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EXHIBIT 2.1
MASTER TRANSACTION AGREEMENT
BY AND AMONG
RAYTEL MEDICAL CORPORATION
RAYTEL SOUTHEAST MANAGEMENT, L. P.
AND
SOUTHEAST TEXAS CARDIOLOGY ASSOCIATES II, P. A.
SOUTHEAST TEXAS CARDIOLOGY GROUP, P. A.
AND
XXXXXXX X. XXXXXXXXX, M. D.
XXXXX X. XXXXXXXX, M. D.
XXXXXXX X. XXXXX, M. D.
XXXXXX XXXXXXXXXXX, M.D.
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INDEX
PAGE
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ARTICLE I. DEFINITIONS............................................................... 1
ARTICLE II. RESTRUCTURING............................................................ 5
Section 2.01 Pre-Closing Actions.................................................... 5
Section 2.02 Purchase, Security and Conveyance Agreements........................... 5
Section 2.03 Partnership Interest Purchase Agreement................................ 5
Section 2.04 Noncompetition and Confidentiality Covenants........................... 7
ARTICLE III. REPRESENTATIONS OF THE PHYSICIAN PARTIES................................ 7
Section 3.01 Joint Representations of the Physicians................................ 7
(a) Organization, Valid Authorization and Good Standing.......................... 7
(b) Compliance................................................................... 8
(c) Approvals.................................................................... 8
(d) Financial Statements......................................................... 8
(e) Undisclosed Liabilities...................................................... 9
(f) Absence of Changes or Events................................................. 9
(g) Litigation................................................................... 10
(h) Permits; Compliance with Laws................................................ 10
(i) Insurance.................................................................... 11
(j) Tax Matters.................................................................. 11
(k) Contracts.................................................................... 12
(l) Employee Benefit Plans....................................................... 12
(m) Environmental Protection..................................................... 14
(n) Labor Matters................................................................ 14
(o) Brokers...................................................................... 14
(p) Disclosure................................................................... 15
Section 3.02 Several Representations of the Physicians.............................. 15
(b) Compliance................................................................... 15
(c) Approvals.................................................................... 16
(d) Litigation................................................................... 16
(e) Permits...................................................................... 16
(f) Staff Privileges............................................................. 16
(h) Intentions................................................................... 17
ARTICLE IV. REPRESENTATIONS OF THE RAYTEL PARTIES.................................... 17
Section 4.01 Representations of the Raytel Parties.................................. 17
(b) Compliance................................................................... 17
(c) Approvals.................................................................... 18
(d) Financial Statements......................................................... 18
(e) Litigation................................................................... 18
(f) Disclosure................................................................... 18
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ARTICLE V. PRE-CLOSING COVENANTS..................................................... 19
Section 5.01 Conduct of Physician Practice.......................................... 19
Section 5.02 Access to Information and Records Before Closing....................... 19
Section 5.03 Other Transactions..................................................... 20
Section 5.04 Covenant Not To Compete................................................ 20
ARTICLE VI. ADDITIONAL AGREEMENTS.................................................... 20
Section 6.01 Certain Notifications.................................................. 20
Section 6.02 Investment Representations and Covenants of Physicians................. 20
Section 6.03 No Corporate Practice.................................................. 22
Section 6.04 Development of Cardiac Catheterization Laboratory...................... 22
ARTICLE VII. CONDITIONS.............................................................. 23
Section 7.01 Conditions Precedent to the Obligations of All Parties................. 23
Section 7.02 Conditions Precedent to the Obligations of the Raytel Parties.......... 23
Section 7.03 Conditions Precedent to the Obligations of the Physician Parties....... 24
ARTICLE VIII. CLOSING................................................................ 25
Section 8.01 Closing................................................................ 25
Section 8.02 Deliveries to the Raytel Parties at the Closing........................ 25
Section 8.03 Deliveries to the Physician Parties at the Closing..................... 26
ARTICLE IX. TERMINATION................................................................. 26
Section 9.01 Termination by Mutual Agreement........................................ 26
Section 9.02 Termination by Raytel Parties.......................................... 26
Section 9.03 Termination by the Physician Parties................................... 27
Section 9.04 Termination Date....................................................... 27
ARTICLE X. INDEMNIFICATION........................................................... 27
Section 10.01 Indemnification by the Physician Parties.............................. 27
Section 10.02 Indemnification by the Raytel Parties................................. 28
Section 10.03 Notice................................................................ 28
Section 10.04 Defense of Third Party Claims......................................... 29
Section 10.05 Payment of Losses..................................................... 30
Section 10.06 Limitations........................................................... 31
ARTICLE XI. ARBITRATION................................................................ 32
Section 11.01 Scope................................................................. 32
Section 11.02 Arbitrators........................................................... 32
Section 11.03 Applicable Rules...................................................... 33
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ARTICLE XII. MISCELLANEOUS.............................................................. 34
Section 12.01 Remedies Not Exclusive................................................ 34
Section 12.02 Expenses.............................................................. 35
Section 12.03 Parties Bound......................................................... 35
Section 12.04 Notices............................................................... 35
Section 12.05 Choice of Law......................................................... 36
Section 12.06 Entire Agreement; Amendments and Waivers.............................. 36
Section 12.07 Reformation Clause.................................................... 36
Section 12.08 Assignment............................................................ 37
Section 12.09 Attorneys' Fees....................................................... 37
Section 12.10 Further Assurances.................................................... 37
Section 12.11 Announcements and Press Releases...................................... 37
Section 12.12 Return of Information and Confidentiality............................. 37
Section 12.12 Antidilution.......................................................... 38
Section 12.13 No Tax Representations................................................ 38
Section 12.14 No Rights as Stockholder.............................................. 39
Section 12.15 Multiple Counterparts................................................. 39
Section 12.16 Headings.............................................................. 39
Section 12.17 Severability.......................................................... 39
EXHIBITS
Exhibit A Form of Asset Purchase Agreement
Exhibit B Form of Conveyance Agreement
Exhibit C Form of Employment Agreement
Exhibit D Form of Management Services Agreement
Exhibit E Form of New P Partnership Agreement
Exhibit F Form of New PA Bylaws
Exhibit G Form of New PA Articles of Association
Exhibit H Form of New PA Consent
Exhibit I Form of Note
Exhibit J Form of Partnership Interest Purchase Agreement
Exhibit K Form of Security Agreement
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MASTER TRANSACTION AGREEMENT
This Master Transaction Agreement ("Master Transaction Agreement"), dated and
effective as of August 21, 1996, is by and among (i) RAYTEL MEDICAL CORPORATION,
a Delaware corporation ("Raytel"); (ii) RAYTEL SOUTHEAST MANAGEMENT, L.P., a
Texas limited partnership ("Raytel Management"); RAYTEL TEXAS PHYSICIAN
SERVICES, INC., a Delaware corporation (the "Corporate General Partner") (iii)
