERMINATION.................................................................................31
9.1 Termination Events............................................................................31
9.2 Effect of Termination.........................................................................31
ARTICLE X INDEMNIFICATION; REMEDIES....................................................................32
10.1 Survival ..................................................................................32
10.2 Right to Indemnification Not Affected by Knowledge...........................................32
10.3 Indemnification and Payment of Damages by Sellers............................................32
10.4 Limitations on Indemnification and Payment of Damages by Sellers.............................33
10.5 Indemnification and Payment of Damages by Buyer..............................................33
10.6 Limitations on Indemnification and Payment of Damages by Buyer...............................33
10.7 Procedures for Indemnification -- Third Party Claims.........................................33
10.8 Procedure for Indemnification -- Other Claims................................................34
10.9 Net Damages..................................................................................35
10.10 Lost Profits and Special Damages............................................................35
10.11 Satisfaction of Indemnification Liability...................................................35
10.12 Non-exclusive Remedies......................................................................35
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Section Page No.
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ARTICLE XI POST-CLOSING COVENANTS......................................................................35
11.1 Covenants with Respect to Taxes..............................................................35
11.2 Registration of Sellers' AdvancePCS Stock....................................................36
ARTICLE XII GENERAL PROVISIONS.........................................................................39
12.1 Expenses.....................................................................................39
12.2 Public Announcements.........................................................................39
12.3 Confidentiality..............................................................................39
12.4 Notices......................................................................................39
12.5 Jurisdiction; Service of Process.............................................................40
12.6 Further Assurances...........................................................................40
12.7 Waiver.......................................................................................40
12.8 Entire Agreement and Modification............................................................41
12.9 Schedules....................................................................................41
12.10 Assignments, Successors, and No Third-Party Rights..........................................41
12.11 References to Knowledge.....................................................................41
12.12 Severability................................................................................41
12.13 Article and Section Headings, Construction..................................................41
12.14 Time of Essence.............................................................................41
12.15 Governing Law...............................................................................42
12.16 Counterparts................................................................................42
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STOCK PURCHASE AGREEMENT
This
STOCK PURCHASE AGREEMENT (this "AGREEMENT") is made as of
June 18, 2001, by and between
ADVANCEPCS, a
Delaware corporation ("BUYER"), and
the persons listed on Schedule I (herein referred to individually as a "SELLER"
and collectively, as the "SELLERS").
RECITAL
WHEREAS, the Sellers own, in the aggregate, two hundred fifty
five (255) shares (the "SHARES" ) of the no par value Common Stock (the "COMPANY
STOCK") of ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇, Inc., an Ohio corporation (the "COMPANY"), being all
the issued outstanding shares of capital stock of the Company;
WHEREAS, the Company owns all the issued and outstanding
shares of capital stock of TheraCom, Inc., an Ohio corporation ("THERACOM"),
which is licensed and/or registered as a mail-order pharmacy and wholesale
distributor of pharmaceutical products and which is engaged in the business of
selling and distributing pharmaceutical products;
WHEREAS, each Seller desires to sell to Buyer, and Buyer
desires to purchase from each Seller, the number of Shares set forth opposite
each such Seller as specified on Schedule I hereto under the heading "Numbers of
Purchase Shares" (collectively, the "PURCHASE SHARES"), constituting one hundred
percent (100%) of the issued and outstanding shares of the Company's capital
stock, all on the terms and subject to the conditions hereinafter set forth; and
WHEREAS, Sellers and Buyer intend that Buyer's acquisition of
the Purchase Shares from Sellers as contemplated under this Agreement be treated
as a tax-free reorganization under Section 368 of the Internal Revenue Code of
1986, as amended;
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which is acknowledged, the parties intending to be
legally bound, hereby agree as follows:
ARTICLE I
DEFINITIONS
For purposes of this Agreement, the following terms have the
meanings specified or referred to in this Article I:
"ACCOUNTS RECEIVABLE"--as defined in Section 3.8.
"ACQUIRED COMPANIES"--the Company and TheraCom,
collectively.
"ACQUIRED COMPANIES' TRANSACTION EXPENSES"--expenses
incurred by the Acquired Companies, and specifically
identified by Sellers to Buyer in writing at the Closing (the
"TRANSACTION EXPENSES STATEMENT"), in connection with the
preparation, execution, and performance of this Agreement and
the transactions contemplated by the Transaction Documents,
including all fees and expenses of agents, representatives,
counsel, and accountants.
"ACQUIRED COMPANY"--the Company or TheraCom,
individually.
"ADDITIONAL PAYMENT"--as defined in Section 2.2(b).
"ADDITIONAL PAYMENT ESCROW AGREEMENT"--as defined
in Section 2.2(b).
"ADDITIONAL SELLER"--as defined in Section 3.3(b).
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"
ADVANCEPCS STOCK"--as defined in Section 2.2(a).
"APPLICABLE CONTRACT"--any Contract (a) under which
any Acquired Company has or may acquire any rights, (b) under
which any Acquired Company has or may become subject to any
obligation or liability, or (c) by which any Acquired Company
or any of its assets owned or used by it is or may become
bound.
"BALANCE SHEET"--as defined in Section 3.4.
"BLUE SKY QUALIFICATIONS"--as defined in Section
11.2(a).
"BREACH"--a "Breach" of a representation, warranty,
covenant, obligation, or other provision of this Agreement or
any instrument delivered pursuant to this Agreement will be
deemed to have occurred if there is or has been any inaccuracy
in or breach of, or any failure to perform or comply with,
such representation, warranty, covenant, obligation, or other
provision.
"BUSINESS DAY"--any day other than a Saturday,
Sunday, public holiday under the laws of the State of
Maryland.
"BUYER"--as defined in the first paragraph of this
Agreement.
"BUYER INDEMNIFIED PERSONS"--as defined in Section
10.3.
"BUYER'S ADVISORS"--as defined in Section 5.1.
"CLOSING"--as defined in Section 2.4.
"CLOSING DATE"--the date and time as of which the
Closing actually takes place.
"CLOSING DATE PAYMENT"--as defined in Section 2.2(a).
"CLOSING DATE STOCK PRICE" means the average closing
price of a share of
AdvancePCS Stock traded on the NASDAQ
exchange and reported in the Wall Street Journal for the
twenty (20) consecutive trading day period the last day of
which shall be the day prior to the Closing Date.
"COMPANY"--as defined in the Recitals of this
Agreement.
"COMPANY CLASS B COMMON STOCK"--as defined as in
Section 3.3.
"COMPANY COMMON STOCK"--as defined in the Recitals
of this Agreement.
"COMPANY STOCK"--the Company Common Stock and the
Company Class B Common Stock, collectively.
"CONSENT"--any approval, consent, ratification,
waiver, or other authorization (including any Governmental
Authorization).
"CONTRACT"--any agreement, contract, obligation,
promise, or undertaking (whether written or oral and whether
express or implied) that is legally binding (excluding any
Governmental Authorization).
"DAMAGES"--as defined in Section 10.3.
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"DEBT"--the debt of the Acquired Companies to Star
Bank, N.A. and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ outstanding as of the Closing
Date together with any and all costs, fees, penalties, or
expenses incurred by Buyer in satisfying and/or discharging
the Debt in full.
"EMPLOYMENT AGREEMENTS"--as defined in Section
2.5(a)(ii).
"ENCUMBRANCE"--any mortgage, easement, right of way,
charge, claim, community property interest, condition,
equitable interest, lien, option, pledge, security interest,
right of first refusal, or restriction or adverse claim of any
kind, including any restriction on use, voting, transfer,
receipt of income, or exercise of any other attribute of
ownership, or any other encumbrance or exception to title of
any kind.
"ENVIRONMENT"--soil, land surface or subsurface
strata, surface waters (including navigable waters, ocean
waters, streams, ponds, drainage basins, and wetlands),
groundwaters, drinking water supply, stream sediments, ambient
air (including indoor air), plant and animal life, and any
other environmental medium or natural resource.
"ENVIRONMENTAL, HEALTH, AND SAFETY LIABILITIES"--any
cost, damages, expense, liability, obligation, or other
responsibility arising from or under Environmental Law or
Occupational Safety and Health Law and consisting of or
relating to:
(a) any environmental, health, or safety matters
or conditions (including on-site or off-site
contamination, occupational safety and
health, and regulation of chemical
substances or products);
(b) fines, penalties, judgments, awards,
settlements, legal or administrative
proceedings, damages, losses, claims,
demands and response, investigative,
remedial, or inspection costs and expenses
arising under Environmental Law or
Occupational Safety and Health Law;
(c) financial responsibility under Environmental
Law or Occupational Safety and Health Law
for cleanup costs or corrective action,
including any investigation, cleanup,
removal, containment, or other remediation
or response actions ("Cleanup") required by
applicable Environmental Law or Occupational
Safety and Health Law (whether or not such
Cleanup has been required or requested by
any Governmental Body or any other Person)
and for any natural resource damages; or
(d) any other compliance, corrective,
investigative, or remedial measures required
under Environmental Law or Occupational
Safety and Health Law.
The terms "removal," "remedial," and "response
action," include the types of activities covered by the United
States Comprehensive Environmental Response, Compensation, and
Liability Act, 42 U.S.C. Section 9601 et seq., as amended
("CERCLA").
"ENVIRONMENTAL LAW"--any Legal Requirement, whether
now existing or subsequently enacted or amended, relating to
(a) pollution or protection of the Environment, including
natural resources, (b) exposure of Persons, including but not
limited to employees, to Hazardous Materials, (c) protection
of the public health or welfare from the effects of products,
by-products, wastes, emissions,
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discharges, migration, or releases of Hazardous Materials or
(d) regulation of the manufacture, use or introduction into
commerce of Hazardous Materials including their manufacture,
formulation, packaging, labeling, distribution, generation,
transportation, handling, treatment, storage or disposal.
Without limitation, "Environmental Law" shall also include (a)
any Government Authorization issued pursuant to any
Environmental Law and the terms and conditions thereof and (b)
the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended by the Superfund Amendments
and Reauthorization Act of 1986, 42 U.S.C. 9601 et seq., Solid
Waste Disposal Act, as amended by the Resource Conservation
and Recovery Act of 1976 and Solid and Hazardous Waste
Amendments of 1984, 42 U.S.C. 6901 et seq., Federal Water
Pollution Control Act, as amended by the Clean Water Act of
1977, 33 U.S.C. 1251 et seq., Clean Air Act of 1966, as
amended, 42 U.S.C. 7401 et seq., Toxic Substances Control Act
of 1976, 15 U.S.C. 2601 et seq., Hazardous Materials
Transportation Act, 49 U.S.C. Section 5101, et seq.,
Occupational Safety and Health Act of 1970, as amended, 29
U.S.C. 651 et seq., Emergency Planning and Community
Right-to-Know Act of 1986, 42 U.S.C. 11001 et seq., Safe
Drinking Water Act of 1974, as amended, 42 U.S.C. 300(f) et
seq., and any similar or implementing state law, and all
amendments, rules, regulations and guidance documents
promulgated thereunder.
"ERISA"--the Employee Retirement Income Security Act
of 1974 as amended from time to time, including any successor
law, and regulations and rules issued pursuant thereto.
"ESCROW AGENT"--as defined in Section 2.2(a).
"ESCROW AGREEMENT"--as defined in Section 2.2(a).
"ESCROWED
ADVANCEPCS STOCK"--as defined in Section
2.2(a).
"FACILITIES"--any real property, leaseholds, or other
interests currently or formerly owned or operated by any
Acquired Company and any buildings, plants, structures, or
equipment (including motor vehicles, tank cars, and rolling
stock) currently or formerly owned or operated by any Acquired
Company.
"GAAP"--generally accepted United States accounting
principles, applied on a consistent basis.
"GOVERNMENTAL AUTHORIZATION"--any approval, consent,
license, permit, certification, registration, waiver, or other
authorization issued, granted, given, or otherwise made
available by or under the authority of any Governmental Body
or pursuant to any Legal Requirement.
"GOVERNMENTAL BODY"--any:
(a) nation, state, county, city, town, village,
district, or other jurisdiction of any
nature;
(b) federal, state, local, municipal, foreign,
or other government;
(c) governmental or quasi-governmental authority
of any nature (including any governmental
agency, branch, department, official, or
entity and any court or other tribunal); or
(d) body exercising, or entitled to exercise,
any administrative, executive, judicial,
legislative, police, regulatory, or taxing
authority or power of any nature.
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"HAZARDOUS ACTIVITY"--the distribution, generation,
handling, importing, management, manufacturing, processing,
production, refinement, Release, storage, transfer,
transportation, treatment, or use (including any withdrawal or
other use of groundwater) of Hazardous Materials in, on,
under, about, or from the Facilities or any part thereof into
the Environment, and any other act, business, operation, or
thing that increases the danger, or risk of danger, or poses
an unreasonable risk of harm to persons or property on or off
the Facilities, or that may affect the value of the Facilities
or any Acquired Company.
"HAZARDOUS MATERIALS"--any waste or other substance
that is listed, defined, designated, or classified as, or
otherwise determined to be, hazardous, radioactive, or toxic
or a pollutant or a contaminant under or pursuant to any
Environmental Law, including any admixture or solution
thereof, and specifically including petroleum and all
derivatives thereof or synthetic substitutes therefor,
asbestos or asbestos-containing materials, radon and
urea-formaldehyde.
"INDEMNITY THRESHOLD AMOUNT"--as defined in Section
10.4(a).
"INTELLECTUAL PROPERTY ASSETS"--as defined in Section
3.22.
"INTERIM BALANCE SHEET"--as defined in Section 3.4.
"INVENTORY"--inventories (including, without
limitation, inventories of pharmaceutical products,
intravenous products and solutions, medical products and
supplies, and containers and other packaging materials)
relating to the business of each Acquired Company which exist
at the Closing Date.
"IRC"--the Internal Revenue Code of 1986, as amended,
including any successor law, and regulations issued
thereunder.
"IRS"--the United States Internal Revenue Service or
any successor agency, and, to the extent relevant, the United
States Department of the Treasury.
"LEGAL REQUIREMENT"--any federal, state, local,
municipal, foreign, international, multinational, or other
administrative order, constitution, law, ordinance, principle
of common law, court order, consent, decree, regulation,
license, permit, statute, or treaty.
"MULTI-EMPLOYER PLAN"--has the meaning given in ERISA
Section 3(37)(a).
"NASD"--as defined in Section 11.2(a).
"NONCOMPETITION AGREEMENTS"--as defined in Section
2.5(a)(iii).
"OCCUPATIONAL SAFETY AND HEALTH LAW"--any Legal
Requirement designed to provide safe and healthful working
conditions and to reduce occupational safety and health
hazards, and any program, whether governmental or private
(including those promulgated or sponsored by industry
associations and insurance companies), designed to provide
safe and healthful working conditions.
"OPTION SHARES""--as defined in Section 3.3(b).
"ORDER"--any award, decision, injunction, judgment,
order, ruling, subpoena, or verdict entered, issued, made, or
rendered by any court, administrative agency, or other
Governmental Body or by any arbitrator.
"ORGANIZATIONAL DOCUMENTS"--(a) the articles or
certificate of incorporation and the bylaws or code of
regulations of a corporation; (b) the
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partnership agreement and any statement of partnership of a
general partnership; (c) the limited partnership agreement and
the certificate of limited partnership of a limited
partnership; (d) the certificate of organization and limited
liability company agreement of a limited liability company;
(e) any charter or similar document adopted or filed in
connection with the creation, formation, or organization of a
Person; and (f) any amendment to any of the foregoing.
"OTHER BENEFIT OBLIGATIONS"--all obligations,
arrangements, or customary practices, whether or not legally
enforceable, to provide benefits, other than salary, as
compensation for services rendered, to present or former
directors, employees, or agents, other than obligations,
arrangements, and practices that are Plans. Other Benefit
Obligations include consulting agreements under which the
compensation paid does not depend upon the amount of service
rendered, sabbatical policies, severance payment policies, and
fringe benefits within the meaning of IRC Section 132.
"PATIENT"--as defined in Section 5.1.
"PENSION PLAN"--has the meaning given in ERISA
Section 3(2).
"PERSON"--any individual, corporation (including any
non-profit corporation), general or limited partnership,
limited liability company, joint venture, estate, trust,
association, organization, labor union, or other entity or
Governmental Body.
"POSSIBLE OPTIONEES"--as defined in Section 3.3(b).
"PROCEEDING"--any action, arbitration, audit,
hearing, investigation, litigation, or suit (whether civil,
criminal, administrative, investigative, or informal)
commenced, brought, conducted, or heard by or before, or
otherwise involving, any Governmental Body or arbitrator.
"PROPRIETARY RIGHTS AGREEMENT"--as defined in Section
3.20(b).
"PURCHASE AGREEMENT AMENDMENT"--as defined in Section
3.3(b).
"PURCHASE PRICE"--as defined in Section 2.2.
"PURCHASE SHARES"--as defined in the Recitals of this
Agreement.
"QUALIFIED PLAN"--any Plan that meets or purports to
meet the requirements of IRC Section 401(a).
"REGISTRATION STATEMENT"--as defined in Section
11.2(a).
"RELEASE"--any spilling, leaking, emitting,
discharging, depositing, escaping, leaching, dumping, or other
releasing into the Environment, whether intentional or
unintentional.
"RELEVANT OFFICERS"--as defined in Section 12.11.
"REPORTS"--as defined in Section 4.5(a).
"REPRESENTATIVE"--with respect to a particular
Person, any director, officer, employee, agent, consultant,
advisor, or other representative of such Person, including
legal counsel, accountants, and financial advisors.
"SEC"--as defined in Section 4.5(a).
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"SECURITIES ACT"--as defined in Section 4.4.
"SELLER INDEMNIFIED PERSONS"--as defined in Section
10.5.
"SELLERS"--as defined in the first paragraph of this
Agreement.
"SELLERS' CLOSING DOCUMENTS"--as defined in Section
3.2(a).
"SHARES"--as defined in the Recitals of this
Agreement.
"SUBSIDIARY"--with respect to any Person (the
"Owner"), any corporation or other Person of which securities
or other interests having the power to elect a majority of
that corporation's or other Person's board of directors or
similar governing body, or otherwise having the power to
direct the business and policies of that corporation or other
Person (other than securities or other interests having such
power only upon the happening of a contingency that has not
occurred) are held by the Owner or one or more of its
Subsidiaries; when used without reference to a particular
Person, "Subsidiary" means a Subsidiary of any Acquired
Company.
"TAX"--any tax (including any income tax, capital
gains tax, value-added tax, sales tax, property tax, gift tax,
estate tax, generation-skipping tax or transfer tax), levy,
assessment, tariff, duty (including any customs duty),
deficiency, or other fee, and any related charge or amount
(including any fine, penalty, interest, or addition to tax),
imposed, assessed, or collected by or under the authority of
any Governmental Body or payable pursuant to any tax-sharing
agreement or any other Contract relating to the sharing or
payment of any such tax, levy, assessment, tariff, duty,
deficiency, or fee.
"TAX PROCEEDING"--as defined in Section 11.1.
"TAX RETURN"--any return (including any information
return), report, statement, schedule, notice, form, or other
document or information filed with or submitted to, or
required to be filed with or submitted to, any Governmental
Body in connection with the determination, assessment,
collection, or payment of any Tax or in connection with the
administration, implementation, or enforcement of or
compliance with any Legal Requirement relating to any Tax.
"TERMINATION AGREEMENT"--as defined in Section
2.5(a)(vii).
"THERACOM CLASS B COMMON STOCK"--as defined in
Section 3.3.
"THERACOM COMMON SHARES"--as defined in Section 3.3.
"THERACOM COMMON STOCK"--as defined in Section 3.3.
"THERACOM STOCK"--the TheraCom Common Stock and the
TheraCom Class B Common Stock, collectively.
"THERACOM EBITDA"--the earnings of TheraCom as a
separate and distinct business entity before interest, taxes,
depreciation and amortization, and shall be determined without
regard to (i) any charges or corporate allocations (including
overhead) by Buyer, (ii) any startup or other extraordinary
costs associated with the launch of new products by TheraCom,
and (iii) any costs associated with the repayment of Debt or
the write-off of costs associated with other financing
arrangements. Theracom EBITDA shall be determined in
accordance with Buyer's accounting practices and procedures.
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"THREAT OF RELEASE"--a substantial likelihood of a
Release that may require action in order to prevent or
mitigate damage to the Environment that may result from such
Release.
"THREATENED"--a claim, Proceeding, dispute, action,
or other matter will be deemed to have been "Threatened" if
any demand or statement has been made (orally or in writing)
or any notice has been given (orally or in writing), or if any
other event has occurred or any other circumstances exist,
that would lead a reasonably prudent Person to conclude that
such a claim, Proceeding, dispute, action, or other matter is
likely to be asserted, commenced, taken, or otherwise pursued
in the future.
"TRANSACTION DOCUMENTS"--this Agreement, the
Employment Agreements, the Termination Agreement and the
Noncompetition Agreements.
"TRANSACTION EXPENSES STATEMENT"--has the meaning
given under the definition of Acquired Companies' Transaction
Expenses.
"WELFARE PLAN"--has the meaning given in ERISA
Section 3(1).
ARTICLE II
SALE AND TRANSFER OF PURCHASE SHARES; PURCHASE PRICE; CLOSING
2.1. PURCHASE SHARES. Subject to the terms and conditions of
this Agreement, at the Closing, Sellers will sell and transfer the Purchase
Shares to Buyer, and Buyer will purchase the Purchase Shares from Sellers.
2.2. PURCHASE PRICE; PAYMENT THEREOF. In consideration of the
sale and transfer of the Purchase Shares to Buyer, and the performance by
Sellers of their covenants hereunder (including making the deliveries hereby),
Buyer shall pay to Sellers an aggregate amount not to exceed Sixty Million
Dollars ($60,000,000) less the Debt and the Acquired Companies' Transaction
Expenses (the "PURCHASE PRICE"). The Purchase Price shall be payable as follows:
(a) On the Closing Date, Buyer shall issue to Sellers or their
designees (allocated as specified in Schedule I) that number of shares of common
stock, par value one cent ($.01) per share, of Buyer ("
ADVANCEPCS STOCK") equal
in value to Fifty-Five Million Dollars ($55,000,000) reduced by the Debt and the
Acquired Companies' Transaction Expenses (the "CLOSING DATE PAYMENT"). A portion
of the Closing Date Payment consisting of that number of shares of
AdvancePCS
Stock equal in value to Six Million Five Hundred Thousand Dollars ($6,500,000)
(the "ESCROWED
ADVANCEPCS STOCK") shall be deposited with the escrow agent (the
"ESCROW AGENT") designated under the escrow agreement in the form attached
hereto as Exhibit 2.2(a) (the "ESCROW AGREEMENT"). At the Closing, Buyer shall
deliver to Sellers or the Escrow Agent, as applicable, certificates for that
number of shares of AdvancePCS Stock that results from dividing the Closing Date
Payment by the Closing Date Stock Price.
(b) In the event that (i) both (y) the TheraCom EBITDA for
calendar year 2001 is equal to or greater than $3,900,000 and (z) the TheraCom
EBITDA for calendar year 2002 is equal to or greater than $5,000,000 or (ii) the
TheraCom EBITDA for calendar year 2001 is less than $3,900,000 but the
cumulative TheraCom EBITDA for calendar year 2001 and calendar year 2002 is
equal to or greater than $8,900,000, then, in either such event, Buyer shall
issue to Sellers or their designees (allocated as specified by Sellers)
AdvancePCS Stock equal in value to $5,000,000 (the "ADDITIONAL PAYMENT"). On the
Closing Date, that number of shares of AdvancePCS Stock equal in value to the
Additional Payment shall be deposited with the Escrow Agent under the escrow
agreement in the form to be agreed upon by Buyer and Sellers prior to Closing
(the "ADDITIONAL PAYMENT ESCROW AGREEMENT"). On or prior to the thirtieth (30th)
day following a determination that the conditions to the payment of the
Additional Payment have been
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met, Buyer shall direct the Escrow Agent to release and deliver to Sellers
certificates for that number of shares of AdvancePCS Stock that results from
dividing the Additional Payment by the Closing Date Stock Price.
(c) No fractional share of AdvancePCS Stock shall be issued
pursuant to this Section 2.2; instead, Sellers shall be entitled to receive a
cash payment in lieu of such fraction of a share in an amount equal to the
product obtained by multiplying such fraction by the Closing Date Stock Price.
2.3. ALLOCATION OF PURCHASE PRICE. The Purchase Price, and
each component thereof, shall be allocated among the Sellers as specified on
Schedule I under the heading "Allocation of Purchase Price."
2.4. CLOSING. The purchase and sale (the "CLOSING") provided
for in this Agreement will take place at the offices of ▇▇▇▇ ▇▇▇▇▇ LLP at ▇▇▇▇ ▇
▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇ ▇▇▇▇-▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇, at 10:00 a.m.
(local time) on August 1, 2001, or at such other time and place as the parties
may agree.
2.5. CLOSING OBLIGATIONS. At the Closing:
(a) Sellers will deliver to Buyer:
(i) certificates representing the Purchase Shares, duly
endorsed (or accompanied by duly executed stock powers), with any
transfer stamps offered thereto.
(ii) employment agreements in the form of Exhibit 2.5(a)(ii),
executed by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇ ▇. ▇▇▇▇▇▇ (collectively,
"EMPLOYMENT AGREEMENTS");
(iii) noncompetition agreements in the form of Exhibit
2.5(a)(iii), executed by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇, the ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇ Trust, the ▇▇▇▇ ▇. ▇▇▇▇▇▇ Trust, and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
(collectively, the "NONCOMPETITION AGREEMENTS");
(iv) a certificate executed by Sellers representing and
warranting to Buyer that each of Sellers' representations and
warranties in this Agreement was accurate in all material respects as
of the date of this Agreement and is accurate in all material respects
as of the Closing Date as if made on the Closing Date (giving full
effect to any supplements to the Schedules that shall have been
delivered by Sellers to Buyer prior to the Closing Date in accordance
with Section 5.5) and identifying any Breaches of the representations
and warranties (without giving effect to any such supplements) that
would cause the conditions set forth in Section 7.1 not to be
satisfied;
(v) a certificate of good standing of each Acquired Company
from its state of incorporation, and each jurisdiction in which such
Acquired Company is qualified to do business, issued no earlier than
thirty (30) days prior to Closing;
(vi) resignations of all members of the Board of Directors of
each Acquired Company;
(vii) an agreement in the form of Exhibit 2.5(a)(vii) (the
"TERMINATION AGREEMENT") terminating: (A) the Agreement dated July 19,
1994 by and among certain of the Sellers and the Company, and (B) the
Voting Trust Agreement dated October 9, 1996 by and among certain of
the Sellers;
(viii) the Escrow Agreement and Additional Payment Escrow
Agreement, duly executed by the Sellers;
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(ix) signature cards or other documentation in form and
substance satisfactory to Buyer, necessary to transfer the signing
authority for each Acquired Company's bank accounts to Representatives
of Buyer;
(x) an opinion of counsel for Sellers, dated the Closing Date,
in a form reasonably acceptable to Buyer; and
(xi) the Transaction Expenses Statement.
(b) Buyer will deliver to Sellers:
(i) a certificate executed by Buyer to the effect that each of
Buyer's representations and warranties in this Agreement was accurate
in all material respects as of the date of this Agreement and is
accurate in all material respects as of the Closing Date as if made on
the Closing Date;
(ii) the Employment Agreements, duly executed by Buyer;
(iii) the Escrow Agreement and the Additional Payment Escrow
Agreement, duly executed by Buyer;
(iv) the Noncompetition Agreements, duly executed by Buyer;
(v) certificates evidencing the shares of AdvancePCS stock to
be issued to Sellers pursuant to Section 2.2; and
(vi) an opinion of counsel for Buyer, dated the Closing Date,
in a form reasonably acceptable to Sellers.
(c) the Acquired Companies shall pay in full the amount of the
Acquired Companies' Transaction Expenses as set forth in the
Transaction Expenses Statement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers jointly and severally represent and warrant to Buyer
as follows:
3.1. ORGANIZATION AND GOOD STANDING.
(a) Each Acquired Company is a corporation duly organized,
validly existing, and in good standing under the laws of the State of Ohio, with
full corporate power and authority to conduct its business as it is now being
conducted, to own or use the properties and assets that it purports to own or
use, and to perform all its obligations under the Applicable Contracts. Each
Acquired Company is duly qualified to do business as a foreign corporation and
is in good standing under the laws of the State of Maryland and in each other
state or jurisdiction in which either the ownership or use of the properties
owned or used by it, or the nature of the activities conducted by it, requires
such qualification, except where failure to be so qualified would not have a
material adverse effect on the business, operations, properties, prospects,
assets, or condition of any Acquired Company.
(b) Sellers have delivered to Buyer copies of the
Organizational Documents of each Acquired Company, as currently in effect.
3.2. AUTHORITY; NO CONFLICT.
(a) This Agreement and each other agreement and instrument to
be executed by Sellers in connection herewith constitutes (or upon execution
will constitute) the legal, valid,
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and binding obligation of Sellers, enforceable against Sellers in accordance
with their respective terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally. Upon the execution and delivery by Sellers of the Employment
Agreements, the Noncompetition Agreements, the Termination Agreement and each
other agreement and instrument to be executed by Sellers in connection herewith
(collectively, the "SELLERS' CLOSING DOCUMENTS"), the Sellers' Closing Documents
will constitute the legal, valid, and binding obligations of Sellers,
enforceable against Sellers in accordance with their respective terms, subject
to applicable bankruptcy, insolvency, reorganization, moratorium and similar
laws affecting creditors' rights and remedies generally. Sellers have the
absolute and unrestricted right, power, authority, and capacity to execute and
deliver this Agreement and the Sellers' Closing Documents and to perform their
obligations under this Agreement and the Sellers' Closing Documents.
