EXHIBIT 2(a)
SHARE PURCHASE AGREEMENT
THIS SHARE PURCHASE AGREEMENT, dated 2 April 1999, is entered into by and among
CHARTER MEDICAL INTERNATIONAL, S.A., INC, a company incorporated in Nevada whose
principal office is at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇.▇., ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇ U.S.A. (the "Seller"), MAGELLAN HEALTH SERVICES, INC., a company
incorporated in Delaware whose principal office is at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇.▇.,
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇.▇.▇. ("Magellan"), INVESTMENT AB BURE, a
company incorporated in Sweden whose principal office is at ▇▇ ▇▇▇ ▇▇▇▇ ▇-▇▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ("Bure"), and CMEL HOLDING LIMITED, a company incorporated in
England and Wales (registered no.3743891 )
whose registered office is at ▇-▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇ (the "Buyer").
WHEREAS, the Seller owns all of the issued share capital of the Company;
WHEREAS, the Seller is a wholly owned subsidiary of Magellan and Magellan has
agreed to be a party to this Agreement for the purposes of guaranteeing the
obligations of the Seller under this Agreement and for certain other purposes
which have induced the Buyer to enter into this Agreement;
WHEREAS, the Charter St. Louis Property is owned by Charter Hospital of St.
Louis, Inc., a wholly owned subsidiary of Magellan, and Magellan has agreed to
procure the sale of the Charter St. Louis Property in accordance with the terms
of this Agreement;
WHEREAS, the Buyer is a wholly owned subsidiary of Bure and Bure has agreed to
be a party to this Agreement for the purpose of guaranteeing the obligations of
the Buyer under this Agreement;
WHEREAS, the Seller desires to sell and the Buyer desires to purchase all of the
Shares on the terms and conditions provided in this Agreement;
NOW THEREFORE in consideration of the mutual covenants contained herein, and of
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Parties hereto hereby agree as follows:
1. DEFINITIONS AND INTERPRETATION
1.1 In this Agreement and the Schedules, the following words and
expressions have the following meanings unless otherwise stated:
"AFFILIATE" in relation to any body corporate any Holding Company or
Subsidiary of such body corporate or any Subsidiary of a Holding
Company of such body corporate.
"AGREEMENT" this Share Purchase Agreement.
"AUDITED ACCOUNTS" the audited balance sheet, as at the Last Accounts
Date, and audited profit and loss account for the financial year ended
on the Last Accounts Date, for the Company, including directors'
report, auditors report and notes.
"AUDITORS" ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ of ▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇.
"BUSINESS DAY" a weekday (other than a Saturday) when clearing banks
are open for a full range of banking transactions in London and
Stockholm.
"BUYER'S GROUP" means the Buyer and each of its Affiliates.
"BUYER'S SOLICITORS" White & Case, ▇-▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
"CA" Companies ▇▇▇ ▇▇▇▇.
"CHARTER ST. LOUIS" means Charter Hospital of St. Louis, Inc., a
company incorporated in Missouri whose principal office is at ▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇.▇., ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇.
"CHARTER ST. LOUIS PROPERTY" means those freehold properties which are
owned by Charter St. Louis as identified by reference to Schedule 6,
Part II.
"CLOSING" closing of the sale and purchase of the Shares pursuant to
clauses 4.1 to 4.5 of this Agreement.
"CLOSING ACCOUNTS" means the accounts referred to in paragraph 2.2 of
Schedule 5.
"CLOSING DATE" means the date when Closing takes place in accordance
with clauses 4.1 to 4.5 .
"COMPANY" Charter Medical of England Limited (registered No. 1431836),
a company incorporated in England and Wales whose registered office is
at ▇-▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇.
"COMPETENT AUTHORITY" any person or legal entity (including any
government or government agency) having regulatory authority and/or any
court of law or tribunal, or any local or national agency, authority,
department, inspectorate, minister, ministry, official or public or
statutory person (whether autonomous or not) of, or the government of,
the United Kingdom or the European Community.
"COMPETITIVE BUSINESS" has the meaning set forth in clause 8.1.
"CONFIDENTIAL INFORMATION" has the meaning set forth in clause 8.3.
"CONNECTED PERSONS" shall have the meaning given to it by section 839
Income and Corporation Taxes ▇▇▇ ▇▇▇▇.
"CONTRACT" any agreement or commitment, whether conditional or
unconditional and whether by deed or under hand.
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"DISCLOSURE LETTER" the disclosure letter, of the same date as this
Agreement, from the Seller to the Buyer qualifying the Warranties,
including all documents both referred to in the disclosure letter and
annexed to it.
"ENCUMBRANCE" any mortgage, charge, lien or pledge or other form of
security whatsoever.
"ENVIRONMENT" any and all organisms, ecological systems, property and
the following media: air (including, without limitation, the air within
buildings and the air within other natural or man-made structures made
whether above or below ground), water (including, without limitation,
water under or within land or in drains or sewers and coastal and
inland waters) and land (including, without limitation, land under
water).
"ENVIRONMENTAL AUTHORISATIONS" all or any permits, consents, licences,
approvals, certificates and other authorisations required under
Environmental Laws and all terms and conditions thereof required under
any Environmental Laws for the operation of the business of the Company
or the occupation or use of any land or premises in relation to the
business of the Company.
"ENVIRONMENTAL LAWS" any and all laws (whether criminal, civil or
administrative) including European Community or European Union
regulations, directives and decisions, statutes and subordinate
legislation, regulations, orders, ordinances, Environmental
Authorisations, guidance notes, codes of practice, governmental
circulars and the like, local laws and by-laws, treaty, common law,
court orders, judgments, notices, orders, directions, instructions,
decisions or awards of any Competent Authority applicable to the
Company and/or the Property and/or the operation of the business of the
Company and which have as a purpose or effect the protection of the
Environment and/or prevention of Harm or Damage and/or the provision of
remedies in respect of Harm or Damage and are in force at the Closing
Date.
"ENVIRONMENTAL LIABILITY" civil or criminal liability (including,
without limitation, the liability in respect of Remedial Action) on the
part of the Company and/or any of their directors or officers or
shareholders under Environmental Laws.
"ERA" the Employment Rights ▇▇▇ ▇▇▇▇.
"FREEHOLD PROPERTY" the freehold property shortly described in Schedule
6 Part II.
"FSA" means the Financial Services ▇▇▇ ▇▇▇▇.
"HARDWARE" all computer hardware-related peripherals or equipment and
all telecommunication systems networks equipment and apparatus.
"HARM OR DAMAGE" harm or damage to or other interference with man or
any other living organism or harm or damage to or interference with the
Environment or public health or welfare.
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"HAZARDOUS MATTER" any and all matter (whether alone or in combination
with other matter) which may or is liable to cause or is capable of
causing Harm or Damage or which is nuisance to any person or persons or
which may make use or ownership of any part of the Property more
costly.
"HOLDING COMPANY" a holding company within the meaning ascribed to such
expressions by CA sections 736 and 736A.
"ICTA" Income and Corporation Taxes ▇▇▇ ▇▇▇▇.
"INTELLECTUAL PROPERTY RIGHTS" any and all computer programmes in both
source and object code form, including all databases for outcomes data
and other similar information for the professional application,
monitoring and developing of case methods and systems, all modules, all
source and other preparatory materials, specifications, charts,
diagrams, manuals or other documentation relating thereto and computer
generated works, all patents, rights in designs, trade and service
marks (whether registered or unregistered), trade and business names
(including rights in any get-up or trade dress), copyright, moral
rights, know-how, confidential information and all other similar
intellectual or industrial property rights (including rights under
licences and consents in relation to any such thing) including any
registration of any such rights to make applications for any of the
foregoing and any similar or analogous rights to any of the foregoing,
whether subsisting in the United Kingdom or any other part of the
world, and all documents, records, tapes, disc and other material
containing copyright works, Know-How or computer generated works,
together with all or any goodwill relating or attached thereto.
"INTRA-GROUP GUARANTEES" the guarantees, indemnities, cross-indemnities
and letters of comfort given to any third party by Magellan and any of
its Affiliates in respect of the liability of the Company which are in
force at the date of this Agreement including (without prejudice to the
generality of the foregoing) any guarantees given by Magellan and any
of its Affiliates in respect of the liabilities of the Company under
any of the Leases other than in respect of the lease referred to in
clause 9.1.
"KNOW-HOW" all commercial information whether or not in the public
domain including (but not limited to) that information concerned with
the marketing of any products or services, trade secrets and
confidential business information (including customer and supplier
lists, sales statistics, survey reports and market share data).
"LAST ACCOUNTS DATE" September 30, 1998.
"LEASES" the leases shortly described in Schedule 6 Part III.
"LEASEHOLD PROPERTY" the leasehold property shortly described in
Schedule 6 Part I and held under the terms of the Leases.
"LICENSE AGREEMENT" means the License Agreement between Charter System
LLC and the Company in the agreed form.