SOUTHEAST TEXAS CARDIOLOGY ASSOCIATES, P.A., a Texas professional association
("Existing PA"); (iv) SOUTHEAST TEXAS CARDIOLOGY GROUP II, P.A., a Texas
professional association ("New PA"); and (v) XXXXXXX X. XXXXXXXXX, M.D., XXXXX
X. XXXXXXXX, M. D., XXXXXXX X. XXXXX, M. D., and XXXXXX XXXXXXXXXXX, M.D.
(collectively the "Physicians" and individually a "Physician")(Raytel, Raytel
Management, Corporate General Partner, Existing PA, New PA and the Physicians
are collectively referred to herein as the "Parties" and individually as a
"Party").
R E C I T A L S
A. Each Physician is a physician licensed to practice medicine in
the State of Texas.
B. The Physicians desire to restructure their cardiology practice by
consummation of the transactions described in this Master Transaction Agreement.
C. The Parties to this Master Transaction Agreement desire to set
forth the terms and conditions upon which the restructuring described above
shall be accomplished and to agree upon other matters set forth herein.
NOW, THEREFORE, in consideration of the mutual agreements contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally bound
hereby, the Parties agree as follows:
A G R E E M E N T
ARTICLE I.
DEFINITIONS
For purposes of this Master Transaction Agreement, the following terms, in
addition to other capitalized terms used in this Master Transaction Agreement
that are defined elsewhere herein, shall have the meanings set forth herein.
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1.01. Asset Purchase Agreement. The Asset Purchase Agreement to be
executed by and between Raytel Management, the Corporate General Partner,
Existing PA and New PA, including the Physicians' Agreement and Covenant Not To
Compete attached thereto and forming a part thereof for all purposes,
substantially in the form attached hereto as Exhibit A.
1.02. Closing. The closing of the transactions contemplated by this
Master Transaction Agreement.
1.03. Closing Date. As defined in Section 8.01 hereof.
1.04. Code. The Internal Revenue Code of 1986, as amended.
1.05. Conveyance Agreement. The Conveyance Agreement to be executed
between Existing PA and New PA substantially in the form attached hereto as
Exhibit B.
1.06. Disclosure Schedule. The disclosure schedule attached hereto
setting forth, with reference to the applicable section and subsection of this
Master Transaction Agreement, certain information and exceptions to the
representations, warranties and covenants.
1.07. Employment Agreements. Collectively, the Employment Agreements
to be executed between each Physician and New PA, substantially in the form set
forth in Exhibit C.
1.08. Environmental Laws. As defined in Section 3.01(m) hereof.
1.09. ERISA. As defined in Section 3.01(l) hereof.
1.10. Existing PA Balance Sheet. As defined in Section 3.01(d)
hereof.
1.11. Existing PA Balance Sheet Date. As defined in Section 3.01(d)
hereof.
1.12. Existing PA Unaudited Financial Statements. As defined in
Section 3.01(d) hereof.
1.13. Exchange Act. The Securities Exchange Act of 1934, as amended.
1.14. GAAP. Generally accepted accounting principles, consistently
applied.
1.15. Governmental Authority. Any national, state, provincial, local
or tribal governmental, judicial or administrative authority or agency.
1.16. Hazardous Wastes. As defined in Section 3.01(m) hereof.
1.17. Indemnity Loss. As defined in Section 10.01(a) hereof.
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1.18. Investment Representations Schedule. The schedule attached
hereto setting forth exceptions to each Physician's representations, warranties
and covenants set forth in Section 6.02 hereof.
1.19. Management Services Agreement. The Management Services
Agreement to be executed between New P and New PA substantially in the form set
forth in Exhibit D.
1.20. Market Price. The market price per share of Raytel Common
Stock determined in the following manner: (i) the closing price (which shall be
the last reported sales price, or, in case no such sales take place on such day,
the average of the closing bid and the asked prices) per share of Raytel Common
Stock on the principal national securities exchange on which the Raytel Common
Stock is then listed or admitted for trading, if the Raytel Common Stock is then
listed or admitted for trading on any national securities exchange; (ii) if
Raytel Common Stock is not then so listed on a national securities exchange, the
average of the closing bid and asked prices of the Raytel Common Stock in the
over-the-counter market as reported by Nasdaq; (iii) if the Raytel Common Stock
is not then quoted by Nasdaq, as furnished by any member of NASD selected by
Raytel for that purpose; or (iv) if no member of NASD furnishes quotes with
respect to the Raytel Common Stock, an amount determined in good faith by the
board of directors of Raytel and approved by Physicians.
1.21. NASD. The National Association of Securities Dealers, Inc.
1.22. Nasdaq. The National Association of Securities Dealers
Automated Quotation System.
1.23. New P. Cardiology Management Partnership, a Texas general
partnership.
1.24. New P Partnership Agreement. The Partnership Agreement of New
P, substantially in the form attached hereto as Exhibit E.
1.25. New PA Bylaws. The Bylaws of New PA, substantially in the form
attached hereto as Exhibit F.
1.26. New PA Articles of Association. The Articles of Association of
New PA, substantially in the form attached hereto as Exhibit G.
1.27. New PA Consent. The Unanimous Consent of directors of New PA,
substantially in the form attached hereto as Exhibit H.
1.28. Notes. Collectively, the promissory notes to be delivered to
the Physicians at the Closing pursuant to this Master Transaction Agreement,
substantially in the form set forth in Exhibit I.
1.29. Partnership Interest Purchase Agreement. The Partnership
Interest Purchase
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Agreement to be executed by and among Raytel Management, the Corporate General
Partner and the Physicians, substantially in the form attached hereto as Exhibit
J.