(b) Except as set forth on Schedule 3.2, neither the execution
and delivery of this Agreement nor the consummation or performance of any of the
transactions contemplated by the Transaction Documents will, directly or
indirectly (with or without notice or lapse of time):
(i) contravene, conflict with, or result in a violation of (A)
any provision of the Organizational Documents of any Acquired Company,
or (B) any resolution adopted by the board of directors or the
stockholders of any Acquired Company;
(ii) contravene, conflict with, or result in a violation of,
or give any Governmental Body or other Person the right to challenge
any of the transactions contemplated by the Transaction Documents or to
exercise any remedy or obtain any relief under, any Legal Requirement
or any Order to which any Acquired Company or any Seller, or any of the
assets owned or used by any Acquired Company, or the Purchase Shares
may be subject;
(iii) contravene, conflict with, or result in a violation of
any of the terms or requirements of, or give any Governmental Body the
right to revoke, withdraw, suspend, cancel, terminate, or modify, any
Governmental Authorization that is held by any Acquired Company or that
otherwise relates to the business of, or any of the assets owned or
used by, any Acquired Company;
(iv) cause any Acquired Company to become subject to, or to
become liable for the payment of, any Tax;
(v) cause any of the assets owned by any Acquired Company to
be reassessed or revalued by any taxing authority or other Governmental
Body;
(vi) contravene, conflict with, or result in a violation or
breach of any provision of, or give any Person the right to declare a
default or exercise any remedy under, or to accelerate the maturity or
performance of, or to cancel, terminate, or modify, any Applicable
Contract or any material Contract to which any Seller is a party; or
(vii) result in the imposition or creation of any Encumbrance
upon or with respect to any of the assets owned or used by any Acquired
Company.
(d) Except as set forth on Schedule 3.2, neither any Acquired
Company nor any Seller is or will be required to give any notice to or obtain
any Consent from any Person in connection with the execution and delivery of
this Agreement or the consummation or performance of any of the transactions
contemplated by the Transaction Documents.
3.3. CAPITALIZATION.
(a) The authorized equity securities of the Company consist of
three hundred (300) shares of Company Common Stock and three thousand seven
hundred (3,700) shares of no par value Class B Common stock (the "COMPANY CLASS
B COMMON STOCK"), of which only the
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Shares are issued and outstanding. The authorized equity securities of TheraCom
consist of three hundred (300) shares of no par value Common stock (the
"THERACOM COMMON STOCK"), and three thousand seven hundred (3,700) shares of
Class B Common stock (the "THERACOM CLASS B COMMON STOCK"), of which only ninety
(90) shares of the TheraCom Common Stock (the "THERACOM COMMON SHARES") are
issued and outstanding. Each Seller is and, subject to modification as provided
in Section 3.3(b) below, will be on the Closing Date, the record and beneficial
owner and holder of the number of Shares set opposite the name of each Seller on
Schedule I under the heading "NUMBER OF SHARES"), free and clear of all
Encumbrances. The Company is and on the Closing Date will be the record and
beneficial owner and holder of all of the TheraCom Common Shares. Except in
respect of the Agreement dated July 19, 1994, which shall be terminated as of
Closing as provided in the Termination Agreement, no legend or other reference
to any purported Encumbrance appears on any certificate representing the Shares
or the TheraCom Common Shares. All of the Shares and the TheraCom Common Shares
have been duly authorized and validly issued and are fully paid and
nonassessible. Except for this Agreement and except as provided in Section
3.3(a) below, there are no Contracts relating to the issuance, sale, or transfer
of any shares of the Company Stock or the TheraCom Stock, or any other capital
stock of any Acquired Company. None of the outstanding equity securities or
other securities of any Acquired Company was issued in violation of the
Securities Act or any other Legal Requirement. No Acquired Company owns nor has
any Contract to acquire, any equity securities or other securities of any Person
or any direct or indirect equity or owner interest in any other business. The
delivery by each Seller of certificates evidencing the number of Purchase Shares
set forth opposite the name of such Seller on Schedule I (subject to
modification as provided in Section 3.3(b) below) under the heading "Number of
Purchase Shares", duly endorsed for transfer or accompanied by stock transfer
powers duly endorsed in blank, will transfer valid title to said Purchase Shares
to Buyer, free and clear of any and all Encumbrances whatsoever. The Company has
no Subsidiaries other than TheraCom.
(b) It is hereby acknowledged and agreed by Buyer and Sellers
that prior to the Closing the employees of TheraCom identified at Schedule
3.3(b) (the "POSSIBLE OPTIONEES") may exercise options to acquire such number of
shares of such class of Company Stock set opposite the name of each such
Possible Optionee on Schedule 3.3(b) under the heading "Number of Option Shares"
(the "OPTION SHARES"). A Possible Optionee shall not be permitted to exercise
such option or to acquire any Option Shares unless and until he or she executes
and delivers to Buyer and Sellers an amendment to this Agreement (the "PURCHASE
AGREEMENT AMENDMENT") in form and substance acceptable to Buyer and Sellers in
their sole and absolute discretion. Such Purchase Agreement Amendment must be
executed and delivered by Buyer, Sellers and each Possible Optionee owning
Option Shares ("ADDITIONAL SELLER") prior to the Closing and would provide,
among other things, that (i) each such Additional Seller shall be deemed a
Seller under this Agreement and therefore subject to, and bound by, all of the
terms and conditions hereof except as otherwise specifically provided in such
Purchase Agreement Amendment, (ii) the provisions of Section 3.3(b), Schedule I
and other applicable provisions of this Agreement shall be modified to reflect
the Option Shares owned by such Additional Seller (provided, however, that the
total Purchase Price payable by Buyer under this Agreement shall not be
increased as a result of Buyer's purchase of any Option Shares from any
Additional Sellers, but rather such Purchase Price will only be reallocated to
reflect the inclusion of any such Additional Sellers), and (iii) Buyer shall
purchase such Option Shares from such Additional Seller at the Closing in
accordance with the terms and conditions of this Agreement except as otherwise
specifically provided in such Purchase Agreement Amendment.
3.4. FINANCIAL STATEMENTS. Sellers have delivered to Buyer:
(a) audited consolidated balance sheets of the Acquired Companies as of December
31 in each of the years 1997 through 1999 and the related audited statement of
income, changes in stockholders' equity, and cash flow for each of the fiscal
years from 1997 through 1999 together with the report thereon of ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇, independent certified public accountants, (b) an audited consolidated
balance sheet for the Acquired Companies as of December 31, 2000 (including the
notes thereto, the "BALANCE SHEET"), and the related statements of income,
changes in stockholders' equity, and cash flow for the fiscal year then ended,
together with the report thereon of ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, independent certified
public accountants, and (c) an unaudited consolidated
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balance sheet of each Acquired Company as of May 31, 2001 (the "INTERIM BALANCE
SHEET") and the related unaudited statements of income, changes in stockholders'
equity, and cash flow for the 5 months then ended, including in each case the
notes thereto; provided, however, that it is hereby understood and agreed by
Sellers and Buyer that Sellers shall deliver the Interim Balance Sheet to Buyer
within ten (10) Business Days following the full execution and delivery of this
Agreement. The financial statements of the Acquired Companies (i) are a true and
correct reflection of the financial condition of the Acquired Companies in all
material respects as of the dates therein; (ii) were prepared on an accrual
basis, (iii) were prepared in accordance with the books and records of the
Acquired Companies, (iv) fairly present in all material respects the Acquired
Companies' financial condition and the results of their operations at the
relevant dates thereof and for the years or periods covered thereby, (v) contain
and reflect all necessary adjustments and accruals for a fair presentation of
their financial condition and the results of their operations for the periods
covered by such financial statements, and (vi) contain and reflect reasonable
provisions for reserves and for all reasonably anticipated liabilities for all
taxes, federal, state, or local, with respect to the periods then ended and all
prior periods.
3.5. BOOKS AND RECORDS. The books of account, minute books,
stock record books, and other records of each Acquired Company, all of which
have been delivered or made available to Buyer, are complete and correct in all
material respects. The Acquired Companies (a) keep books, records, and accounts
that accurately, fairly, and in reasonable detail reflect in all material
respects their assets and transactions; and (b) maintain a system of internal
accounting controls sufficient to provide reasonable assurance that (i)
transactions are accurately and promptly recorded, (ii) transactions are
executed in accordance with management's specific or general authorizations, and
(iii) access to their assets is permitted only in accordance with management's
general or specific authorization. The minute books of each Acquired Company
contains accurate and complete records of all meetings held of, and corporate
action taken by, the stockholders, the Board of Directors, and committees of the
Board of Directors of such Acquired Company, and no meeting of any such
stockholders, Board of Directors, or committee has been held for which minutes
have not been prepared and are not contained in such minute books. At the
Closing, all of those books and records will be in the possession of the
Acquired Companies.
3.6. TITLE TO PROPERTIES; ENCUMBRANCES. No Acquired Company
owns any real property. Schedule 3.6 contains a complete and accurate list of
all leasehold interests of each Acquired Company. Each Acquired Company owns all
the properties and assets that it purports to own located in the current
Facilities operated by such Acquired Company or reflected as owned in the books
and records of such Acquired Company, including all of the properties and assets
reflected in the Balance Sheet and the Interim Balance Sheet, and all of the
properties and assets purchased or otherwise acquired by such Acquired Company
since the date of the Balance Sheet. All material properties and assets
reflected in the Balance Sheet and the Interim Balance Sheet are free and clear
of all Encumbrances except, with respect to all such properties and assets,
(a) security interests shown on the Balance Sheet or the
Interim Balance Sheet as securing specified liabilities or obligations, with
respect to which no default (or event that, with notice or lapse of time or
both, would constitute a default) exists,
(b) security interests incurred in connection with the
purchase of property or assets after the date of the Interim Balance Sheet (such
security interests being limited to the property or assets so acquired), with
respect to which no default (or event that, with notice or lapse of time or
both, would constitute a default) exists, and
(c) liens for current taxes not yet due.
3.7. CONDITION AND SUFFICIENCY OF ASSETS. The equipment of
each Acquired Company is in good operating condition and repair, and is adequate
for the uses to which it is being put, and none of such equipment is in need of
maintenance or repairs except for ordinary, routine maintenance and repairs that
are not material in nature or cost. The equipment and all other assets and
properties of each Acquired Company are sufficient for the continued conduct of
such Acquired Company's business after the Closing in substantially the same
manner as
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conducted prior to the Closing. Each Acquired Company has all easements, rights
of way and other leasehold property rights which are necessary for the use and
operation of its properties, assets and business. The Acquired Companies have
not received any notice from any current supplier of items essential to the
conduct of their business that such supplier intends to terminate or materially
alter a business relationship for any reason, and, to the knowledge of Sellers
and each of the Acquired Companies, no such supplier intends to terminate or
materially alter any such business relationship with any Acquired Company. The
Acquired Companies have not received any notice from any customer that such
customer intends to discontinue purchases of products or services from any
Acquired Company, and, to the knowledge of Sellers, no such customer intends to
discontinue or cancel purchases or orders.
3.8. ACCOUNTS RECEIVABLE. All accounts receivable of each
Acquired Company that are reflected on the Balance Sheet or the Interim Balance
Sheet or on the accounting records of each such Acquired Company as of the
Closing Date (collectively, the "ACCOUNTS RECEIVABLE") represent or will
represent valid obligations arising from sales actually made or services
actually performed in the ordinary course of business. Unless paid prior to the
Closing Date, the Accounts Receivable are or will be as of the Closing Date
current and collectible net of the respective reserves shown on the Balance
Sheet or the Interim Balance Sheet or on the accounting records of each Acquired
Company as of the Closing Date (which reserves are adequate and calculated
consistent with past practice and, in the case of the reserve as of the Closing
Date, will not represent a greater percentage of the Accounts Receivable as of
the Closing Date than the reserve reflected in the Interim Balance Sheet
represented of the Accounts Receivable reflected therein and will not represent
a material adverse change in the composition of such Accounts Receivable in
terms of aging). No obligor of any Accounts Receivable has made any claim or
contest or proposed invoking a right of set-off (other than returns in the
ordinary course of business) relating to the amount or validity of such Accounts
Receivable. Schedule 3.8 contains a complete and accurate list of all Accounts
Receivable as of the date of the Interim Balance Sheet, which list sets forth
the aging of such Accounts Receivable.
3.9. INVENTORY. All of each Acquired Company's Inventory is
readily saleable in the ordinary course of business at the full, non-discounted
price customarily charged therefor and in quantities as are justified in light
of the present volume of the business of each Acquired Company and the volume of
business contemplated in the Contracts. Without limiting the generality of the
requirement as to salability, an item will be deemed readily saleable only if
(i) it is new, unused, and if packaged, unopened, (ii) if perishable, it is
fresh, wholesome, and has a wholesaler's shelf life at least as long as is
customarily required to sell such item of product; (iii) if marked for
expiration by the manufacturer, packager or otherwise, it is neither expired nor
so close to expiration as to affect saleability; (iv) it is held in quantities
which can be, and are customarily sold (with no broken lots or cases, unless
sales of less than one lot or broken cases can readily be made without undue
loss of economy), (v) it is a product for which there is currently a reasonable
market and which is expected to be sold within a four (4) month period and in
any event prior to a time when its condition is other than as described in (i),
(ii), (iii), (iv) or (v) of this sentence, and (vi) it is otherwise in good,
merchantable and saleable condition.
3.10. NO UNDISCLOSED LIABILITIES. Except as set forth in
Schedule 3.10, to the knowledge of Sellers and each Acquired Company, no
Acquired Company has any liabilities or obligations of any nature (whether
absolute, accrued, contingent, or otherwise) except for liabilities or
obligations reflected or reserved against in the Balance Sheet or the Interim
Balance Sheet and current liabilities incurred in the ordinary course of
business since the respective dates thereof.
3.11. TAXES.
(a) Each Acquired Company has filed or caused to be filed (on
a timely basis since 1994) all Tax Returns that are or were required to be filed
by or with respect to it pursuant to applicable Legal Requirements. Sellers have
delivered to Buyers copies of, and Schedule 3.11 contains a complete and
accurate list of, all such Tax Returns filed since 1994. Each Acquired Company
has paid, or made provisions for the payment of all Taxes that have or may have
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become due pursuant to those Tax Returns or otherwise, or pursuant to any
assessment received by Sellers or such Acquired Company, except such Taxes, if
any, as are listed in Schedule 3.11 and are being contested in good faith and as
to which adequate reserves (determined in accordance with GAAP) have been
provided in the Balance Sheet and the Interim Balance Sheet.
(b) Except as described in Schedule 3.11, no Acquired Company
nor any Seller has given or been requested to give waivers or extensions (or is
or would be subject to a waiver or extension given by any other Person) of any
statute of limitation relating to the payment of Taxes of any Acquired Company
or for which any Acquired Company may be liable. No audit or other proceedings
by any Governmental Body is pending or threatened with respect to any Taxes due
from or with respect to any Acquired Company or any Tax Return filed by or with
respect to any Acquired Company.
(c) There exists no proposed tax assessment against any
Acquired Company except as disclosed in the Balance Sheet or in Schedule 3.11.
No consent to the application of Section 341(f)(2) of the IRC has been filed
with respect to any property or assets held, acquired, or to be acquired by any
Acquired Company. All Taxes that any Acquired Company is or was required by
Legal Requirements to withhold or collect have been duly withheld or collected
and, to the extent required, have been paid to the proper Governmental Body or
other Person. No Acquired Company is currently subject to an agreement or
requirement to make any adjustment pursuant to Section 481 of the IRC by reason
of any change in any accounting method of any Acquired Company and there is no
application pending with any Governmental Body requesting permission for any
changes in any accounting period. No Acquired Company is a "foreign person"
within the meaning of Section 1445(b)(12) of the IRC.
(d) All Tax Returns filed by (or that include on a
consolidated basis) each Acquired Company are true, correct, and complete. There
is no tax sharing agreement that will require any payment by any Acquired
Company after the date of this Agreement.
(e) The United States federal and state income Tax Returns of
each Acquired Company subject to such taxes have never been audited by the IRS
or relevant state tax authorities.
3.12. NO MATERIAL ADVERSE CHANGE. Except as set forth in
Schedule 3.12, since the date of the Balance Sheet, there has not been any
material adverse change in the business, operations, properties, prospects,
assets, or condition of any Acquired Company and no event has occurred or
circumstance exists to the knowledge of Sellers and each Acquired Company that
could reasonably result in such a material adverse change.
3.13. EMPLOYEE BENEFITS. Schedule 3.13 lists all Pension and
Welfare Plans, programs, agreements, commitments and arrangements maintained by
or on behalf of any Acquired Company that provide benefits or compensation to,
or for the benefit of, any employee or former employee of any Acquired Company.
Except as set forth on Schedule 3.13, only employees and former employees (and
eligible dependents and beneficiaries of such employees and former employees)
participate in the Plans. All of the Plans covered thereby are in compliance in
all material respects with ERISA and the IRC. All of the Plans which are
intended to meet the requirements of Section 401(a) of the IRC have been
determined by the IRS to be "qualified" within the meaning of Section 401(a) of
the IRC, and, to the best knowledge of the Sellers and each Acquired Company,
there are no facts which would adversely affect the qualified status of any of
the Plans. Except as set forth on Schedule 3.13, (i) there is no accumulated
funding deficiency, within the meaning of Section 412(a) of the IRC or Section
302(a)(2) of ERISA, in connection with the Plans, (ii) no reportable event, as
defined in Section 4043(b) of ERISA, has occurred in connection with the Plans,
(iii) the Plans have not, nor has any trustee or administrator of the Plans,
engaged in any prohibited transaction as defined in Sections 406 and 407 of
ERISA or Section 4975 of the IRC, (iv) no Acquired Company is contributing to,
and has not, since January 1, 1974, contributed to, any multi-employer plan, as
defined in Section 4001 (a)(3) of ERISA, (v) no Acquired Company has, since
January 1, 1974, terminated a single-employer plan, as defined in Section
4001(a)(15) of ERISA, and (vi) the consummation of
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the transactions contemplated by the Transaction Documents will not result in
the payment, vesting, or acceleration of any benefit under a Pension or Welfare
Plan.
3.14. COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL
AUTHORIZATIONS.
(a) Except as set forth in Schedule 3.14:
(i) each Acquired Company is, and at all times has been, in
material compliance with each Legal Requirement that is or was
applicable to it or to the conduct or operation of its business or the
ownership or use of any of its assets;
(ii) no event has occurred or circumstance exists that (with
or without notice or lapse of time) (A) may constitute or result in a
material violation by any Acquired Company of, or a material failure on
the part of any Acquired Company to comply with, any Legal Requirement,
(B) may give rise to any obligation on the part of any Acquired Company
to undertake, or to bear all or any portion of the cost of, any
material remedial action of any nature or (C) may result in the
imposition of any lien against any Acquired Company or any of its
property under any Legal Requirement; and
(iii) no Acquired Company has received, at any time, any
notice or other communication (whether oral or written) from any
Governmental Body or any other Person regarding (A) any actual,
alleged, possible, or potential violation of, or failure to comply
with, any Legal Requirement, or (B) any actual, alleged, possible, or
potential obligation on the part of any Acquired Company to undertake,
or to bear all or any portion of the cost of, any remedial action of
any nature; and
(b) Schedule 3.14 contains a complete and accurate list of
each Governmental Authorization that is held by each Acquired Company or that
otherwise relates to the business of, or to any of the assets owned or used by,
any Acquired Company. Each Governmental Authorization listed or required to be
listed in Schedule 3.14 is valid and in full force and effect. Except as set
forth in Schedule 3.14:
(i) each Acquired Company is, and at all times has been, in
material compliance with all of the terms and requirements of each
Governmental Authorization identified or required to be identified in
Schedule 3.14;
(ii) no event has occurred or circumstance exists that may
(with or without notice or lapse of time) (A) constitute or result
directly or indirectly in a material violation of or a material failure
to comply with any term or requirement of any Governmental
Authorization listed or required to be listed in Schedule 3.14, or (B)
result directly or indirectly in the revocation, withdrawal,
suspension, cancellation, or termination of, or any modification to,
any Governmental Authorization listed or required to be listed in
Schedule 3.14;
(iii) no Acquired Company has received, at any time, any
notice or other communication (whether oral or written) from any
Governmental Body or any other Person regarding (A) any actual,
alleged, possible, or potential violation of or failure to comply with
any term or requirement of any Governmental Authorization, or (B) any
actual, proposed, possible, or potential revocation, withdrawal,
suspension, cancellation, termination of, or modification to any
Governmental Authorization; and
(iv) all applications required to have been filed for the
renewal of the Governmental Authorizations listed or required to be
listed in Schedule 3.14 have been duly filed on a timely basis with the
appropriate Governmental Bodies, and all other filings required to have
been made with respect to such Governmental Authorizations have been
duly made on a timely basis with the appropriate Governmental Bodies.
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(v) The Governmental Authorizations listed in Schedule 3.14
collectively constitute all of the Governmental Authorizations
necessary to permit each Acquired Company to lawfully conduct and
operate its business in the manner it currently conducts and operates
such business and to permit each Acquired Company to own and use its
assets in the manner in which it currently owns and uses such assets.
Sellers know of no reason why such Governmental Authorizations will not
be reissued or transferred in the ordinary course if required as a
result of the execution and consummation of this Agreement.
3.15. LEGAL PROCEEDINGS; ORDERS.
(a) Except as set forth in Schedule 3.15, there is no pending
Proceeding:
(i) that has been commenced by or against any Acquired Company
or that otherwise relates to or may affect the business of, or any of
the assets owned or used by, any Acquired Company; or
(ii) that challenges, or that may have the effect of
preventing, delaying, making illegal, or otherwise interfering with,
any of the transactions contemplated by the Transaction Documents.
To the knowledge of Sellers and each Acquired Company, (1) no such Proceeding
has been Threatened, and (2) no event has occurred or circumstance exists that
may give rise to or serve as a basis for the commencement of any such
Proceeding. Sellers have delivered to Buyer copies of all pleadings,
correspondence, and other documents relating to each Proceeding listed in
Schedule 3.15. The Proceedings listed in Schedule 3.15 will not have a material
adverse effect on the business, operations, assets, condition, or prospects of
any Acquired Company.
(b) Except as set forth in Schedule 3.15:
(i) there is no Order to which any Acquired Company, or any of
the assets owned or used by any Acquired Company, is subject;
(ii) no Seller is subject to any Order that relates to the
business of, or any of the assets owned or used by, any Acquired
Company; and
(iii) no officer, director, or employee, or to the knowledge
of Sellers and each Acquired Company, agent of any Acquired Company is
subject to any Order that prohibits such officer, director, agent, or
employee from engaging in or continuing any conduct, activity, or
practice relating to the business of any Acquired Company.
(c) Except as set forth in Schedule 3.15:
(i) each Acquired Company is, and at all times has been, in
full compliance with all of the terms and requirements of each Order to
which it, or any of the assets owned or used by it, is or has been
subject;
(ii) no event has occurred or circumstance exists that may
constitute or result in (with or without notice or lapse of time) a
violation of or failure to comply with any term or requirement of any
Order to which any Acquired Company, or any of the assets owned or used
by any Acquired Company, is subject; and
(iii) no Acquired Company has received, at any time, any
notice or other communication (whether oral or written) from any
Governmental Body or any other Person regarding any actual, alleged,
possible, or potential violation of, or failure to comply with, any
term or requirement of any Order to which any Acquired Company, or any
of the assets owned or used by any Acquired Company, is or has been
subject.
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3.16. ABSENCE OF CERTAIN CHANGES AND EVENTS. Except as set
forth in Schedule 3.16, since the date of the Balance Sheet, each Acquired
Company has conducted its businesses only in the ordinary course of business and
there has not been any:
(a) change in any Acquired Company's authorized or issued
capital stock; grant of any stock option or right to purchase shares of capital
stock of any Acquired Company; issuance of any security convertible into such
capital stock; grant of any registration rights; purchase, redemption,
retirement, or other acquisition by any Acquired Company of any shares of any
such capital stock; or declaration or payment of any dividend or other
distribution or payment in respect of shares of capital stock;
(b) amendment to the Organizational Documents of any Acquired
Company;
(c) payment or increase by any Acquired Company of any
bonuses, salaries, or other compensation to any stockholder, director, officer,
or (except in the ordinary course of business) employee or entry into any
employment, severance, or similar Contract with any director, officer, or
employee;
(d) adoption of, or increase in the payments to or benefits
under, any profit sharing, bonus, deferred compensation, savings, insurance,
pension, retirement, or other employee benefit plan for or with any employees of
any Acquired Company;
(e) damage to or destruction or loss of any asset or property
of any Acquired Company, whether or not covered by insurance, materially and
adversely affecting the properties, assets, business, financial condition, or
prospects of any Acquired Company, taken as a whole;
(f) entry into, termination of, or receipt of notice of
termination of (i) any license, distributorship, dealer, sales representative,
joint venture, credit, or similar agreement, or (ii) any Contract or transaction
involving a total remaining commitment by or to any Acquired Company of at least
$25,000;
(g) sale, lease, or other disposition of any asset or property
of any Acquired Company or mortgage, pledge, or imposition of any lien or other
encumbrance on any material asset or property of any Acquired Company, including
the sale, lease, or other disposition of any of the Intellectual Property
Assets;
(h) cancellation or waiver of any claims or rights with a
value to any Acquired Company in excess of $25,000;
(i) material change in the accounting methods used by any
Acquired Company; or
(j) agreement, whether oral or written, by any Acquired
Company to do any of the foregoing.
3.17. APPLICABLE CONTRACTS; NO DEFAULTS.
(a) Schedule 3.17 contains a complete and accurate list, and
Sellers have delivered to Buyer true and complete copies of, all
Applicable Contracts (but in respect of only such contracts that the
and all amendments, supplements and modifications (whether oral or
written) in respect of all such Applicable Contracts. Notwithstanding
the foregoing, and only with respect to Applicable Contracts which are
third party payor contracts, Sellers shall be required to list on
Schedule 3.17 only such third party payor contracts which, in the
aggregate, account for not less than sixty percent (60%) of the gross
revenues generated under all third party payor contracts which are
Applicable Contracts.
(b) Except as set forth in Schedule 3.17:
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(i) no Seller has or may acquire any rights under, and no
Seller has or may become subject to any obligation or liability under,
any Applicable Contract that relates to the business of, or any of the
assets owned or used by, any Acquired Company; and
(ii) no officer, director, or employee, or to the knowledge of
Sellers and each Acquired Company, agent, consultant, or contractor, of
any Acquired Company is bound by any Contract that purports to limit
the ability of such officer, director, agent, employee, consultant, or
contractor to (A) engage in or continue any conduct, activity, or
practice relating to the business of any Acquired Company, or (B)
assign to any Acquired Company or to any other Person any rights to any
invention, improvement, or discovery.
(c) Except as set forth in Schedule 3.17, each Applicable
Contract is in full force and effect and is valid and enforceable in
accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally.
(d) Except as set forth in Schedule 3.17:
(iii) each Acquired Company is, and at all times has been, in
material compliance with all applicable terms and requirements of each
Applicable Contract under which such Acquired Company has or had any
obligation or liability or by which such Acquired Company or any of the
assets owned or used by such Acquired Company is or was bound;
(iv) to the knowledge of Sellers and each Acquired Company,
each other Person that has or had any obligation or liability under any
Applicable Contract under which each Acquired Company has or had any
rights is, and at all times has been, in material compliance with all
applicable terms and requirements of such Applicable Contract;
(v) no event has occurred or circumstance exists that (with or
without notice or lapse of time) may contravene, conflict with, or
result in a material violation or material breach of, or give any
Acquired Company or, to the knowledge of Sellers and each Acquired
Company, any other Person the right to declare a default or exercise
any remedy under, or to accelerate the maturity or performance of, or
to cancel, terminate, or modify, any Applicable Contract; and
(vi) no Acquired Company has given to or received from any
other Person, at any time, any notice or other communication (whether
oral or written) regarding any actual, alleged, possible, or potential
violation or breach of, or default under, any Applicable Contract.
(e) There are no renegotiations of, attempts to renegotiate,
or outstanding rights to renegotiate any material amounts paid or
payable to any Acquired Company under current or completed Applicable
Contracts with any Person and, to the knowledge of Sellers and each
Acquired Company, no such Person has made written demand for such
renegotiations.
3.18. INSURANCE.
(a) Sellers have delivered to Buyer:
(i) true and complete copies of all policies of insurance
listed on Schedule 3.18 to which each Acquired Company is a party or
under which any Acquired Company, or any director of any Acquired
Company, is or has been covered for the period indicated in such
policies; and
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(ii) true and complete copies of all pending applications for
policies of insurance.
(b) Schedule 3.18 describes:
(i) any self-insurance arrangement by or affecting any
Acquired Company, including any reserves established thereunder;
(ii) any contract or arrangement, other than a policy of
insurance, for the transfer or sharing of any risk by any Acquired
Company; and
(iii) all obligations of each Acquired Company to third
parties with respect to insurance (including such obligations under
leases and service agreements) and identifies the policy under which
such coverage is provided.
(c) Schedule 3.18 sets forth, by year, for the current policy
year and each of the two (2) preceding policy years:
(i) a summary of the loss experience under each policy;
(ii) a statement describing each claim under an insurance
policy for an amount in excess of $25,000, which sets forth:
(A) the name of the claimant;
(B) a description of the policy by insurer, type of insurance,
and period of coverage; and
(C) the amount and a brief description of the claim; and
(iii) a statement describing the loss experience for all
claims that were self-insured, including the number and aggregate cost
of such claims.