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"LOSSES" actions, proceedings, losses, damages, liabilities, claims and
reasonable costs and expenses, including, without limitation, fines,
penalties, legal and other professional fees.
"PARTIES" the parties to this Agreement.
"PENSION SCHEME" the Charter Medical of England Pension Plan dated 1
December 1982.
"PROPERTIES" the Freehold Property and the Leasehold Property.
"PROPERTY SALE AGREEMENT" means the sale and purchase agreement in the
agreed form as set out in Schedule 6 Part IV relating to the Charter
St. Louis Property.
"RELEVANT CLAIM" means a claim for breach of any of the Warranties or
for breach of any other covenant set out in this Agreement which is
expressly stated to be a Relevant Claim and for the purposes of Clauses
5.8.1, 5.8.2 and 5.8.3 a reference to a Relevant Claim shall include a
reference to a breach of any of the warranties set out in the Swiss
Sale Agreement and a breach of any Warranty assigned to the purchaser
of the Charter St. Louis Property.
"REMEDIAL ACTION" (i) preventing, limiting, removing, remedying,
cleaning-up, abating, containing or ameliorating the presence or effect
of any Hazardous Matter in the Environment (including, without
limitation, the Environment at the Property) or (ii) carrying out
investigative work and obtaining legal and other professional advice as
is reasonably required in relation to (i).
"RESTRICTED TERRITORY" means ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇, , ▇▇▇▇▇▇▇▇▇▇▇ and the United Kingdom.
"SELLER'S SOLICITORS" ▇▇▇▇▇ ▇▇▇, ▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇'▇ ▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇.
"SERVICES AGREEMENT" means the Services Agreement between the Company
and Magellan Behavioral Health, Inc., in the agreed form.
"SHARES" the 1,510,000 issued ordinary shares of (pound)1 each in the
capital of the Company being the entire issued share capital of the
Company.
"SOFTWARE" a computer programme whether in object or source code form
and its associated documentation algorithms and preparatory materials.
"SWISS COMPANY" Societe Anonyme de la Metairie, a company incorporated
in Switzerland.
"SWISS SALE AGREEMENT" the agreement of even date herewith between the
Seller, Magellan and CMEL Holding AB with regard to the sale of the
Swiss Stock
"SWISS STOCK" the 300 registered shares of CHF1,000 being the entire
issued share capital of the Swiss Company.
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"SUBSIDIARY" a subsidiary as defined in CA sections 736 and S736A;
provided that Charter Behavioral Health Systems, LLC ("CBHS") shall not
be deemed a subsidiary of Magellan or any Magellan Affiliates provided,
further that if at any time Magellan or a Magellan Affilliate owns more
than 50 percent of the outstanding voting equity interest of CBHS, or
has a right to designate a majority of the governing board of CBHS,
then CBHS shall be deemed a subsidiary of Magellan.
"TAX COVENANT" the tax covenant set out in Schedule 4.
"TAX OR TAXATION" (i) all forms of taxation, including and without any
limitation any charge, tax, duty, levy, impost, withholding or
liability wherever chargeable imposed for support of national, state,
federal, municipal or local government or any other person and whether
of the United Kingdom or any other jurisdiction; and (ii) any penalty,
fine, surcharge, interest, charges or costs payable in connection with
any taxation within (i) above or in connection with any account, record
form, return or computation in respect thereof.
"TAX AUTHORITY" "ICTA", "TCGA", "TMA", "VAT" and "VAT GROUP" shall have
the meanings given to them in the Tax Covenant.
"VATA" Value Added Tax ▇▇▇ ▇▇▇▇.
"WARRANTIES" the warranties set out in Schedule 3 and Part II of
Schedule 4.
1.2 All references in this Agreement to a statutory provision shall be
construed as including references to each of the following, as in
effect prior to the date hereof:
1.2.1 any statutory modification, consolidation or
re-enactment for the time being in force;
1.2.2 all statutory instruments, regulations, directives or
orders made pursuant to a statutory provision; and
1.2.3 any statutory provisions of which a statutory provision
is a consolidation, re-enactment or modification.
1.3 Any reference in this Agreement to either Party includes their
respective successors and assigns.
1.4 Unless the context otherwise requires, words denoting the singular
shall include the plural and vice versa, references to any gender shall
include all other genders and references to persons shall include
bodies corporate, unincorporated associations and partnerships, in each
case whether or not having a separate legal personality.
1.5 A reference in this Agreement to a SSAP and FRS respectively shall be a
reference to a Statement of Standard Accounting Practice as published
by the Institute of Chartered Accountants of England and Wales or a
Financial Reporting Standard published by the Accounting Standards
Board, in each case, as published prior to the date hereof.
1.6 Clause headings in this Agreement are for ease of reference only and do
not affect the construction of any provision.
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1.7 Any reference to a Clause or Schedule is to a Clause or Schedule (as
the case may be) of or to this Agreement.
1.8 References to documents in the "agreed form" shall mean documents in a
form agreed between the parties and initialled for the purposes of
identification by or on behalf of the Seller and the Buyer.
2. SALE OF SHARES
2.1 The Seller shall sell with full title guarantee and the Buyer shall
purchase all of the Shares for the consideration set forth in clause 3
below.
2.2 Each of the Shares will be sold and bought free from any claim, charge,
lien, encumbrance, equity or third party right and with all rights
attached to them, including all rights to any dividends or other
distributions declared after the date of the execution of this
Agreement.
3. CONSIDERATION
3.1 The aggregate consideration for the sale of the Shares, the Swiss Stock
and the Charter St Louis Property shall be US$56,904,000 which shall be
apportioned in the following manner:
3.1.1 US$26,200,000 together with an extension payment equal to
interest on US$26,200,000 calculated at the rate of 2% per
annum above the base rate from time to time of the Royal Bank
of Scotland plc from and including 1 April 1999 to the Closing
Date, payable for the shares pursuant to this Agreement.
3.1.2 US$23,364,000 payable for the Swiss Stock pursuant to the
Swiss Sale Agreement, together with an extension payment equal
to interest on US$23,364,000 calculated in the manner
described in Section 1.2 of the Swiss Sale Agreement; and
3.1.3 US$7,340,000 payable for the Charter St. Louis Property
pursuant to the Property Sale Agreement together with an
extension payment equal to interest on US$7,340,000 calculated
at the rate of 2% per annum above the base rate from time to
time of Royal Bank of Scotland plc from and including 1 April
1999 to the Closing Date .
3.2 The consideration for the Shares shall be increased by the amount by
which uniform business rates paid by the Company in respect of the
Property and refunded to the Company after 31 March 1999 in respect of
any period up to and including 31 March 1999.
3.3 The consideration for the Shares shall be decreased by the amount of
uniform business rate rebates previously obtained by the Company on or
before 31 March 1999 as the Company may be required to repay after 31
March 1999 to the relevant rating authority in respect of any period up
to and including 31 March 1999.
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3.4 The Buyer shall procure that, as soon as practicable after the
determination of proceedings relating to the uniform business rates
referred to in clauses 3.2 and 3.3, it delivers a written notice to the
Seller informing the Seller of the nature of such determination and of
the amount due from the Seller to the Buyer or the Buyer to the Seller
(as the case may be).
3.5 Any payments to be made pursuant to clauses 3.2 and 3.3 shall be made:-
3.5.1 in the case of a payment due pursuant to clause 3.2 within 10
days of the date on which the Company receives payment of the
relevant refund from the relevant local authority;
3.5.2 in the case of a payment due pursuant to clause 3.3, within 10
days of the receipt by the Seller of the notice referred to in
clause 3.4.
3.6 The following definitions shall apply for the purposes of this clause
3.6:-
3.6.1 "Charter St. Louis Deposit" - the sum of $7,340,000.00 (being
part of the Price, (as defined in the Property Sale
Agreement)).
3.6.2 " Charter St. Louis Deposit Account" - a specially designated
"Project Marigold" client deposit account of the Seller's
Solicitors.
3.6.3 " Management Period" - the period from the date of Closing to
either the date of receipt by the Seller's Solicitors of the
Transfer Notice or 31 May 1999 (whichever is the earlier).
3.6.4 "Transfer Notice" - notice in writing from the Buyer's
Solicitors to the Seller's Solicitors to complete the Land
Registry Transfer of the Charter St. Louis Property in favour
of the party named in the notice.
3.6.5 " Land Registry Transfer" - the transfer of the Charter St.
Louis Property to be executed by Charter St. Louis in the
agreed form.
3.6.6 " Retained Deeds" - the title deeds and documents relating to
the Charter St. Louis Property retained by the Seller's
Solicitors during the Management Period.
3.7 On Closing the Charter St. Louis Deposit shall be paid into the Charter
St. Louis Deposit Account and the deed and documents relating to the
Charter St. Louis Property shall be delivered to the Seller's
Solicitors.