1.30. Physician Indemnified Persons. As defined in Section 10.02
hereof.
1.31. Physician Parties. The Physicians, Existing PA and New PA.
1.32. Practice. The cardiology and all other related healthcare
practices conducted by Existing PA prior to the Closing and by New PA after the
Closing.
1.33. Raytel Audited Financial Statements. As defined in Section
4.01(e) hereof.
1.34. Raytel Common Stock. The Common Stock, par value $0.001 per
share, of Raytel.
1.35. Raytel Indemnified Persons. As defined in Section 10.01(a)
hereof.
1.36. Raytel Parties. Raytel and Raytel Management.
1.37. SEC. The Securities and Exchange Commission.
1.38. Securities. The Notes and the shares of Raytel Common Stock to
be issued to the Physicians pursuant to this Master Transaction Agreement.
1.39. Securities Act. The Securities Act of 1933, as amended.
1.40. Security Agreement. The Security Agreement to be executed by
and between Raytel Management and the Physicians, substantially in the form
attached hereto as Exhibit K.
1.41 Supplies. The supplies, pharmaceuticals, medical devices,
equipment and other expendables used by the Physicians in performing medical
services as that term is defined in the Management Services Agreement.
1.42. Taxes. As defined in Section 3.01(j) hereof.
1.43. Transaction Documents. This Master Transaction Agreement, the
Asset Purchase Agreement (including the Agreement and Covenant Not To Compete
attached thereto and forming a part thereof for all purposes), the Conveyance
Agreement, the Employment Agreements, the Management Services Agreement, the New
P Partnership Agreement, the New PA Bylaws, the New PA Articles of Association,
the New PA Consent, the Notes, the Partnership Interest Purchase Agreement, the
Security Agreement and each other document and instrument executed and delivered
at the Closing.
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ARTICLE II.
RESTRUCTURING
Section 2.01 Pre-Closing Actions. Immediately prior to the Closing,
the following actions shall occur in the order set forth in this Section 2.01:
(a) each Physician and Existing PA shall terminate any
existing employment agreement or other agreement between such
Physician and Existing PA;
(b) the Physicians shall duly organize New P by
executing and delivering the New P Partnership Agreement;
(c) the Physicians shall cause New PA to be duly
organized under the laws of Texas by (i) filing the New PA Articles
of Association with the Secretary of State of the State of Texas,
(ii) adopting the New PA Bylaws and (iii) executing the New PA
Consent.
(d) New PA and New P shall execute and deliver the
Management Service Agreement; and
(e) New PA and each Physician shall execute and deliver
an Employment Agreement.
Section 2.02 Purchase, Security and Conveyance Agreements. Subject
to the conditions set forth herein, at the Closing, Existing PA and Raytel
Management shall execute and deliver the Asset Purchase Agreement, and each
Physician shall execute and deliver the Agreement and Covenant Not To Compete
attached thereto and forming a part thereof. In addition, Raytel Management and
the Physicians shall execute and deliver the Security Agreement and existing PA
and New PA shall execute and deliver the Conveyance Agreement.
Section 2.03 Partnership Interest Purchase Agreement. Subject to the
conditions set forth herein, at the Closing, after the occurrence of the events
described in Section 2.02, Raytel Management and the Physicians shall execute
and deliver the Partnership Interest Purchase Agreement, and, in consideration
therefor, Raytel or Raytel Management, as appropriate, shall deliver the
following consideration to the Physicians in the amounts and on the dates set
forth below:
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(a) At the Closing, Raytel shall deliver to each
Physician a Note in the original principal amount set forth opposite
such Physician's name:
PRINCIPAL
AMOUNT
PHYSICIAN OF NOTE
--------- -------
Xxxxxxx X. Xxxxxxxxx, M.D. [*]
Xxxxx X. Xxxxxxxx, M.D. [*]
Xxxxxxx X. Xxxxx, M.D. [*]
Xxxxxx Xxxxxxxxxxx, M.D. [*]
Provided, however, that, to secure for New PA the benefits of each
Employment Agreement and as an additional inducement for the
performance by each Physician of such Physician's obligations
thereunder, in the event the Employment Agreement between New PA and
any Physician is terminated prior to the fifth anniversary of the
Closing Date by (i) New PA for cause and without such Physician's
payment of the appropriate amount of liquidated damages, as
specified in such Employment Agreement, or (ii) such Physician
without cause and without such Physician's payment of the
appropriate amount of liquidated damages, as specified in such
Employment Agreement, then such Physician shall execute an
appropriate assignment of the Note held by such Physician pursuant
to which all of the Physician's rights under such Note are assigned
to Raytel Management. If such Physician fails to execute the
assignment of Note provided for in this Section 2.03, such Note
shall be deemed assigned to Raytel Management, and Raytel shall be
authorized to setoff against such Note the amounts specified herein.
(b) At the Closing, Raytel Management shall deliver to
each Physician cash in the amount set forth opposite such
Physician's name:
PHYSICIAN CASH AMOUNT
--------- -----------
Xxxxxxx X. Xxxxxxxxx, M.D. [*]
Xxxxx X. Xxxxxxxx, M.D. [*]
Xxxxxxx X. Xxxxx, M.D. [*]
Xxxxxx Xxxxxxxxxxx, M.D. [*]
Payments of the cash amounts set forth above may be made by wire
transfer to bank accounts designated by each Physician.
(c) On the first, second, third, fourth and fifth
anniversaries of the Closing
[*CONFIDENTIAL TREATMENT REQUESTED -- OMITTED PORTIONS FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION]
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Date, Raytel shall deliver shares of Raytel Common Stock to each
Physician in the amounts set forth opposite such Physician's name:
Number of Shares of Raytel Common Stock
---------------------------------------------------------------
First Second Third Fourth Fifth
Physician Anniversary Anniversary Anniversary Anniversary Anniversary
--------- ----------- ----------- ----------- ----------- -----------
Xxxxxxx X. Xxxxxxxxx, M.D [*] [*] [*] [*] [*]
Xxxxx X. Xxxxxxxx, M.D [*] [*] [*] [*] [*]
Xxxxxxx X. Xxxxx, M.D [*] [*] [*] [*] [*]
Xxxxxx Xxxxxxxxxxx, M.D [*] [*] [*] [*] [*]
Section 2.04. Noncompetition and Confidentiality Covenants. In
connection with the consummation of the transactions contemplated by this Master
Transaction Agreement, and by executing and delivering certain of the other
Transaction Documents, the Physician Parties will be entering into certain
noncompetition and confidentiality covenants. The Physician Parties recognize
that such covenants are an essential part of the transactions contemplated by
this Master Transaction Agreement and certain other Transaction Documents and
that, but for the contemplated agreement of the Physician Parties to comply with
such covenants, the Raytel Parties would not have entered into this Master
Transaction Agreement or any other Transaction Documents.