(d) Except as set forth in Schedule 3.18:
(i) All policies to which any Acquired Company is a party or
that provide coverage to any Seller, any Acquired Company, or any
director or officer of any Acquired Company:
(A) are valid, outstanding, and enforceable (subject to
applicable bankruptcy, insolvency, reorganization, moratorium
and similar laws affecting creditors' rights and remedies
generally);
(B) taken together, provide adequate insurance coverage for
the assets and the operations of each Acquired Company for all
risks normally insured against by a Person carrying on the
same business or businesses as such Acquired Company;
(C) are sufficient for compliance with all Legal Requirements
and Applicable Contracts to which any Acquired Company is a
party or by which it is bound;
(D) will continue in full force and effect following the
consummation of the transactions contemplated by the
Transaction Documents; and
(E) do not provide for any retrospective premium adjustment or
other experienced-based liability on the part of any Acquired
Company.
(ii) Neither any Acquired Company nor any Seller has received
(A) any refusal of coverage or any notice that a defense will be
afforded with reservation of rights, or (B)
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any notice of cancellation or any other indication that any insurance
policy is no longer in full force or effect or will not be renewed or
that the issuer of any policy is not willing or able to perform its
obligations thereunder.
(iii) Each Acquired Company has paid all premiums due, and has
otherwise performed all of its obligations, under each policy to which
such Acquired Company is a party or that provides coverage to such
Acquired Company or any director thereof.
(iv) Each Acquired Company has given notice to the insurer of
all claims that may be insured thereby.
3.19. ENVIRONMENTAL MATTERS. Except as set forth in Schedule
3.19:
(a) Each Acquired Company is, and at all times has been, in
compliance with, and has not been and is not in violation of or liable under,
any Environmental Law. Neither any Acquired Company nor any Seller has any basis
to expect, nor has any of them or any other Person for whose conduct they are or
may be held to be responsible received, any actual or Threatened Order, notice,
or other communication from (i) any Governmental Body or private citizen acting
in the public interest, or (ii) the current or prior owner or operator of any
Facilities, of any actual or potential violation or failure to comply with any
Environmental Law or of any actual or Threatened Release, or of any actual or
Threatened obligation to undertake or bear the cost of any Environmental,
Health, and Safety Liabilities with respect to any of the Facilities or any
other properties or assets (whether real, personal, or mixed) in which any
Seller or any Acquired Company has had an interest, or with respect to any
property or Facility at or to which Hazardous Materials were generated,
manufactured, refined, transferred, imported, used, or processed by Sellers, any
Acquired Company, or any other Person for whose conduct they are or may be held
responsible, or from which Hazardous Materials have been transported, treated,
stored, handled, transferred, disposed, recycled, or received.
(b) There are no pending or, to the knowledge of Sellers and
each Acquired Company, Threatened claims, Encumbrances, or other restrictions of
any nature, resulting from any Environmental, Health, and Safety Liabilities or
arising under or pursuant to any Environmental Law, with respect to or affecting
any of the Facilities or any other properties and assets (whether real,
personal, or mixed) in which Sellers or any Acquired Company has or had an
interest.
(c) Neither any Acquired Company nor any Seller has any basis
to expect, nor has any of them or any other Person for whose conduct they are or
may be held responsible, received, any citation, directive, inquiry, notice,
Order, summons, warning, or other communication that relates to Hazardous
Activity, Hazardous Materials, or any alleged, actual, or potential violation or
failure to comply with any Environmental Law, or of any alleged, actual, or
potential obligation to undertake or bear the cost of any Environmental, Health,
and Safety Liabilities with respect to any of the Facilities or any other
properties or assets (whether real, personal, or mixed) in which Sellers or any
Acquired Company had an interest, or with respect to any property or facility to
which Hazardous Materials generated, manufactured, refined, transferred,
imported, used, or processed by Sellers, any Acquired Company, or any other
Person for whose conduct they are or may be held responsible, have been
transported, treated, stored, handled, transferred, disposed, recycled, or
received.
(d) Neither any Acquired Company nor any Seller, or any other
Person for whose conduct they are or may be held responsible, has any
Environmental, Health, and Safety Liabilities with respect to the Facilities or
with respect to any other properties and assets (whether real, personal, or
mixed) in which Sellers or any Acquired Company (or any predecessor), has or had
an interest.
(e) There are no Hazardous Materials present on or in the
Environment at the Facilities, including any Hazardous Materials contained in
barrels, above or underground storage tanks, landfills, land deposits, dumps,
equipment (whether moveable or fixed) or other containers,
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either temporary or permanent, and deposited or located in land, water, sumps,
or any other part of the Facilities or such adjoining property, or incorporated
into any structure therein or thereon. Neither any Acquired Company nor any
Seller, any other Person for whose conduct they are or may be held responsible,
or any other Person, has permitted or conducted, or is aware of, any Hazardous
Activity conducted with respect to the Facilities or any other properties or
assets (whether real, personal, or mixed) in which Sellers or any Acquired
Company has or had an interest except in full compliance with all applicable
Environmental Laws.
(f) There has been no Release or, to the knowledge of Sellers
and each Acquired Company, Threat of Release, of any Hazardous Materials at or
from the Facilities or at any other locations where any Hazardous Materials were
generated, manufactured, refined, transferred, transported, produced, imported,
used, or processed from or by the Facilities, or from or by any other properties
and assets (whether real, personal, or mixed) in which Sellers or any Acquired
Company has or had an interest, whether by Sellers, any Acquired Company, or any
other Person.
(g) Neither any Seller nor any Acquired Company has any copies
or results of, or has knowledge of the existence of, any reports, studies,
analyses, tests, or monitoring possessed or initiated by any Seller or any
Acquired Company pertaining to Hazardous Materials or Hazardous Activities in,
on, or under the Facilities, or concerning compliance by any Seller, any
Acquired Company, or any other Person for whose conduct they are or may be held
responsible, with Environmental Laws.
3.20. EMPLOYEES.
(a) Schedule 3.20 contains a complete and accurate list of the
following information for each employee or director of each Acquired Company,
including each employee on leave of absence or layoff status: employer; name;
job title; current compensation paid or payable; vacation accrued; and date of
hire.
(b) No employee or director of any Acquired Company is a party
to, or is otherwise bound by, any agreement or arrangement, including any
confidentiality, noncompetition, or proprietary rights agreement, between such
employee or director and any other Person ("PROPRIETARY RIGHTS AGREEMENT") that
in any way adversely affects or will affect (i) the performance of his duties as
an employee or director of any Acquired Company, or (ii) the ability of any
Acquired Company to conduct its business, including any Proprietary Rights
Agreement with Sellers or any Acquired Company by any such employee or director.
To the knowledge of Sellers and each Acquired Company, no director, officer, or
other key employee of any Acquired Company intends to terminate his employment
with any Acquired Company.
(c) Schedule 3.20 also contains a complete and accurate list
of the following information for each retired employee or director of each
Acquired Company, or their dependents, receiving benefits or scheduled to
receive benefits in the future: name, pension benefit, pension option election,
retiree medical insurance coverage, retiree life insurance coverage, and other
benefits.
3.21. LABOR RELATIONS; COMPLIANCE. No Acquired Company has
been a party to any collective bargaining or other labor Contract. There has not
been, there is not presently pending or existing, and there is not, to Sellers'
and each Acquired Company's knowledge, Threatened, (a) any strike, slowdown,
picketing, work stoppage, or employee grievance process, (b) any Proceeding
against or any Acquired Company relating to the alleged violation of any Legal
Requirement pertaining to labor relations or employment matters, including any
charge or complaint filed by an employee or union with the National Labor
Relations Board, the Equal Employment Opportunity Commission, or any comparable
Governmental Body, organizational activity, or other labor or employment dispute
against or affecting any Acquired Company, or (c) any application for
certification of a collective bargaining agent. No event has occurred or
circumstance exists that could provide the basis for any work stoppage or other
labor dispute. There is no lockout of any employees by any Acquired Company, and
no such action is
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contemplated by any Acquired Company. Each Acquired Company has complied in all
material respects with all Legal Requirements relating to employment, equal
employment opportunity, nondiscrimination, immigration, wages, hours, benefits,
collective bargaining, the payment of social security and similar taxes, and
occupational safety and health. No Acquired Company is liable for the payment of
any compensation, damages, fines, penalties, or other amounts, however
designated, for failure to comply with any of the foregoing Legal Requirements.
3.22. INTELLECTUAL PROPERTY. Schedule 3.22 contains a complete
and accurate list and summary description of all patents, trademark, tradenames,
service marks, copyrights, software, trade secrets, and know-how, owned, used or
licensed by each Acquired Company (the "INTELLECTUAL PROPERTY ASSETS"). The
Intellectual Property Assets owned by each Acquired Company, listed in Schedule
3.22, are free and clear of all Encumbrances, other than claims of licensors
identified in Schedule 3.22. No Acquired Company unlawfully or wrongfully uses
any Intellectual Property Asset, or infringes upon the rights of third parties
through its use of the Intellectual Property Assets. No Acquired Company is in
default under, or has received any notice of any claim of infringement or any
other claim or proceeding relating to any Intellectual Property Asset. No
present or former employee of any Acquired Company and, to Sellers' and each
Acquired Company's knowledge, no other Person owns or has any proprietary,
financial or other interest, direct or indirect, in whole or in part, in any
Intellectual Property Asset. Each Acquired Company has taken all necessary steps
to ensure the validity and enforceability of its Intellectual Property Assets.
Schedule 3.22 lists all confidentiality or non-disclosure agreements to which
each Acquired Company or any employee of any Acquired Company is a party which
relate to the Intellectual Property Assets.
3.23. CERTAIN PAYMENTS. Neither any Acquired Company nor
director, officer, agent, or employee of any Acquired Company, or any other
Person associated with or acting for or on behalf of any Acquired Company, has
directly or indirectly (a) made or promised to make any contribution, gift,
bribe, rebate, payoff, influence payment, kickback, or other payment to any
Person, private or public, regardless of form, whether in money, property, or
services, or otherwise taken any similar action, in violation of any Legal
Requirement, or (b) established or maintained any fund or asset that has not
been recorded in the books and records of such Acquired Company.
3.24. DISCLOSURE.
(a) No representation or warranty of Sellers in this Agreement
and no statement or disclosure in any Schedule hereto omits to state a material
fact necessary to make the statements herein or therein, in light of the
circumstances in which they were made, not misleading.
(b) No notice given pursuant to Section 5.5 will contain any
untrue statement or omit to state a material fact necessary to make the
statements therein or in this Agreement, in light of the circumstances in which
they were made, not misleading.
(c) There is no fact known to any Seller that has specific
application to either Seller or any Acquired Company (other than general
economic or industry conditions) and that materially adversely affects the
assets, business, prospects, financial condition, or results of operations of
any Acquired Company that has not been set forth in this Agreement or any
Schedule hereto.
3.25. BROKERS OR FINDERS. Sellers, the Acquired Companies, and
their respective agents have incurred no obligation or liability, contingent or
otherwise, for brokerage or finders' fees or agents' commissions or other
similar payment in connection with this Agreement and Sellers will indemnify and
hold Buyer harmless from any such payment alleged to be due by or through the
Sellers or any Acquired Company as a result of the action of Sellers, any
Acquired Company or their respective agents.
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3.26. FRAUD AND ABUSE; SELF-REFERRAL; FALSE CLAIMS. Except as
disclosed in Schedule 3.26, the Sellers and the Acquired Companies and their
respective officers and directors have not, and, to the knowledge of the Sellers
and each Acquired Company, persons who provide professional services under
agreements with any Acquired Company, have not:
(a) engaged in any activities which are prohibited under
federal Medicare and Medicaid statutes, 42 U.S. C. Sections 1320a-7, 1320a-7(a)
and 1320a-7b, or the regulations promulgated pursuant to such statutes or
related state or local statutes or regulations or which are prohibited by rules
of professional conduct, including but not limited to the following:
(i) knowingly and willfully making or causing to be made a
false statement or representation of a material fact in any application for any
benefit or payment;
(ii) knowingly and willfully making or causing to be made any
false statement or representation of a material fact for use in determining
rights to any benefit or payment;
(iii) presenting or causing to be presented a claim for
reimbursement for services under Medicare, Medicaid, or other state health care
program that is for an item or service that is known or should be known to be
(A) not provided as claimed, or (B) false or fraudulent;
(iv) failing to disclose knowledge by a claimant of the
occurrence of any event affecting the initial or continued right to any benefit
or payment on its own behalf or on behalf of another, with intent to
fraudulently secure such benefit or payment;
(v) knowingly and willfully offering, paying, soliciting or
receiving any remuneration (including any kickback, bribe, or rebate), directly
or indirectly, overtly or covertly, in cash or in kind (A) in return for
referring an individual to a person for the furnishing or arranging for the
furnishing of any item or service for which payment may be made in whole or in
part by Medicare or Medicaid, or other state health care program, or (B) in
return for purchasing, leasing, or ordering any good, facility, service, or item
for which payment may be made in whole or in part by Medicare or Medicaid or
other state health care programs; or
(vi) knowingly and willfully making or causing to be made or
inducing or seeking to induce the making of any false statement or
representation (or omit to state a fact required to be stated therein or
necessary to make the statements contained therein not misleading) of a material
fact with respect to (A) the conditions or operations of a facility in order
that the facility may qualify for Medicare, Medicaid or other sate health care
program certification, or (B) information required to be provided under Section
1124A of the Social Security Act (42 U.S.C. Section 1320a-3);
(b) submitted any claim in connection with any referral to any
Acquired Company which violated any applicable self-referral law, including the
Federal Ethics in Patient Referrals Act, 42 U.S.C. Section 1395nn (known as the
"▇▇▇▇▇ Act"), or any applicable state self-referral law; or
(c) submitted any claim for payment to any payor source,
either governmental or nongovernmental, in material violation of any false claim
or fraud law, including the "False Claim Act," 31 U.S.C. Section 3729, or any
other applicable federal or state false claim or fraud law.
3.27. DEBT AND TRANSACTION EXPENSES.
(a) Except with respect to (i) the Debt, (ii) accounts payable
arising in the ordinary course of business, and (iii) the obligations identified
in Schedule 3.27, no Acquired Company is bound by, or is a party to, any
Contract, promissory note, indenture or other document which imposes upon any
Acquired Company any obligation to repay borrowed money
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or other indebtedness or to mortgage, pledge or otherwise place an Encumbrance
on any asset of any Acquired Company.
(b) The amount of the Acquired Companies' Transaction Expenses
set forth in the Transaction Expenses Statement provided by Sellers to Buyer at
the Closing shall be the total amount of all Acquired Companies' Transaction
Expenses incurred by the Acquired Companies.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Sellers as follows:
4.1. ORGANIZATION AND GOOD STANDING. Buyer is a corporation
duly organized, validly existing, and in good standing under the laws of the
State of
Delaware, with full corporate power and authority to conduct its
business as it is now being conducted, to own or use the properties and assets
that it purports to own or use. Buyer is duly qualified to do business in any
foreign jurisdictions where its ownership or leasing of property or assets or
the conduct of its business requires it to be so qualified, except where failure
to be so qualified would not have a material adverse effect on the business and
operations of Buyer and its Affiliates, taken as a whole.
4.2. ADVANCEPCS STOCK.
(a) Buyer is authorized to issue (i) 86,250,000 shares of its
Class A Common stock of which 32,282,307 shares were outstanding as of ▇▇▇▇▇ ▇▇,
▇▇▇▇, (▇▇) 7,500,000 shares of its Class B-1 Common stock of which 4,207,300
shares were outstanding as of ▇▇▇▇▇ ▇▇, ▇▇▇▇, (▇▇▇) 6,250,0000 shares of its
Class B-2 Common stock of which 100 shares were outstanding as of March 31,
2001, and (iv) 5,000,000 shares of its Class A-1 Preferred stock of which 65,854
shares were outstanding as of March 31, 2001.
(b) Upon consummation of the transactions contemplated by
this Agreement and the issuance and delivery of the certificates representing
the shares of AdvancePCS Stock to be issued to Sellers (or their designees)
pursuant to Section 2.2, such shares of AdvancePCS Stock will have been duly
authorized, validly issued, fully paid and nonassessable.
4.3. AUTHORITY; NO CONFLICT.
(a) This Agreement and each other agreement and instrument to
be executed by Buyer in connection herewith constitutes the legal, valid, and
binding obligation of Buyer, enforceable against Buyer in accordance with its
respective terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium and similar laws affecting creditors' rights and remedies generally.
Buyer has the absolute and unrestricted right, power, and authority to execute
and deliver this Agreement and each other agreement and instrument to be
executed by Buyer in connection herewith and to perform its obligations under
this Agreement and each other agreement and instrument to executed by Buyer in
connection herewith subject to the approval of the Board of Directors of Buyer,
which such approval will not be obtained prior to the signing of this Agreement.
(b) Neither the execution and delivery of this Agreement by
Buyer nor the consummation or performance of any of the transactions
contemplated by the Transaction Documents by Buyer will give any Person the
right to prevent, delay, or otherwise interfere with any of the transactions
contemplated by the Transaction Documents pursuant to:
(i) any provision of Buyer's Organizational Documents; or
(ii) any Legal Requirement or Order to which Buyer may be
subject.
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4.4. INVESTMENT INTENT. Buyer is acquiring the Purchase Shares
for its own account and not with a view to their distribution within the meaning
of Section 2(11) of the Securities Act of 1933, as amended, and the rules and
regulations thereunder, all as the same shall be in effect at the time (the
"SECURITIES ACT").
4.5. SEC DOCUMENTS; MATERIAL ADVERSE EFFECT.
(a) Since March 31, 1999, Buyer has filed all reports,
registrations and statements, together with any required amendments thereto,
that it was required to file with the Securities and Exchange Commission
("SEC"), including Forms 10-K, Forms 10-Q, Forms 8-K and proxy statements
(collectively, the "REPORTS"). As of their respective dates (and taking into
account any amendments filed thereto), the Reports complied in all material
respects with all the rules and regulations promulgated by the SEC and did not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
financial statements of Buyer included in the Reports were in compliance in all
material respects with applicable accounting requirements and the rules and
regulations promulgated by the SEC with respect thereto, were prepared in
accordance with GAAP consistently applied during the periods presented (except,
as noted therein, or in the case of the unaudited statements, as permitted by
Form 10-Q of the SEC) and fairly presented (subject, in the case of the
unaudited statements, to normal audit adjustments) the financial position of
Buyer as of the date thereof and the results of its operations and its cash
flows for the periods then ended.
(b) Since December 31, 2000, there has not been any material
adverse change in the business and operations of Buyer and its Affiliates, taken
as a whole.
4.6. COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL
AUTHORITIES.
Except as set forth in Schedule 4.6 and except where the
inaccuracy of any of the following would not have a material adverse effect on
the business and operations of Buyer and its Affiliates, taken as a whole:
(a) Buyer is in material compliance with each Legal
Requirement or Governmental Authorization that is applicable to it or to the
conduct or operation of its business.
(b) No event has occurred or circumstance exists (with or
without notice or lapse of time) that may constitute or result in a material
violation by Buyer, or a material failure on the part of Buyer to comply with,
any Legal Requirement or Government Authorization.
(c) Buyer has not received any written notice from any
Governmental Body regarding any actual, alleged violation of, or failure to
comply with, any Legal Requirement or Governmental Authorization.
(d) Buyer has all Government Authorizations necessary to
permit it to lawfully conduct and operate its business as currently conducted in
all material respects.
4.7. CERTAIN PROCEEDINGS. There is no pending Proceeding that
has been commenced against Buyer and that challenges, or may have the effect of
preventing, delaying, making illegal, or otherwise interfering with, any of the
transactions contemplated by the Transaction Documents. To Buyer's knowledge, no
such Proceeding has been Threatened.
4.8. BROKERS OR FINDERS. Except with respect to Bank of
America Securities, Buyer and its officers and agents have incurred no
obligation or liability, contingent or otherwise, for brokerage or finders' fees
or agents' commissions or other similar payment in connection with this
Agreement and will indemnify and hold Sellers harmless from any such payment
alleged to be due by or through Buyer as a result of the action of Buyer or its
officers or agents.
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ARTICLE V
COVENANTS OF SELLERS PRIOR TO CLOSING DATE
5.1. ACCESS AND DUE DILIGENCE INVESTIGATION. Between the date
of this Agreement and the Closing Date, Sellers will, and will cause each
Acquired Company and its Representatives to, (a) afford Buyer and its
Representatives and prospective lenders and their Representatives (collectively,
"BUYER'S ADVISORS") full and free access during normal business hours to each
Acquired Company's personnel, properties, contracts, books and records, and
other documents and data, (b) afford Buyer and Buyer's Advisors full and free
access to all suppliers, manufacturers, customers, physicians, healthcare
professionals, landlords, creditors and others having any business relationship
with any Acquired Company, (c) furnish Buyer and Buyer's Advisors with copies of
all such contracts, books and records, and other existing documents and data as
Buyer may reasonably request where not prohibited by law governing the
confidentiality of medical records, and (d) furnish Buyer and Buyer's Advisors
with such additional financial, operating, and other data and information as
Buyer may reasonably request. Notwithstanding anything herein to the contrary,
Buyer and Buyer's Advisors agree not to contact any customer of the Acquired
Companies who has received pharmaceutical and related services for treatment of
a medical condition ("PATIENT") without first notifying Sellers to enable
Sellers to contact the Patient for the purpose of securing such Patient's
consent to the proposed contact, and Sellers hereby agree to use, and to cause
the Acquired Companies to use, their best reasonable efforts to obtain each such
consent. Buyer agrees not to contact any Patient (and not to permit Buyer's
Advisors to contact any Patient) without receiving confirmation from Sellers
that any such Patient has consented to the contact with Buyer or Buyer's
Advisors. In the event that Buyer (or Buyer's Advisors) comes into possession of
individually identifiable Patient information (of any kind whatsoever) and the
Closing does not occur, Buyer agrees to maintain the confidentiality of such
Patient information in compliance with applicable Law governing the
confidentiality of patient medical information and return or destroy all copies
of such information in any medium in its (or its Advisors') possession.
5.2. OPERATION OF THE BUSINESSES OF EACH ACQUIRED COMPANY.
Between the date of this Agreement and the Closing Date, Sellers will, and will
cause each Acquired Company to:
(a) conduct the business of each Acquired Company only in the
ordinary course of business; and
(b) use best efforts to preserve intact the current business
organization of each Acquired Company, keep available the services of the
current officers, employees, and agents of each Acquired Company, and maintain
the relations and good will with suppliers, manufacturers, customers,
physicians, healthcare professionals, landlords, creditors, employees, agents,
and others having business relationships with each Acquired Company.
5.3. NEGATIVE COVENANTS. Except as otherwise expressly
permitted by this Agreement, between the date of this Agreement and the Closing
Date, Sellers will not, and will cause each Acquired Company not to, do or
perform any of the following with respect to any Acquired Company without the
prior consent of Buyer:
(a) enter into any Contract, obligation or understanding, oral
or written, with respect to the ownership, governance, business, operations,
prospects or finances of any Acquired Company except in the ordinary course of
business;
(b) take any affirmative action, or fail to take any
reasonable action within their or its control, as a result of which any of the
changes or events listed in Section 3.16 is reasonably likely to occur;
(c) declare or pay any dividends or make any distributions of
any kind to its shareholders;
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(d) make any direct or indirect redemption, retirement,
purchase, or other acquisition of any shares of the Company Stock or the
TheraCom Stock;
(e) extend any loans, incur any indebtedness or assume any
obligation or liability (whether absolute or contingent; and whether or not
currently due and payable);
(f) hire additional employees except in the ordinary course of
business;
(g) make any material change in its accounting methods, except
as required by GAAP, and/or its business policies;
(h) waive any material right under any Contract or terminate
or fail to renew any Contract material to the condition of any Acquired Company;
(i) fail to maintain to full force and effect policies of
insurance in effect at the time of execution of this Agreement;
(j) encumber any of any Acquired Company's assets or enter
into or change any material transactions; or
(k) take any action in any legal, administrative or
governmental proceeding or otherwise that could have a material adverse effect
on the business, operations or prospects of any Acquired Company.
5.4. REQUIRED APPROVALS. As promptly as practicable after the
date of this Agreement, Sellers will, and will cause each Acquired Company to,
make all filings required by Legal Requirements to be made by them in order to
consummate the transactions contemplated by the Transaction Documents. Between
the date of this Agreement and the Closing Date, Sellers will, and will cause
each Acquired Company to, (a) cooperate with Buyer with respect to all filings
that Buyer elects to make or is required by Legal Requirements to make in
connection with the transactions contemplated by the Transaction Documents, and
(b) cooperate with Buyer in obtaining all consents identified in Schedule 3.2.
5.5. NOTIFICATION. Between the date of this Agreement and the
Closing Date, each Seller will promptly notify Buyer in writing if such Seller
or any Acquired Company has knowledge of any fact or condition that causes or
constitutes a Breach of any of Sellers' representations and warranties as of the
date of this Agreement, or if any Seller or any Acquired Company obtains
knowledge of the occurrence after the date of this Agreement of any fact or
condition that would (except as expressly contemplated by this Agreement) cause
or constitute a Breach of any such representation or warranty had such
representation or warranty been made as of the time of occurrence or discovery
of such fact or condition. Should any such fact or condition require any change
in the Schedules hereto, Sellers will promptly deliver to Buyer a supplement to
the applicable Schedule specifying such change. During the same period, each
Seller will promptly notify Buyer of the occurrence of any Breach of any
covenant of Sellers in this Article V or of the occurrence of any event that
reasonably could be expected to make the satisfaction of the conditions in
Article VII impossible or unlikely.
5.6. NO NEGOTIATION. Until such time, if any, as this
Agreement is terminated pursuant to Article IX, Sellers will not, and will cause
each Acquired Company and each of their Representatives not to, directly or
indirectly solicit, initiate, or encourage any inquiries or proposals from,
discuss or negotiate with, provide any non-public information to, or consider
the merits of any unsolicited inquiries or proposals from, any Person (other
than Buyer) relating to any transaction involving the sale of the business or
assets of any Acquired Company, or any of the capital stock of any Acquired
Company, or any merger, consolidation, business combination, or similar
transaction involving any Acquired Company.
5.7. REASONABLE EFFORTS. Between the date of this Agreement
and the Closing Date, Sellers will use all reasonable efforts to cause the
conditions in Articles VII to be satisfied.
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ARTICLE VI
COVENANTS OF BUYER PRIOR TO CLOSING DATE
6.1. APPROVALS OF GOVERNMENTAL BODIES. As promptly as
practicable after the date of this Agreement, Buyer will make all filings
required by Legal Requirements to be made by it to consummate the transactions
contemplated by the Transaction Documents. Between the date of this Agreement
and the Closing Date, Buyer will (i) cooperate with Sellers with respect to all
filings that Sellers are required by Legal Requirements to make in connection
with the transactions contemplated by the Transaction Documents, and (ii)
cooperate with Sellers in obtaining all consents identified in Schedule 3.2;
provided that this Agreement will not require Buyer to dispose of or make any
change in any portion of its business or to incur any other burden to obtain a
Governmental Authorization.
6.2. REASONABLE EFFORTS. Except as set forth in the proviso to
Section 6.1, between the date of this Agreement and the Closing Date, Buyer will
use all reasonable efforts to cause the conditions in Articles VII and VIII to
be satisfied.
ARTICLE VII
CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE
Buyer's obligation to purchase the Purchase Shares and to take
the other actions required to be taken by Buyer at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by Buyer, in whole or in part):
7.1. ACCURACY OF REPRESENTATIONS. All of Sellers'
representations and warranties in this Agreement (considered collectively), and
each of these representations and warranties (considered individually), must
have been accurate in all material respects as of the date of this Agreement,
and must be accurate in all material respects as of the Closing Date as if made
on the Closing Date, without giving effect to any supplement to the Schedules.
7.2. SELLERS' PERFORMANCE.
(a) All of the covenants and obligations that Sellers are
required to perform or to comply with pursuant to this Agreement at or prior to
the Closing (considered collectively), and each of these covenants and
obligations (considered individually), must have been duly performed and
complied with in all material respects.
(b) Each document required to be delivered pursuant to Section
2.5 must have been delivered, and each of the other covenants and obligations in
Article V must have been performed and complied with in all respects.
7.3. CONSENTS. Each of the Consents identified in Schedule
3.2, must have been obtained and must be in full force and effect.
7.4. ADDITIONAL DOCUMENTS. Each of the following documents
must have been delivered to Buyer:
(a) An opinion of counsel for Sellers dated the Closing Date,
in a form reasonably acceptable to Buyer; and
(b) such other documents as Buyer may reasonably request for
the purpose of (i) evidencing the accuracy of any of Sellers' representations
and warranties, (ii) evidencing the performance by each Seller of, or the
compliance by each Seller with, any covenant or obligation required to be
performed or complied with by such Seller, (iii) evidencing the satisfaction of
any condition referred to in this Article VII, or (iv) otherwise facilitating
the consummation or performance of any of the transactions contemplated by the
Transaction Documents.
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7.5. NO CLAIM REGARDING STOCK OWNERSHIP OR SALE PROCEEDS.
Except for the lawsuit described in Section 10.3(e) hereof, there must not have
been made or Threatened by any Person any claim asserting that such Person (a)
is the holder or the beneficial owner of, or has the right to acquire or to
obtain beneficial ownership of, any stock of, or any other voting, equity, or
ownership interest in, any Acquired Company, or (b) is entitled to all or any
portion of the Purchase Price payable for the Purchase Shares.
7.6. NO PROHIBITION. Neither the consummation nor the
performance of any of the transactions contemplated by the Transaction Documents
will, directly or indirectly (with or without notice or lapse of time),
materially contravene, or conflict with, or result in a material violation of,
or cause Buyer or any Person affiliated with Buyer to suffer any material
adverse consequence under, (a) any applicable Legal Requirement or Order, or (b)
any Legal Requirement or Order that has been published, introduced, or otherwise
proposed by or before any Governmental Body.
7.7. AUTHORITY. All actions required to be taken by or on the
part of Buyer to authorize the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby shall
have been duly and validly taken by the Board of Directors of Buyer.