3.8 The Transfer Notice may be served at any time during the Management
Period.
3.9 Upon receipt of the Transfer Notice the Seller's Solicitors are
irrevocably instructed by the Seller (as directed by Charter St. Louis)
forthwith to:-
3.9.1 Complete the Land Registry Transfer and deliver the same to
the Buyer's Solicitors together with the Retained Deeds; and
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3.9.2 Pay the Charter St. Louis Deposit (together with interest
accrued on such amount under the Charter St. Louis Deposit
Account) to the Seller or as it shall direct.
3.10 If no Transfer Notice has been served by the expiry of the Management
Period the Seller's Solicitors are irrevocably instructed by the Seller
(as directed by Charter St. Louis) following the expiry of the
Management Period forthwith to:-
3.10.1 Complete the Land Registry Transfer to the Buyer and to
deliver the same to the Buyer's Solicitors together with the
Retained Deeds; and
3.10.2 Pay the Charter St. Louis Deposit (together with interest
accrued on such amount under the Charter St. Louis Deposit
Account) to the Seller or as it shall direct.
3.11 The Buyer shall during the Management Period indemnify the Seller and
Charter St. Louis from and against all reasonable and proper expenses,
liabilities, costs, proceedings and demands howsoever arising and,
without prejudice to the generality of the foregoing, repay to the
Seller and/or Charter St. Louis all reasonable and proper expenses,
liabilities, costs and demands relating to the Charter St. Louis
Property.
3.12 (i) The Buyer may assign the benefit of the Warranties (subject to the
Disclosure Letter) to (a) the party nominated in the Transfer Notice or
(b) to its transferee in the event that the Land Registry Transfer is
completed in accordance with clause 3.10.1 PROVIDED THAT (1) immediate
notice in writing is given by the Buyer to the Seller specifying which
Warranties have been assigned (2) all liability of the Seller to the
Buyer under the terms of this Agreement howsoever arising shall cease
in respect of any Warranties assigned and (3) no further assignment or
assignments of whatever nature shall be permitted except where such
further assignment or assignments are to the Buyer or a company being a
member of the same group of companies within the meaning of Section 42
of the Landlord and ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇ and upon the company ceasing to be
a member of the same group of companies as the Buyer all liability of
the Seller under the Warranties so assigned shall cease.
(ii) It is acknowledged by the Seller that any Warranties assigned in
accordance with Clause 3.12(i) shall be enforceable against the Seller
on the same terms (including limitations in this Agreement) as are
contained in this Agreement
4 CLOSING
4.1 Closing shall take place at the offices of the Seller's Solicitors on
such date as is mutually agreed and in any event before 26 April 1999.
The parties shall have a pre-closing the day before the Closing Date to
examine Closing deliveries.
4.2 At Closing, the Seller shall deliver to the Buyer's Solicitors:
4.2.1 a written resolution of the directors of the Seller
authorising the sale of the Company and the execution by the
Seller of this Agreement (such written resolution being
certified as correct by the secretary of the Seller);
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4.2.2 a letter in the agreed form from the Seller confirming that
all debts and accounts between the Company (of the one part)
and the Seller or any Affiliate of the Seller (of the other
part) have been fully paid and settled;
4.2.3 evidence, reasonably satisfactory to the Buyer that all long
term debt of the Company has been discharged;
4.2.4 all outstanding charges, mortgages and debentures to which the
Company is a party, together with duly executed discharges
completed in respect of them;
4.2.5 transfers of the Shares duly executed by the Seller in favour
of the Buyer or its nominee, together with the relevant share
certificates;
4.2.6 irrevocable powers of attorney in the agreed form executed by
the Seller in favour of the Buyer to enable the Buyer (pending
registration of the transfers of the Shares) to exercise all
voting and other rights attaching to the Shares and to appoint
proxies for this purpose;
4.2.7 the resignations in the agreed form of the directors of the
Company from their respective offices with a written
acknowledgement from each of them executed as a Deed
confirming that he has no claim against the Company on any
grounds whatsoever;
4.2.8 the resignation of the Auditors to take effect from Closing
containing a statement under CA section 394(1) that there are
no such circumstances as are mentioned in that section;
4.2.9 the certificate of incorporation of the Company;
4.2.10 the statutory books and registers, including minute books,
books of account and documents of record of the Company,
complete and up-to-date;
4.2.11 the appropriate forms to amend the mandates given by the
Company to its bankers;
4.2.12 all deeds and documents as listed in the schedule to File 4D
of the Property Disclosure Bundle to the Disclosure Letter
relating to the title of the Properties excluding the deeds
and documents relating to the Charter St. Louis Property;
4.2.13 the Property Sale Agreement duly executed by Charter St. Louis
in the agreed form as set out in Schedule 6 Part IV (which
will be exchanged with the Buyer on Closing);
4.2.14 the License Agreement in the agreed form duly executed by
Charter Advantage, LLC and Charter System LLC;
4.2.15 the Services Agreement in the agreed form duly executed by
Magellan Behavioral Health Systems, Inc.;
4.2.16 the opinion of Dow, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, PLLC in the agreed
form;
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4.2.17 the opinion of ▇▇▇▇▇ ▇▇▇ in the agreed form;
4.2.18 termination of the licence agreement between Charter St. Louis
and the Company relating to the Charter St. Louis Property in
the agreed form; and
4.2.19 evidence, satisfactory to the Buyer, of the discharge of any
long term debt of the Swiss Company outstanding on the date of
this Agreement.
4.3 At Closing, the Seller will procure that a duly convened meeting of the
Company's directors is held at which:
4.3.1 the transfers referred to in clause 4.2.5 are approved
(subject to stamping) for registration in the books of the
Company;
4.3.2 the resignations of all the directors are accepted with effect
from the closure of the meeting and persons nominated by the
Buyer are appointed as additional directors of the Company;
4.3.3 all existing instructions to the bankers of the Company are
revoked and new instructions are given to such bankers as the
Buyer may nominate in such form as the Buyer directs;
4.3.4 the License Agreement, and the Service Agreement are approved
and any of the directors of the Company are authorised to sign
such agreements on behalf of the Company; and
4.3.5 the resignation of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ as auditor of the Company
is accepted and Ernst & Young are appointed in their place.
4.4 At Closing the Buyer shall pay and deliver or cause to be paid and
delivered to the Seller the consideration for the Shares in immediately
available funds to the bank account details of which are set out in
Schedule 8 4.5 At Closing, the Buyer shall deliver to the Seller's
Solicitors:
4.5.1 an extract, certified as true by the secretary of the Buyer,
from the minutes of a meeting of the directors of the Buyer,
resolving that the Buyer should enter into this Agreement and
the Company shall enter into the License Agreement and the
Services Agreement and authorising execution of this Agreement
by each person signing on behalf of the Buyer;
4.5.2 the License Agreement duly executed by the Company; and.
4.5.3 the Services Agreement duly executed by the Company.
4.5.4 the Property Sale Agreement in the agreed form as set out in
Schedule 6 Part IV signed by the Buyer which will be exchanged
with Charter St. Louis (at the direction of the Seller) on
Closing.
4.6 The Buyer shall for a period of 8 years after Closing give to the
Seller reasonable access to the Company's books and records in relation
to matters prior to the date of
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Closing for the purpose of dealing with any queries raised by any Tax
Authority in respect of such matters.
4.7 The Buyer shall not be obliged to close the sale and purchase of the
Shares unless the sale and purchase of all the Shares and the sale and
purchase of the Swiss Stock pursuant to the Swiss Sale Agreement is
completed simultaneously and all the other requirements of clauses 4.2
and 4.3 are complied with.
4.8 If the obligations of the Seller under clauses 4.2 and 4.3 are not
complied with in all material respects on the Closing Date, the Buyer
may (a) defer Closing to another date being not more than 21 days after
the date of the deferred Closing or (b) without prejudice to any other
rights it may have under this Agreement, proceed to Closing so far as
is practicable (provided nothing in this clause 4.8.(b) shall relieve
Buyer from delivering the Consideration referred to in clause 3.1 on
the date on which Closing takes place) or (c) treat this Agreement as
terminated and/or may bring an action under clause 22.
4.9 If the obligations of the Buyer under Section 4.4 are not complied with
on the Closing Date, the Seller may treat this Agreement as terminated
and/or bring an action under Clause 22.
4.10 Time shall be of the essence in relation to clauses 4.8 and 4.9 in this
Agreement.
5. WARRANTIES OF SELLER
5.1.1 The Seller warrants to the Buyer that each of the Warranties
is accurate in all respects at the date of this Agreement.
5.1.2 The Seller shall be deemed to have repeated each of the
Warranties on the Closing Date as if all express or implied
references to the date of this Agreement were references to
the Closing Date.
5.1.3 Each of the Warranties shall be construed as a separate and
independent warranty and shall not be limited or restricted by
reference to or inference from any other Warranty.