ARTICLE III.
REPRESENTATIONS OF THE PHYSICIAN PARTIES
Section 3.01 Joint Representations of the Physicians. The Physicians
represent and warrant to the Raytel Parties that:
(a) Organization, Valid Authorization and Good Standing.
Each of Existing PA and New PA is a professional associations duly
organized, validly existing and in good standing under the laws of
the State of Texas. Each of Existing PA and New PA has the power and
authority to own all of its properties and assets and to conduct the
Practice. Each of Existing PA and New PA has the power and authority
to enter into the Transaction Documents to which it is a party and
to carry out its obligations thereunder. The execution and delivery
of the Transaction Documents to which Existing PA or New PA is a
party and the consummation of the transactions contemplated thereby
have been duly and validly authorized by such party, and no other
corporate or other proceedings on the part of such party are
necessary to authorize such Transaction Documents and the
transactions contemplated thereby. This
[*CONFIDENTIAL TREATMENT REQUESTED -- OMITTED PORTIONS FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION]
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Master Transaction Agreement has been duly and validly executed and
delivered by Existing PA and New PA and constitutes the valid and
binding agreement of such party enforceable against it in accordance
with its terms. Each Transaction Document executed and delivered by
Existing PA or New PA will upon such execution and delivery
constitute the valid and binding agreement of such party enforceable
against it in accordance with its terms.
(b) Compliance. Except as disclosed on the Disclosure
Schedule, the execution and delivery of the Transaction Documents
and the consummation of the transactions contemplated thereby by
Existing PA or New PA will not (i) violate any provision of its
organizational documents, (ii) violate any material provision of or
result in the breach of or entitle any party to accelerate (whether
after the giving of notice or lapse of time or both) any material
obligation under, any mortgage, lien, lease, contract, license,
instrument or any other agreement to which party is a party, (iii)
result in the creation or imposition of any material lien, charge,
pledge, security interest or other material encumbrance upon any
property of such party or (iv) to the best of each Physician's
knowledge, violate or conflict with any order, award, judgement or
decree or other material restriction or any law, ordinance or
regulation to which such party or its property is or will be
subject.
(c) Approvals. To the best of each Physician's
knowledge, no consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Authority
or other person is required in connection with the execution and
delivery of the Transaction Documents by Existing PA or New PA or
the consummation by it of the transactions contemplated thereby,
except for those consents or approvals set forth in the Disclosure
Schedule.
(d) Financial Statements. Existing PA has furnished to
the Raytel Parties Existing PA's unaudited financial statements for
the two years ended December 31, 1994 and December 31, 1995, the
six-month period ended June 30, 1996, consisting of a balance sheet,
the related statement of income, and changes in stockholders' equity
(collectively, the "Existing PA Unaudited Financial Statements"). To
the best of each Physician's knowledge, except for the omission of
footnotes, preparation in summary or condensed form and the effect
of normal, recurring year-end adjustments, the Existing PA Unaudited
Financial Statements (i) have been prepared in accordance with the
principles of cash accounting consistently applied, (ii) are true,
complete and correct in all material respects as of the dates and
for the periods above stated and (iii) fairly present the financial
position of Existing PA at such dates and the results of its
operations for the periods ended on such dates. Except as set forth
in the Disclosure Schedule, and except for the omission of
footnotes, preparation in summary or condensed form and the effect
of normal, year-end adjustments, the Existing PA Unaudited Financial
Statements reflect all of the liabilities and obligations of
Existing PA that are required to be reflected or disclosed therein
in accordance with principles of cash accounting consistently
applied. For purposes of this Master Transaction
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Agreement, the balance sheet of Existing PA included in Existing PA
Unaudited Financial Statements is referred to as the "Existing PA
Balance Sheet" and the date thereof is referred to as the "Existing
PA Balance Sheet Date."
(e) Undisclosed Liabilities. To the best of each
Physician's knowledge, Existing PA does not have any liability
(whether asserted or unasserted, whether absolute or contingent,
whether accrued or unaccrued, whether liquidated or unliquidated,
whether due or to become due, and whether xxxxxx or inchoate)
individually or in the aggregate in excess of $10,000, and there is
no basis for any present or future action, suit, proceeding,
hearing, investigation, charge, complaint, claim or demand against
Existing PA giving rise to any liability, except as set forth on the
Existing PA Balance Sheet or on the Disclosure Schedule.
(f) Absence of Changes or Events. Except as set forth on
the Disclosure Schedule, since the Existing PA Balance Sheet Date,
Existing PA has conducted the Practice only in the ordinary course
of business, and Existing PA has not:
(i) Incurred any obligation or liability, absolute,
accrued, contingent or otherwise, whether due or to become due,
whether individually or in the aggregate, that has had or might
have a material adverse effect on Existing PA or the Practice;
(ii) Pledged or subjected to any material lien,
charge, security interest or any other encumbrance or
restriction on any of its assets;
(iii) Sold, transferred, leased to others or
otherwise disposed of any of its assets material to the
operation of the Practice, except in the ordinary course of the
business of Existing PA;
(iv) Canceled or compromised any material debt or
claim, or waived or released any right of substantial value;
(v) Received any notice of termination of any
contract, lease or other agreement, or suffered any damage,
destruction or loss that, individually or in the aggregate, has
had or might have a material adverse effect on Existing PA or
the Practice;
(vi) Instituted, settled or agreed to settle any
litigation, action, proceeding or arbitration;
(vii) Failed to replenish its Supplies (as defined
in Section 1.37) in a normal and customary manner or made any
material purchase commitment other than in the ordinary course
of business of Existing PA;
(viii) Failed to pay any accounts or notes payable
or any other
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obligations on a timely basis consistent with the practices of
Existing PA;
(ix) Entered into any material transaction, contract
or commitment other than in the ordinary course of the business
of Existing PA;
(x) Suffered any event or events, whether
individually or in the aggregate, that has had or could be
reasonably expected to have a material adverse effect on the
financial condition, results of operations, properties, assets,
liabilities, business, operations or prospects of Existing PA
or the Practice;
(xi) Made any material change in the rate of
compensation, commission, bonus or other remuneration payable,
or paid or agreed to pay any material bonus, extra
compensation, pension, severance or vacation pay, to any
partner or employee;
(xii) Issued any equity interests, declared or paid
any distribution or entered into any agreement or understanding
to do or engage in any of the foregoing actions;
(xiii) Engaged in any activities or practices other
than the Practice; or
(xiv) Entered into any agreement or made any
commitment to take any of the actions described in Subsections
(i) through (xiii) inclusive of this Section 3.01(f).