ARTICLE VIII
CONDITIONS PRECEDENT TO SELLERS' OBLIGATION TO CLOSE
Sellers' obligation to sell the Purchase Shares and to take
the other actions required to be taken by Sellers at the Closing is subject to
the satisfaction, at or prior to the Closing, of each of the following
conditions (any of which may be waived by Sellers, in whole or in part):
8.1. ACCURACY OF REPRESENTATIONS. All of Buyer's
representations and warranties in this Agreement (considered collectively), and
each of these representations and warranties (considered individually), must
have been accurate in all material respects as of the date of this Agreement and
must be accurate in all material respects as of the Closing Date as if made on
the Closing Date.
8.2. BUYER'S PERFORMANCE.
(a) All of the covenants and obligations that Buyer is
required to perform or to comply with pursuant to this Agreement at or prior to
the Closing (considered collectively), and each of these covenants and
obligations (considered individually), must have been performed and complied
with in all material respects.
(b) Buyer must have delivered each of the documents required
to be delivered by Buyer pursuant to Section 2.5.
8.3. CONSENTS. Each of the Consents identified in Schedule
3.2, and any and all other consents required to be obtained by Sellers from
third parties in order not to be in default under any contract identified in
Schedule 3.17 hereof and to consummate the transactions contemplated hereunder,
must have been obtained and must be in full force and effect.
8.4. ADDITIONAL DOCUMENTS. Each of the following documents
must have been delivered to Sellers:
(a) An opinion of counsel for Buyer dated the Closing Date, in
a form reasonably acceptable to the Sellers; and
(b) such other documents as Sellers may reasonably request for
the purpose of (i) evidencing the accuracy of any representation or warranty of
Buyer, (ii) evidencing the
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performance by Buyer of, or the compliance by Buyer with, any covenant or
obligation required to be performed or complied with by Buyer, (iii) evidencing
the satisfaction of any condition referred to in this Article VIII, or (iv)
otherwise facilitating the consummation of any of the transactions contemplated
by the Transaction Documents.
8.5. NO PROHIBITION. Neither the consummation nor the
performance of any of the transactions contemplated by the Transaction Documents
will, directly or indirectly (with or without notice or lapse of time),
contravene, or conflict with, or result in a violation of, or cause Sellers or
any Acquired Company to suffer any adverse consequence under, (a) any applicable
Legal Requirement or Order, or (b) any Legal Requirement or Order that has been
published, introduced, or otherwise proposed by or before any Governmental Body.
8.6. PERSONAL GUARANTY(IES). The personal guaranty(ies)
identified at Schedule 8.6, pursuant to which current or former shareholders,
directors, officers or employees of an Acquired Company have guarantied certain
obligations of an Acquired Company, shall have been released or Buyer shall have
agreed in writing to fully indemnify and hold harmless the individual(s) in
question from any liability or obligation with respect to any such personal
guaranty(ies).
ARTICLE IX
TERMINATION
9.1. TERMINATION EVENTS. This Agreement may, by notice given
prior to or at the Closing, be terminated:
(a) by either Buyer or Sellers if a material Breach of any
provision of this Agreement has been committed by the other party and such
Breach has not been waived;
(b) (i) by Buyer if any of the conditions in Article VII have
not been satisfied as of the Closing Date or if satisfaction of such a condition
is or becomes impossible (other than through the failure of Buyer to comply with
its obligations under this Agreement) and Buyer has not waived such condition on
or before the Closing Date; or (ii) by Sellers, if any of the conditions in
Article VIII has not been satisfied of the Closing Date or if satisfaction of
such a condition is or becomes impossible (other than through the failure of
Sellers to comply with their obligations under this Agreement) and Sellers have
not waived such condition on or before the Closing Date;
(c) by mutual consent of Buyer and Sellers; or
(d) by either Buyer or Sellers if the Closing has not occurred
(other than through the failure of any party seeking to terminate this Agreement
to comply fully with its obligations under this Agreement) on or before
September 30, 2001, or such later date as the parties may agree upon.
9.2. EFFECT OF TERMINATION. Each party's right of termination
under Section 9.1 is in addition to any other rights it may have under this
Agreement or otherwise, and the exercise of a right of termination will not be
an election of remedies. If this Agreement is terminated pursuant to Section
9.1, all further obligations of the parties under this Agreement will terminate,
except that the obligations in Sections 12.1 and 12.3 will survive; provided
that if this Agreement is terminated by a party because of the Breach of the
Agreement by the other party or because one or more of the conditions to the
terminating party's obligations under this Agreement is not satisfied as a
result of the other party's failure to comply with its obligations under this
Agreement, the terminating party's right to pursue all legal remedies will
survive such termination unimpaired.
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ARTICLE X
INDEMNIFICATION; REMEDIES
10.1. SURVIVAL. All representations, warranties, covenants and
obligations in this Agreement, the Schedules, the supplements to the Schedules,
the certificate delivered pursuant to Section 2.5(a)(iv), and any other
certificate or document delivered pursuant to this Agreement will survive the
Closing for a period of two (2) years; provided, however, that the
representations and warranties in Sections 3.1, 3.2(a), 3.3, 3.25, 4.1, 4.2,
4.3(a), and 4.8 shall survive without limitation and the representations and
warranties in Sections 3.11 and 3.19 shall survive until the expiration of any
applicable statute of limitations. If, prior to the relevant expiration date set
forth in this Section 10.1, written notice of an indemnification claim in
respect of a Breach of a representation or warranty is given by an indemnified
party to an indemnifying party, then notwithstanding such expiration, such
representation and warranty shall survive the Closing but only in respect of
such claim until payment in full of any and all Damages (as defined herein)
resulting therefrom or the release of the indemnifying party therefrom by the
indemnified party following a final and binding settlement or non-appealable
judgment with respect thereto.
10.2. RIGHT TO INDEMNIFICATION NOT AFFECTED BY KNOWLEDGE. The
right to indemnification, payment of Damages or other remedy based on such
representations, warranties, covenants, and obligations will not be affected by
any investigation conducted with respect to, or any knowledge acquired (or
capable of being acquired) at any time, whether before or after the execution
and delivery of this Agreement or the Closing Date, with respect to the accuracy
or inaccuracy of or compliance with, any such representation, warranty,
covenant, or obligation. Except as otherwise provided herein, the waiver of any
condition based on the accuracy of any representation or warranty, or on the
performance of or compliance with any covenant or obligation, will not affect
the right to indemnification, payment of Damages, or other remedy based on such
representations, warranties, covenants, and obligations.
10.3. INDEMNIFICATION AND PAYMENT OF DAMAGES BY SELLERS.
Sellers, jointly and severally, will indemnify and hold harmless Buyer, each
Acquired Company, and their respective Representatives, stockholders,
controlling persons, and affiliates (collectively, the "BUYER INDEMNIFIED
PERSONS") for, and will pay to the Buyer Indemnified Persons the amount of, any
loss, liability, claim, damage (excluding Lost Profits and Special Damages (as
defined in Section 10.10) except where an indemnified party has actually paid
amounts on account of Lost Profits and Special Damages to a third party
claimant), expense (including costs of investigation and defense and reasonable
attorneys' fees), whether or not involving a third-party claim (collectively,
"DAMAGES"), incurred, arising, directly or indirectly, from or in connection
with:
(a) any Breach of any representation or warranty made by
Sellers in this Agreement (after giving effect to any supplement to the
Schedules), other than, if the Closing occurs, Breaches of such representations
or warranties that are identified in the certificate delivered pursuant to
Section 2.5(a)(iv) as having caused the condition specified in Section 7.1 not
to be satisfied, and for purposes of this subsection 10.3(a) any qualification
of such representations and warranties by reference to the materiality of
matters stated therein, shall be disregarded, in determining any Breach thereof;
(b) any Breach by any Seller of any covenant or obligation of
such Seller in this Agreement;
(c) any claim by any Person for brokerage or finder's fees or
commissions or similar payments based upon any agreement or understanding
alleged to have been made by any such Person with any Seller or any Acquired
Company (or any Person acting on their behalf) in connection with any of the
transactions contemplated under the Transaction Documents;
(d) any matter disclosed in the Schedules hereto;
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(e) that certain lawsuit captioned ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ v.
TheraCom, Inc., ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, and ▇▇▇▇ ▇▇▇▇▇▇, filed in the Superior Court of
the State of California for the County of Los Angeles on September 14, 2000; or
(f) any indemnification obligations under Section 2(d) of the
Escrow Agreement.
10.4. LIMITATIONS ON INDEMNIFICATION AND PAYMENT OF DAMAGES BY
SELLERS.
(a) Sellers shall not have liability under Section 10.3(a)
hereof unless the aggregate amount of indemnifiable Damages to the Buyer
Indemnified Persons finally determined to arise thereunder exceeds $250,000 (the
"INDEMNITY THRESHOLD AMOUNT") and, in such event, subject to Section 10.4(b),
Sellers shall be required to pay the aggregate amount by which such Damages
exceed the Indemnity Threshold Amount; provided, however, that Damages finally
determined to arise based upon, attributable to or resulting from the Breach of
any representation or warranty set forth in Sections 3.1, 3.2(a), 3.3, 3.11,
3.19 and 3.25 shall not be subject to the foregoing limitation and shall be
indemnified in full even if less than the Indemnity Threshold Amount.
(b) The maximum amount of Damages for which all Sellers shall
be jointly and severally liable pursuant to Section 10.3(a) shall not exceed
Twenty Seven Million Five Hundred Thousand Dollars ($27,500,000); provided,
however, that the maximum amount of Damages for which all Sellers shall be
jointly and severally liable pursuant to Section 10.3(a) for a breach of Section
3.14 or Section 3.26 which is based upon the physician billing practices engaged
in by the Acquired Companies pursuant to the Sales and Billing Agent Agreements
included in the Applicable Contracts shall not exceed five million dollars
($5,000,000), but such limitation of Damages shall apply only to the extent the
physician billing practices in question are consistent in all material respects
with the physician billing practices described and disclosed in Schedule
10.4(b).
10.5. INDEMNIFICATION AND PAYMENT OF DAMAGES BY BUYER. Buyer
will indemnify and hold harmless Sellers, and their respective trustees,
beneficiaries, successors and assigns (collectively, the "SELLER INDEMNIFIED
PERSONS"), and will pay to the Seller Indemnified Persons the amount of any
Damages arising, directly or indirectly, from or in connection with (a) any
Breach of any representation or warranty made by Buyer in this Agreement or in
any certificate delivered by Buyer pursuant to this Agreement, (b) any Breach by
Buyer of any covenant or obligation of Buyer in this Agreement, or (c) any claim
by any Person for brokerage or finder's fees or commissions or similar payments
based upon any agreement or understanding alleged to have been made by such
Person with Buyer (or any Person acting on its behalf) in connection with any of
the transactions contemplated by the Transaction Documents.
10.6. LIMITATIONS ON INDEMNIFICATION AND PAYMENT OF DAMAGES BY
BUYER.
(a) For purposes of Section 10.5(a), the total amount of
Damages for which Buyer is obligated to indemnify Sellers pursuant to Section
10.5(a) in the event of a Breach of one of Buyer's representations or warranties
hereunder, exclusive of any expenses directly incurred by Sellers and
indemnifiable by Buyer, shall be limited solely to the amount by which the
shares of AdvancePCS Stock received by Sellers pursuant to this Agreement are
diminished in value and such diminution in value could reasonably be directly
attributable to such a Breach, subject to the limitations contained in the
remainder of this Section 10.6.
(b) Buyer shall not have liability under Section 10.5(a)
hereof unless the aggregate amount of indemnifiable Damages to the Seller
Indemnified Persons finally determined to arise thereunder exceeds the Indemnity
Threshold Amount and, in such event, subject to Section 10.6(a), the Buyer shall
be required to pay the aggregate amount by which such Damages exceed the
Indemnity Threshold Amount.
10.7. PROCEDURES FOR INDEMNIFICATION -- THIRD PARTY CLAIMS.
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(a) Promptly after receipt by an indemnified party under
Section 10.3 or 10.5 of notice of the commencement of any Proceeding against it,
such indemnified party will, if a claim is to be made against an indemnifying
party under such Section, give written notice to the indemnifying party of the
commencement of such claim, but the failure to so notify the indemnifying party
will not relieve the indemnifying party of any liability that it may have to any
indemnified party, subject to the time limitations set forth in Section 10.1 and
except to the extent that the indemnifying party demonstrates that the defense
of such action is prejudiced by the indemnifying party's failure to give such
notice.
(b) If any Proceeding referred to in Section 10.3 (and it is
hereby acknowledged by the parties that the term Proceeding includes, but is not
limited to, the lawsuit identified in Section 10.3(e)) is brought against an
indemnified party and it gives written notice to the indemnifying party of the
commencement of such Proceeding, the indemnifying party will, unless the claim
involves Taxes, be entitled to participate in such Proceeding and, to the extent
that it wishes (unless (i) the indemnifying party is also a party to such
Proceeding and the indemnified party determines in good faith that joint
representation would be inappropriate, or (ii) the indemnifying party fails to
provide reasonable assurance to the indemnified party of its financial capacity
to defend such Proceeding and provide indemnification with respect to such
Proceeding), to assume the defense of such Proceeding with counsel reasonably
satisfactory to the indemnified party and, after written notice from the
indemnifying party to the indemnified party of its election to assume the
defense of such Proceeding, the indemnifying party will not, as long as it
diligently conducts such defense, be liable to the indemnified party under this
Article X for any fees of other counsel or any other expenses with respect to
the defense of such Proceeding, in each case subsequently incurred by the
indemnified party in connection with the defense of such Proceeding, other than
reasonable costs of investigation. If the indemnifying party assumes the defense
of a Proceeding, (i) it will be conclusively established for purposes of this
Agreement that the claims made in that Proceeding are within the scope of and
subject to indemnification to the extent adversely determined; (ii) no
compromise or settlement of such claims may be effected by the indemnifying
party without the indemnified party's written consent, which consent shall not
be unreasonably withheld unless (A) there is no finding or admission of any
violation of Legal Requirements or any violation of the rights of any Person and
no effect on any other claims that may be made against the indemnified party,
and (B) the sole relief provided is monetary damages that are paid in full by
the indemnifying party; (iii) the indemnified party will have no liability with
respect to any compromise or settlement of such claims effected without its
written consent when such consent is required hereunder; and (iv) no compromise
or settlement of such claims may be effected by the indemnified party without
the indemnifying party's written consent, which consent shall not be
unreasonably withheld. If written notice is given to an indemnifying party of
the commencement of any Proceeding and the indemnifying party does not, within
twenty (20) days after the indemnified party's written notice is given, give
written notice to the indemnified party of its election to assume the defense of
such Proceeding, the indemnifying party will be bound by any determination made
in such Proceeding or any compromise or settlement effected by the indemnified
party; provided, however, that the indemnifying party shall not be precluded
from otherwise participating in such Proceeding as permitted by this Section
10.7(b).
(c) Notwithstanding the foregoing, if an indemnified party
determines in good faith that there is a reasonable probability that a
Proceeding may adversely affect it or its affiliates other than as a result of
monetary damages for which it would be entitled to indemnification under this
Agreement, the indemnified party may, by notice to the indemnifying party,
assume the exclusive right to defend, compromise, or settle such Proceeding, but
the indemnifying party will not be bound by any determination of a Proceeding so
defended or any compromise or settlement effected without its written consent
(which may not be unreasonably withheld).
10.8. PROCEDURE FOR INDEMNIFICATION -- OTHER CLAIMS. Subject
to the time limitations in Section 10.1, a claim for indemnification for any
matter not involving a third-party claim may be asserted by written notice to
the party from whom indemnification is sought, which notice shall set forth a
reasonable description of the basis of such claim and the amount necessary to
satisfy such claim, if known.
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10.9. NET DAMAGES. All Damages receivable by an indemnified
party under this Article X shall be net of insurance proceeds, the reasonable
cost of recovering the amount of coverage from the insurer, and recoveries from
third parties (except cost of collection from such third parties which shall be
indemnifiable Damages) actually received by such indemnified party. The amount
of any Damages shall be net of any tax benefits or savings realized or to be
realized by the indemnified party as a result of the matter giving rise to the
claim for indemnification.
10.10. LOST PROFITS AND SPECIAL DAMAGES. Except as expressly
provided herein, no party shall be required to indemnify, hold harmless or
otherwise compensate the any party for damage to reputation, lost business
opportunities, lost profits, diminution of value, mental or emotional distress,
incidental, special, exemplary, indirect or consequential damages (collectively,
"Lost Profits and Special Damages").
10.11. SATISFACTION OF INDEMNIFICATION LIABILITY. Except as
otherwise provided in the Escrow Agreement in respect of the Escrowed AdvancePCS
Stock, each Seller may elect to indemnify the Buyer Indemnified Persons by
payment of cash, by surrender of shares of AdvancePCS Stock or by a combination
of payment of cash and surrender of shares of AdvancePCS Stock. For purposes of
determining the number of shares of AdvancePCS Stock to be so surrendered,
Sellers shall surrender that number of shares of AdvancePCS Stock that results
from dividing the amount of Damages owed by Sellers by the Closing Date Stock
Price.
10.12. NON-EXCLUSIVE REMEDIES. The remedies available to the
parties under this Agreement shall not be exclusive of any other remedies
available to the parties at law, equity or otherwise.
ARTICLE XI
POST-CLOSING COVENANTS
11.1 COVENANTS WITH RESPECT TO TAXES. If, with respect to a
taxable period ending on or before the Closing Date, (i) any tax authority
commences or has commenced an audit and such authority proposes an adjustment or
makes any other claim with respect to a Tax liability of an Acquired Company, or
(ii) an Acquired Company files or has filed a claim against any tax authority
for refund of Taxes paid or for a credit against any Tax liability assessed
against and paid by an Acquired Company (collectively, a "TAX PROCEEDING"), and
the Tax Proceeding would give rise to an indemnification claim by Buyer against
Sellers pursuant to Section 10. 3 above, then Buyer shall promptly notify
Sellers in writing of such Tax Proceeding. Sellers shall be entitled to
participate in such Tax Proceeding and, to the extent that Sellers wish (and
Buyer determines in good faith that joint representation would be
inappropriate), to assume the defense or prosecution, as the case may be, of
such Tax Proceeding with counsel reasonably satisfactory to Buyer and, after
written notice from Sellers to Buyer of their election to assume the defense or
prosecution, as the case may be, of such Tax Proceeding, Sellers will not, as
long as they diligently conduct such defense or prosecution, as the case may be,
be liable to Buyer under this Section 11.1 or Article X for any fees of other
counsel or any other expenses with respect to the defense or prosecution, as the
case may be, of such Tax Proceeding, in each case subsequently incurred by Buyer
in connection with the defense or prosecution, as the case may be, of such Tax
Proceeding, other than reasonable costs of investigation. If Sellers assume the
defense or prosecution, as the case may be, of a Tax Proceeding, (i) it will be
conclusively established for purposes of this Agreement that the claims made in
that Tax Proceeding are within the scope of and subject to indemnification to
the extent adversely determined; (ii) no compromise or settlement of such claims
may be effected by Sellers without Buyer's written consent, which consent cannot
be unreasonably withheld; (iii) Buyer will have no liability with respect to any
compromise or settlement of such claims effected without its written consent;
and (iv) no compromise or settlement of such claims may be effected by Buyer
without Sellers' written consent, which consent shall not be unreasonably
withheld. If written notice is given to Sellers of a Tax Proceeding and Sellers
do not, within twenty (20) days after Buyer's written notice is given,
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give written notice to Buyer of their election to assume the defense or
prosecution, as the case may be, of such Tax Proceeding, Sellers will be bound
by any determination made in such Tax Proceeding or any compromise or settlement
effected by Buyer. [Notwithstanding the foregoing, if Buyer determines in good
faith that there is a reasonable probability that a Tax Proceeding may adversely
affect it or its Affiliates other than as a result of monetary damages for which
it would be entitled to indemnification under this Agreement, Buyer may , by
notice to Sellers, assume the exclusive right to defend, prosecute, compromise,
or settle such Tax Proceeding, but Sellers will not be bound by any
determination of a Tax Proceeding so defended or prosecuted or any compromise or
settlement effected without its written consent (which may not be unreasonably
withheld) and Sellers will have no liability with respect to such compromise or
settlement. With respect to Tax Returns of an Acquired Company for tax periods
that commenced prior to the Closing Date but for which Tax Returns were not
required to have been filed prior to the Closing Date, Buyer shall permit
Sellers and their tax advisors to review and comment on each such Tax Return
within a reasonable time prior to filing and shall consider in good faith all
such revisions to such Tax Returns as are reasonably requested by Sellers.
11.2 REGISTRATION OF SELLERS' ADVANCEPCS STOCK. Sellers shall
have the following registration rights with respect to the AdvancePCS Stock
issued to them hereunder.
(a) Registration Rights for AdvancePCS Stock; Filing of
Registration Statement. AdvancePCS will utilize its reasonable best efforts to
cause, as soon as practicable following the Closing Date and in no event later
than sixty (60) days thereafter, a registration statement to be filed under the
Securities Act or an existing registration statement to be amended for the
purpose of registering the AdvancePCS Stock for resale by Sellers (the
"REGISTRATION STATEMENT"). Buyer will use its reasonable best efforts to have
the Registration Statement become effective and cause the AdvancePCS Stock owned
by Sellers to be registered under the Securities Act, and registered, qualified
or exempted under the state securities laws of such jurisdictions as any Seller
(collectively, "BLUE SKY QUALIFICATIONS") reasonably requests as soon as
reasonably practicable following the Closing Date, provided, however, that Buyer
shall not be required to qualify to do business in any state or to consent to be
subject to general service of process in any state where it is not otherwise
required to be so qualified or subject. Buyer shall use its reasonable best
efforts to list the AdvancePCS Stock on a national securities exchange or have
such stock designated as national market securities by the National Association
of Securities Dealers, Inc ("NASD"). The registration pursuant to this Section
11.1 shall be effected by the filing of a registration statement on Form S-3,
unless the use of a different form has been agreed to in writing by the parties.
(b) Expenses of Registration. Buyer shall pay all expenses
incurred by Buyer under this Section 11.2 in connection with the registration,
Blue Sky Qualifications or other qualification and/or exemption of AdvancePCS
Stock, including any SEC registration, Blue Sky Qualifications and filing fees,
printing expenses, fees and disbursements of Buyer's counsel and accountants,
transfer agents' and registrars' fees, fees and disbursements of experts used by
Buyer in connection with such registration or Blue Sky Qualifications,
qualification and/or exemption, and expenses incidental to any amendment or
supplement to the Registration Statement or prospectuses contained therein.
Buyer shall not, however, be liable for any sales, broker's or underwriting
commissions upon sale by any Seller of any of AdvancePCS Stock owned by Sellers.
(c) Furnishing of Documents. Buyer shall furnish to Sellers
such reasonable number of copies of the Registration Statement, such
prospectuses as are contained in the Registration Statement and such other
documents as Sellers may reasonably request in order to facilitate the offering
of AdvancePCS Stock owned by Sellers.
(d) Amendments and Supplements. Buyer shall prepare and
promptly file with the SEC and promptly notify Sellers of the filing of such
amendments or supplements to the Registration Statement or prospectuses
contained therein as may be necessary to correct any statements or omissions if,
at the time when a prospectus relating to AdvancePCS Stock is required to be
delivered under the Securities Act, any event shall have occurred as a result of
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which any such prospectus or any other prospectus as then in effect would
include an untrue statement of a material fact or omit to state any material
fact necessary to make the statement therein, in the light of the circumstances
under which they were made not misleading. Buyer shall also advise Sellers
promptly after it shall receive notice or obtain knowledge thereof, of the
issuance of any order suspending the effectiveness of the Registration Statement
or the Blue Sky Qualifications or the initiation or threatening of any
proceeding for that purpose and promptly use its reasonable best efforts to
prevent the issuance of any stop order or to obtain its withdrawal if such stop
order should be issued.
(e) Duration. Buyer shall maintain the effectiveness of the
Registration Statement and the Blue Sky Qualifications until the earlier of (i)
the second anniversary of the Closing Date or (ii) the sale of all of AdvancePCS
Stock then owned by Sellers. Buyer's obligations contained in Sections 11.2(a),
(c), and (d) shall terminate on the second anniversary of the Closing Date.
(f) Further Information. If AdvancePCS Stock owned by a Seller
is included in any registration, such Seller shall furnish Buyer such
information regarding itself as Buyer may reasonably request and as shall be
required in connection with any registration, qualification or compliance
referred to in this Agreement.
(g) Indemnification.
(i) To the extent permitted by law, AdvancePCS will
indemnify each Seller with respect to whom a registration, qualification or
compliance has been effected pursuant to this Section 11.2, against all
expenses, claims, losses, damages or liabilities (or actions in respect
thereof), including any of the foregoing incurred in settlement of any
litigation, commenced or threatened, arising out of or based on any untrue
statement (or alleged untrue statement) of a material fact contained in any
registration statement, prospectus, offering circular or other document, or any
amendment or supplement thereto, incident to any such registration,
qualification or compliance, or based on any omission (or alleged omission) to
state therein a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances in which they were made,
not misleading, or any violation by AdvancePCS of any rule or regulation
promulgated under the Securities Act applicable to AdvancePCS in connection with
any such registration, qualification or compliance, and AdvancePCS will
reimburse each such Seller, for any legal and any other expenses reasonably
incurred in connection with investigating, preparing or defending any such
claim, loss, damage, liability or action, as such expenses are incurred,
provided that AdvancePCS will not be liable in any such case to the extent that
any such claim, loss, damage, liability or expense arises out of or is based on
any untrue statement or omission or alleged untrue statement or omission, made
in reliance upon and in conformity with written information furnished to
AdvancePCS by such Seller for use therein.
(ii) To the extent permitted by law, each Seller will, if
AdvancePCS Stock held by such Seller is included in the securities as to which
such registration, qualification or compliance is being effected, indemnify
AdvancePCS, each of its directors and officers, each person who controls
AdvancePCS within the meaning of Section 15 of the Securities Act, and each
other such Seller, each of its officers and directors and each person
controlling such Seller within the meaning of Section 15 of the Securities Act,
against all claims, losses, damages and liabilities (or actions in respect
thereof) arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any such registration statement,
prospectus, offering circular or other document, or any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will reimburse
AdvancePCS, such Sellers, such directors, officers, persons, or control persons
for any legal or any other expenses reasonably incurred in connection with
investigating or defending any such claim, loss, damage, liability or action, as
such expenses are
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incurred, in each case to the extent, but only to the extent, that such untrue
statement (or alleged untrue statement) or omission (or alleged omission) is
made in such registration statement, prospectus, offering circular or other
document in reliance upon and in conformity with written information furnished
to AdvancePCS by such Seller for use therein; provided that in no event shall
any indemnity under this subparagraph 11.2(g)(ii) exceed the net proceeds
received by such Seller in such registration.
(iii) Each Indemnified Party shall give notice to each
Indemnifying Party promptly after such Indemnified Party has actual knowledge of
any claim as to which indemnity may be sought, and shall permit the Indemnifying
Party to assume the defense of any such claim or any litigation resulting
therefrom, provided that counsel for the Indemnifying Party, who shall conduct
the defense of such claim or litigation, shall be approved by the Indemnified
Party (whose approval shall not be unreasonably withheld), and the Indemnified
Party may participate in such defense at such party's expense; provided,
however, that an Indemnified Party (together with all other Indemnified Parties
which may be represented without conflict by one counsel) shall have the right
to retain one separate counsel, with the fees and expenses to be paid by the
Indemnifying Party, if representation of such Indemnified Party by the counsel
retained by the Indemnifying Party would be inappropriate due to actual or
potential differing interests between such Indemnified Party and any other party
represented by such counsel in such proceeding. The failure of any Indemnified
Party to give notice as provided herein shall not relieve the Indemnifying Party
of its obligations under this Section 11.2(g) unless the failure to give such
notice is materially prejudicial to an Indemnifying Party's ability to defend
such action. No Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the consent of each Indemnified Party, consent to
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation.
(iv) If the indemnification provided for in this Section
11.2(g) is held by a court of competent jurisdiction to be unavailable to an
Indemnified Party with respect to any claim, loss, damage, liability or action
referred to therein, then the Indemnifying Party, in lieu of indemnifying such
Indemnified Party hereunder, shall contribute to the amount paid or payable by
such Indemnified Party as a result of such claim, loss, damage, liability or
action in such proportion as is appropriate to reflect the relative fault of the
Indemnifying Party on the one hand and the Indemnified Party on the other in
connection with the actions that resulted in such claims, loss, damage,
liability or action, as well as any other relevant equitable considerations. The
relative fault of the Indemnifying Party and of the Indemnified Party shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission to state a material fact
related to information supplied by the Indemnifying Party or by the Indemnified
Party and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
(v) AdvancePCS and the Sellers agree that it would not be
just and equitable if contribution pursuant to this Section 11.2(g) were based
solely upon the number of entities from whom contribution was requested or by
any other method of allocation which does not take account of the equitable
considerations referred to above in this Section 11.2(g). The amount paid or
payable by an Indemnified Party as a result of the losses, claims, damages and
liabilities referred to above in this Section 11.2(g) shall be deemed to include
any legal or other expenses reasonably incurred by such Indemnified Party in
connection with investigating or defending any such action or claim, subject to
the provisions of this Section 11.2(g). Notwithstanding the provisions of this
Section 11.2(g), no Seller shall be required to contribute any amount or make
any other payments under this Agreement which in the aggregate exceed the net
proceeds (after selling expenses) received by such Seller. No person guilty of
fraudulent misrepresentation (within the meaning of the Securities Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation.
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ARTICLE XII
GENERAL PROVISIONS
12.1. EXPENSES. Except as otherwise expressly provided in this
Agreement, each party to this Agreement will bear its respective expenses
incurred in connection with the preparation, execution, and performance of this
Agreement and the transactions contemplated by the Transaction Documents,
including all fees and expenses of agents, representatives, counsel, and
accountants. In the event of termination of this Agreement, the obligation of
each party to pay its own expenses will be subject to any rights of such party
arising from a Breach of this Agreement by another party.