5.1.4 Where any of the Warranties are made or given "so far as the
Seller is aware," such Warranty shall be deemed to be given to
the best of the knowledge, information and belief of the
Seller as the Seller would have obtained after making
reasonable enquiries of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇
(and ▇▇▇▇▇▇ ▇▇▇▇▇▇ only with respect to the IT System, as
defined in the Warranties) into the subject matter of that
Warranty.
5.1.5 In the event that prior to the Closing Date
(i) there occurs any act or omission which would
constitute a breach of any of the Warranties (whether
or not such breach is material) or which would make
any of the Warranties inaccurate or misleading and
such act or omission becomes known to the Buyer; or
12
(ii) it becomes apparent that the Seller is in breach of
any of the Warranties (whether or not such breach is
material),
the Buyer shall not be entitled to rescind this Agreement and
shall proceed to Closing but without prejudice to its right to
claim for breach of the Warranties.
5.2 QUALIFICATIONS
The Warranties are given subject to the information fairly and
adequately disclosed in the Disclosure Letter. Any disclosure which is
fairly and adequately made in the Disclosure Letter is to be treated as
a disclosure in respect of each and every Warranty and not solely in
respect of any particular Warranty.
5.3 DISCLOSURE OF BREACHES
The Seller undertakes to disclose in writing to the Buyer anything
which is or is reasonably likely to constitute a breach of any of the
Warranties immediately after it comes to the Seller's notice both
before and after Closing.
5.4 CLAIMS AGAINST EMPLOYEES
Each of the Seller and Magellan undertakes (if any claim is brought
against it in connection with the sale of the Shares to the Buyer) not
to make any claim against the Company or any director or employee of
the Company on whom it may have relied before agreeing to any terms of
this Agreement or authorising any statement in the Disclosure Letter.
5.5 TAXATION ON PAYMENTS
If in respect of or in connection with any breach of any of the
Warranties or any facts or matters warranted not being true any amount
payable to the Buyer by the Seller (or by Magellan under the guarantee
set out in clause 6) is subject to taxation, such amounts shall be
increased to such extent as may be necessary to procure that the net
amount received by the Buyer is equal to the full amount payable to the
Buyer under this Agreement.
5.6 INDEMNITY FOR COSTS AND EXPENSES BY THE SELLER
The Seller undertakes to indemnify the Buyer against all costs,
expenses or other liabilities which the Buyer may reasonably incur
either before or after the commencement of any action in connection
with:
5.6.1 any legal proceedings in which the Buyer claims that any of
the Warranties are untrue or have been breached and in which
judgment is given for the Buyer; and
5.6.2 the enforcement of any such settlement or judgment against
either the Seller or Magellan.
13
5.7 INDEMNITY FOR COSTS AND EXPENSES BY THE BUYER
The Buyer undertakes to indemnify the Seller against all costs,
expenses or other liabilities which the Seller may reasonably incur
either before or after the commencement of any action in connection
with:
5.7.1 any legal proceedings in which the Seller claims that any of
the Warranties are untrue or have been breached and in which
judgment is given for the Seller; and
5.7.2 the enforcement of any such settlement of judgment against
either the Buyer or Bure.
5.8 LIMITATION OF LIABILITY
5.8.1 The aggregate liability of the Seller in respect of all
Relevant Claims relating to a breach of the warranties set out
in Schedule 3 shall not exceed the aggregate amount of the
consideration payable in respect of the Shares, the Swiss
Stock and the Charter. St. Louis Property referred to in
clause 3.
5.8.2 The Seller will be under no liability to make any payment in
respect of any liability pursuant to a Relevant Claim unless
and to the extent the aggregate amount of its liability in
respect of any such Relevant Claim is, when aggregated with
the Seller's liability in respect of any other such Relevant
Claim(s) or which would have been made but for the provisions
of this clause 5.8.2, in excess of US$500,000.
5.8.3 The Seller will be under no liability in respect of any
Relevant Claim, where the aggregate of the amounts for which
the Seller would be liable under such Relevant Claim is less
than U.S.$45,000 and the aggregate amount of such Relevant
Claim shall be disregarded for the purposes of aggregation of
Relevant Claims pursuant to clause 5.8.2; provided that, for
the purposes of this clause, any Relevant Claims arising out
of the same event, act, default or omission or any sequence of
related events, acts, defaults or omissions shall be
aggregated together.
5.8.4 The Buyer agrees with the Seller that it shall not be entitled
to recover damages or obtain payment, reimbursement,
restitution or indemnity more than once in respect of any one
shortfall, damage, deficiency, breach or other set of
circumstances which gives rise to one or more Relevant Claim..
5.8.5 The Seller shall not be liable in respect of a Relevant Claim
unless written notice containing, so far as reasonably
practicable, details of the Relevant Claim is served on the
Seller:
(i) in respect of any Relevant Claim relating to a breach
of the warranties set out in Schedule 3 other than
Sub-clauses (ii) and (iii) of this clause on or
before the date which is 2 years after Closing; or
14
(ii) in respect of any Relevant Claim relating to a breach
of the warranties set out in Schedule 3 Paragraph 16
(Environmental Matters) on or before the tenth
anniversary of the Closing Date; or
(iii) in respect of a claim under the Tax Covenant or the
warranties in Schedule 4 Part II, on or before the
date being seven years and one month from the Last
Accounting Date.
5.8.6 A Relevant Claim shall not be enforceable against the Seller
unless legal proceedings in connection with it are commenced
by both being issued and served within twelve months after
written notice of that Relevant Claim is served on the Seller.
5.8.7 The Seller shall not be liable in respect of a Relevant Claim:
5.8.7 (i) which would not have arisen but for an act, omission
or transaction outside the ordinary course of
business carried out after Closing by the Buyer or
the Company, their respective directors, employees or
agents or successors in title;
(ii) to the extent that it relates to any loss which is
recovered under any policy of insurance effected by
or for the Company. The Buyer agrees that it will,
and will cause the Company to, use best efforts to
successfully claim under such policy, provided always
that the Buyer shall not be prejudiced or prohibited
from bringing any claim against the Seller under the
terms of the Warranties if recovery has not been
successfully made or is still being pursued within 30
days prior to the expiration of the relevant periods
provided for within clause 5.8.5. In the event that
the claim is successfully made against the Seller,
then the Buyer shall or shall cause the Company to
continue to seek recovery as aforesaid and in the
event of any subsequent recovery under any such
policy of insurance, the Buyer shall reimburse the
Seller with the amounts recovered under such policy
(after deduction of all proper costs and expenses
incurred by the Buyer or the Company in relation to
such recovery and not previously reimbursed) up to
the amount previously received from the Seller;
(iii) to the extent that allowance, provision or reserve
has been made for such fact, matter, event or
circumstance in the Audited Accounts or the Closing
Accounts or to the extent that payment or discharge
of the relevant matter has been taken into account
therein or to the extent that such matter was
specifically referred to in the notes to such Audited
Accounts; or
(iv) to the extent that such Relevant Claim is
attributable to, or such Relevant Claim is increased
as a result of, any legislation not in force at the
date hereof or to any change of law, regulation,
directive, requirement or administrative practice or
any change in rates of tax, which in each case is not
in force at the date hereof.
15
5.8.8 If the Seller pays to the Buyer or the Company an amount in
respect of any Relevant Claim and the Buyer or the Company
subsequently recovers a sum or credit which is referable to
that Relevant Claim, the Buyer shall (or, as the case may be,
shall procure that the Company shall) promptly repay to the
Seller an amount equal to the lesser of (i) the amount or
value of such benefit recovered less any reasonable costs,
fees and expenses incurred by the Company or the Buyer in
connection with the recovery and not reimbursed or (ii) the
total amount paid by the Seller in respect of that Relevant
Claim.
5.8.9 Any payment made by the Seller in respect of any Relevant
Claim shall be deemed a reduction in the consideration paid by
Buyer hereunder.
5.9 Upon any Relevant Claim being made, or notification from the Buyer to
the Seller pursuant to clauses 5.8.5 and 5.10 of any third party claim,
potential claim, matter or event which might lead to a Relevant Claim
being made, the Buyer shall, and shall co-operate to cause the Company
to:
5.9.1 make available to accountants and other professional advisers
appointed by the Seller such access to the personnel of the
Company and to any relevant records and information as the
Seller reasonably requests in connection with such Relevant
Claim or third party claim, potential claim, matter or event;
and
5.9.2 use best efforts to cause the auditors (both past and then
current) of the Company to make available their audit working
papers in respect of audits of the Company's accounts for any
relevant accounting period in connection with such Relevant
Claim, matter or event. Such access shall be required only at
reasonable times and on reasonable notice.