(g) Litigation. Except as disclosed on the Disclosure
Schedule, there are no material claims, actions, suits, proceedings
(arbitration or otherwise) or investigations pending or, to the best
of each Physician's knowledge, threatened against Existing PA or the
Practice at law or in equity in any court or before or by any
Governmental Authority, and, to the best of each Physician's
knowledge, there are no, and have not been any, facts, conditions or
incidents that may result in any such actions, suits, proceedings
(arbitration or otherwise) or investigations which if adversely
determined would have a material adverse effect on the practice. To
the best of the Physicians' knowledge, neither Existing PA nor the
Practice is in default in respect of any judgment, order, writ,
injunction or decree of any court or other Governmental Authority.
(h) Permits; Compliance with Laws. Each of Existing PA
and New PA has all permits, licenses, orders and approvals of all
Governmental Authorities material to the conduct of the Practice, a
true and correct list of which is set forth on the Disclosure
Schedule. To the best of each Physician's knowledge, all such
permits, licenses, orders and approvals are in full force and
effect, and no suspension or cancellation of any of them is pending
or threatened. To the best of each Physician's
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knowledge, none of such permits, licenses, orders or approvals, and
no application for any of such permits, licenses, orders or
approvals, will be adversely affected by the consummation of the
transactions contemplated by this Master Transaction Agreement or
any other Transaction Document. Except as set forth on the
Disclosure Schedule, no consent or approval is required for, and no
other impediment or restriction exists that will prohibit or limit,
the transfer of any of such permits, licenses, orders and approvals
(and any applications therefor) in accordance with the terms of the
Transaction Documents. The Physician Parties have not received any
written notice of violation that Existing PA in its conduct of the
Practice has not complied in any material respects with any rule or
regulation of any Governmental Authority having authority over
Existing PA, including without limitation, agencies concerned with
occupational safety, environmental protection, employment practices,
and Medicare and Medicaid requirements applicable to Existing PA's
billing procedures (except denials of claims in the ordinary course
of business).
(i) Insurance. The Disclosure Schedule sets forth a
complete and correct list of all insurance policies obtained and
maintained by Existing PA or the Physicians in connection with the
operation of the Practice. Such insurance policies are in full force
and effect, and all premiums due on such policies have been paid.
The insureds under each such policy have complied in all material
respects with the provisions of all such policies. Except as set
forth on the Disclosure Schedule, no consent or approval is required
for, and no other impediment or restriction exists that will
prohibit or limit, the transfer of any such insurance policies in
accordance with the terms of the Asset Purchase Agreement. Existing
PA and the Physicians have made available to the Raytel Parties
complete and correct copies of all such policies, together with all
riders and amendments thereto. Existing PA and the Physicians have
also set forth on the Disclosure Schedule a list of malpractice
insurance policies previously maintained within the last ten (10)
years by them. They have also set forth on such Disclosure Schedule
a list of all malpractice claims and similar types of claims,
actions or proceedings asserted against any of the Physicians or
Existing PA at any time within the last ten (10) years.
(j) Tax Matters. To the best of each Physician's
knowledge, all federal, state and local tax returns required to be
filed by Existing PA prior to the Closing Date have been filed on a
timely basis with the appropriate Governmental Authorities in all
jurisdictions in which such returns are required to be filed, and
all such returns are true and correct. To the best of each
Physician's knowledge, all federal, state and local income,
franchise, sales, use, property, and all other taxes, fees,
assessments or other governmental changes (including withholding
taxes), and all interest and penalties thereon (all of the
foregoing, collectively "Taxes") due from, or properly accruable by,
Existing PA with respect to taxable periods ending on or prior to,
and the portion of any interim period through, the date hereof have
been fully and timely paid or, in the case of Taxes for which
payment is not yet required, properly and fully accrued for on
Existing PA Unaudited Financial Statements. The Raytel Parties will
not after the
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16
Closing owe, or be liable directly or indirectly, to any other
person or entity for any taxes imposed upon Existing PA. Existing PA
is not currently the subject of any audit, examination or any
similar investigation by any Governmental Authority. The Disclosure
Schedule sets forth all audits, examinations or similar
investigations of Existing PA by any Governmental Authority since
January 1, 1990. The consummation of the transactions contemplated
by the Asset Purchase Agreement will not be subject to any sales or
other transfer tax of any state or local taxing authority.
(k) Contracts. Set forth on the Disclosure Schedule is a
complete and correct list of all material agreements, contracts and
commitments, written or oral, to which Existing PA is a party or by
which it or any of its properties or the Practice is bound,
including without limitation: (i) mortgages, indentures, notes,
letters or credit, security agreements and other agreements and
instruments relating to the borrowing of money by or extension of
credit to or by Existing PA; (ii) employment and consulting
agreements, employee benefit, profit-sharing and retirements plans
and all collective bargaining agreements; (iii) all joint venture or
partnership agreements to which Existing PA is a party; (iv)
licenses of software and any patent, trademark and other
intellectual property rights; (v) agreements or commitments for
capital expenditures; (vi) brokerage or finder's agreements; (vii)
agreements regarding clinical research; and (viii) agreements with
payors, leases for real or personal property and contracts to
provide medical or health-care services. Existing PA has made
available to the Raytel Parties complete and correct copies of all
written agreements, contracts and commitments, together with all
amendments thereto, and accurate descriptions of all oral
agreements, set forth on the list on the Disclosure Schedule. All
such agreements, contracts and commitments are in full force and
effect and, to the best of each Physician's knowledge, all parties
thereto have performed all material obligations required to be
performed by them to date, are not in default in any material
respect thereunder, and have not violated any representation or
warranty, explicit or implied, contained therein. No claim or
default by any party has been made or is now pending under any such
agreement, contract or commitment, and, to the best of the
Physicians' knowledge, no event has occurred and is continuing that
with notice or the passing of time or both would constitute a
default thereunder or would excuse performance by any party thereto.