12.2. PUBLIC ANNOUNCEMENTS. Any public announcement or similar
publicity with respect to this Agreement or the transactions contemplated by the
Transaction Documents will be issued, if at all, at such time and in such manner
as Buyer and Sellers mutually shall determine. Unless consented to by Buyer or
Sellers, as the case may be, in advance or required by Legal Requirements, prior
to the Closing Sellers and Buyer shall, and shall cause each Acquired Company
to, keep this Agreement strictly confidential and may not make any disclosure of
this Agreement to any Person. Sellers and Buyer will consult with each other
concerning the means by which each Acquired Company's employees, customers, and
suppliers and others having dealings with such Acquired Company will be informed
of the transactions contemplated by the Transaction Documents, and Buyer will
have the right to be present for any such communication.
12.3. CONFIDENTIALITY. Between the date of this Agreement and
the Closing Date, Buyer and Sellers will maintain in confidence, and will cause
the directors, officers, employees, agents, and advisors of Buyer and each
Acquired Company to maintain in confidence, any written, oral, or other
information obtained in confidence from another party or any Acquired Company in
connection with this Agreement or the transactions contemplated by the
Transaction Documents, unless (a) such information is already known to such
party or to others not bound by a duty of confidentiality or such information
becomes publicly available through no fault of such party, (b) the use of such
information is necessary or appropriate in making any filing or obtaining any
consent or approval required for the consummation of the transactions
contemplated by the Transaction Documents, or (c) the furnishing or use of such
information is required by or necessary or appropriate in connection with legal
proceedings. If the transactions contemplated by the Transaction Documents are
not consummated, each party will return or destroy as much of such written
information as the other party may reasonably request.
12.4. NOTICES. All notices, consents, waivers, and other
communications under this Agreement must be in writing and will be deemed to
have been duly given when (a) delivered by hand (with written confirmation of
receipt), (b) sent by telecopier (with written confirmation of receipt),
provided that a copy is mailed by registered or certified mail, return receipt
requested, or (c) when received by the addressee, if sent by a nationally
recognized overnight delivery service (receipt requested), in each case to the
appropriate addresses and telecopier numbers set forth below (or to such other
addresses and telecopier numbers as a party may designate by notice to the other
parties):
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If to Sellers: To each Seller at the address and telecopier
number set forth opposite each such Seller's
name on Schedule I hereto.
With a Copy to: Squire, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to Buyer: AdvancePCS
▇▇▇▇ ▇▇▇▇▇ ▇'▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: Chief Executive Officer
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a Copy to: ▇▇▇▇ ▇▇▇▇▇ LLP
▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇▇ - ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
12.5 JURISDICTION; SERVICE OF PROCESS. Any action or
proceeding seeking to enforce any provision of, or based on any right arising
out of, this Agreement may be brought against any of the parties in the courts
of the State of
Delaware and each of the parties consents to the jurisdiction of
such courts (and of the appropriate appellate courts) in any such action or
proceeding and waives any objection to venue laid therein. Process in any action
or proceeding referred to in the preceding sentence may be served on any party
anywhere in the world.
12.6 FURTHER ASSURANCES. The parties agree (a) to furnish upon
request to each other such further information, (b) to execute and deliver to
each other such other documents, and (c) to do such other acts and things, all
as the other party may reasonably request for the purpose of carrying out the
intent of this Agreement and the documents referred to in this Agreement.
12.7 WAIVER. The rights and remedies of the parties to this
Agreement are cumulative and not alternative. Neither the failure nor any delay
by any party in exercising any right, power, or privilege under this Agreement
or the documents referred to in this Agreement will operate as a waiver of such
right, power, or privilege, and no single or partial exercise of any such right,
power, or privilege will preclude any other or further exercise of such right,
power, or privilege or the exercise of any other right, power, or privilege. To
the maximum extent permitted by applicable law, (a) no claim or right arising
out of this Agreement or the documents referred to in this Agreement can be
discharged by one party, in whole or in part, by a waiver or renunciation of the
claim or right unless in writing signed by the other party; (b) no waiver that
may be given by a party will be applicable except in the specific instance for
which it is given; and (c) no notice to or demand on one party will be deemed to
be a waiver of any obligation of such party or of the right of the party giving
such notice or demand to take further action without notice or demand as
provided in this Agreement or the documents referred to in this Agreement.
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12.8 ENTIRE AGREEMENT AND MODIFICATION. This Agreement
supersedes all prior agreements between the parties with respect to its subject
matter and constitutes (along with the Schedules, Exhibits and other documents
referred to in this Agreement) a complete and exclusive statement of the terms
of the agreement between the parties with respect to its subject matter. This
Agreement may not be amended except by a written agreement executed by each
party.
12.9 SCHEDULES.
(a) The disclosures in the Schedules, and those in any
supplement thereto, must relate only to the representations and warranties in
the Section of the Agreement to which they expressly relate and not to any other
representation or warranty in this Agreement; provided, however, that specific
cross references between disclosure schedules incorporating by reference
information specifically disclosed in other disclosure schedules are permitted.
(b) In the event of any inconsistency between the statements
in the body of this Agreement and those in the Schedules (other than an
exception expressly set forth as such in the Schedules with respect to a
specifically identified representation or warranty), the statements in the body
of this Agreement will control.
12.10 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS.
Neither party may assign any of its rights under this Agreement without the
prior written consent of the other parties except that Buyer may assign any of
its rights under this Agreement to any Subsidiary of Buyer. Subject to the
preceding sentence, this Agreement will apply to, be binding in all respects
upon, and inure to the benefit of the successors and permitted assigns of the
parties. Nothing expressed or referred to in this Agreement will be construed to
give any Person other than the parties to this Agreement any legal or equitable
right, remedy, or claim under or with respect to this Agreement or any provision
of this Agreement. This Agreement and all of its provisions and conditions are
for the sole and exclusive benefit of the parties to this Agreement and their
successors and assigns.
12.11 REFERENCES TO KNOWLEDGE. All references in this
Agreement to the "knowledge" of (i) the Acquired Companies shall mean, with
respect to a specified matter or fact, the actual knowledge of ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇, and ▇▇▇ ▇▇▇▇▇▇ (collectively, the "RELEVANT OFFICERS") with
regard to such specified fact or matter, or such knowledge as the Relevant
Officers would have been likely to learn had they conducted a reasonable inquiry
with respect to such fact or matter and (ii) a Seller shall mean, with respect
to a specified matter or fact, the actual knowledge of such Seller with regard
to such specified fact or matter, or such knowledge as such Seller would have
been likely to learn had he/she/it conducted a reasonable inquiry with respect
to such fact or matter.
12.12 SEVERABILITY. If any provision of this Agreement is held
invalid or unenforceable by any court of competent jurisdiction, the other
provisions of this Agreement will remain in full force and effect. Any provision
of this Agreement held invalid or unenforceable only in part or degree will
remain in full force and effect to the extent not held invalid or unenforceable.
12.13 ARTICLE AND SECTION HEADINGS, CONSTRUCTION. The headings
of Sections in this Agreement are provided for convenience only and will not
affect its construction or interpretation. All references to "Article",
"Articles", "Section" or "Sections" refer to the corresponding Article,
Articles, Section or Sections of this Agreement. All words used in this
Agreement will be construed to be of such gender or number as the circumstances
require. Unless otherwise expressly provided, the word "including" does not
limit the preceding words or terms.
12.14 TIME OF ESSENCE. With regard to all dates and time
periods set forth or referred to in this Agreement, time is of the essence.
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12.15 GOVERNING LAW. This Agreement will be governed by the
laws of the State of
Delaware without regard to conflicts of laws principles.
12.16 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties have executed and delivered
this Agreement as of the date first written above.
BUYER: SELLERS:
ADVANCEPCS
By:
----------------------------- -----------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Print Name:
----------------------
Title:
-------------------------- ------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ TRUST
By:
---------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, TRUSTEE
▇▇▇▇ ▇. ▇▇▇▇▇▇ TRUST
By:
---------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, TRUSTEE
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SCHEDULE I
LIST OF SELLERS
Number of Number of Allocation of
Sellers Shares Purchase Shares Purchase Price
------- --------- --------------- --------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 82.75 82.75 $________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Trust 32 32 $________
▇▇▇▇ ▇. ▇▇▇▇▇▇ 86 86 $________
▇▇▇▇ ▇. ▇▇▇▇▇▇ Trust 28.75 28.75 $________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 25.50 25.50 $________
The addresses, and telephone and fax numbers for the Sellers
are as follows:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------
--------------------------------------
Telephone:
----------------------------
Facsimile No.:
------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Trust
Squire, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
--------------------------------------
--------------------------------------
Telephone:
----------------------------
Facsimile No.:
------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇ Trust
Squire, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
-44-
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------
--------------------------------------
--------------------------------------
Telephone:
----------------------------
Facsimile No.:
------------------------
-45-
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EXHIBIT
2.2(a) ESCROW AGREEMENT
-46-
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FINAL EXHIBIT
EXHIBIT 2.2(a)
ESCROW AGREEMENT
================================================================================
THIS ESCROW AGREEMENT (this "AGREEMENT"), dated as of ________, 2001,
is by and among AdvancePCS, a
Delaware corporation ("PURCHASER"), Sellers (as
hereinafter defined) and __________________, a ________ corporation (the "ESCROW
AGENT").
RECITALS
WHEREAS, Purchaser and the Persons listed on Schedule 1 hereto
("SELLERS") have entered into a
Stock Purchase Agreement dated as of
____________, 2001 (the "PURCHASE AGREEMENT"), relating to the purchase by
Purchaser of the Purchase Shares. Capitalized terms used in this Agreement
without definition have the respective meanings given to them in the Purchase
Agreement;
WHEREAS, pursuant to the Purchase Agreement, Purchaser has deposited
with the Escrow Agent certificates for _____________ (_______) shares of common
stock of Purchaser ("AdvancePCS Common Stock") equal in value to $6,500,000 (the
"Initial Escrow Value"), issued in the names of the Persons listed on Schedule 1
hereto (such shares, or any portion thereof at any time held by the Escrow Agent
pursuant to this Agreement, are hereinafter referred to herein as the "ESCROWED
SHARES");
WHEREAS, the parties hereto wish to specify the terms and conditions
upon which the Escrowed Shares will be held and disbursed; and
WHEREAS, the Escrow Agent has expressed its willingness to act as
escrow agent hereunder;
NOW, THEREFORE, in consideration of the mutual undertakings and
covenants contained in this Agreement and the Purchase Agreement, the parties
hereto covenant and agree as follows:
1. OBLIGATION OF ESCROW AGENT. The Escrow Agent hereby acknowledges
receipt of the Escrowed Shares and agrees to hold and dispose of such shares
pursuant to the terms and conditions of this Agreement.
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2. REPLACEMENT OF ESCROWED SHARES.
(a) In the event that AdvancePCS shall at any time after the
date of this Agreement (i) declare a dividend or make a distribution on the
AdvancePCS Common Stock payable in shares of AdvancePCS Common Stock, (ii)
subdivide the outstanding AdvancePCS Common Stock into a greater number of
shares, (iii) combine the outstanding AdvancePCS Common Stock into a smaller
number of shares or (iv) issue any shares of AdvancePCS by reclassification of
the AdvancePCS Common Stock (including any such reclassification in connection
with a consolidation or merger in which AdvancePCS is the continuing or
surviving corporation), then, with respect to any such event which requires the
surrender of certificates for shares of AdvancePCS Common Stock by the holders
thereof generally, the Escrow Agent shall surrender to AdvancePCS the
certificates for the Escrowed Shares. Upon receipt of such certificates,
AdvancePCS shall issue a new stock certificates in the name of Sellers for the
number of shares resulting from such stock dividend, stock split, reverse stock
split, or reclassification and deliver such certificates to the Escrow Agent.
The shares evidenced by such certificates shall thereafter be deemed the
Escrowed Shares.
(b) In the event that AdvancePCS shall at any time after the
date of this Agreement consolidate with, merge into, or engage in any
transaction with, any other Person, and, pursuant to such consolidation, merger
or similar transaction, (i) AdvancePCS is not the continuing or surviving
corporation and (ii) the continuing or surviving corporation issues shares of
its capital stock to the holders of AdvancePCS Common Stock in exchange for such
AdvancePCS Common Stock, the Escrow Agent shall surrender to the continuing or
surviving corporation the certificates for the Escrowed Shares. Upon receipt of
such certificates, the continuing or surviving corporation shall issue a new
stock certificates in the name of Sellers for the number of shares resulting
from such consolidation, merger or similar transaction and deliver such
certificates to the Escrow Agent. The shares delivered to the Escrow Agent and
evidenced by the certificates issued in connection with such event shall
thereafter be deemed the Escrowed Shares and shall be subject to proportional
adjustments from time to time to give effect to stock dividends, stock splits,
reverse stock splits or other reclassifications of such Person.
(c) In the event that AdvancePCS shall at any time after the
date of this Agreement consolidate with, merge into, or engage in any
transaction with, any other Person, and, pursuant to such consolidation, merger
or similar transaction, (i) AdvancePCS is not the continuing or surviving
corporation and (ii) the continuing or surviving corporation pays cash or other
property ("NON-STOCK CONSIDERATION") to the holders of AdvancePCS Common Stock
in exchange for such AdvancePCS Common Stock, the Escrow Agent shall surrender
to the continuing or surviving corporation the certificates for the Escrowed
Shares. Upon receipt of such certificates, the continuing or surviving
corporation shall forward the Non-Stock Consideration to the Escrow Agent who
will hold such Non-Stock Consideration in escrow pursuant to this Agreement as
the "Escrowed Shares". The account into which any cash Non-Stock Consideration
is deposited by the Escrow Agent hereunder is sometimes hereinafter referred to
as the "Escrow Account."
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(d) A Seller may elect any time (by providing written notice
of such election to the Purchaser and the Escrow Agent) to replace Escrowed
Shares with cash equivalent in value to the Escrowed Shares at the time of such
request, but only to the extent that after any such replacement the aggregate
value of the Escrow Account and the Escrowed Shares shall not be less than the
Initial Escrow Value. Upon receipt of such cash equivalent in accordance with
the subsection (d), the Escrow Agent shall release to Seller certificates
representing the Escrowed Shares so replaced. Any cash received by the Escrow
Agent shall be deposited in the Escrow Account. Purchaser shall have no
liability to any Seller arising or resulting from the application of this
subsection (d), and Purchaser shall be indemnified for any such liability under
Section 10.3 of the Purchase Agreement.
(e) In the event that subsection (a), (b) or (c) if this
Section 2 shall be applicable, and the aggregate value of the Escrowed Shares
and the Escrow Account substantially exceeds the Initial Escrow Value, Sellers
may request Purchaser's consent to the release of Escrowed Shares and/or funds
in the Escrow Account constituting a portion of such excess. Purchaser shall
consider in good faith, but shall not be obligated to grant such request.
3. INVESTMENTS
(a) The Escrow Agent agrees to invest and reinvest funds in
the Escrow Account, but only upon written instructions signed by an authorized
agent of AdvancePCS and Sellers in any permitted investment.
(b) The parties recognize and agree that the Escrow Agent will
not provide supervision, recommendations or advice relating to either the
investment of moneys held in the Escrow Account or the purchase, sale, retention
or other disposition of any permitted investment.
(c) Interest and other earnings on permitted investments shall
be added to the Escrow Account. Any loss or expense incurred as a result of an
investment will be borne by the Escrow Account. In the event that the Escrow
Agent does not receive written directions to invest funds held in the Escrow
Account, the Escrow Agent shall invest such funds in United States Treasury
securities.
(d) The Escrow Agent is hereby authorized to execute purchases
and sales of permitted investments through the facilities of its own trading or
capital markets operations or those of any affiliated entity. The Escrow Agent
shall send statements to each of the parties hereto on a monthly basis
reflecting activity in the Escrow Account for the preceding month. Although
AdvancePCS and Sellers recognize that they may obtain a broker confirmation or
written statement containing comparable information at no additional cost,
AdvancePCS and Sellers hereby agree that the confirmations of permitted
investments are not required to be issued by the Escrow Agent for each month in
which a monthly statement is rendered. No statement need be rendered for the
Escrow Account if no activity occurred for such month.
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(e) AdvancePCS and Sellers acknowledge and agree that the
delivery of any Escrowed Shares held by the Escrow Agent in the form of cash is
subject to the sale and final settlement of permitted investments. Proceeds of a
sale of permitted investments will be delivered on the business day on which the
appropriate instructions are delivered to the Escrow Agent if received prior to
the deadline for same day sale of such permitted investments. If such
instructions are received after the applicable deadline, proceeds will be
delivered on the next succeeding business day.
4. JOINT CLAIM FOR PAYMENT. Should the Escrow Agent at any time receive
a written notice executed by AdvancePCS and Sellers instructing the Escrow Agent
on how to disburse all or any portion of the Escrowed Shares, the Escrow Agent
shall disburse such Escrowed Shares in accordance with such instructions.
5. UNILATERAL CLAIM FOR PAYMENT; RIGHT TO OBJECT; ARBITRATION OF
DISPUTES.
(a) If, at any time during the term of this Agreement,
AdvancePCS or any other Indemnified Person has given Sellers written notice of a
claim for indemnification by Sellers pursuant to Article X of the Purchase
Agreement (an "INDEMNIFICATION CLAIM"), AdvancePCS may make a claim for all or a
portion of the Escrowed Shares (an "ESCROW CLAIM") by giving written notice of
such Escrow Claim to the Escrow Agent and Sellers, which notice shall have
attached thereto a copy of the Indemnification Claim and shall state (i) that it
is an Escrow Claim pursuant to this Agreement, (ii) AdvancePCS's best estimate
of the dollar amount of the Indemnification Claim as of such time (the "CLAIMED
AMOUNT"), and (iii) the number of Escrowed Shares which AdvancePCS will be
entitled to receive in satisfaction of such Indemnification Claim pursuant to
Section 10.3 of the Purchase Agreement (the "CLAIMED SHARES") assuming that
AdvancePCS or another Buyer Indemnified Person, as applicable, is entitled to be
indemnified for the full Claimed Amount and that such Claimed Amount will not be
paid to AdvancePCS or such other Buyer Indemnified Person in cash as hereinafter
set forth. Accordingly, absent an event of the type described in Section 2, the
number of Claimed Shares shall be equal to the Claimed Amount divided by the
Closing Date Stock Price. In the event that AdvancePCS's best estimate of the
dollar amount of any Indemnification Claim thereafter changes (including,
without limitation, by virtue of any reasonable legal fees or other costs
incurred or likely to be incurred by AdvancePCS in arbitrating AdvancePCS's or
the applicable Buyer Indemnified Person's right to indemnification upon any
contest of such right by Sellers), AdvancePCS shall give a supplemental notice
to the Escrow Agent and Sellers amending its original Escrow Claim with respect
to such Indemnification Claim to increase or decrease, as applicable, the
Claimed Amount, in which event the number of Claimed Shares shall accordingly be
increased or decreased accordingly consistent with this Section 5(a).
(b) Upon receipt of an Escrow Claim (or any amendment to an
Escrow Claim increasing the number of Claimed Shares) the Escrow Agent shall,
within two (2) Business Days, notify AdvancePCS and Sellers in writing that it
has received such notice, attaching a copy thereof and specifying the date (the
"DISBURSEMENT DATE") on which the Claimed Shares will be paid to AdvancePCS
unless an Objection Notice (as hereinafter defined) is received by the
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Escrow Agent before such time. For such purposes, the Disbursement Date shall be
the tenth (10th) Business Day after the Escrow Agent shall have delivered notice
of the Escrow Claim (or, as applicable, the amendment thereto) to Sellers.
(c) Sellers shall be entitled to object to the disbursement to
AdvancePCS of all or a portion of the Claimed Shares by delivering written
notice (an "OBJECTION NOTICE") to both the Escrow Agent and AdvancePCS prior to
the Disbursement Date. Such Objection Notice shall (i) make reference to this
Agreement and the Escrow Claim, (ii) state that Sellers dispute AdvancePCS's
right to be indemnified for the Indemnification Claim and/or the Claimed Amount,
describing the reason(s) why in reasonable detail, and (iii) specify what
portion of the Claimed Shares Sellers accordingly object to being disbursed to
AdvancePCS hereunder by calculating such number of Claimed Shares corresponding
to the portion of the Claimed Amount to which Sellers object consistent with
Section 5(a) hereof (the portion of such Claimed Shares as to which Sellers
shall have so objected to being disbursed hereunder shall hereinafter be
referred to as the "DISPUTED SHARES"), and (iv) direct the Escrow Agent to
retain the Disputed Shares and proceed as set forth in subsection 5(e) hereof.
(d) As an alternative or in addition to the bases for
objection described in Section 5(c) above, Sellers may object to the
disbursement of any Claimed Shares on the basis that Sellers have paid to
AdvancePCS or the other applicable Buyer Indemnified Person, in cash, the
portion of the Claimed Amount to which such Claimed Shares relate. In such
event, Sellers' Objection Notice shall so state, and Sellers shall attach
thereto supporting documentation evidencing that such payment has been made.
(e) Unless the Escrow Agent receives an Objection Notice prior
to the Disbursement Date, it shall disburse the Claimed Shares to AdvancePCS. If
the Escrow Agent receives an Objection Notice prior to the Disbursement Date,
then, subject to Section 4 above, the Escrow Agent (i) shall retain the Disputed
Shares in escrow hereunder pending its receipt of the award of an arbitrator
determining which party is entitled to the Disputed Shares pursuant to the
procedures set forth below, and upon its receipt of such award the Escrow Agent
shall disburse or retain the Disputed Shares as set forth therein, and (ii)
shall disburse to AdvancePCS any portion of the Claimed Shares which are not
Disputed Shares.
(f) If Sellers issue an Objection Notice, then AdvancePCS and
Sellers, or either of them, shall commence an arbitration proceeding in the
Dallas, Texas office of the American Arbitration Association pursuant to the
Commercial Arbitration Rules of the American Arbitration Association to
determine which party is entitled to the Disputed Shares in accordance with the
terms of the Purchase Agreement and this Agreement.
(g) All disputes with regard to the parties' respective
entitlement to any of the Disputed Shares or any other Escrowed Shares hereunder
shall be settled by arbitration in Dallas County, Texas, before a single
arbitrator pursuant to the rules of the American Arbitration Association, and
judgment upon the award of the arbitrator may be entered in any court having
jurisdiction thereof. Arbitration may be initiated by either party hereto. Any
award rendered by
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the arbitrator shall be conclusive and binding upon the parties; provided,
however that any such award shall be accompanied by a written opinion of the
arbitrator giving the reasons for the award. This provision for arbitration
shall be specifically enforceable by the parties. The decision of the arbitrator
in accordance herewith shall be final and binding, and there shall be no right
of appeal therefrom.
6. TERMINATION.
(a) This Agreement shall terminate upon the later of (i) the
second anniversary of the date of this Agreement, or (ii) the date that the
lawsuit captioned ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ v. TheraCom, Inc., ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, and ▇▇▇▇
▇▇▇▇▇▇, filed in the Superior Court of the State of California for the County of
Los Angeles on September 14, 2000 (the "▇▇▇▇▇▇▇▇ Case"), has been settled or a
final judgment or order has been entered with respect thereto by a court of
competent jurisdiction, which judgement or order is no longer subject to appeal
(a "Final Resolution").
(b) If a Final Resolution of the ▇▇▇▇▇▇▇▇ Case occurs prior to
the second anniversary of the date of this Agreement, then on or after the later
of (i) the date of such Final Resolution or (ii) the first anniversary of the
date of this Agreement, Seller shall be permitted to withdraw Escrowed Shares to
the extent that after such withdrawal the aggregate value of the Escrow Account
and the Escrowed Shares is equal to no greater than $2,000,000 plus the value of
any Disputed Shares and any Escrowed Shares subject to an Indemnification Claim
which have not been disbursed to Purchaser (or the cash equivalent of such
Disputed Shares or Escrowed Shares subject to an Indemnification Claim).
(c) Upon termination of this Agreement, (i) any Escrowed
Shares other than Disputed Shares and Escrowed Shares subject to an
Indemnification Claim shall be disbursed to Sellers; (ii) any Escrowed Shares
subject to an Indemnification Claim (other than Disputed Shares) shall be
disbursed to Buyer; and (iii) any Disputed Shares shall continue to be held in
escrow pursuant to the terms and conditions of this Agreement.
(d) Upon the conclusion of arbitration related to the Disputed
Shares, the Disputed Shares shall be disbursed in accordance with the
instructions of the arbitrator.
(e) Upon the disbursement of all of the Escrowed Shares and
all funds in the Escrow Account in accordance with the provisions of this
Agreement, the Escrow Agent shall be discharged of any further liability.
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7. DISBURSEMENT OF ESCROWED SHARES.
(a) The Escrow Agent shall make no disbursements of the
Escrowed Shares, except as provided pursuant to Sections 4, 5 and 6 hereof or as
permitted pursuant to Sections 14 and 15 hereof.
(b) In the event that the Escrow Agent is at any time required
hereunder to disburse all or any portion of the Escrowed Shares to a Person
other than Sellers, the Escrow Agent shall effect such disbursement by
delivering to AdvancePCS or its successor the certificates for the Escrowed
Shares together with stock powers or other appropriate instrument of assignment,
executed by the Escrow Agent in the name of Sellers pursuant to the power of
attorney contained in Section 9 below, assigning to the party to which such
disbursement is to be made (the "TRANSFEREE") the number of Escrowed Shares to
which such party is entitled; provided, that, in the case of Non-Stock
Consideration, such as cash, such disbursement shall be made through a wire
transfer or other customary method of transfer. Upon its receipt of such
certificates and stock powers, AdvancePCS or its successor shall (i) issue new
stock certificates to the Transferee for the number of shares so assigned to the
Transferee and (ii) issue new stock certificates in the name of Sellers for the
balance of the Escrowed Shares, if any, represented by the certificates
surrendered by the Escrow Agent and deliver such certificates to the Escrow
Agent. Notwithstanding the foregoing, in the event that the Escrow Agent is at
any time required hereunder to disburse all or a portion of the Escrowed Shares
to Sellers, the Escrow Agent shall deliver to Sellers certificates for the
number of Escrowed Shares to be so disbursed (and shall split up any certificate
for a larger number of Escrowed Shares necessary to permit such disbursement);
provided, that in the case of Non-Stock Consideration, such as cash, such
disbursement shall be made through a wire transfer or other customary method of
transfer.
(c) If at any time the Escrowed Shares are comprised of cash
or property other than AdvancePCS Common Stock and the Escrow Agent is required
hereunder to disburse to AdvancePCS all or a portion of the Escrowed Shares, the
amount of such cash and/or property to be disbursed hereunder shall be such
amount of cash or property received by the Escrow Agent pursuant to Section 2
with respect to the number of shares of AdvancePCS Common Stock to which
AdvancePCS would be entitled hereunder if an event described in Section 2 had
never occurred.
8. OWNERSHIP OF ESCROWED SHARES. Subject to the terms of this
Agreement, Sellers shall have all indicia of ownership of the Escrowed Shares
while they are held by the Escrow Agent, including, without limitation, the
right to vote the Escrowed Shares (in the manner set forth in Section 18 below),
the right to receive any cash dividends on or with respect to the Escrowed
Shares (subject to Section 2 above), and the obligation to pay all taxes,
assessments, and charges with respect thereto; provided, however, that Sellers
shall have no right to sell, transfer, pledge, hypothecate or otherwise dispose
of any Escrowed Shares while they remain Escrowed Shares. Any cash dividends
with respect to the Escrowed Shares shall be distributed within two (2) Business
Days of receipt by the Escrow Agent to, and for tax purposes shall be allocable
to, Sellers.
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9. POWER OF ATTORNEY.
(a) Sellers hereby name, constitute and appoint the Escrow
Agent (including any successor escrow agent hereunder) to be Sellers' true and
lawful attorney, with full power and authority for and in their name, place and
▇▇▇▇▇ and on their behalf to execute, acknowledge and deliver any writing and to
do, perform or transact each and every other act that Sellers could lawfully do,
perform or transact, in each case in connection with or relating to the
assignment and transfer of all or any portion of the Escrowed Shares as provided
in this Agreement. By way of illustration but not of limitation, Sellers' said
attorney shall have and may exercise the following powers: (i) to execute and
deliver stock powers and other instruments of assignment with respect to the
Escrowed Shares; and (ii) to take any action to surrender or otherwise transfer
the Escrowed Shares in accordance with Section 2.
(b) No Person entering into any transaction of any kind
whatever with Sellers' said attorney shall be under any obligation to inquire as
to the authority of this said attorney to effect the same or the expediency
thereof or to see to the proper application of the proceeds therefrom, whatever
may be the nature of such proceeds. Any person, corporation, partnership, bank,
trust company or depository of any kind may rely upon this Power of Attorney
until such person, corporation, partnership, bank, trust company or depository
receives written notice of the revocation of this Power of Attorney.
(c) This Power of Attorney and the powers conveyed hereby are
coupled with an interest and irrevocable and shall continue until termination of
this Agreement.