5.10 If the Buyer becomes aware of any third party claim, potential claim,
matter or event (a "third party claim") which might lead to a Relevant
Claim being made, the Buyer-
5.10.1 shall cause notice of such third party claim to be given
promptly to the Seller;
5.10.2 shall not make (or, as appropriate, shall co-operate to ensure
that the Company shall not make) any admission of liability,
agreement or compromise with any person, body or authority in
relation to any such third party claim until the expiration of
ten Business Days ("Notice Period") from the date of service
on the Seller of the notice referred to in clause 5.10.1. The
Buyer shall not take any action specified in the prior
sentence if so instructed by the Seller in writing during the
Notice Period (subject to it being indemnified to its
reasonable satisfaction against all reasonable out of pocket
expenses incurred by it or the Company;
5.10.3 shall take (or, as appropriate, shall co-operate to cause the
Company to take) such action as the Seller may reasonably
request in writing to avoid, dispute, resist, appeal,
compromise or defend such third party claim or any
adjudication in respect of that third party claim (subject to
being fully indemnified to its reasonable satisfaction by the
Seller against all reasonable out of pocket expenses incurred
by the Buyer or the Company); and
16
5.10.4 if so required by the Seller in writing, and subject to being
fully indemnified to its reasonable satisfaction by the Seller
against all reasonable out of pocket expenses incurred by the
Buyer or the Company shall ensure (or, as appropriate, shall
co-operate to cause the Company to ensure), that the Seller is
placed in a position to take on or take over the conduct of
all proceedings and/or negotiations of whatsoever nature
arising in connection with the third party claim in question
and provide (or, as appropriate, co-operate to cause the
Company to provide) such information and assistance as the
Seller may reasonably require in connection with the
preparation for and conduct of such proceedings and/or
negotiations; provided that, where the Seller takes over the
conduct of proceedings or negotiations pursuant to this
clause, the Seller shall not settle any such proceedings or
agree on any final outcome of such negotiations without the
prior written consent of the Buyer (which shall not be
unreasonably withheld or delayed), unless in connection with
such settlement, the Buyer is fully released from any
liability.
5.11 A breach of Warranty which is capable of remedy shall not entitle the
Buyer to compensation except to the extent that:
5.11.1 the Seller is given written notice of such breach; and
5.11.2 such breach is not remedied within 30 days after the date on
which such notice is served on the Seller.
5.12 The Seller shall not be liable to satisfy any Relevant Claim relating
to a breach of the Warranties which shall be made after the Company
shall cease to be a Subsidiary of the Buyer or of its Affiliates.
5.13 Where the Company or the Buyer is entitled to recover from some other
person any sum in respect of any liability, loss or damage which is the
subject of a Relevant Claim against the Seller or for which such a
Relevant Claim could be made (and whether before or after the Seller
has made payment hereunder), the Buyer shall (or, ensure that the
Company shall)
5.13.1 promptly notify the Seller and provide such information as the
Seller may reasonably require relating to such liability or
dispute and the steps taken or to be taken by the Buyer or the
Company in connection with it;
5.13.2 if so required by the Seller (subject to the Buyer being fully
indemnified to its reasonable satisfaction by the Seller
against all reasonable out of pocket costs and expenses
incurred by the Buyer or the Company) and before seeking to
recover any amount from the Seller under this Agreement, first
take all steps (whether by way of a claim against its insurers
or otherwise, including, but without limitation, proceedings)
as the Seller may reasonably require to enforce such recovery;
and
5.13.3 keep the Seller informed of the progress of any action taken,
and thereafter any claim against the Seller shall be limited
(in addition to the limitations on the liability of the Seller
referred to in this Agreement) to the
17
amount by which the loss or damage suffered by the Buyer as a
result of such breach shall exceed the amount so recovered.
5.14 Without limiting the rights of the Buyer (or the purchaser (the
"Purchaser") of the Charter St. Louis Property, for any of the
Warranties referred to below which were assigned to the Purchaser) or
its ability to claim damages on any other basis under this Agreement,
if any of the Warranties set out in Paragraph 16 of Schedule 3 is
untrue by reason of the Company having committed a breach or
non-observance of any Environmental Laws, the Seller shall pay to the
Buyer (or the Purchaser, as the case may be) an amount equal to all
liabilities incurred by the Company as a consequence of the breach of
such Environmental Laws, including, without limitation, the cost of all
reasonable and appropriate remedial works required to be carried out at
the relevant property to procure compliance with such Environmental
Laws; provided any damage claim provided in this clause 5.14 shall be
deemed a Relevant Claim for all purposes including for purposes of
clause 5.8; provided further, that in no event shall the Seller be
liable for the same claim to both the Buyer and the Purchaser.
5.15 Seller's Indemnities
5.15.1 The Seller covenants with the Buyer that it will pay to the Buyer an
amount equal to the amount necessary to indemnify the Buyer and the
Company from and against all actions, proceedings, claims, demands and
reasonable costs and expenses which may be suffered or incurred by the
Buyer or the Company arising out of or in respect of:-
(a) the claims disclosed in paragraphs 8.1(d)(i) and (ii) and (e)
of the Disclosure Letter headed "Litigation and Defences" and
documents numbers 5.3, 5.4, 5.7, 5.8, 5.11 and 5.12 of file 3B
referred to in such paragraph 8.1(d)(iii) of the Disclosure
Letter;
(b) the guarantee given by the Company in favour of the
subordinated notes issued by Charter Medical Corporation
pursuant to an indenture dated May, 1994 and the guarantee
given by the Company in favour of the Lenders under a credit
agreement with Magellan dated 12 February, 1998;
(c) the agreement dated 10th April 1997 relating to the provision
of care for overseas patients made between the Company and
Riverside Mental Health Trust;
(d) any liability relating to the Charter Medical of England
Limited (1987) Pension Plan which is referred to in a letter
dated 24th February 1995 from London and Manchester (Pensions)
Limited to ▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇ Limited
(e) any liability incurred by the Company arising as a consequence
of its employment of ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ prior to closing; and
(f) any liability of the Company to the Seller of any Affiliate of
the Seller, including, without limitation, any amount due to
Charter St. Louis in respect of the Company's occupation of
the Charter St. Louis Property.
18
5.16 The Seller undertakes to the Buyer that between the date of this
Agreement and Closing (save with the previous written consent of the
Buyer):-
5.16.1 the business of the Company shall be carried on in the
ordinary course
5.16.2 the Company shall take no action of an unusual or non-routine
nature which is calculated solely or principally to increase
or decrease the amount of cash in hand of the Company;
5.16.3 the Company shall take all reasonable steps to preserve and
protect its business and assets;
5.16.4 all existing insurance policies relating to the Company shall
be maintained in full force and effect and shall not be
allowed to lapse, expire or be forfeited or otherwise
terminated;
5.16.5 no encumbrance (other than liens arising in the ordinary
course of business) shall be created or extended over any of
the Company's assets;
5.16.6 no capital commitment with an individual contract value in
excess of (pound)10,000 shall be entered into by the Company
except in the ordinary course of business;
5.16.7 the Company shall not dispose of or grant or agree to dispose
of or grant any option in respect of any assets valued in
excess of (pound)10,000 except in the ordinary course of
business
5.16.8 the Company shall not enter into, amend or terminate any
individual contract or commitment which involves payments in
excess of (pound)10,000 or which is materially unusual or
abnormal;
5.16.9 the Company shall not increase the compensation or benefits
paid or to become payable to any of its officers or employees
or agree to do the same;
5.16.10 the Company shall not appoint or terminate the employment of
or make any material variation to the terms of employment of
any director or senior employee;
5.16.11 the Company shall not make or propose a material change to any
benefit of any kind which is payable on a person's retirement,
death or disability to or in respect of any of the directors
or employees or to any pension scheme (other than a change
required by law) or, without limiting the foregoing, carry out
any action in relation to any scheme other than in the
ordinary course of operating such scheme;
5.16.12 no amendment shall be made to the Company's articles of
association and no resolutions which are inconsistent with the
Company's articles of association shall be made or proposed;
5.16.13 no change shall be made in the Company's accounting reference
date;
19
5.16.14 the Company shall not initiate, compromise or settle any
litigation, arbitration or mediation proceedings other than
debt collection conducted in the ordinary course of business;
5.16.15 no increase or reduction shall be made in the authorised,
allotted or issued share capital of the Company;
5.16.16 no option, right of conversion or right of pre-emption shall
be allotted or granted by the Company over the whole or any
part of its share capital, whether issued or unissued;
5.16.17 no dividends or other distributions shall be declared, made or
paid by the Company; and
5.16.18 the Company shall not create any new debt other than trade
debt incurred in the ordinary course of business; and
5.16.19 the Company shall not make any commitment to do any of the
foregoing
provided that the Seller shall not be in breach of any provisions
contained in this clause 5.16 where the intention of the Company to
carry out any action which would otherwise place the Seller in breach
of this clause 5.16 has already been disclosed to the Buyer in writing
on the date of this Agreement.