Except as set forth in the Disclosure Schedule, no consents or
approvals are required under the terms of any agreement listed on
the Disclosure Schedule in connection with any of the transactions
contemplated by the Transaction Documents including, without
limitation, the transfer of any such agreement pursuant to the Asset
Purchase Agreement.
(l) Employee Benefit Plans. Except as set forth on the
Disclosure Schedule, neither Existing PA nor any other entity,
whether or not incorporated, which is deemed to be under common
control (as defined in Section 414 of the Code or 4001(b) of the
Employee Retirement Income Security Act of 1974, as amended
("ERISA"), with Existing PA ("Commonly Controlled Entity") maintains
or contributes to any employee pension benefit plan (as defined in
Section 3(2) of ERISA)
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17
that is a defined contribution plan described in Section 3(34) of
ERISA or Section 414(i) of the Code, or that is a defined benefit
plan described in Section 3(35) of ERISA or Section 414(j) of the
Code, and that gives, or will give, rise to any liability of
Existing PA for (i) any premium payments due under Section 4007 of
ERISA with respect to any such defined benefit plan, or (ii) any
unpaid minimum funding contributions that would result in the
imposition of a lien on any assets of Existing PA pursuant to
Section 412(c)(11) of the Code or Section 302(c)(11) of ERISA.
Neither Existing PA nor any Commonly Controlled Entity sponsors or
sponsored, or maintains or maintained, any defined benefit plan
(described in the immediately preceding sentence) that has been, or
will be, terminated in a manner that would result in any liability
of Existing PA to the Pension Benefit Guaranty Corporation or that
would result in the imposition of a lien on any assets of Existing
PA pursuant to Section 4068 of ERISA. At no time during the five (5)
consecutive year period immediately preceding the first day of the
year in which the Closing Date occurs has Existing PA or any
Commonly Controlled Entity participated in or contributed to any
multiemployer plan defined in Section 4001(a)(3) of ERISA, or
Section 414(f) of the Code, nor during such period has Existing PA
or any Commonly Controlled Entity had an obligation to participate
in or contribute to any such multiemployer plan. Except as set forth
on the Disclosure Schedule, Existing PA is not obligated under any
agreement or other arrangement pursuant to which compensation or
benefits will become payable as a result of the consummation of the
transactions contemplated in this Master Transaction Agreement.
Neither Existing PA nor any of its respective directors, officers,
employees or agents, has, with respect to any employee benefit plan
(as defined in Section 3(3) of ERISA), that is or has been
established by or contributed to, or with respect to which costs or
liabilities are accrued by Existing PA, engaged in any conduct that
would result in any material taxes or penalties on prohibited
transactions under Section 4975 of the Code or under Section 502(i)
or (1) of ERISA or in breach of fiduciary duty liability under
Section 409 of ERISA which, in the aggregate, could be material to
the business, financial condition or results of operation of
Existing PA, taken as a whole, and no actions, investigations, suits
or claims with respect to the fiduciaries, administrators or assets
of any such employee benefit plan (other than routine claims for
benefits) is pending or threatened, which, in the aggregate could
reasonably be expected to give rise to material liability of
Existing PA, that could be material to the business, financial
condition or results of operations of Existing PA, taken as a whole.
None of the Existing PA welfare benefit plans (as defined in Section
3(1) of ERISA) provides for or promises retiree medical, disability
or life insurance benefits to any current or former employee,
officer or director of Existing PA other than "continuation
coverage" required under the Controlled Omnibus Budget
Reconciliation Act of 1985. Any and all plans, policies, programs or
arrangements of Existing PA or any Commonly Controlled Entity which
are subject to Section 4980B of the Code have been and are in
compliance with the requirements of Section 4980B of the Code and
Part 6 of Title I of ERISA. Existing PA will remain fully liable
with respect to all plans, programs, policies or other arrangements,
including but not limited to any pension, profit-sharing, thrift or
other retirement plan; deferred compensation;
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18
or any other pension benefit plan of any kind; stock ownership,
stock purchase, performance share, bonus or other incentive plan;
severance plan; disability, medical, dental, vision or other health
plan; life insurance or death benefit plan; vacation, sick leave,
holiday or other paid leave plan; cafeteria plan, medical flexible
spending account reimbursement plan; dependent care plan; or any
other welfare benefit plan of any kind; or any other benefit plan,
policy, program or arrangement whether or not any such plan, policy,
program or other arrangement is, or is intended to be, qualified
under Section 401(a) of the Code, and whether or not any such plan,
policy, program or arrangement is subject to the provisions of
ERISA, and the Raytel Parties will not be required to assume by law
or under any form of any such plans, policies, programs or
arrangements any of the liabilities for or under such plans,
policies, programs or arrangements.
(m) Environmental Protection. To the best of each
Physician's knowledge, Existing PA has obtained all permits,
licenses and other authorizations that are required for the conduct
of its Practice under any federal, state and local laws and the
regulations promulgated thereunder relating to pollution or
protection of the environment, including laws relating to emissions,
discharges, releases or threatened releases of hazardous substances,
materials or wastes (collectively, "Hazardous Wastes"), into the
environment (including, without limitation, ambient air, surface
water, ground water, or land), or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling of Hazardous Wastes (collectively,
"Environmental Laws"). To the best of each Physician's knowledge,
Existing PA and the Practice is in material compliance with all
terms and conditions of such required permits, licenses and
authorizations, and is also in compliance with all applicable
Environmental Laws. Except as set forth on the Disclosure Schedule,
no consent or approval is required for, and no other impediment or
restriction exists that will prohibit or limit, the transfer of such
permits, licenses and authorizations in accordance with the terms of
the Asset Purchase Agreement. There are no pending or, to the best
of each Physician's knowledge, threatened, investigations, actions
or proceedings of whatsoever nature involving Existing PA or the
Practice arising under any Environmental Laws.