10. EXCULPATION OF ESCROW AGENT. The Escrow Agent shall have no duties
or responsibilities except for those set forth herein (and required by
applicable law), which the parties agree are ministerial in nature. If in doubt
as to its duties and responsibilities hereunder, the Escrow Agent may consult
with counsel of its choice and shall be protected in any action taken or omitted
in connection with the advice or opinion of such counsel. Except for the Escrow
Agent's own willful misconduct or gross negligence: (a) the Escrow Agent shall
have no liability of any kind whatsoever for the performance of any duties
imposed upon the Escrow Agent under this Agreement or for any action or failure
to act by the Escrow Agent hereunder; (b) the Escrow Agent shall not be
responsible for the acts or omissions of any other parties hereto; (c) the
Escrow Agent shall not be liable to anyone for damages, losses or expenses
arising out of this Agreement; (d) provided that the Escrowed Shares are held as
directed, the Escrow Agent shall have no responsibility for the preservation of
such shares; and (e) the Escrow Agent may rely and/or act upon any instrument or
document reasonably believed by the Escrow Agent in good faith to be genuine and
to be executed and delivered by the proper Person, and may assume in good faith
the authenticity, validity and effectiveness thereof and shall not be obligated
to make any investigation or determination as to the truth and accuracy of any
information contained therein. The Escrow Agent shall neither be responsible for
, nor chargeable with, knowledge of the terms and conditions of any other
agreement, instrument or document between the other parties hereto, in
connection herewith, including without limitation the Purchase Agreement. This
Agreement sets forth all matters pertinent to the escrow
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contemplated hereunder, and no additional obligations of the Escrow Agent shall
be inferred from the terms of this Agreement or any other Agreement. IN NO EVENT
SHALL THE ESCROW AGENT BE LIABLE, DIRECTLY OR INDIRECTLY, FOR ANY (i) DAMAGES OR
EXPENSES ARISING OUT OF THE SERVICES PROVIDED HEREUNDER, OTHER THAN DAMAGES
WHICH RESULT FROM THE ESCROW AGENT'S FAILURE TO ACT IN ACCORDANCE WITH THE
STANDARDS SET FORTH IN THIS AGREEMENT, OR (ii) SPECIAL OR CONSEQUENTIAL DAMAGES,
EVEN IF THE ESCROW AGENT HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. In
the event of any dispute between AdvancePCS and Sellers, AdvancePCS and Sellers
shall pay, on demand, the reasonable attorneys' fees and other reasonable costs
and expenses incurred by the Escrow Agent in respect thereof. AdvancePCS and
Sellers shall be jointly and severally liable for such fees, costs and expenses
but, as between themselves, the fees, costs and expenses shall be paid by the
prevailing party in any such dispute.
11. INDEMNIFICATION. In consideration of its acceptance of the
appointment as the Escrow Agent, the other parties hereto, jointly and
severally, agree to indemnify and hold the Escrow Agent harmless as to any
liability it incurs by reason of its having accepted the same or in carrying out
any of the terms hereof (in each case except for any liability the Escrow Agent
incurs as a result of the Escrow Agent's own willful misconduct or gross
negligence), and to reimburse the Escrow Agent for all its reasonable expenses,
including, among other things, counsel fees and court costs, incurred by reason
of its position hereunder or actions taken pursuant hereto. Escrow Agent's
indemnification shall survive its resignation, removal or the termination of
this Agreement.
THE FOREGOING INDEMNIFICATION IN FAVOR OF THE ESCROW AGENT SHALL APPLY WHETHER
OR NOT ANY NEGLIGENCE OF THE ESCROW AGENT IS ALLEGED OR PROVEN IN CONNECTION
WITH THE ESCROW AGENT'S INVESTIGATION AS TO THE MATTERS THAT ARE THE SUBJECT OF
THIS AGREEMENT.
12. NO ADDITIONAL DUTIES. The Escrow Agent shall have no duties except
those which are expressly set forth herein, and it shall not be bound by any
notice of a claim for payment, or demand with respect thereto, or any waiver,
modification, amendment, termination or rescission of this Agreement, unless
received by it in writing.
13. MODIFICATION. No modification of this Agreement shall be valid
unless in writing and signed by AdvancePCS, Sellers and the Escrow Agent.
14. RESIGNATION OF THE ESCROW AGENT. The Escrow Agent, and any
successor Escrow Agent, may resign at any time as Escrow Agent hereunder by
giving at least twenty (20) Business Days' prior written notice to Sellers and
AdvancePCS. Upon their receipt of notice of resignation from the Escrow Agent,
AdvancePCS and Sellers shall use their best efforts jointly to designate a
successor Escrow Agent. In the event AdvancePCS and Sellers do not agree upon a
successor Escrow Agent within twenty (20) Business Days after receiving the
notice of
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resignation, the resigning Escrow Agent may petition any court of competent
jurisdiction for the appointment of a successor Escrow Agent or other
appropriate relief and any such resulting appointment shall be binding upon all
parties hereto. By mutual agreement, AdvancePCS and Sellers shall have the right
at any time upon at least five (5) Business Days' written notice to terminate
their appointment of the Escrow Agent, or successor Escrow Agent. The Escrow
Agent, or successor Escrow Agent, shall continue to act as Escrow Agent until a
successor is appointed and qualified. Upon qualification of the successor Escrow
Agent, the resigning Escrow Agent shall deliver the Escrowed Shares to the
successor Escrow Agent, the successor Escrow Agent shall succeed to all rights
and obligations of the resigning Escrow Agent as if originally named herein and
the resigning Escrow Agent shall be absolved, from the date of delivery of the
Escrowed Shares forward, from any and all liability in connection with the
exercise of its powers and duties as Escrow Agent hereunder.
15. INCONSISTENT CLAIMS. If the Escrow Agent should at any time be
confronted with inconsistent claims or demands by the parties hereto, the Escrow
Agent shall have the right to interplead the parties in any court of competent
jurisdiction and request that such court determine the respective rights of the
parties under this Agreement, and upon doing so, the Escrow Agent shall
automatically be released from any obligations or liability as a consequence of
any such claims or demands.
16. JURY WAIVER. If a lawsuit arises under or otherwise in connection
with this Agreement, AdvancePCS, Sellers and the Escrow Agent agree to waive any
right to trial by jury.
17. FEE OF THE ESCROW AGENT. The Escrow Agent shall be entitled to
compensation in accordance with the schedule set forth in Annex A hereto. The
cost of compensation and expenses shall be borne equally by AdvancePCS and
Sellers.
18. RIGHT TO VOTE THE ESCROWED SHARES. Each Seller shall have the right
to direct the Escrow Agent, in writing, to exercise the voting rights pertaining
to all or a portion of the Escrowed Shares held in the name of such Seller. The
Escrow Agent shall comply with such directions. In the absence of direction from
any Seller, the Escrowed Shares allocable to such Seller shall not be voted by
the Escrow Agent.
19. MISCELLANEOUS. The Escrow Agent may execute any of its powers or
responsibilities hereunder and exercise any rights hereunder either directly or
by or through its agents or attorneys. Nothing in this Agreement shall be deemed
to impose upon the Escrow Agent any duty to qualify to do business or to act as
fiduciary or otherwise in any jurisdiction. The Escrow Agent shall not be
responsible for and shall not be under a duty to examine or pass upon the
validity, binding effect, execution or sufficiency of this Agreement or of any
amendatory or supplemental agreement. Any banking association or corporation
into which the Escrow Agent may be merged, converted or with which the Escrow
Agent may be consolidated, or any corporation resulting from any merger,
conversation or consolidation to which the Escrow Agent shall be a party, or any
banking association or corporation to which all or substantially all of the
corporate trust business of the Escrow Agent shall be transferred, shall succeed
to all the
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Escrow Agent's rights, obligations and immunities hereunder without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, anything herein to the contrary notwithstanding.
20. COUNTERPARTS; FACSIMILE SIGNATURE PAGES. This Agreement may be
executed in one or more counterparts, each of which will be deemed to be an
original and all of which, when taken together, will be deemed to constitute one
and the same agreement. Any facsimile copy of an executed signature page to this
Agreement shall be deemed an original signature page hereto for all purposes.
21. NOTICES. All notices, consents, waivers, and other communications
under this Agreement must be in writing and will be deemed to have been duly
given when (a) delivered by hand (with written confirmation of receipt), (b)
sent by telecopy (with written confirmation of receipt) provided that a copy is
mailed by registered or certified mail, return receipt requested, or (c) when
received by the addressee, if sent by a nationally recognized overnight delivery
service (receipt requested), in each case to the appropriate addresses or
telecopy numbers set forth below (or to such other addresses or telecopy numbers
as a party may designate by notice to the other parties):
If to AdvancePCS: AdvancePCS
▇▇▇▇ ▇▇▇▇▇ ▇'▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
ATTN: Legal Department
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇ ▇▇▇▇▇ LLP
▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇▇ - East Tower
Washington, D.C. 20005
ATTN: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esquire
If to Sellers: To each Seller at the address,
telephone and
telecopier number set
forth opposite each
such Person's name on
Schedule 1 hereto.
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With a copy to: Squire, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, L.L.P.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Escrow Agent:
22. BINDING EFFECT. Neither party may assign any of its rights under
this Agreement without the prior consent of the other parties. Subject to the
preceding sentence, this Agreement will apply to, be binding in all respects
upon, and inure to the benefit of the successors and permitted assigns of the
parties. Nothing expressed or referred to in this Agreement will be construed to
give any Person other than the parties to this Agreement any legal or equitable
right, remedy, or claim under or with respect to this Agreement.
23. APPLICABLE LAW. This Agreement, and the rights, remedies,
obligations, and duties of the parties under this Agreement, shall be governed
by, construed in accordance with and enforced under the laws of the State of
Maryland, without giving effect to the principles of conflict of laws of such
state.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have executed this Escrow
Agreement as of the date first written above.
PURCHASER
ADVANCEPCS
By:
--------------------------
SELLERS
-----------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ TRUST
-------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Trustee
▇▇▇▇ ▇. ▇▇▇▇▇▇ TRUST
-------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Trustee
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ESCROW AGENT
------------------------
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ANNEX A
FEES OF ESCROW AGENT
================================================================================
One-Time Acceptance Fee* $______
Annual Fee (payable in advance) $______
*Fee due at closing
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SCHEDULE 1
SELLERS
================================================================================
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EXHIBIT
2.5(a)(ii) EMPLOYMENT AGREEMENT
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FINAL EXHIBIT
EXHIBIT 2.5(a)(ii)
(DRESING)
EMPLOYMENT AGREEMENT
This Employment Agreement (the "AGREEMENT"), dated as of _____________, 2001, is
entered into by and between THERACOM, INC. (the "EMPLOYER"), and ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇ (the "EMPLOYEE").
RECITALS
WHEREAS, pursuant to that certain
Stock Purchase Agreement dated as of
____________, 2001 (the "
STOCK PURCHASE AGREEMENT"), AdvancePCS, a
Delaware
corporation ("ADVANCEPCS"), has acquired all of the issued and outstanding
capital stock of ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇, Inc., an Ohio corporation (the "ACQUIRED
COMPANY");
WHEREAS, Employer is a wholly-owned subsidiary of the Acquired Company;
WHEREAS, Employer desires to employ Employee as the Senior Vice
President of Employer, and Employee desires to be employed by Employer in such
capacity; and
WHEREAS, this Agreement is executed in connection with, and is an
integral part of, the acquisition of the Acquired Company by AdvancePCS;
NOW, THEREFORE, in consideration of the foregoing, the mutual covenants
and undertakings herein contained, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto, intending to be legally bound, hereby agree as follows:
AGREEMENT
SECTION 1. EMPLOYMENT
Section 1.1 Term of Employment. Employer shall employ Employee, and
Employee shall serve Employer, for a term of three (3) years beginning on the
date hereof and continuing until ________________, 2004 (the "TERM OF
EMPLOYMENT").
Section 1.2 Title and Duties. During the Term of Employment, Employee
shall be employed as Senior Vice President of Employer and/or in such other
comparable position and title, with such duties, functions, responsibilities and
authority as are typically consistent with such position, as Employer may from
time to time determine. Employee agrees to devote his best efforts and his full
time and attention to the performance of his duties under this Agreement, and to
perform such duties in an efficient, trustworthy and businesslike manner, and in
a manner that complies with all of Employer's policies and procedures.
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Section 1.3 Limitation on Authority. Without the prior authorization of
Employer, Employee shall not have the authority to bind Employer with respect to
the acquisition, disposition or undertaking of any material property, investment
or project, any borrowing, or the settlement of any material claims or disputes.
Section 1.4 No Conflicts. Employee represents and warrants to Employer
that he is not restricted from entering into this Agreement and that his
execution, delivery and performance of this Agreement will not violate any
contract or agreement to which Employee is a party or by which Employee is
bound.
Section 1.5 Duty to Act in the Best Interest of Employer. Employee
shall not act in any manner, directly or indirectly, which may damage the
business of Employer or any of its Affiliates (as defined below) or which would
adversely affect the goodwill, reputation or business relations of Employer or
any of its Affiliates with their respective customers, the public generally or
with any of their other employees. For the purposes of this Agreement, the term
"Affiliate" shall mean any business, corporation or other entity controlling,
controlled by or under common control with Employer (including but not limited
to AdvancePCS, the companies controlled by AdvancePCS and DLI).
SECTION 2. COMPENSATION
Section 2.1 Salary. For each year during the Term of Employment,
Employer shall pay Employee an annual salary of no less than ___________________
______________________________________________ (the "BASE SALARY"), payable in
accordance with the normal payroll practices of Employer and subject to annual
increases in the sole discretion of Employer.
Section 2.2 Benefits. Employee shall be entitled to (i) to participate
in any health, accident, disability and life insurance programs, and any other
benefit program which Employer may adopt and implement for the benefit of
Employer's employees, and (ii) to such other benefits as are provided generally
to other executive employees of Employer in positions comparable to that held by
Employee.
Section 2.3 Annual Bonus Opportunity. Employee shall be eligible to
receive bonus compensation from Employer in respect of each fiscal year (or
portion thereof) occurring during the Term of Employment in an amount which
shall not exceed _____ percent _____ of Employee's Base Salary for such fiscal
year. Such bonus compensation shall be determined and paid by Employer in
accordance with, and subject to the terms and conditions of, the AdvancePCS
Management Incentive Program (as the same may be modified or amended from time
to time by Employer in its sole discretion) which takes into consideration,
among other things, performance-based criteria applicable to Employee as well
as the financial results of Employer and AdvancePCS with respect to the fiscal
year in question.
Nothing contained herein and no action taken in respect to any bonus
(or otherwise in respect of this Section 2.3) shall create or be construed to
create a trust of any kind. All bonuses that may become payable shall be paid
after the date that AdvancePCS has received from its
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independent certified public accountants their report on the audited
consolidated financial statements of AdvancePCS for the fiscal year in respect
of which any such bonus shall have been determined.
Section 2.4 Expenses. Employee shall be paid or reimbursed for all
reasonable business expenses incurred by him in the performance of his duties
for Employer in accordance with Employer's policies and procedures. Employee
shall also be reimbursed for all reasonable transportation expenses (and in the
case of airfare, coach class only) incurred by him in connection with commuting
between Bethesda, Maryland and his residences in Ohio and Florida; provided,
however, that Employer shall not be obligated to reimburse Employee for more
than four (4) such trips in any calendar month . Employee shall furnish
appropriate documentation of all expenses for which Employee may be reimbursed
pursuant to this Section 2.4, including documentation required by the Internal
Revenue Service.
Section 2.5 Withholding. Employer shall, in accordance with its payroll
policies and procedures, deduct and/or withhold from any compensation and
benefits provided to Employee hereunder any income, social security,
unemployment and other appropriate taxes required to be so deducted and/or
withheld under applicable local, state and federal laws, rules and regulations.
Section 2.6 Stock Options. Employee will be granted an option to
purchase _________________________ shares of the common stock of AdvancePCS in
accordance with, and subject to the terms and conditions set forth in, the
Incentive Stock Option Agreement in the form of Exhibit A hereto (the "OPTION
AGREEMENT") which shall be entered into by and between Employee and AdvancePCS
simultaneously with the execution and delivery of this Agreement.
Section 2.7 Paid Time Off. During the Term of Employment, Employee
shall be permitted to take time off with such frequency and of such duration as
are consistent with the executive paid time off policies of Employer in effect
on the date of this Agreement so long as the absence of Employee does not
interfere in any material respect with the performance by Employee of Employee's
duties hereunder.
Section 2.8. Company Car. Employee shall be entitled to the use of a
leased company vehicle on terms (including but not limited to the lease rate)
and conditions comparable to that in effect with respect to the leased company
vehicle utilized by Employee as of the date of this Agreement. Employer shall
pay all insurance, insurance deductibles, maintenance and repair costs with
respect to such vehicle.
SECTION 3. EMPLOYEE'S ACKNOWLEDGMENTS
Section 3.1 Confidential Information. Employee recognizes and
acknowledges that: (i) in the course of Employee's employment by Employer,
Employee will have access to and shall acquire certain confidential and
proprietary information relating to the business and operation of Employer and
its Affiliates, including but not limited to information with respect to
Employer's and its Affiliates' existing and contemplated services, products,
trade secrets, ideas, know how, research and development, formulas, models,
compilations, processes, inventions, computer code
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generated or developed, software or programs, related documentation, business
and financial methods or practices, plans, pricing, operating margins,
marketing, merchandising and selling techniques and information, customer lists,
details of customer agreements, sources of supply, employee compensation and
benefit plans, patient records and data, and other confidential information
relating to Employer's and its Affiliates' policies, operating strategies,
expansion strategies or business strategies or other confidential or proprietary
information of Employer and its Affiliates (collectively, the "CONFIDENTIAL
INFORMATION"); (ii) the Confidential Information is the property of Employer;
(iii) the use, misappropriation or disclosure of the Confidential Information
would constitute a breach of trust and could cause irreparable injury to
Employer; and (iv) it is essential to the protection of Employer's good will and
to the maintenance of Employer's competitive position that the Confidential
Information be kept secret and that Employee not disclose the Confidential
Information to others or use the Confidential Information to Employee's own
advantage or the advantage of others.
Section 3.2 Solicitation. Employee further recognizes and acknowledges
that it is essential for the proper protection of the business of Employer and
its Affiliates that Employee be restrained (i) from soliciting or inducing any
employee of Employer or any of its Affiliates to leave the employ of Employer or
any such Affiliate, (ii) from hiring or attempting to hire any employee of
Employer or any of its Affiliates, (iii) from soliciting the trade of or trading
with the customers and suppliers of Employer or any of its Affiliates for any
business purpose, and (iv) from competing against Employer or any of its
Affiliates for a reasonable period following the termination of Employee's
employment with Employer.
Section 3.3 Preparation of Materials. Employee further recognizes and
understands that his duties at Employer may include the preparation of
materials, including written or graphic materials, and that any such materials
conceived or written by him shall be done as "work made for hire" as defined and
used in the Copyright Act of 1976, 17 USC Section 1 et seq. In the event of
publication of such materials, Employee understands that since the work is a
"work made for hire", Employer will solely retain and own all rights in said
materials, including right of copyright, and that Employer may, at its
discretion, on a case-by-case basis, grant Employee by-line credit on such
materials as Employer may deem appropriate.
SECTION 4. EMPLOYEE'S COVENANTS AND AGREEMENTS
Section 4.1 Non-Disclosure of Confidential Information. Employee
covenants and agrees to hold and safeguard the Confidential Information in trust
for Employer, its successors and assigns and agrees that he shall not, without
the prior written consent of Employer, misappropriate or disclose or make
available to anyone for use outside Employer's organization at any time, either
during his employment with Employer or subsequent to the termination of his
employment with Employer for any reason, including without limitation
termination by Employer for Cause or without cause, any of the Confidential
Information, whether or not developed by Employee, except as required in the
performance of Employee's duties to Employer; provided, however, that the
foregoing shall not apply to (i) any information generally available to the
public or which becomes generally available to the public through no fault of
Employee, but only from and after the date such information becomes so
available, (ii) any
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information obtained by Employee from a third party which Employee has no reason
to believe is violating any obligation of confidentiality to Employer or any of
its Affiliates, or (iii) any information Employee is required by law to
disclose.
Section 4.2 Disclosure of Works and Inventions/Assignment of Patents.
Employee shall disclose promptly to Employer or its nominee any and all works,
inventions, discoveries and improvements authored, conceived or made by Employee
during the Term of Employment and related to the business or activities of
Employer and its Affiliates, and hereby assigns and agrees to assign all his
interest therein to Employer or its nominee. Whenever requested to do so by
Employer, Employee shall execute any and all applications, assignments or other
instruments which Employer shall deem necessary to apply for and obtain Letters
Patent or Copyrights of the United States or any foreign country or to otherwise
protect Employer's interest therein. Such obligations shall continue beyond the
termination of employment with respect to works, inventions, discoveries and
improvements authored, conceived or made by Employee during the Term of
Employment, and shall be binding upon Employee's assigns, executors,
administrators and other legal representatives.
Section 4.3 Return of Materials. Upon the termination of Employee's
employment with Employer for any reason, including without limitation
termination by Employer for Cause or without cause, Employee shall promptly
deliver to Employer all correspondence, drawings, blueprints, manuals, letters,
notes, notebooks, reports, flowcharts, programs, proposals and any documents
concerning the customers or concerning products or processes used by Employer
and its Affiliates and, without limiting the foregoing, will promptly deliver to
Employer any and all other documents or materials containing or constituting
Confidential Information.
Section 4.4 Restrictions on Competition. Employee covenants and agrees
that during the Term of Employment and for a period of three (3) years (except
in the case of clause (v) of the following sentence where the period shall be
five (5) years) following the termination of Employee's employment, including
without limitation termination by Employer for Cause or without cause, or by
Employee for Good Reason, Employee shall not, in the United States of America ,
engage, directly or indirectly, whether as principal or as agent, officer,
director, employee, consultant, shareholder, or otherwise, alone or in
association with any other person, corporation or other entity, in any business
or enterprise substantially engaged in or about to become engaged substantially
in the Business of Employer or its Affiliates. For purposes of this Agreement,
the term "Business" shall mean all those products and services that are
presently or hereafter marketed by Employer or its Affiliates that are
significant lines of business for them, or that are in the development stage at
the time of termination of Employee's employment and are actually marketed by
Employer or its Affiliates thereafter, as well as, the following businesses: (i)
the third party prescription drug claims processing business; (ii) the
organization and administration of retail pharmacy networks; (iii) the design,
development or marketing of or consulting as to, prescription drug benefit
plans; (iv) the provision of mail service pharmacy; (v) the sale, marketing or
distribution of specialty pharmaceuticals; (vi) the collection, analysis and/or
sale of data relating to prescription drug utilization; (vii) formulary
management and rebate administration services; (viii) disease state management,
case management or demand
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management services; (ix) distributing pharmaceutical products; and (x) any
other business in which Employer or any of its Affiliates is then engaged.
Section 4.5 Non-Solicitation of Customers and Suppliers. Employee
agrees that during the Term of Employment he shall not, directly or indirectly,
solicit the trade of, or trade with, any customer, prospective customer,
supplier, or prospective supplier of Employer or any of its Affiliates for any
business purpose other than for the benefit of Employer and its Affiliates.
Employee further agrees that for five (5) years following termination of his
employment with Employer, including without limitation termination by Employer
for Cause or without cause, Employee shall not, directly or indirectly, solicit
the trade of, or trade with, any customers or suppliers, or prospective
customers or suppliers, of Employer or any of its Affiliates.
Section 4.6 Non-Solicitation of Employees. Employee agrees that, during
the Term of Employment and for five (5) years following termination of
Employee's employment with Employer, including without limitation termination by
Employer for Cause or without cause, or by Employee for Good Reason, Employee
shall not, directly or indirectly, solicit or induce, or attempt to solicit or
induce, any employee of Employer or any of its Affiliates to leave the Employer
or any such Affiliate for any reason whatsoever, or hire any employee of
Employer or any of its Affiliates.
SECTION 5. TERMINATION OF EMPLOYMENT
Section 5.1 Termination by Employer for Cause. Termination pursuant to
any one or more of subsections (a) through (d) below shall constitute
termination for "Cause".
(a) Death. Employee's employment pursuant to this
Agreement shall terminate upon Employee's death. In such event any amounts
payable to Employee hereunder shall be paid directly to Employee's estate.
(b) Disability. If Employer determines in good faith
that the Disability of Employee has occurred (pursuant to the definition of
"Disability" set forth below), it may give to Employee written notice of its
intention to terminate Employee's employment. In such event, Employee's
employment with Employer shall terminate effective on the 30th day after receipt
of such notice by Employee (the "Disability Effective Date"), provided that,
within the 30 days after such receipt, Employee could not have (as determined by
the process set forth below) and shall not have returned to the performance of
the essential functions of Employee's position with or without reasonable
accommodations (as defined in Title I of the American's with Disabilities Act)
("Reasonable Accommodations"). For purposes of this Agreement, "Disability"
means Employee's incapacity due to physical or mental illness, which is
determined by a physician selected by Employer or its insurers and acceptable to
Employee or Employee's legal representative (such agreement as to acceptability
not to be withheld unreasonably), to prevent Employee's substantial and
continuous performance of the essential functions of his position with or
without Reasonable Accommodations for a period of more than 12 weeks after its
commencement or for an aggregate of sixteen weeks in any 12-month period.
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(c) Breach of Agreement. In the event Employee
breaches this Agreement, Employer shall have the right to terminate Employee's
employment hereunder (i) if upon notice from Employer, Employee fails to cure
such breach, if curable, within thirty (30) days, and (ii) immediately upon
notice to Employee if such breach cannot be cured within thirty (30) days.
(d) Dishonesty; Fraud; Similar Acts. Employer shall
have the right to terminate Employee's employment hereunder for any of the
following: (i) dishonesty, fraud, or any act involving moral turpitude which is
materially detrimental to Employer or any of its Affiliates, (ii) Employee
becomes a target of any governmental investigation or proceeding (including any
action brought on behalf of the government, such as a qui tam suit) for
violation of any law, rule or regulation pertaining to health care and/or
pharmaceutical services and products (including, without limitation, laws, rules
and regulations pertaining to reimbursement or coverage by the Medicare program,
any state Medicaid program or any other governmental health care program or by
third-party payors, laws prohibiting kickbacks or false claims, and laws
prohibiting fraud or abuse or fraudulent or abusive activities) and, as a result
Employee is convicted, debarred or suspended from participating in any federal
or state health care program, (iii) willful disobedience or insubordination
prejudicial to Employer, (iv) intentional or gross neglect of the performance of
his duties, (v) intentional withholding or nondisclosure of material information
to Employer, (vi) disclosing information materially prejudicial to Employer,
(vii) misappropriation of any corporate opportunity, or (viii) being convicted
of a felony.
Section 5.2 Obligations of Employer Upon Termination for Cause. In the
event that Employee's employment is terminated for Cause, Employer shall have no
further obligation to Employee under this Agreement except for payment of
amounts owed to Employee at the date of such termination, subject to any right
of set off.
Section 5.3 Termination By Employee for Good Reason. During the Term of
Employment, Employee's employment hereunder may be terminated by Employee for
Good Reason upon thirty (30) days prior written notice by Employee to Employer.
For purposes of this Agreement, "Good Reason" shall mean:
(a) without Employee's consent, the assignment to
Employee of any duties inconsistent in any material respect with Employee's
position (including status and titles), authority, duties or responsibilities as
contemplated by Section 1.2 of this Agreement, excluding for this Section 5.3
any isolated and inadvertent action not taken in bad faith and which is remedied
by Employer within ten (10) days after receipt of a notice thereof given by
Employee;
(b) without Employee's consent, any failure by
Employer to comply with any of the provisions of Section 2 of this Agreement
other than an isolated and inadvertent failure not taken in bad faith and which
is remedied by Employer within thirty (30) days after receipt of notice thereof
given by Employee, or the relocation of Employee's principal place of business
to a location not with in a thirty (30) mile radius of Bethesda, Maryland;
(c) without Employee's consent, any purported
termination by Employer of Employee's employment other than as expressly
permitted by this Agreement; or
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(d) the employment of ▇▇▇▇ ▇▇▇▇▇▇ is terminated by
Employer without cause or ▇▇▇▇ ▇▇▇▇▇▇ terminates his employment with Employer
for Good Reason pursuant to his Employment Agreement dated the date hereof.
Section 5.4 Termination by Employer Without Cause. Employer shall have
the right to terminate this Agreement and Employee's employment without cause
upon thirty (30) days' written notice to Employee.
Section 5.5 Obligations of Employer Upon Termination Without Cause or
For Good Reason. If Employer terminates Employee's employment without cause
pursuant to Section 5.4 or Employee terminates his employment for Good Reason
pursuant to Section 5.3, Employee shall receive (i) an amount equal to
Employee's Base Salary for a period of twelve (12) months following termination,
(ii) Employees benefits pursuant to Section 2.2 hereof for a period of twelve
(12) months following termination, and (iii) bonus compensation in respect of
the fiscal year during which any such termination takes place pursuant to, and
subject to the terms and conditions of, Section 2.3 hereof (collectively, the
"Severance Payment"). In addition, if Employer terminates Employee's employment
without cause pursuant to Section 5.4 or Employee terminates his employment for
Good Reason pursuant to Section 5.3, all options granted to Employee pursuant to
Section 2.6 hereof that are unvested as of such date shall immediately and
without the necessity of further action be vested in full. Upon such
termination, and except as expressly provided above, Employee shall not receive
any further compensation pursuant to Sections 2.1, 2.2, 2.3 or 2.4 of this
Agreement (except as specifically required by law). In the event of termination
by Employer without cause, or by Employee for Good Reason, Employee acknowledges
that Employer shall have no liability to him whatsoever other than its
obligations set forth in this Section 5.5.
Section 5.6 Obligations of the Employee Following Termination. In the
event that Employee's employment is terminated, Employee shall have no further
obligations hereunder, except that he shall (i) continue to be bound by the
provisions of Articles 3 and 4 of this Agreement in accordance with the terms
thereof, (ii) remain liable to Employer for any damages caused by Employee's
conduct described in Section 5.1(c) or (d), and (iii) if Employee's employment
was terminated under Section 5.1(c) or (d), continue to cooperate with Employer
without charge to Employer for a reasonable period of time upon reasonable
request as to matters within Employee's personal knowledge.