6. GUARANTEE AND INDEMNITY BY MAGELLAN
6.1 Magellan hereby unconditionally and irrevocably guarantees to the Buyer
the due and punctual performance and observance by the Seller of all
its obligations ("Seller Obligations") under or pursuant to this
Agreement arising after Closing (the "Magellan Guaranteed Obligations")
and agrees to indemnify the Buyer against all loss, damage, costs and
expenses which the Buyer may suffer through or arising from any breach
by the Seller of its obligations under or pursuant to this Agreement.
The liability of Magellan under this Agreement shall not be released or
diminished by any variation of the terms of this Agreement (if agreed
to by Magellan), any forbearance, neglect or delay in seeking
performance of the obligations imposed under this Agreement or any
granting of time for such performance.
6.2 If and whenever the Seller defaults for any reason whatsoever in the
performance of any of the Magellan Guaranteed Obligations, Magellan
shall upon demand unconditionally perform (or procure performance of)
and satisfy (or procure the satisfaction of) the obligation or
liability in regard to which such default has been made in the manner
prescribed by this Agreement and so that the same benefits shall be
conferred on the Buyer as it would have received if such obligation or
liability had been duly performed and satisfied by the Seller.
6.3 The guarantee set out in this clause 6 is to be a continuing guarantee
and accordingly is to remain in force until all of the Magellan
Guaranteed Obligations shall have been performed or satisfied. This
guarantee is in addition to and without prejudice to and not in
substitution for any rights or security which the Buyer may now or
hereafter have or hold for the performance and observance of the
obligations, commitments,
20
undertakings and warranties of the Seller under or in connection with
this Agreement or any other agreement entered into pursuant to this
Agreement.
6.4 As a separate and independent stipulation, Magellan agrees that any of
the Magellan Guaranteed Obligations (including, without limitation, any
moneys expressed to be payable under this Agreement) which may not be
enforceable against or recoverable from the Seller by reason of any
legal limitation, disability or incapacity of the Seller or any other
fact or circumstance (other than any limitation imposed by this
Agreement) shall nevertheless be enforceable against and recoverable
from Magellan as though the same had been incurred by Magellan and Bure
were the sole or principal obligor in respect thereof.
7. GUARANTEE AND INDEMNITY BY BURE
7.1 Bure hereby unconditionally and irrevocably guarantees to the Seller
the due and punctual performance and observance by the Buyer of all its
obligations (the "Buyer's Obligations") under or pursuant to clauses
2.1 (sale of shares), 4.4 (payment of Consideration) and 9 (Buyer's
Warranties) 3.7 (payment of Charter St. Louis Deposit) (such provisions
being referred to in this clause as the "Guaranteed Obligations") and
agrees to indemnify the Seller against all loss, damage, costs and
expenses which the Seller may suffer through or arising from any breach
by the Buyer of its obligations under or pursuant to the Guaranteed
Obligations. The liability of Bure under this Agreement shall not be
released or diminished by any variation of the terms of this Agreement
(if agreed to by Bure), any forbearance, neglect or delay in seeking
performance of the obligations imposed under this Agreement or any
granting of time for such performance.
7.2 If and whenever the Buyer defaults for any reason whatsoever in the
performance of any of the Guaranteed Obligations, Bure shall upon
demand unconditionally perform (or procure performance of) and satisfy
(or procure the satisfaction of) the obligation or liability in regard
to which such default has been made in the manner prescribed by this
Agreement and so that the same benefits shall be conferred on the
Seller as it would have received if such obligation or liability had
been duly performed and satisfied by the Buyer.
7.3 The guarantee set out in this clause 7 is to be a continuing guarantee
and accordingly is to remain in force until all of the Guaranteed
Obligations shall have been performed or satisfied. This guarantee is
in addition to and without prejudice to and not in substitution for any
rights or security which the Seller may now or hereafter have or hold
for the performance and observance of the obligations, commitments,
undertakings and warranties of the Buyer under or in connection with
this Agreement or any other agreement entered into pursuant to this
Agreement.
7.4 As a separate and independent stipulation, Bure agrees that any of the
Guaranteed Obligations (including, without limitation, any moneys
expressed to be payable under this Agreement) which may not be
enforceable against or recoverable from the Buyer by reason of any
legal limitation, disability or incapacity of the Buyer or any other
fact or circumstance (other than any limitation imposed by this
Agreement) shall nevertheless be enforceable against and recoverable
from Bure as though the same had been incurred by Bure and Bure were
the sole or principal obligor in respect thereof.
21
8. RESTRICTIVE COVENANT
8.1 For the purpose of assuring to the Buyer the full benefit of the
Company and in consideration for the Buyer agreeing to buy the Shares
on the terms of this Agreement, each of the Seller and Magellan,
(referred to together in this Clause as the "Covenantors") undertake to
the Buyer that, except as provided below, they will not, and will
procure that no Subsidiary of the Seller or Magellan will, without the
prior written consent of the Buyer, whether directly or indirectly, at
any time within three years following Closing within the Restricted
Territory, whether alone or in conjunction with, or on behalf of, any
other person and whether as principal, shareholder (other than solely
as an investor with no management function or controlling influence of
the company in question), agent, consultant, partner or otherwise,
construct, own, lease, operate or manage, any of: (i) an acute care
psychiatric hospital, (ii) an acute care psychiatric unit as part of an
acute care general hospital, (iii) a psychiatric residential treatment
center, (iv) a part of a facility operating a psychiatric residential
treatment center, (v) any facility providing 24-hour psychiatric
healthcare, (vi) a psychiatric daycare facility or (vii) any facility
providing psychiatric outpatient services (a "Competitive Business");
provided, however, that Magellan and the Seller, and the Subsidiaries
of Magellan and the Seller, may provide psychiatric outpatient services
required by or in connection with a contract to provide utilisation
management, network management, care management and employee assistance
programme services not involving the transfer of intellectual property
or know-how to any of the Company's competitors in the United Kingdom
or Switzerland (collectively, "Managed Contract Services") for and on
behalf of a healthcare plan or entity (including self-assured plans)
provided that if any outpatient services are to be provided within the
United Kingdom, Magellan or any of the subsidiaries shall use its
reasonable endeavours to offer the Buyer the opportunity to provide
such outpatient services on substantially the same terms that Magellan
or its relevant subsidiary would be providing such services; PROVIDED
FURTHER, that if the Buyer declined to provide such services pursuant
to any offer, then Magellan would be permitted to provide such
services. Magellan agrees that neither it nor its subsidiaries shall
contribute capital to CBHS for the purpose of operating or owning a
Competitive Business in the Restricted Territory.
8.2 Each of the Covenantors undertakes to the Buyer that it will not, and
it will procure that no Subsidiary of the Covenantors will, for a
period of three years immediately following Closing, solicit or
endeavour to solicit away from the Company any person employed by, or
who is a consultant to, the Company at Closing.
8.3 The Covenantors acknowledge that each of them has information in
respect of the business and financing of the Company and its dealings,
transactions, affairs, plans and proposals, all of which information
is, or may be, secret or confidential and important to the Company. In
this clause 8, "Confidential Information" means information, other than
information referred to in clause 8.5, relating to the Company's
finances, prices, business plans, marketing plans, development plans,
manpower plans, sales targets, sales statistics, customers lists,
customer relationships, suppliers lists, sales statistics, survey
reports and market share data. The Covenantors further acknowledge that
the disclosure of Confidential Information (whether directly or
indirectly) to actual or potential competitors of the Company would
place the
22
Company at a competitive disadvantage and would do damage (whether
financial or otherwise) to its business. Each of the Covenantors
accordingly agrees to enter into the restrictions contained in clause
8.5.
8.4
8.4.1 Each of the Buyer and Bure undertakes that it will not and
will procure that no Subsidiary of Bure will without the prior
written consent of the Seller whether directly or indirectly
for a period of three years outside whether alone or in
conjunction with or on behalf of any other person and whether
as principal shareholder (other than solely as an investor
with no management function or controlling influence of the
company in question), agent, consultant, partner or otherwise
use the Company's operating system (the "Company's System")
related to treatment methods, therapies or protocols for any
illness, addiction or condition at any facility or location
within the United States.
8.4.2 For the avoidance of doubt nothing contained in this Agreement
shall prevent Magellan or any of its Subsidiaries from
licensing to third parties for use in jurisdictions other than
the United Kingdom and Switzerland an operating system
referred to as the "Charter System", which is presently
licensed by a Magellan Subsidiary to third parties and which
is similar to the Company's System.
8.5 Each of the Covenantors undertakes that it will not, and will procure
that none of its Affiliates will, at any time during the said
three-year period after Closing:
8.5.1 disclose Confidential Information to any person except (i) to
its professional advisors or officers or employees and, in
each case, whose province it is to know the same, (ii) to
those authorised by the Company to know; or (iii) insofar as
it is compelled by law or competent authority so to do;
8.5.2 use Confidential Information for its own purposes or for any
purpose other than those of the Company; or
8.5.3 through any failure to exercise all due care and diligence,
cause or permit any unauthorised disclosure of any
Confidential Information of the Company;
provided that these restrictions on the Covenantors will cease to apply
to information which (otherwise than through the default of the Seller
or Magellan) becomes available to the public generally.