(n) Labor Matters. Except as described on the Disclosure
Schedule, there are no contracts for the employment of any officer
or employee of Existing PA in effect. The Disclosure Schedule sets
forth a complete list of the names and positions held of all
employees of Existing PA, and the current annual rate of
compensation (including bonuses) paid to each such employee.
(o) Brokers. All negotiations relating to the
Transaction Documents and the transactions contemplated hereby have
been carried on without the intervention of any person acting on
behalf of the Physician Parties as a group in such manner as to give
rise to any valid claim against any Raytel Party for any broker's or
finder's fee or similar compensation.
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19
(p) Disclosure. To the best of each Physician's'
knowledge, no representation, warranty or statement made by any of
the Physician Parties in this Master Transaction Agreement or any of
the exhibits or schedules hereto, or any agreements, certificates,
documents or instruments delivered or to be delivered to the Raytel
Parties in accordance with this Master Transaction Agreement or the
other Transaction Documents, contains any untrue statement of a
material fact or omits to state a material fact necessary to make
the statements contained herein or therein, in light of the
circumstances under which they were made, not misleading. The
Physician Parties do not know of any fact or condition (other than
general economic conditions or legislative or administrative changes
in health-care delivery) that materially adversely affects, or in
the future may materially adversely affect, the condition,
properties, assets, liabilities, business, operations or prospects
of the Practice that has not been set forth herein or in the
Disclosure Schedule.
(q) Cardiac Catheterization Lab. The Physicians have an
existing agreement with St. Elizabeth's Hospital or with Baptist
Memorial Hospital in Beaumont, Texas, for the development of a
cardiac catheterization laboratory on the hospital campus, and the
Cath Lab will be eligible for licensing as a fully functional cath
lab for the performance of both diagnostic and invasive and
noninvasive therapeutic procedures.
(r) Financial and Medical Environmental Factors. Except
as set forth on the Disclosure Schedule, the Physicians are not
aware of any financial or medical practice environmental factor
which would materially affect the medical practice as now being
conducted by the Physicians and the Existing PA.
Section 3.02 Several Representations of the Physicians. Each of the
Physicians severally represents and warrants to the Raytel Parties as to himself
that:
(a) Valid Authorization. Such Physician is competent and
has full power, capacity and authority to enter into the Transaction
Documents to which such Physician is a party and to carry out such
Physician's obligations thereunder. This Master Transaction
Agreement has been duly and validly executed and delivered by such
Physician and constitutes the valid and binding agreement of such
Physician enforceable against such Physician in accordance with its
terms. Each Transaction Document executed and delivered at the
Closing by such Physician will upon such execution and delivery
constitute the valid and binding agreement of such Physician
enforceable against such Physician in accordance with its terms.
(b) Compliance. Except as set forth on the Disclosure
Schedule, to the best of such Physician's knowledge, the execution
and delivery of the Transaction Documents and the consummation of
the transactions contemplated thereby by such Physician will not (i)
violate any material provision of or result in the breach of or
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20
entitle any party to accelerate (whether after the giving of notice
or lapse of time or both) any material obligation under any
mortgage, lien, lease, contract, license, instrument or any other
agreement to which such Physician is a party, (ii) result in the
creation or imposition of any material lien, charge, pledge,
security interest or other encumbrance upon any property of such
Physician or (iii) violate or conflict with any order, award,
judgment or decree or other material restriction or any law,
ordinance or regulation to which such Physician or the property of
such Physician is subject.
(c) Approvals. To the best of such Physician's
knowledge, no consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Authority
or other person is required in connection with the execution and
delivery of the Transaction Documents by such Physician or the
consummation by such Physician of the transactions contemplated
thereby.
(d) Litigation. Except as disclosed on the Disclosure
Schedule, there are no claims, actions, suits or proceedings
(arbitration or otherwise) pending or, to such Physician's
knowledge, threatened against such Physician at law or at equity in
any court or before or by any Governmental Authority arising out of
or otherwise relating to such Physician's practice of medicine, and,
to such Physician's knowledge, there are no, and within the last
five (5) years have not been any, facts, conditions or incidents
that may result in any such actions, suits, proceedings (arbitration
or otherwise) or investigations which if adversely determined would
have a material adverse effect on the Practice. Such Physician is
not in default in respect of any judgement, order, writ, injunction
or decree of any court or other Governmental Authority known to such
Physician.
(e) Permits. To the best of such Physician's knowledge,
such Physician has all permits, licenses, orders and approvals of
all Governmental Authorities necessary to perform the services
performed by such Physician in connection with the conduct of the
Practice. All such permits, licenses, orders and approvals are in
full force and effect and no suspension or cancellation of any of
them is pending or threatened. To the best of such Physician's
knowledge, none of such permits, licenses, orders or approvals, and
no application for any of such permits, licenses, orders or
approvals will be adversely affected by the consummation of the
transactions contemplated by the Transaction Documents. Such
Physician is a participating physician, as such term is defined by
the Medicare program, and such Physician has not been disciplined,
sanctioned or excluded from the Medicare program and has not been
subject to any plan of correction imposed by any professional review
body within the last five (5) years.
(f) Staff Privileges. The Disclosure Schedule lists all
hospitals at which such Physician has full staff privileges. Such
staff privileges have not been revoked, surrendered, suspended or
terminated, and to such Physician's knowledge, there are no, and
have not been any, facts, conditions or incidents that may result in
any such
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21
revocation, surrender, suspension or termination.
(g) Board Certification. The Physicians each are board
certified in cardiology by the American College of Cardiology.
(h) Intentions. Except as set forth on the Disclosure
Schedule, from and after the Closing Date, such Physician intends to
continue practicing medicine on a full-time basis for the next five
(5) years with New PA and does not know of any fact or condition
that materially adversely affects, or in the future may materially
adversely affect, his ability or intention to practice medicine on a
full-time basis for the next five years with New PA.
ARTICLE IV.
REPRESENTATIONS OF THE RAYTEL PARTIES
Section 4.01 Representations of the Raytel Parties. The Raytel
Parties jointly and severally represent and warrant to each of the Physicians
that:
(a) Organization, Valid Authorization and Good Standing.