Section 5.7 Stock Options. Except as otherwise provided herein,
Employee shall have ninety (90) days from the termination of the Term of
Employment to exercise any vested but unexercised options previously granted to
Employee to purchase shares of the Common Stock of AdvancePCS. Any such exercise
will be in accordance with the terms and conditions of the applicable stock
option plan and stock option agreement.
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SECTION 6. GENERAL PROVISIONS
Section 6.1 Notices. All notices, claims, demands, and other
communications required or permitted to be given hereunder shall be in writing
and shall be deemed given upon (i) confirmation of receipt of a facsimile
transmission if sent by facsimile transmission, (ii) confirmed delivery by a
standard overnight carrier or when delivered by hand, or (iii) the expiration of
five (5) days after the day when mailed by registered or certified mail (postage
prepaid, return receipt requested), addressed to the respective parties at the
following addresses (or such other address for a party as shall be specified by
like notice):
If to Employee:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------
----------------------------
----------------------------
----------------------------
----------------------------
----------------------------
With a Copy to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Squire, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
If to Employer:
TheraCom, Inc.
c/o AdvancePCS
▇▇▇▇ ▇▇▇▇▇ ▇'▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: Legal Department
With a Copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
▇▇▇▇ ▇▇▇▇▇ LLP
▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇▇ - ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇-▇▇▇▇
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Section 6.2 Assignment; Binding Effect. Subject to the terms,
conditions, and restrictions contained herein, Employer may assign its rights
and obligations under this Agreement to any of Employer's Affiliates without
Employee's consent. Further, if Employer sells all or substantially all of its
assets, the rights and obligations of Employer under this Agreement may be
assigned without Employee's consent. In all other circumstances, the rights and
obligations of Employer under this Agreement may be assigned with Employee's
written consent (which shall not be unreasonably withheld) and shall inure to
the benefit of and be binding upon the successors and assigns of Employer.
Employee's obligation to provide services hereunder may not be assigned to or
assumed by any other person or entity.
Section 6.3 Choice of Law. This Agreement and the rights and duties of
the parties hereunder shall be governed by, construed under and enforced in
accordance with the laws of the State of Maryland.
Section 6.4 Arbitration. Any dispute or controversy between Employer
and Employee, whether arising out of or relating to this Agreement, the breach
of this Agreement, or otherwise, shall be settled by arbitration administered by
the American Arbitration Association ("AAA") in accordance with its Commercial
Arbitration Rules then in effect and judgment on the award rendered by the
arbitrator may be entered in any court having jurisdiction thereof. Any
arbitration shall be held before a single arbitrator who shall be selected by
the mutual agreement of Employer and Employee, unless the parties are unable to
agree to an arbitrator, in which case, the arbitrator will be selected under the
procedures of the AAA. The arbitrator shall have the authority to award any
remedy or relief that a court of competent jurisdiction could order or grant,
including, without limitation, the issuance of an injunction. However, either
party may, without inconsistency with this arbitration provision, apply to any
court having jurisdiction over such dispute or controversy and seek interim
provisional, injunctive or other equitable relief until the arbitration award is
rendered or the controversy is otherwise resolved. Except as necessary in court
proceedings to enforce this arbitration provision or an award rendered
hereunder, or to obtain interim relief, neither a party nor an arbitrator may
disclose the existence, content or results of any arbitration hereunder without
the prior written consent of Employer and Employee. Employer and Employee
acknowledge that this Agreement evidences a transaction involving interstate
commerce. Notwithstanding any choice of law provision included in this
Agreement, the United States Federal Arbitration Act shall govern the
interpretation and enforcement of this arbitration provision. The arbitration
proceeding shall be conducted in Dallas County, Texas or such other location to
which the parties may agree. Employer shall pay the costs of any arbitrator
appointed hereunder.
Section 6.5 Remedies. The parties to this Agreement shall be entitled
to enforce their respective rights under this Agreement specifically, to recover
damages (including, without limitation, reasonable fees and expenses of counsel)
by reason of any breach of any provision of this Agreement and to exercise all
other rights existing in their respective favor. The parties hereto agree and
acknowledge that money damages may not be an adequate remedy for any breach or
threatened breach of the provisions of this Agreement and that any party may,
subject to Section 6.4 hereof, in their respective sole discretion apply to any
court of law or equity of competent jurisdiction for specific performance and/or
injunctive relief in order to enforce or
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prevent any violations of the provisions of this Agreement. Such injunction or
decree shall be available without the posting of any bond or other security.
Section 6.6 Amendment; Waiver. No modification or amendment to this
Agreement shall be valid unless made in writing and signed by all parties
hereto. Any waiver by any party of any violation of, breach of or default under
any provision of this Agreement, by the other party shall not be construed as,
or constitute, a continuing waiver of such provision, or waiver of any other
violation of, breach of or default under any other provision of this Agreement.
Section 6.7 Severability. If any provision of this Agreement is or
becomes or is deemed invalid, illegal or unenforceable in any jurisdiction, such
provision (expressly including, without limitation, those set forth in Sections
3 and 4), shall be deemed amended to conform to the applicable laws of such
jurisdiction so as to be valid and enforceable. If any provision of this
Agreement cannot be so amended without materially altering the intention of the
parties, the provision will be stricken, but the validity, legality and
enforceability of such provision shall not in any way be affected or impaired
thereby in any other jurisdiction and the remainder of this Agreement shall
remain in full force and effect.
Section 6.8 Survival of Certain Obligations. The obligations of
Employer and Employee set forth in this Agreement which by their terms extend
beyond or survive the termination of the Term of Employment shall not be
affected or diminished in any way by the termination of the Term of Employment.
Section 6.9 Headings. The headings in this Agreement are intended
solely for convenience and shall be disregarded in interpreting it.
Section 6.10 Entire Agreement. This Agreement sets forth the entire
understanding of the parties to this Agreement regarding the subject matter
hereof and supercedes all prior agreements, arrangements, communications,
representations and warranties, whether oral or written, between the parties
regarding the subject matter hereof.
Section 6.11 Third Parties. Nothing expressed or implied in this
Agreement is intended, or shall be construed, to confer upon or give any person
or entity other than Employer and its Affiliates and Employee any rights or
remedies under, or by reason of, this Agreement. Employer's Affiliates are
express third party beneficiaries of this Agreement.
Section 6.12 Counterparts. This Agreement may be executed in
counterparts, and all of such counterparts, when separate counterparts have been
executed by the parties hereto, shall be deemed to be one and the same
agreement.
Section 6.13 Facsimile. Facsimile signatures of a party will be as
valid and binding as an original signature of that party and each party waives
any defense to enforcement of this Agreement based on acceptance of a facsimile
signature.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, Employer and Employee have executed this
Agreement as of the date first written above.
THERACOM, INC.
By:
----------------------------------
Name:
-------------------------------
Title:
------------------------------
EMPLOYEE:
--------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Social Security Number:
---------------
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EXHIBIT A
INCENTIVE STOCK OPTION AGREEMENT
AdvancePCS (the "Company"), in consideration of the value of the
continuing services of ________________ ("Optionee"), which continuing services
the grant of this option is designed to secure, and in consideration of the
undertakings made herein by Optionee, and pursuant to its Amended and Restated
Incentive Stock Option Plan (the "Plan"), hereby grants to Optionee an option,
evidenced by this option agreement, exercisable for the period and upon the
terms hereinafter set out, to purchase ________________ (________) shares of
common stock ("Common Stock") of the Company upon exercise of the option.
1. ELIGIBILITY/RESTRICTIVE COVENANTS. In order for an employee to be
eligible to participate in this stock option program and in furtherance of the
objective of securing the loyalty of Optionee and protecting the trade secret
and confidential information of the Company, Optionee agrees to the
confidentiality provisions and restrictions on competition and solicitation set
forth in Optionee's Employment Agreement.
2. EXERCISE PRICE. The exercise price of the option shall be $_______
per share, which price represents at least 100% of the fair market value of a
share of the Common Stock at the Date of Grant (as hereinafter defined).
3. TERM OF OPTION. This option is granted and dated as of
_______________, 2001 (sometimes hereinafter called the "Date of Grant"), and
will terminate and expire, to the extent not previously exercised, ten (10)
years after the Date of Grant, or at such earlier time as may be specified in
Section 4 of the Plan. Except as otherwise provided in this Option Agreement or
in the Plan, this option is exercisable as to 20% of the total shares covered by
such option as of the first anniversary of the Date of Grant, and the right to
exercise with respect to an additional 20% of the total shares shall accrue on
each of the next four anniversaries of the Date of Grant and shall be
cumulative.
4. MANNER OF EXERCISE. The Optionee (or other person entitled to
exercise the option) shall purchase shares of Common Stock subject hereto in the
manner and in accordance with the rules set forth in the Plan.
5. TERMINATION OF EMPLOYMENT. As provided in the Plan, if Optionee's
employment with the Company and its Affiliates (as defined in the Plan) is
terminated for any reason, (i) any portion of the option not vested on the date
of termination will be forfeited, and (ii) at any time within 90 days of the
date of such termination, the Optionee shall have the right to exercise any or
all of the options vested in such Optionee immediately prior to such
termination.
6. ADJUSTMENTS ON RECAPITALIZATION. The number of shares of Common
Stock subject hereto and the option price per share shall be proportionately
adjusted for any increase or decrease in the number of issued shares of the
Common Stock resulting from the subdivision or
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consolidation of shares, or the payment of a stock dividend after the Date of
Grant, or other decrease or increase in the shares of Common Stock outstanding
effected without receipt of consideration by the Company, provided, however,
that any options to purchase fractional shares resulting from such adjustments
shall be eliminated.
7. BREACH OF AGREEMENT. Should Optionee, at any time, breach the terms
and conditions of this Agreement, Optionee shall immediately forfeit any rights
to future vesting of options under this Agreement and shall repay the Company
any amount gained from the previous exercise of any options granted hereunder.
8. SUBJECT TO PLAN. This option is subject to all the terms and
conditions of the Plan, and specifically to the power of the Compensation
Committee of the Board of Directors of the Company to make interpretations of
the Plan and of options granted thereunder, and of the Board of Directors of the
Company to alter, amend, suspend, or discontinue the Plan subject to the
limitations expressed in the Plan. By acceptance hereof, Optionee acknowledges
receipt of a copy of the Plan and recognizes and agrees that all determinations,
interpretations, or other actions respecting the Plan may be made by a majority
of the Board of Directors of the Company or of the Compensation Committee, and
that such determinations, interpretations, or other actions are final,
conclusive and biding upon all parties, including Optionee.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, this Option Agreement is executed below so as to be
effective as of the ______ DAY OF ________________, 2001.
ADVANCEPCS
By:
-----------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇. Vice President, Corporate
Affairs and Secretary
The undersigned Optionee hereby accepts the benefits of the foregoing
Incentive Stock Option Agreement.
-------------------------------
, Optionee
------------------
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FINAL EXHIBIT
EXHIBIT 2.5(a)(ii)
(HANSAN)
EMPLOYMENT AGREEMENT
This Employment Agreement (the "AGREEMENT"), dated as of _____________, 2001, is
entered into by and between THERACOM, INC. (the "EMPLOYER"), and ▇▇▇▇ ▇. ▇▇▇▇▇▇
(the "EMPLOYEE").
RECITALS
WHEREAS, pursuant to that certain
Stock Purchase Agreement dated as of
____________, 2001 (the "
STOCK PURCHASE AGREEMENT"), AdvancePCS, a
Delaware
corporation ("ADVANCEPCS"), has acquired all of the issued and outstanding
capital stock of ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇, Inc., an Ohio corporation (the "ACQUIRED
COMPANY");
WHEREAS, Employer is a wholly-owned subsidiary of the Acquired Company;
WHEREAS, Employer desires to employ Employee as the Senior Vice
President of Employer, and Employee desires to be employed by Employer in such
capacity; and
WHEREAS, this Agreement is executed in connection with, and is an
integral part of, the acquisition of the Acquired Company by AdvancePCS;
NOW, THEREFORE, in consideration of the foregoing, the mutual covenants
and undertakings herein contained, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto, intending to be legally bound, hereby agree as follows:
AGREEMENT
SECTION 1. EMPLOYMENT
Section 1.1 Term of Employment. Employer shall employ Employee, and
Employee shall serve Employer, for a term of three (3) years beginning on the
date hereof and continuing until ________________, 2004 (the "TERM OF
EMPLOYMENT").
Section 1.2 Title and Duties. During the Term of Employment, Employee
shall be employed as Senior Vice President of Employer and/or in such other
comparable position and title, with such duties, functions, responsibilities and
authority as are typically consistent with such position, as Employer may from
time to time determine. Employee agrees to devote his best efforts and his full
time and attention to the performance of his duties under this Agreement, and to
perform such duties in an efficient, trustworthy and businesslike manner, and in
a manner that complies with all of Employer's policies and procedures.
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Section 1.3 Limitation on Authority. Without the prior authorization of
Employer, Employee shall not have the authority to bind Employer with respect to
the acquisition, disposition or undertaking of any material property, investment
or project, any borrowing, or the settlement of any material claims or disputes.
Section 1.4 No Conflicts. Employee represents and warrants to Employer
that he is not restricted from entering into this Agreement and that his
execution, delivery and performance of this Agreement will not violate any
contract or agreement to which Employee is a party or by which Employee is
bound.
Section 1.5 Duty to Act in the Best Interest of Employer. Employee
shall not act in any manner, directly or indirectly, which may damage the
business of Employer or any of its Affiliates (as defined below) or which would
adversely affect the goodwill, reputation or business relations of Employer or
any of its Affiliates with their respective customers, the public generally or
with any of their other employees. For the purposes of this Agreement, the term
"Affiliate" shall mean any business, corporation or other entity controlling,
controlled by or under common control with Employer (including but not limited
to AdvancePCS, the companies controlled by AdvancePCS and DLI).
SECTION 2. COMPENSATION
Section 2.1 Salary. For each year during the Term of Employment,
Employer shall pay Employee an annual salary of no less than ___________________
_______________________________________________ (the "BASE SALARY") payable in
accordance with the normal payroll practices of Employer and subject to annual
increases in the sole discretion of Employer.
Section 2.2 Benefits. Employee shall be entitled to (i) to participate
in any health, accident, disability and life insurance programs, and any other
benefit program which Employer may adopt and implement for the benefit of
Employer's employees, and (ii) to such other benefits as are provided generally
to other executive employees of Employer in positions comparable to that held by
Employee.
Section 2.3 Annual Bonus Opportunity. Employee shall be eligible to
receive bonus compensation from Employer in respect of each fiscal year (or
portion thereof) occurring during the Term of Employment in an amount which
shall not exceed _____ percent (__%) of Employee's Base Salary for such fiscal
year. Such bonus compensation shall be determined and paid by Employer in
accordance with, and subject to the terms and conditions of, the AdvancePCS
Management Incentive Program (as the same may be modified or amended from time
to time by Employer in its sole discretion) which takes into consideration,
among other things, performance-based criteria applicable to Employee as well
as the financial results of Employer and AdvancePCS with respect to the fiscal
year in question.
Nothing contained herein and no action taken in respect to any bonus
(or otherwise in respect of this Section 2.3) shall create or be construed to
create a trust of any kind. All bonuses that may become payable shall be paid
after the date that AdvancePCS has received from its
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independent certified public accountants their report on the audited
consolidated financial statements of AdvancePCS for the fiscal year in respect
of which any such bonus shall have been determined.
Section 2.4 Expenses. Employee shall be paid or reimbursed for all
reasonable business expenses incurred by him in the performance of his duties
for Employer in accordance with Employer's policies and procedures. Employee
shall furnish appropriate documentation of all expenses for which Employee may
be reimbursed pursuant to this Section 2.4, including documentation required by
the Internal Revenue Service.
Section 2.5 Withholding. Employer shall, in accordance with its payroll
policies and procedures, deduct and/or withhold from any compensation and
benefits provided to Employee hereunder any income, social security,
unemployment and other appropriate taxes required to be so deducted and/or
withheld under applicable local, state and federal laws, rules and regulations.
Section 2.6 Stock Options. Employee will be granted an option to
purchase _________________________ shares of the common stock of AdvancePCS in
accordance with, and subject to the terms and conditions set forth in, the
Incentive Stock Option Agreement in the form of Exhibit A hereto (the "OPTION
AGREEMENT") which shall be entered into by and between Employee and AdvancePCS
simultaneously with the execution and delivery of this Agreement.
Section 2.7 Paid Time Off. During the Term of Employment, Employee
shall be permitted to take time off with such frequency and of such duration as
are consistent with the executive paid time off policies of Employer in effect
on the date of this Agreement so long as the absence of Employee does not
interfere in any material respect with the performance by Employee of Employee's
duties hereunder.
Section 2.8. Company Car. Employee shall be entitled to the use of a
leased company vehicle on terms (including but not limited to the lease rate)
and conditions comparable to that in effect with respect to the leased company
vehicle utilized by Employee as of the date of this Agreement. Employer shall
pay all insurance, insurance deductibles, maintenance and repair costs with
respect to such vehicle.
SECTION 3. EMPLOYEE'S ACKNOWLEDGMENTS
Section 3.1 Confidential Information. Employee recognizes and
acknowledges that: (i) in the course of Employee's employment by Employer,
Employee will have access to and shall acquire certain confidential and
proprietary information relating to the business and operation of Employer and
its Affiliates, including but not limited to information with respect to
Employer's and its Affiliates' existing and contemplated services, products,
trade secrets, ideas, know how, research and development, formulas, models,
compilations, processes, inventions, computer code generated or developed,
software or programs, related documentation, business and financial methods or
practices, plans, pricing, operating margins, marketing, merchandising and
selling techniques and information, customer lists, details of customer
agreements, sources of supply, employee compensation and benefit plans, patient
records and data, and other confidential
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information relating to Employer's and its Affiliates' policies, operating
strategies, expansion strategies or business strategies or other confidential or
proprietary information of Employer and its Affiliates (collectively, the
"CONFIDENTIAL INFORMATION"); (ii) the Confidential Information is the property
of Employer; (iii) the use, misappropriation or disclosure of the Confidential
Information would constitute a breach of trust and could cause irreparable
injury to Employer; and (iv) it is essential to the protection of Employer's
good will and to the maintenance of Employer's competitive position that the
Confidential Information be kept secret and that Employee not disclose the
Confidential Information to others or use the Confidential Information to
Employee's own advantage or the advantage of others.
Section 3.2 Solicitation. Employee further recognizes and acknowledges
that it is essential for the proper protection of the business of Employer and
its Affiliates that Employee be restrained (i) from soliciting or inducing any
employee of Employer or any of its Affiliates to leave the employ of Employer or
any such Affiliate, (ii) from hiring or attempting to hire any employee of
Employer or any of its Affiliates, (iii) from soliciting the trade of or trading
with the customers and suppliers of Employer or any of its Affiliates for any
business purpose, and (iv) from competing against Employer or any of its
Affiliates for a reasonable period following the termination of Employee's
employment with Employer.
Section 3.3 Preparation of Materials. Employee further recognizes and
understands that his duties at Employer may include the preparation of
materials, including written or graphic materials, and that any such materials
conceived or written by him shall be done as "work made for hire" as defined and
used in the Copyright Act of 1976, 17 USC Section 1 et seq. In the event of
publication of such materials, Employee understands that since the work is a
"work made for hire", Employer will solely retain and own all rights in said
materials, including right of copyright, and that Employer may, at its
discretion, on a case-by-case basis, grant Employee by-line credit on such
materials as Employer may deem appropriate.
SECTION 4. EMPLOYEE'S COVENANTS AND AGREEMENTS
Section 4.1 Non-Disclosure of Confidential Information. Employee
covenants and agrees to hold and safeguard the Confidential Information in trust
for Employer, its successors and assigns and agrees that he shall not, without
the prior written consent of Employer, misappropriate or disclose or make
available to anyone for use outside Employer's organization at any time, either
during his employment with Employer or subsequent to the termination of his
employment with Employer for any reason, including without limitation
termination by Employer for Cause or without cause, any of the Confidential
Information, whether or not developed by Employee, except as required in the
performance of Employee's duties to Employer; provided, however, that the
foregoing shall not apply to (i) any information generally available to the
public or which becomes generally available to the public through no fault of
Employee, but only from and after the date such information becomes so
available, (ii) any information obtained by Employee from a third party which
Employee has no reason to believe is violating any obligation of confidentiality
to Employer or any of its Affiliates, or (iii) any information Employee is
required by law to disclose.
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Section 4.2 Disclosure of Works and Inventions/Assignment of Patents.
Employee shall disclose promptly to Employer or its nominee any and all works,
inventions, discoveries and improvements authored, conceived or made by Employee
during the Term of Employment and related to the business or activities of
Employer and its Affiliates, and hereby assigns and agrees to assign all his
interest therein to Employer or its nominee. Whenever requested to do so by
Employer, Employee shall execute any and all applications, assignments or other
instruments which Employer shall deem necessary to apply for and obtain Letters
Patent or Copyrights of the United States or any foreign country or to otherwise
protect Employer's interest therein. Such obligations shall continue beyond the
termination of employment with respect to works, inventions, discoveries and
improvements authored, conceived or made by Employee during the Term of
Employment, and shall be binding upon Employee's assigns, executors,
administrators and other legal representatives.
Section 4.3 Return of Materials. Upon the termination of Employee's
employment with Employer for any reason, including without limitation
termination by Employer for Cause or without cause, Employee shall promptly
deliver to Employer all correspondence, drawings, blueprints, manuals, letters,
notes, notebooks, reports, flowcharts, programs, proposals and any documents
concerning the customers or concerning products or processes used by Employer
and its Affiliates and, without limiting the foregoing, will promptly deliver to
Employer any and all other documents or materials containing or constituting
Confidential Information.
Section 4.4 Restrictions on Competition. Employee covenants and agrees
that during the Term of Employment and for a period of three (3) years (except
in the case of clause (v) of the following sentence where the period shall be
five (5) years) following the termination of Employee's employment, including
without limitation termination by Employer for Cause or without cause, or by
Employee for Good Reason, Employee shall not, in the United States of America ,
engage, directly or indirectly, whether as principal or as agent, officer,
director, employee, consultant, shareholder, or otherwise, alone or in
association with any other person, corporation or other entity, in any business
or enterprise substantially engaged in or about to become engaged substantially
in the Business of Employer or its Affiliates. For purposes of this Agreement,
the term "Business" shall mean all those products and services that are
presently or hereafter marketed by Employer or its Affiliates that are
significant lines of business for them, or that are in the development stage at
the time of termination of Employee's employment and are actually marketed by
Employer or its Affiliates thereafter, as well as, the following businesses: (i)
the third party prescription drug claims processing business; (ii) the
organization and administration of retail pharmacy networks; (iii) the design,
development or marketing of or consulting as to, prescription drug benefit
plans; (iv) the provision of mail service pharmacy; (v) the sale, marketing or
distribution of specialty pharmaceuticals; (vi) the collection, analysis and/or
sale of data relating to prescription drug utilization; (vii) formulary
management and rebate administration services; (viii) disease state management,
case management or demand management services; (ix) distributing pharmaceutical
products; and (x) any other business in which Employer or any of its Affiliates
is then engaged.
Section 4.5 Non-Solicitation of Customers and Suppliers. Employee
agrees that during the Term of Employment he shall not, directly or indirectly,
solicit the trade of, or trade
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with, any customer, prospective customer, supplier, or prospective supplier of
Employer or any of its Affiliates for any business purpose other than for the
benefit of Employer and its Affiliates. Employee further agrees that for five
(5) years following termination of his employment with Employer, including
without limitation termination by Employer for Cause or without cause, Employee
shall not, directly or indirectly, solicit the trade of, or trade with, any
customers or suppliers, or prospective customers or suppliers, of Employer or
any of its Affiliates.
Section 4.6 Non-Solicitation of Employees. Employee agrees that, during
the Term of Employment and for five (5) years following termination of
Employee's employment with Employer, including without limitation termination by
Employer for Cause or without cause, or by Employee for Good Reason, Employee
shall not, directly or indirectly, solicit or induce, or attempt to solicit or
induce, any employee of Employer or any of its Affiliates to leave the Employer
or any such Affiliate for any reason whatsoever, or hire any employee of
Employer or any of its Affiliates.
SECTION 5. TERMINATION OF EMPLOYMENT
Section 5.1 Termination by Employer for Cause. Termination pursuant to
any one or more of subsections (a) through (d) below shall constitute
termination for "Cause".
(a) Death. Employee's employment pursuant to this
Agreement shall terminate upon Employee's death. In such event any amounts
payable to Employee hereunder shall be paid directly to Employee's estate.
(b) Disability. If Employer determines in good faith that
the Disability of Employee has occurred (pursuant to the definition of
"Disability" set forth below), it may give to Employee written notice of its
intention to terminate Employee's employment. In such event, Employee's
employment with Employer shall terminate effective on the 30th day after receipt
of such notice by Employee (the "Disability Effective Date"), provided that,
within the 30 days after such receipt, Employee could not have (as determined by
the process set forth below) and shall not have returned to the performance of
the essential functions of Employee's position with or without reasonable
accommodations (as defined in Title I of the American's with Disabilities Act)
("Reasonable Accommodations"). For purposes of this Agreement, "Disability"
means Employee's incapacity due to physical or mental illness, which is
determined by a physician selected by Employer or its insurers and acceptable to
Employee or Employee's legal representative (such agreement as to acceptability
not to be withheld unreasonably), to prevent Employee's substantial and
continuous performance of the essential functions of his position with or
without Reasonable Accommodations for a period of more than 12 weeks after its
commencement or for an aggregate of sixteen weeks in any 12-month period.
(c) Breach of Agreement. In the event Employee breaches
this Agreement, Employer shall have the right to terminate Employee's employment
hereunder (i) if upon notice from Employer, Employee fails to cure such breach,
if curable, within thirty (30) days, and (ii) immediately upon notice to
Employee if such breach cannot be cured within thirty (30) days.
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(d) Dishonesty; Fraud; Similar Acts. Employer shall have
the right to terminate Employee's employment hereunder for any of the following:
(i) dishonesty, fraud, or any act involving moral turpitude which is materially
detrimental to Employer or any of its Affiliates, (ii) Employee becomes a target
of any governmental investigation or proceeding (including any action brought on
behalf of the government, such as a qui tam suit) for violation of any law, rule
or regulation pertaining to health care and/or pharmaceutical services and
products (including, without limitation, laws, rules and regulations pertaining
to reimbursement or coverage by the Medicare program, any state Medicaid program
or any other governmental health care program or by third-party payors, laws
prohibiting kickbacks or false claims, and laws prohibiting fraud or abuse or
fraudulent or abusive activities) and, as a result Employee is convicted,
debarred or suspended from participating in any federal or state health care
program, (iii) willful disobedience or insubordination prejudicial to Employer,
(iv) intentional or gross neglect of the performance of his duties, (v)
intentional withholding or nondisclosure of material information to Employer,
(vi) disclosing information materially prejudicial to Employer, (vii)
misappropriation of any corporate opportunity, or (viii) being convicted of a
felony.
Section 5.2 Obligations of Employer Upon Termination for Cause. In the
event that Employee's employment is terminated for Cause, Employer shall have no
further obligation to Employee under this Agreement except for payment of
amounts owed to Employee at the date of such termination, subject to any right
of set off.
Section 5.3 Termination By Employee for Good Reason. During the Term of
Employment, Employee's employment hereunder may be terminated by Employee for
Good Reason upon thirty (30) days prior written notice by Employee to Employer.
For purposes of this Agreement, "Good Reason" shall mean:
(a) without Employee's consent, the assignment to Employee
of any duties inconsistent in any material respect with Employee's position
(including status and titles), authority, duties or responsibilities as
contemplated by Section 1.2 of this Agreement, excluding for this Section 5.3
any isolated and inadvertent action not taken in bad faith and which is remedied
by Employer within ten (10) days after receipt of a notice thereof given by
Employee;
(b) without Employee's consent, any failure by Employer to
comply with any of the provisions of Section 2 of this Agreement other than an
isolated and inadvertent failure not taken in bad faith and which is remedied by
Employer within thirty (30) days after receipt of notice thereof given by
Employee, or the relocation of Employee's principal place of business to a
location not with in a thirty (30) mile radius of Bethesda, Maryland;
(c) without Employee's consent, any purported termination
by Employer of Employee's employment other than as expressly permitted by this
Agreement; or
(d) the employment of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ is terminated by
Employer without cause or ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ terminates his employment with Employer
for Good Reason pursuant to his Employment Agreement dated the date hereof.
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Section 5.4 Termination by Employer Without Cause. Employer shall have
the right to terminate this Agreement and Employee's employment without cause
upon thirty (30) days' written notice to Employee.
Section 5.5 Obligations of Employer Upon Termination Without Cause or
For Good Reason. If Employer terminates Employee's employment without cause
pursuant to Section 5.4 or Employee terminates his employment for Good Reason
pursuant to Section 5.3, Employee shall receive (i) an amount equal to
Employee's Base Salary for a period of twelve (12) months following termination,
(ii) Employees benefits pursuant to Section 2.2 hereof for a period of twelve
(12) months following termination, and (iii) bonus compensation in respect of
the fiscal year during which any such termination takes place pursuant to, and
subject to the terms and conditions of, Section 2.3 hereof (collectively, the
"Severance Payment"). In addition, if Employer terminates Employee's employment
without cause pursuant to Section 5.4 or Employee terminates his employment for
Good Reason pursuant to Section 5.3, all options granted to Employee pursuant to
Section 2.6 hereof that are unvested as of such date shall immediately and
without the necessity of further action be vested in full. Upon such
termination, and except as expressly provided above, Employee shall not receive
any further compensation pursuant to Sections 2.1, 2.2, 2.3 or 2.4 of this
Agreement (except as specifically required by law). In the event of termination
by Employer without cause, or by Employee for Good Reason, Employee acknowledges
that Employer shall have no liability to him whatsoever other than its
obligations set forth in this Section 5.5.