8.6 The parties agree that each of the undertakings set out in this clause
8 is separate, severable and enforceable. Accordingly, if any one or
more of such undertakings or part of any undertaking is held to be
against the public interest or unlawful or in any way an unreasonable
restraint of trade, the remaining undertakings or remaining part of the
undertakings will continue in full force and effect and will bind the
Covenantors.
8.7 No restrictions contained in this Agreement, or in any agreement or
arrangement of which this Agreement forms part, which causes this
Agreement or that agreement or arrangement to be subject to
registration under the Restrictive Trade Practices Act
23
1976 will take effect until the day after particulars of this Agreement
or of that agreement or arrangement, as the case may be, have been
furnished to the Director General of Fair Trading pursuant to that Act.
8.8 Nothing in this clause 8 shall prevent Magellan or its Affiliates from
acquiring the whole or any part of a body corporate or business or any
direct or indirect interest in the whole or any part of a body
corporate or business, the acquisition, holding or carrying on of which
would otherwise amount to a breach of this clause 8, except where more
than 10% of the turnover of the business of the body corporate or
business directly or indirectly acquired in the 12 months prior to such
acquisition consists of any of the business referred to in clause 8.1,
in which case Magellan or its Affiliates shall use reasonable efforts
to dispose of that part of the business which, but for this provision,
would cause it to be a breach of this clause 8 as soon as reasonably
practicable.
9 RELEASE OF LEASE GUARANTEE
9.1 Bure shall at its cost:-
9.1.1 For the nine months following Closing use its reasonable
endeavours to procure as soon as possible the release of
Magellan from the guarantee given by Magellan to the landlord
of the lease (as varied) identified as item 1 Schedule 6 Part
1 ("The Lease") and shall keep Magellan informed as to
progress of negotiations for the release.
9.1.2 provide all reasonable assistance and information to the
Landlord to enable Magellan to be released by the landlord
from Magellan's obligations under the Lease including Bure
standing as guarantor on the same terms as Magellan is bound
as guarantor if required by the landlord, but shall not
include the payment of any money to the landlord as
consideration for the release.
9.2 Unless and until such release has been obtained Bure shall indemnify
and keep Magellan indemnified at all times after Closing against all
proper demands liabilities claims and proceedings of whatsoever nature
howsoever arising suffered or incurred (including legal costs and other
professional fees) reasonably and properly incurred by Magellan in
consequence of the guarantee being enforced against Magellan.
9.3 Bure shall at all times keep Magellan informed as to its address for
service of any claim under this clause (a "Notice of Proceedings") and
the last known address notified to Magellan shall be deemed to be the
address for service of any Notice of Proceedings on Bure. Magellan
shall at all times keep Bure informed as to its address for service of
any notice to be delivered for the purpose of this clause and the last
address notified to Bure shall be deemed to be Magellan's address for
service of any such notice.
9.4 Magellan shall notify Bure promptly of the receipt of any Notice of
Proceedings and at all times Magellan shall keep Bure informed as to
progress relating to any Notice of Proceedings.
9.5 Magellan shall give Bure notice of its intention to settle pay or
otherwise dispose of
24
any proceedings and/or demands relating to any Notice of Proceedings
and Bure shall promptly notify Magellan of its consent (such consent
not to be unreasonably withheld). The provisions of clauses 5.10 and
5.13 of this Agreement shall apply so far as the same are not
inconsistent with the provisions of this clause 9 to the claim to which
any Notice of Proceedings relates as if:
9.5.1 references to the "Buyer" were to Magellan;
9.5.2 references to a "Relevant Claim" were to any claims to which a
Notice of Proceedings relates;
9.5.3 references to the "Seller" were to Bure;
9.5.4 references to the "Company" were deleted; and
9.5.5 references to the Buyer being indemnified were deleted; and
9.5.6 the words "and thereafter any claim..... the amount so
recovered" at the end of clause 13 were deleted and replaced
by:-
"Provided always that notwithstanding any other provision of
this Agreement any claims to which a Notice of Proceedings
relates shall not be construed as a Relevant Claim so as to
limit in any way the liability of Bure in respect of the
indemnity given by it pursuant to clause 9..2 above."
10. WARRANTIES OF BUYER
10.1 In consideration of the Seller entering into this Agreement, the Buyer
warrants to the Seller that:-
10.1.1 it is entitled to purchase the Shares on the terms of this
Agreement without the consent of any third party;
10.1.2 it has full power to enter into and perform this Agreement and
any other agreement which will need to be executed pursuant to
this Agreement without the consent or approval of another
person, and such documents will, when executed, constitute
binding obligations of the Buyer in accordance with their
terms subject to the operation of law as regards the
availability of equitable remedies and matters of public
policy and the application of the relevant statutory
provisions, including those regarding limitation periods,
insolvency and competition matters;
10.1.3 the execution and delivery of the documents referred to in
clause 10.1.2 by the Buyer and the performance of and
compliance with their terms and provisions will not:
(i) conflict with or result in a breach of or constitute
a default under, any agreement or instrument to which
it is a party or by which it is bound or of the
constitutional documents of the Buyer; or
25
(ii) conflict with or result in a breach of any order,
writ, injunction, judgment or decree of any court or
governmental agency.
11. COSTS
Each of the Parties shall pay its own legal and accountancy costs,
charges and expenses connected with the negotiation, preparation and
implementation of this Agreement. The Buyer shall be responsible for
all stamp duty on the transfer of the Shares.
12. GENERAL
12.1 Failure or delay by any Party in exercising any right or remedy under
this Agreement will not in any circumstances operate as a waiver of it,
nor will any single or partial exercise of any right or remedy in any
circumstances preclude any other or further exercise of it or the
exercise of any such right or remedy.
12.2 Any waiver of any breach of or any default under any of the terms of
this Agreement will not be deemed a waiver of any subsequent breach or
default and will in no way affect the terms of this Agreement.
12.3 The Buyer may release or compromise the liability of or grant time or
any other indulgence to, any person who is a Party to this Agreement
without in any way prejudicing or affecting the liability of any person
in respect of any other liability or obligation hereunder.
12.4 No variation of this Agreement or any other documents to be entered
into pursuant to this Agreement shall be effective unless it is in
writing and signed by or on behalf of each of the Parties.
13. ASSIGNMENT
No Party may assign all or any of its rights, obligations or causes of
action arising under or pursuant to this Agreement without the prior
written consent of the other Party; provided that nothing herein shall
prevent the Buyer from (i) charging or assigning all of such rights,
obligations or causes of action to an Affiliate of the Buyer provided
and for so long as it remains an Affiliate and provided further that
the Buyer shall cause its Affiliates to comply fully and timeously with
all the Buyer's duties and obligations under this Agreement, (ii)
charging or assigning such rights, obligations or causes of action
pursuant to the Tax Covenant or the warranties in Schedule 4 part II,
(iii) charging or assigning the benefit of the Warranties contained in
clause 2 and 16 of Schedule 3 to the extent that such clauses relate to
the Charter St. Louis Property to any third party to whom the Charter
St. Louis Property is transferred pursuant to the Property Sale
Agreement. In the event any of the Warranties or the Tax Covenant in
clause (ii) or (iii) in the preceding sentence is assigned as
permitted, the Seller, Magellan or Charter St. Louis shall have
absolutely no liability with respect to any of the assigned Warranties
or Tax Covenant, to the Buyer from and after the date of such
assignment except in circumstances where the assigned Warranties or Tax
Covenant are re-assigned to Bure or one of its Affiliates. The Buyer
shall notify the Seller promptly in writing of any such assignment. In
the event that any Affiliate of the
26
Buyer ceases to be such and has had assigned to it all rights under
this Agreement, such Affiliate shall reassign such rights other than
rights pursuant to the Tax Covenant or the warranties in Schedule 4
part II (which for the avoidance of doubt may be so reassigned) to the
Buyer or another Affiliate of the Buyer. This Agreement will be binding
on and will continue for the benefit of the parties and their
respective successors and assigns to the extent permitted in this
clause 13. Accordingly, references in this Agreement (or any document
entered into pursuant to this Agreement) to the relevant party shall,
following any such assignment and unless the context otherwise
requires, mean the assignee or assignees for the time being.
The Seller and Magellan agree further that, upon the request of the
Buyer or its successors in title or assigns, this Agreement may be
novated (in respect of the Tax Covenant or the warranties in Schedule 4
part II) in favour of the beneficial owner for the time being of the
whole or part of the Shares, and the Seller and Magellan shall execute
such a novation agreement in such form as the Buyer may reasonably
require. If the Seller or Magellan fails to execute any such novation
agreement within 20 Business Days of a request by the Buyer to do so,
the Buyer may execute it on behalf of the Seller or Magellan (as the
case may be) or both of them and only for such purpose each of the
Seller and Magellan hereby irrevocably appoints the Buyer as their
attorney for the purpose of executing any such agreement. The Seller
and Magellan agree to ratify and confirm any action taken by the Buyer
by virtue of this power of attorney.
14. POST CLOSING UNDERTAKINGS
14.1 Following Closing, the Buyer undertakes to the Seller and Magellan
that:
14.1.1 it will use all reasonable endeavours to obtain the release of
the Seller and Magellan and any of their Affiliates from any
Intra-Group Guarantees to which any of them are party and,
pending such release, to indemnify Magellan and its Affiliates
against all amounts paid by any of them to any third party
pursuant to any Intra-Group Guarantees in respect of any
liability of the Company (and all costs incurred in connection
with such liability) arising after Closing; and
14.1.2 save with the prior written consent of Magellan, neither the
Buyer nor the Company will use the names "Magellan" or any
similar name or names likely to be confused with them.
15. FURTHER ASSURANCE
At any time, each of the parties hereto shall (at its cost and expense)
do and execute or procure to be done and executed all necessary acts,
documents and things in a form reasonably satisfactory to the other
party reasonably requested of them by the other party to give effect to
this Agreement and the transactions contemplated in or by it securing
to such other party the full benefit of the rights, powers and remedies
conferred upon such other party in this Agreement.
27
16. INVALIDITY
Each of the provisions of the Agreement is severable. If any provision
in this Agreement is held to be illegal, invalid or unenforceable, in
whole or in part, under any enactment or rule of law, such provision or
part shall to that extent be deemed not to form part of this Agreement
but the legality and enforceability of the remainder of this Agreement
shall not be affected.
17. ENTIRE AGREEMENT
17.1 This Agreement sets out the entire agreement and understanding between
the Parties in respect of the sale and purchase of the Shares. It is
agreed that:-
17.1.1 no Party has entered into this Agreement in reliance upon any
representation, warranty or undertaking of any other Party
which is not expressly set out or referred to in this
Agreement;
17.1.2 no Party shall have any remedy in respect of misrepresentation
or untrue statement made by any other Party unless and to the
extent that a claim lies for breach of Warranty under this
Agreement; and
17.1.3 this clause shall not exclude any liability for fraudulent
misrepresentation.
18. COUNTERPARTS
This Agreement may be entered into in any number of counterparts, all
of which taken together shall constitute one and the same instrument.
Any Party may enter into this Agreement by signing any such
counterpart.
19. INTEREST
If any party defaults in the payment when due of any sum payable under
this Agreement (however determined), the liability of such Party shall
be increased to include interest on such sum from the date when such
payment is due until the date of actual payment (as well after as
before judgment) at a rate per annum of 2 per cent above the base rate
from time to time of the Royal Bank of Scotland Plc.
Such interest shall accrue from day to day.
20. NOTICES
20.1 Any notice, claim or demand to be given in connection with or under
this Agreement shall be in writing and signed by or on behalf of the
Party giving it.
20.2 A notice may be served by letter; each letter containing such notice
shall be left or sent by pre-paid recorded delivery or registered post
to the address set out in clause 20.3 and, if so addressed shall be
deemed to have duly given or made as follows:
20.2.1 if delivered personally, upon delivery at the address of the
relevant Party;
28
20.2.2 if sent by first class post, two Business Days after the date
of posting in the case of a recipient with an address within
the United Kingdom and seven Business Days after the date of
posting otherwise; and
20.2.3 if sent by fax, upon receipt by the relevant Party provided
that if, in accordance with the above provisions, any such
communication would otherwise be deemed to be given or made
outside normal business hours 9.30 a.m. to 5.30 a.m. on a
Business Day in the jurisdiction in which the notice is
served), such communication shall be deemed to be given or
made at 9.30 a.m. on the next succeeding Business Day.
20.3 The relevant details of each Party for the purposes of the
giving of notices, subject to Clause 20.4, are:
Party Addressee Address Fax No.
----- --------- ------- -------
Charter Medical ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, 001-404 8695667
International, S.A., Inc (General Counsel) N.E.,
Suite 1400
▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇
Magellan Health Services, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, 001-404 8695667
Inc. (General Counsel) N.E.,
Suite 1400
▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇
Investment AB Bure ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇ 0046-31-778-5859
▇-▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇
CMEL Holding Limited 1-5 Radnor Walk ▇▇▇▇-▇▇▇ ▇▇▇▇
▇▇▇▇▇▇
▇▇▇ ▇▇▇
A copy of any notice sent to the Seller or Magellan shall be copied to
the Seller's Solicitors and marked for the attention of ▇▇▇▇▇▇ ▇▇▇▇▇. A
copy of any notice sent to the Buyer shall be sent to the Buyer's
Solicitors and marked for the attention of ▇▇▇▇▇ ▇▇▇▇▇▇. A failure to
copy a notice to the Seller's Solicitors or the Buyer's Solicitor as
required in this clause shall not invalidate the relevant notice.
20.4 Each Party may notify the other Parties at any time of a change to its
details for the purposes of clause 20.3 provided that such notification
shall only be effective from
20.4.1 the date specified in the notification as the date on
which the change is to take place; or
29
20.4.2 if no date is specified or the date specified is less
than five Business Days after the date on which notice is
given, the date falling five Business Days after notice of any
such change has been given.
21. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
English law, and the Parties irrevocably submit to the exclusive
jurisdiction of the English courts to settle any disputes which may
arise out of or in connection with this. The Seller and Magellan
appoint ▇▇▇▇▇ ▇▇▇ of ▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇'▇ ▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
as their agent for service of process, and Bure appoints the Buyer as
its agent for service of process. Any party may by notice in writing to
the others appoint an agent for service of process in place of the
existing such agent appointed by it.
22. RIGHT TO SPECIFIC PERFORMANCE
The Seller and the Buyer acknowledge and agree that the subject matter
of this Agreement is unique, and in the case of any breach of the
terms, covenants or conditions to this Agreement by either Party
hereto, the other Party will suffer irreparable injury and harm which
cannot be reasonably or adequately compensated by monetary damages.
Accordingly, in the event of any such breach by a Party hereto, the
other Party shall have, in addition to all other remedies available at
law or equity, the right to obtain a decree of specific performance of
this Agreement and an indemnity from that Party for the legal fees and
expenses incurred by that other Party.
23. ANNOUNCEMENTS
The Parties shall, subject to the requirements of law or any regulatory
body or the rules and regulations of any recognised stock exchange,
consult together as to the terms of, the timetable for and manner of
publication of, any formal announcement or circular to shareholders,
employees, customers, suppliers, distributors and sub-contractors and
to any recognised stock exchange or other authorities and to the media
or otherwise which either of them may desire or be obliged to make
regarding this Agreement. Any other communication which the Parties may
make concerning such matters shall, subject to the requirements of law
or any regulatory body or the rules and regulations of any recognised
stock exchange, be consistent with any such formal announcement or
circular as referred to above; provided that, subject to the preceding
provisions of this clause, no Party shall, prior to Closing, make or
authorise or issue any formal announcement or circular concerning the
subject matter of this Agreement or any other document or transaction
referred to in or contemplated by this Agreement.
24. OBLIGATIONS SURVIVING CLOSING
Except insofar as the same have been fully performed at Closing, each
of the agreements, covenants, obligations, warranties, indemnities and
undertakings contained in this Agreement will continue in full force
and effect notwithstanding Closing.
25. CURRENCY CONVERSION
30
For the purposes of this Agreement, where any sum, or in particular but
without limitation, any liability under the Warranties, is expressed to
be in any currency other than US Dollars, such sum shall be converted
into US Dollars at the Market Rate. "Market Rate" means the mid market
rate for the relevant currency at 4:00pm on the weekday (other than a
Saturday) when banks are open for a full range of banking transactions
in London ("Business Day") preceding the date upon which such sum is
due and payable, or where such sum relates to a claim under this
Agreement, the Business Day preceding the date upon which notice of
such claim is served by the Buyer upon the Seller in accordance with
the provisions of clause 5.8, as evidenced by a list of currencies
provided by Royal Bank of Scotland Plc.
31
This Agreement was executed and delivered as a deed by the Parties or their duly
authorised representatives on the date set out at the beginning of this
Agreement.
EXECUTED as a DEED by CHARTER
MEDICAL INTERNATIONAL,
S.A., INC.
Acting by:
---------------------------------------------
EXECUTED as a DEED by MAGELLAN
HEALTH SERVICES, INC.
Acting by:
---------------------------------------------
EXECUTED as a DEED by
INVESTMENT AB BURE
acting by:
---------------------------------------------
EXECUTED as a DEED by CMEL HOLDING LIMITED
acting by two directors or by one director and its
Company Secretary:
Director:
Director/Secretary:
32