Section 5.6 Obligations of the Employee Following Termination. In the
event that Employee's employment is terminated, Employee shall have no further
obligations hereunder, except that he shall (i) continue to be bound by the
provisions of Articles 3 and 4 of this Agreement in accordance with the terms
thereof, (ii) remain liable to Employer for any damages caused by Employee's
conduct described in Section 5.1(c) or (d), and (iii) if Employee's employment
was terminated under Section 5.1(c) or (d), continue to cooperate with Employer
without charge to Employer for a reasonable period of time upon reasonable
request as to matters within Employee's personal knowledge.
Section 5.7 Stock Options. Except as otherwise provided herein,
Employee shall have ninety (90) days from the termination of the Term of
Employment to exercise any vested but unexercised options previously granted to
Employee to purchase shares of the Common Stock of AdvancePCS. Any such exercise
will be in accordance with the terms and conditions of the applicable stock
option plan and stock option agreement.
SECTION 6. GENERAL PROVISIONS
Section 6.1 Notices. All notices, claims, demands, and other
communications required or permitted to be given hereunder shall be in writing
and shall be deemed given upon (i) confirmation of receipt of a facsimile
transmission if sent by facsimile transmission, (ii) confirmed delivery by a
standard overnight carrier or when delivered by hand, or (iii) the expiration of
five (5) days after the day when mailed by registered or certified mail (postage
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prepaid, return receipt requested), addressed to the respective parties at the
following addresses (or such other address for a party as shall be specified by
like notice):
If to Employee:
▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------
----------------------------
----------------------------
----------------------------
----------------------------
----------------------------
With a Copy to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Squire, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
If to Employer:
TheraCom, Inc.
c/o AdvancePCS
▇▇▇▇ ▇▇▇▇▇ ▇'▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: Legal Department
With a Copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
▇▇▇▇ ▇▇▇▇▇ LLP
▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇▇ - ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇-▇▇▇▇
Section 6.2 Assignment; Binding Effect. Subject to the terms,
conditions, and restrictions contained herein, Employer may assign its rights
and obligations under this Agreement to any of Employer's Affiliates without
Employee's consent. Further, if Employer sells all or substantially all of its
assets, the rights and obligations of Employer under this Agreement may be
assigned without Employee's consent. In all other circumstances, the rights
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and obligations of Employer under this Agreement may be assigned with Employee's
written consent (which shall not be unreasonably withheld) and shall inure to
the benefit of and be binding upon the successors and assigns of Employer.
Employee's obligation to provide services hereunder may not be assigned to or
assumed by any other person or entity.
Section 6.3 Choice of Law. This Agreement and the rights and duties of
the parties hereunder shall be governed by, construed under and enforced in
accordance with the laws of the State of Maryland.
Section 6.4 Arbitration. Any dispute or controversy between Employer
and Employee, whether arising out of or relating to this Agreement, the breach
of this Agreement, or otherwise, shall be settled by arbitration administered by
the American Arbitration Association ("AAA") in accordance with its Commercial
Arbitration Rules then in effect and judgment on the award rendered by the
arbitrator may be entered in any court having jurisdiction thereof. Any
arbitration shall be held before a single arbitrator who shall be selected by
the mutual agreement of Employer and Employee, unless the parties are unable to
agree to an arbitrator, in which case, the arbitrator will be selected under the
procedures of the AAA. The arbitrator shall have the authority to award any
remedy or relief that a court of competent jurisdiction could order or grant,
including, without limitation, the issuance of an injunction. However, either
party may, without inconsistency with this arbitration provision, apply to any
court having jurisdiction over such dispute or controversy and seek interim
provisional, injunctive or other equitable relief until the arbitration award is
rendered or the controversy is otherwise resolved. Except as necessary in court
proceedings to enforce this arbitration provision or an award rendered
hereunder, or to obtain interim relief, neither a party nor an arbitrator may
disclose the existence, content or results of any arbitration hereunder without
the prior written consent of Employer and Employee. Employer and Employee
acknowledge that this Agreement evidences a transaction involving interstate
commerce. Notwithstanding any choice of law provision included in this
Agreement, the United States Federal Arbitration Act shall govern the
interpretation and enforcement of this arbitration provision. The arbitration
proceeding shall be conducted in Dallas County, Texas or such other location to
which the parties may agree. Employer shall pay the costs of any arbitrator
appointed hereunder.
Section 6.5 Remedies. The parties to this Agreement shall be entitled
to enforce their respective rights under this Agreement specifically, to recover
damages (including, without limitation, reasonable fees and expenses of counsel)
by reason of any breach of any provision of this Agreement and to exercise all
other rights existing in their respective favor. The parties hereto agree and
acknowledge that money damages may not be an adequate remedy for any breach or
threatened breach of the provisions of this Agreement and that any party may,
subject to Section 6.4 hereof, in their respective sole discretion apply to any
court of law or equity of competent jurisdiction for specific performance and/or
injunctive relief in order to enforce or prevent any violations of the
provisions of this Agreement. Such injunction or decree shall be available
without the posting of any bond or other security.
Section 6.6 Amendment; Waiver. No modification or amendment to this
Agreement shall be valid unless made in writing and signed by all parties
hereto. Any waiver by any party of
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any violation of, breach of or default under any provision of this Agreement, by
the other party shall not be construed as, or constitute, a continuing waiver of
such provision, or waiver of any other violation of, breach of or default under
any other provision of this Agreement.
Section 6.7 Severability. If any provision of this Agreement is or
becomes or is deemed invalid, illegal or unenforceable in any jurisdiction, such
provision (expressly including, without limitation, those set forth in Sections
3 and 4), shall be deemed amended to conform to the applicable laws of such
jurisdiction so as to be valid and enforceable. If any provision of this
Agreement cannot be so amended without materially altering the intention of the
parties, the provision will be stricken, but the validity, legality and
enforceability of such provision shall not in any way be affected or impaired
thereby in any other jurisdiction and the remainder of this Agreement shall
remain in full force and effect.
Section 6.8 Survival of Certain Obligations. The obligations of
Employer and Employee set forth in this Agreement which by their terms extend
beyond or survive the termination of the Term of Employment shall not be
affected or diminished in any way by the termination of the Term of Employment.
Section 6.9 Headings. The headings in this Agreement are intended
solely for convenience and shall be disregarded in interpreting it.
Section 6.10 Entire Agreement. This Agreement sets forth the entire
understanding of the parties to this Agreement regarding the subject matter
hereof and supercedes all prior agreements, arrangements, communications,
representations and warranties, whether oral or written, between the parties
regarding the subject matter hereof.
Section 6.11 Third Parties. Nothing expressed or implied in this
Agreement is intended, or shall be construed, to confer upon or give any person
or entity other than Employer and its Affiliates and Employee any rights or
remedies under, or by reason of, this Agreement. Employer's Affiliates are
express third party beneficiaries of this Agreement.
Section 6.12 Counterparts. This Agreement may be executed in
counterparts, and all of such counterparts, when separate counterparts have been
executed by the parties hereto, shall be deemed to be one and the same
agreement.
Section 6.13 Facsimile. Facsimile signatures of a party will be as
valid and binding as an original signature of that party and each party waives
any defense to enforcement of this Agreement based on acceptance of a facsimile
signature.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, Employer and Employee have executed this
Agreement as of the date first written above.
THERACOM, INC.
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
EMPLOYEE:
----------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
Social Security Number:
----------------
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EXHIBIT A
INCENTIVE STOCK OPTION AGREEMENT
AdvancePCS (the "Company"), in consideration of the value of the
continuing services of ________________ ("Optionee"), which continuing services
the grant of this option is designed to secure, and in consideration of the
undertakings made herein by Optionee, and pursuant to its Amended and Restated
Incentive Stock Option Plan (the "Plan"), hereby grants to Optionee an option,
evidenced by this option agreement, exercisable for the period and upon the
terms hereinafter set out, to purchase ________________ (________) shares of
common stock ("Common Stock") of the Company upon exercise of the option.
1. ELIGIBILITY/RESTRICTIVE COVENANTS. In order for an employee to be
eligible to participate in this stock option program and in furtherance of the
objective of securing the loyalty of Optionee and protecting the trade secret
and confidential information of the Company, Optionee agrees to the
confidentiality provisions and restrictions on competition and solicitation set
forth in Optionee's Employment Agreement.
2. EXERCISE PRICE. The exercise price of the option shall be $_______
per share, which price represents at least 100% of the fair market value of a
share of the Common Stock at the Date of Grant (as hereinafter defined).
3. TERM OF OPTION. This option is granted and dated as of
_______________, 2001 (sometimes hereinafter called the "Date of Grant"), and
will terminate and expire, to the extent not previously exercised, ten (10)
years after the Date of Grant, or at such earlier time as may be specified in
Section 4 of the Plan. Except as otherwise provided in this Option Agreement or
in the Plan, this option is exercisable as to 20% of the total shares covered by
such option as of the first anniversary of the Date of Grant, and the right to
exercise with respect to an additional 20% of the total shares shall accrue on
each of the next four anniversaries of the Date of Grant and shall be
cumulative.
4. MANNER OF EXERCISE. The Optionee (or other person entitled to
exercise the option) shall purchase shares of Common Stock subject hereto in the
manner and in accordance with the rules set forth in the Plan.
5. TERMINATION OF EMPLOYMENT. As provided in the Plan, if Optionee's
employment with the Company and its Affiliates (as defined in the Plan) is
terminated for any reason, (i) any portion of the option not vested on the date
of termination will be forfeited, and (ii) at any time within 90 days of the
date of such termination, the Optionee shall have the right to exercise any or
all of the options vested in such Optionee immediately prior to such
termination.
6. ADJUSTMENTS ON RECAPITALIZATION. The number of shares of Common
Stock subject hereto and the option price per share shall be proportionately
adjusted for any increase or decrease in the number of issued shares of the
Common Stock resulting from the subdivision or
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consolidation of shares, or the payment of a stock dividend after the Date of
Grant, or other decrease or increase in the shares of Common Stock outstanding
effected without receipt of consideration by the Company, provided, however,
that any options to purchase fractional shares resulting from such adjustments
shall be eliminated.
7. BREACH OF AGREEMENT. Should Optionee, at any time, breach the terms
and conditions of this Agreement, Optionee shall immediately forfeit any rights
to future vesting of options under this Agreement and shall repay the Company
any amount gained from the previous exercise of any options granted hereunder.
8. SUBJECT TO PLAN. This option is subject to all the terms and
conditions of the Plan, and specifically to the power of the Compensation
Committee of the Board of Directors of the Company to make interpretations of
the Plan and of options granted thereunder, and of the Board of Directors of the
Company to alter, amend, suspend, or discontinue the Plan subject to the
limitations expressed in the Plan. By acceptance hereof, Optionee acknowledges
receipt of a copy of the Plan and recognizes and agrees that all determinations,
interpretations, or other actions respecting the Plan may be made by a majority
of the Board of Directors of the Company or of the Compensation Committee, and
that such determinations, interpretations, or other actions are final,
conclusive and biding upon all parties, including Optionee.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, this Option Agreement is executed below so as to be
effective as of the ______ DAY OF ________________, 2001.
ADVANCEPCS
By:
----------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇. Vice President, Corporate
Affairs and Secretary
The undersigned Optionee hereby accepts the benefits of the foregoing
Incentive Stock Option Agreement.
-------------------------------
, Optionee
----------------
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EXHIBIT
2.5(a)(iii) NONCOMPETITION AGREEMENT
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FINAL EXHIBIT
EXHIBIT 2.5(a)(iii)
NONCOMPETITION AGREEMENT
This NONCOMPETITION AGREEMENT (the "AGREEMENT"), dated as of
_______________, 2001, is made by and between AdvancePCS, a
Delaware corporation
("ADVANCEPCS"), and ("COVENANTOR").
RECITALS
WHEREAS, AdvancePCS and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Trust and ▇▇▇▇ ▇. ▇▇▇▇▇▇ Trust (collectively, the
"SELLERS" and individually a "SELLER") entered into that certain
Stock Purchase
Agreement dated as of _______________, 2001 (the "PURCHASE AGREEMENT"), pursuant
to which AdvancePCS purchased all of the issued and outstanding stock of
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇, Inc., an Ohio corporation ("DLI"), from Sellers;
WHEREAS, as a condition to the Closing under the Purchase Agreement,
the Purchase Agreement requires, among other things, that Covenantor enter into
this Agreement and that this Agreement be effective upon the Closing; and
WHEREAS, capitalized terms used herein and not defined shall have the
meanings ascribed to them in the Purchase Agreement;
AGREEMENT
NOW, THEREFORE, in consideration of AdvancePCS entering into the
Purchase Agreement and the mutual covenants and agreements herein contained, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties, intending to be legally bound, hereby agree as
follows:
SECTION 1. TERM. The term of this Agreement shall commence as of the
date first set forth above (the "EFFECTIVE DATE") and shall remain in full force
and effect until the fifth (5th) anniversary of the Effective Date (the "TERM").
SECTION 2. CONSIDERATION. Covenantor hereby acknowledges that a
material inducement for AdvancePCS to enter into the Purchase Agreement and
perform its obligations thereunder is Covenantor's execution of this Agreement.
Covenantor acknowledges and agrees that the consideration provided to him is
adequate and acceptable, and that Covenantor will benefit from AdvancePCS's
performance of its obligations under the Purchase Agreement.
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SECTION 3. NONCOMPETITION AND NONSOLICITATION.
(a) Acknowledgement. Covenantor recognizes and acknowledges
that it is essential for the proper protection of the business of AdvancePCS and
its Affiliates (as defined below) that Covenantor be restrained (i) from
soliciting or inducing any employee of AdvancePCS or any of its Affiliates to
leave the employ of AdvancePCS or any of such Affiliate, (ii) from hiring or
attempting to hire any employee of AdvancePCS or any of its Affiliates, (iii)
from soliciting the trade of or trading with the customers and suppliers of
AdvancePCS or any of its Affiliates for any business purpose competitive with
the Business of AdvancePCS and its Affiliates, and (iv) from competing against
AdvancePCS or any of its Affiliates in connection with the Business. For the
purposes of this Agreement, the term "AFFILIATE" shall mean any business,
corporation or other entity controlling, controlled by or under common control
with AdvancePCS (including but not limited to Theracom and DLI).
(b) Noncompetition. Covenantor covenants and agrees that
during the Term, Covenantor shall not, in the United States of America , engage,
directly or indirectly, whether as principal or as agent, officer, director,
employee, consultant, shareholder, or otherwise, alone or in association with
any other person, corporation or other entity, in any business or enterprise
substantially engaged in or about to become engaged substantially in the
Business of AdvancePCS or any of its Affiliates. For purposes of this Agreement,
the term "Business" shall mean all those products and services that are
presently or hereafter marketed by AdvancePCS or its Affiliates that are
significant lines of business for them, or that are in the development stage as
of the date of this Agreement and are actually marketed by AdvancePCS or any of
its Affiliates thereafter, during the Term, including but not limited to the
following businesses: (i) the third party prescription drug claims processing
business; (ii) the organization and administration of retail pharmacy networks;
(iii) the design, development or marketing of or consulting as to, prescription
drug benefit plans; (iv) the provision of mail service pharmacy; (v) the sale,
marketing or distribution of specialty pharmaceuticals; (vi) the collection,
analysis and/or sale of data relating to prescription drug utilization; (vii)
formulary management and rebate administration services; (viii) disease state
management, case management or demand management services; (ix) distributing
pharmaceutical products; and (x) any other business in which AdvancePCS or any
of its Affiliates is then engaged.
(c) Non-Solicitation of Customers and Suppliers. Covenantor
covenants and agrees that during the Term, Covenantor shall not, directly or
indirectly, solicit the trade of, or trade with, any customer, prospective
customer, supplier, or prospective supplier of AdvancePCS or any of its
Affiliates for any purposes competitive with the Business of AdvancePCS or any
of its Affiliates.
(d) Non-Solicitation of Employees. Covenantor covenants and
agrees that during the Term, Covenantor shall not, directly or indirectly,
solicit or induce, or attempt to solicit or induce, any employee of AdvancePCS
or any of its Affiliates to leave
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AdvancePCS or any such Affiliate for any reason whatsoever, or hire any employee
of AdvancePCS or any of its Affiliates.
(e) Enforceability. The parties agree that the restrictions
set forth in this Section 3 are narrowly tailored to protect the legitimate
interests of the parties and are reasonable. If, however, at the time of
enforcement of any of the provisions of this Section 3 a court holds that the
restrictions stated therein are unreasonable under the circumstances then
existing or are otherwise illegal, invalid or unenforceable in any respect by
reason of its duration, definition of geographic area or scope of activity, or
any other reason, the parties hereto agree that the maximum period, scope or
geographical area reasonable or otherwise enforceable under such circumstances
shall be deemed automatically substituted for the stated period, scope or area,
but the validity, legality and enforceability of such provision shall not in any
way be affected or impaired thereby in any other jurisdiction and the remainder
of this Agreement shall remain in full force and effect.
SECTION 4. CONFIDENTIALITY.
(a) Acknowledgement. Covenantor recognizes and acknowledges
that: (i) Covenantor has had access to and has acquired certain confidential and
proprietary information relating to the business and operation of AdvancePCS and
its Affiliates, including but not limited to information with respect to
AdvancePCS's and its Affiliates' existing and contemplated services, products,
trade secrets, ideas, know how, research and development, formulas, models,
compilations, processes, inventions, computer code generated or developed,
software or programs, related documentation, business and financial methods or
practices, plans, pricing, operating margins, marketing, merchandising and
selling techniques and information, customer lists, details of customer
agreements, sources of supply, employee compensation and benefit plans, patient
records and data, and other confidential information relating to AdvancePCS's
and its Affiliates' policies, operating strategies, expansion strategies or
business strategies or other confidential or proprietary information of
AdvancePCS and its Affiliates (collectively, the "CONFIDENTIAL INFORMATION");
(ii) the Confidential Information is the property of AdvancePCS; (iii) the use,
misappropriation or disclosure of the Confidential Information would constitute
a breach of trust and could cause irreparable injury to AdvancePCS; and (iv) it
is essential to the protection of AdvancePCS's good will and to the maintenance
of AdvancePCS's competitive position that the Confidential Information be kept
secret and that Covenantor not disclose the Confidential Information to others
or use the Confidential Information to Covenantor's own advantage or the
advantage of others.
(b) Non-Disclosure of Confidential Information. Covenantor
covenants and agrees to hold and safeguard the Confidential Information in trust
for AdvancePCS, its successors and assigns and agrees that Covenantor shall not,
without the prior written consent of AdvancePCS, misappropriate or disclose or
make available to anyone at any time, any of the Confidential Information,
whether or not developed by Covenantor; provided, however, that the foregoing
shall not apply to (i) any information
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generally available to the public or which becomes generally available to the
public through no fault of Covenantor, but only from and after the date such
information becomes so available, (ii) any information obtained by Covenantor
from a third party which Covenantor has no reason to believe is violating any
obligation of confidentiality to AdvancePCS or any of its Affiliates, or (iii)
any information Covenantor is required by law to disclose.
SECTION 5. INJUNCTIVE RELIEF. Covenantor and AdvancePCS each agree
that in the event of any breach by Covenantor of any of Covenantor's covenants
or agreements contained herein, AdvancePCS would suffer substantial and
irrevocable damage and would encounter extreme difficulty in attempting to prove
the actual amount of damages suffered by AdvancePCS as a result of such breach,
and AdvancePCS would not have an adequate remedy at law in such event and,
therefore, in addition to any other remedy AdvancePCS may have at law or in
equity in the event of any such breach, AdvancePCS shall be entitled to seek and
receive specific performance and temporary, preliminary and permanent injunctive
relief from any breach of any of the covenants or agreements of this Agreement
from any court of competent jurisdiction without the necessity of proving the
amount of any actual damages to it resulting from such breach.
SECTION 6. MISCELLANEOUS.
(a) Notice. All notices, claims, demands, and other
communications required or permitted to be given hereunder shall be in writing
and shall be deemed given upon (i) confirmation of receipt of a facsimile
transmission if sent by facsimile transmission, (ii) confirmed delivery by a
standard overnight carrier or when delivered by hand, or (iii) the expiration of
five (5) days after the day when mailed by registered or certified mail (postage
prepaid, return receipt requested), addressed to the respective parties at the
following addresses (or such other address for a party as shall be specified by
like notice):
If to Covenantor:
---------------------------
---------------------------
---------------------------
---------------------------
With a Copy to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Squire, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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If to AdvancePCS:
AdvancePCS.
----------------------------------
----------------------------------
Attn:
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With a Copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
▇▇▇▇ ▇▇▇▇▇ LLP
▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇▇ - East Tower
Washington, D.C. 20005-3317
(b) Assignment; Binding Effect. Neither the rights nor the
obligations under this Agreement may be assigned by Covenantor without the
written consent of AdvancePCS. This Agreement shall be binding upon and inure to
the benefit of Covenantor and his heirs, personal representatives, and assigns.
This Agreement shall be binding upon and inure to the benefit of AdvancePCS and
its successors and assigns.
(c) Choice of Law. This Agreement and the rights and duties of
the parties hereunder shall be governed by, construed under and enforced in
accordance with the laws of the State of Maryland.
(d) Arbitration. Any dispute or controversy between Covenantor
and AdvancePCS, whether arising out of or relating to this Agreement, the breach
of this Agreement, or otherwise, shall be settled by arbitration administered by
the American Arbitration Association ("AAA") in accordance with its Commercial
Arbitration Rules then in effect and judgment on the award rendered by the
arbitrator may be entered in any court having jurisdiction thereof. Any
arbitration shall be held before a single arbitrator who shall be selected by
the mutual agreement of Covenantor and AdvancePCS, unless the parties are unable
to agree to an arbitrator, in which case, the arbitrator will be selected under
the procedures of the AAA. The arbitrator shall have the authority to award any
remedy or relief that a court of competent jurisdiction could order or grant,
including, without limitation, the issuance of an injunction. However, either
party may, without inconsistency with this arbitration provision, apply to any
court having jurisdiction over such dispute or controversy and seek interim
provisional, injunctive or other equitable relief until the arbitration award is
rendered or the controversy is otherwise resolved. Except as necessary in court
proceedings to enforce this arbitration provision or an award rendered
hereunder, or to obtain interim relief, neither a party nor an arbitrator may
disclose the existence, content or results of any arbitration hereunder without
the prior written consent of Covenantor and AdvancePCS. Covenantor and
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AdvancePCS acknowledge that this Agreement evidences a transaction involving
interstate commerce. Notwithstanding any choice of law provision included in
this Agreement, the United States Federal Arbitration Act shall govern the
interpretation and enforcement of this arbitration provision. The arbitration
proceeding shall be conducted in Dallas County, Texas or such other location to
which the parties may agree. The prevailing party in any such arbitration
proceeding will be entitled to collect its reasonable costs and expenses from
the non-prevailing party the costs of such arbitration proceeding, including but
not limited to reasonable attorneys' fees and the cost of any arbitrator
appointed hereunder.
(e) Amendment; Waiver. No modification or amendment to this
Agreement shall be valid unless made in writing and signed by all parties
hereto. Any waiver by any party of any violation of, breach of or default under
any provision of this Agreement by the other party shall not be construed as, or
constitute, a continuing waiver of such provision, or waiver of any other
violation of, breach of or default under any other provision of this Agreement.
(f) Severability. If any provision of this Agreement is or
becomes or is deemed invalid, illegal or unenforceable in any jurisdiction, such
provision (expressly including, without limitation, any provision set forth in
Section 3), shall be deemed amended to conform to the applicable laws of such
jurisdiction so as to be valid and enforceable. If any provision of this
Agreement cannot be so amended without materially altering the intention of the
parties, the provision will be stricken, but the validity, legality and
enforceability of such provision shall not in any way be affected or impaired
thereby in any other jurisdiction and the remainder of this Agreement shall
remain in full force and effect.
(g) Headings. The headings in this Agreement are intended
solely for convenience and shall be disregarded in interpreting it.
(h) Entire Agreement. This Agreement sets forth the entire
understanding of the parties to this Agreement regarding the subject matter
hereof and supercedes all prior agreements, arrangements, communications,
representations and warranties, whether oral or written, between the parties
regarding the subject matter hereof.
(i) Third Parties. Nothing expressed or implied in this
Agreement is intended, or shall be construed, to confer upon or give any person
or entity other than AdvancePCS and its Affiliates any rights or remedies under,
or by reason of, this Agreement. AdvancePCS's Affiliates are express third party
beneficiaries of this Agreement.
(j) Counterparts. This Agreement may be executed in
counterparts, and all of such counterparts, when separate counterparts have been
executed by the parties hereto, shall be deemed to be one and the same
agreement.
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(k) Facsimile. Facsimile signatures of a party will be as
valid and binding as an original signature of that party and each party waives
any defense to enforcement of this Agreement based on acceptance of a facsimile
signature.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, Covenantor has executed this Agreement and
AdvancePCS has caused this Agreement to be executed on its behalf as of the
Effective Date.
COVENANTOR
-----------------------------------------
[Name]
ADVANCEPCS
By:
--------------------------------------
Print Name:
------------------------------
Title:
-----------------------------------
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EXHIBIT
2.5(a)(vii) TERMINATION AGREEMENT
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FINAL EXHIBIT
EXHIBIT 2.5(a)(vii)
TERMINATION AGREEMENT
THIS TERMINATION AGREEMENT is made and entered into effective as of
___________ ____, 2001, by and among ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇, Inc., an Ohio Corporation
("DLI"), ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Trust, ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇ ▇.
▇▇▇▇▇▇ Trust and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (individually a "Shareholder" and
collectively, the "Shareholders").
RECITALS
WHEREAS, the Shareholders are parties to that certain
Stock Purchase
Agreement dated as of ___________ ____, 2001 (the "Purchase Agreement") by and
among Shareholders and AdvancePCS, a
Delaware corporation ("AdvancePCS");
WHEREAS, the Shareholders have agreed to sell all of the issued and
outstanding stock owned by them in DLI to AdvancePCS pursuant to the terms and
conditions of the Purchase Agreement;
WHEREAS, the terms of the Purchase Agreement require that the
Agreement dated July 19, 1994 by and among DLI and the Shareholders (the
"Shareholders Agreement") and the Voting Trust Agreement dated October 9, 1996
by and among the Shareholders (the "Voting Trust Agreement") (the Shareholders
Agreement and the Voting Trust Agreement being collectively referred to herein
as the "Agreements") be terminated effective upon the Closing; and
WHEREAS, capitalized terms used herein and not otherwise defined
shall have the meanings ascribed to such terms in the Purchase Agreement;
NOW, THEREFORE, in consideration of the foregoing premises, the
mutual promises contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties, intending
to be legally bound, hereby agree as follows:
1. TERMINATION OF AGREEMENTS. DLI and the Shareholders hereby terminate
the Shareholders Agreement in its entirety, the Shareholders hereby terminate
the Voting Trust Agreement in its entirety, and such Agreements shall have no
further force and effect, at law or in equity.
2. RELEASE. Each party to this Agreement ("Releasor") hereby expressly
releases and discharges each other party to this Agreement, AdvancePCS,
Theracom, Inc., an Ohio corporation which is a wholly-owned subsidiary of DLI,
and their respective shareholders, directors, officers, affiliates, employees,
agents, heirs, executors, successors and assigns (individually, a "Releasee" and
collectively the "Releasees") from any and all claims, demands, causes of
action, suits, proceedings,
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damages, debts, liabilities, and obligations of any kind whatsoever, whether
known or unknown, and whether in law or equity, which such Releasor has or may
have against the Releasees, individually or jointly, as a result of, arising
under, or related to the Agreements.
3. GOVERNING LAW. This Termination Agreement shall be governed by and
construed in accordance with the laws of the State of
Delaware.
4. SUCCESSORS AND ASSIGNS. This Termination Agreement shall be binding
and inure to the benefit of each party hereto and their respective successors,
heirs, executors, representatives, and assigns.
5. ENTIRE AGREEMENT. This Termination Agreement constitutes the entire
agreement between the parties hereto with respect to the subject matter hereof.
6. COUNTERPARTS. This Termination Agreement may be executed in
counterparts, and all of such counterparts, when separate counterparts have been
executed by the parties hereto, shall be deemed to be one and the same
agreement.
7. AMENDMENTS. No modification or amendment to this Agreement shall be
valid unless made in writing and signed by all parties hereto.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the Shareholders have executed this Termination
Agreement as of the day and year first hereinabove written.
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ TRUST
By:
----------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Trustee
▇▇▇▇ ▇. ▇▇▇▇▇▇ TRUST
By:
----------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Trustee
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇, INC.
By:
----------------------------------
Print Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chairman
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SCHEDULES AND EXHIBITS
SCHEDULES
Schedule I List of Sellers
Schedule 3.2 Authority; No Conflict
Schedule 3.3(b) Possible Optionees and Option Shares
Schedule 3.6 Title to Properties; Encumbrances
Schedule 3.8 Accounts Receivable
Schedule 3.10 Liabilities
Schedule 3.11 Taxes
Schedule 3.12 Material Advance Changes
Schedule 3.13 Employee Benefits
Schedule 3.14 Compliance with Legal Requirements; Governmental
Authorizations
Schedule 3.15 Legal Proceedings; Orders
Schedule 3.16 Certain Changes and Events
Schedule 3.17 Applicable Contracts; Defaults
Schedule 3.18 Insurance
Schedule 3.19 Environmental Matters
Schedule 3.20 Employees
Schedule 3.22 Intellectual Property
Schedule 3.26 Fraud and Abuse; Self-Referral; False Claims
Schedule 3.27 Debt
Schedule 8.6 Personal Guaranties
Schedule 10.4(b) Physician Billing Practices
EXHIBITS
Exhibit 2.2(a) Escrow Agreement
Exhibit 2.5(a)(ii) Employment Agreement
Exhibit 2.5(a)(iii) Noncompetition Agreement
Exhibit 2.5(a)(vii) Termination Agreement
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