Raytel is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. Raytel Management
is a limited partnership duly organized, validly existing and in
good standing under the laws of the State of Texas. Each of the
Raytel Parties has the power and authority to own all of its
properties and assets and to conduct its business. Each of the
Raytel Parties has the power and authority to enter into the
Transaction Documents to which it is a party and to carry out its
obligations thereunder. The execution and delivery of the
Transaction Documents to which it is a party and the consummation of
the transactions contemplated thereby have been duly and validly
authorized by each of the Raytel Parties, and no other corporate or
other proceedings on the part of either of the Raytel Parties are
necessary to authorize the Transaction Documents and the
transactions contemplated thereby. This Master Transaction Agreement
has been duly and validly executed and delivered by each of the
Raytel Parties and constitutes the valid and binding agreement of
each of the Raytel Parties enforceable against the Raytel Parties,
in accordance with its terms. Each Transaction Document executed and
delivered at the Closing by a Raytel Party will upon such execution
and delivery constitute the valid and binding agreement of such
Raytel Party, enforceable against such Raytel Party in accordance
with its terms.
(b) Compliance. The execution and delivery of the
Transaction Documents and the consummation of the transactions
contemplated thereby by the Raytel Parties will not (i) violate any
provision of their respective organizational documents, (ii) violate
any material provision of or result in the breach of or entitle any
party to accelerate (whether after the giving of notice or lapse of
time or both) any material obligation under, any mortgage, lien,
lease, contract, license, instrument or
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22
any other agreement to which either of the Raytel Parties is a
party, (iii) result in the creation or imposition of any material
lien, charge, pledge, security interest or other encumbrance upon
any property of either of the Raytel Parties or (iv) violate or
conflict with any order, award, judgement or decree.
(c) Approvals. No consent, approval, order or
authorization of, or registration, declaration or filing with, any
Governmental Authority or other person is required in connection
with the execution and delivery of the Transaction Documents by
either of the Raytel Parties or the consummation by either of the
Raytel Parties of the transactions contemplated thereby.
(d) Financial Statements. Raytel has furnished to the
Physician Parties Raytel's audited financial statements for the year
ended September 30, 1995, consisting of a balance sheet, the related
statement of income and changes in stockholders' equity (the "Raytel
Audited Financial Statements"). In addition, Raytel has furnished to
the Physician Parties its unaudited financial statements for the
three-month period ended March 31, 1996, consisting of a balance
sheet, the related statement of income and changes in stockholders'
equity (the "Raytel Unaudited Financial Statements"). With respect
to the Raytel Unaudited Financial Statements, except for the
omission of footnotes, preparation in summary or condensed form and
the effect of normal, year-end adjustments, the Raytel Audited
Financial Statements and the Raytel Unaudited Financial Statements
(i) have been prepared in accordance with GAAP, (ii) are true,
complete and correct in all material respects as of their date and
for the period above stated and (iii) fairly present the financial
position of Raytel at such date and the results of its operations
for the period ended on such date. Except as set forth on the
Disclosure Schedule, each of the Raytel Audited Financial Statements
and the Raytel Unaudited Financial Statements reflects all of the
liabilities and obligations of Raytel that are required to be
reflected or disclosed therein in accordance with GAAP.
(e) Litigation. Except as set forth on the Disclosure
Schedule, there are no claims, actions, suits, proceedings
(arbitration or otherwise) or investigations pending or, to either
of the Raytel Parties' knowledge, threatened against either of the
Raytel Parties at law or in equity in any court or before or by any
Governmental Authority, and, to such Raytel Parties' knowledge,
there are no, and have not been any, facts, conditions or incidents
that may result in any such actions, suits, proceedings (arbitration
or otherwise) or investigations. Neither of the Raytel Parties is in
default in respect of any judgment, order, writ, injunction or
decree of any court or other Governmental Authority. None of the
matters listed in the Disclosure Schedule will have a material
adverse affect on the Raytel Parties even if adversely decided
against any of the Raytel Parties.
(f) Disclosure. No representation, warranty or statement
made by any of the Raytel Parties in this Master Transaction
Agreement or any of the exhibits or schedules hereto, or any
agreements, certificates, documents or instruments delivered
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23
or to be delivered to the Physician Parties in accordance with this
Master Transaction Agreement or the other Transaction Documents
contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements contained herein or
therein, in light of the circumstances under which they were made,
not misleading.
ARTICLE V.
PRE-CLOSING COVENANTS
Section 5.01 Conduct of Physician Practice. From the date hereto to
the Closing, except with the prior written consent of Raytel or as set forth on
the Disclosure Schedule, or except as otherwise provided for in this Master
Transaction Agreement, each Physician and Existing PA will:
(a) carry on the Practice in the usual, regular and
ordinary course in substantially the same manner as heretofore and
use best efforts to preserve relationships with patients,
contractors, institutional health care providers, health care
professionals and others having business dealings with the Practice;
(b) keep in full force and effect insurance comparable
in amount and scope of coverage to insurance now carried by Existing
PA;
(c) perform all obligations under agreements, contracts
and instruments relating to or affecting the Practice;
(d) comply with all statutes, laws, ordinances, rules
and regulations applicable to the Practice;
(e) not merge or consolidate with or purchase
substantially all of the assets of, or otherwise acquire, any
corporation, partnership, association or other business; and
(f) promptly advise Raytel in writing of any material
adverse change in the financial condition, results of operations,
properties, assets, liabilities, business operations or prospects of
the Practice.
Section 5.02 Access to Information and Records Before Closing.
Subject to the Confidentiality provision set forth in Section 12.12, Raytel may,
at its expense, prior to the Closing Date, make, or cause to be made, such
investigation of the assets, liabilities, operations and properties of Existing
PA and of its financial and legal condition as Raytel deems necessary or
advisable to familiarize itself with such matters. Each Physician Party shall
permit Raytel and its representatives (including legal counsel and independent
accountants) upon reasonable notice to have full access to the properties and
relevant books and records of Existing PA, at reasonable business hours, and
will cause its employees to
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furnish Raytel with such financial and operating data and other information and
copies of documents with respect to the services, operations and properties of
Existing PA as Raytel may from time to time request.
Section 5.03 Other Transactions. Existing PA and the Physicians
agree that so long as this Agreement has not been terminated in accordance with
its terms, neither Existing PA nor any of the Physicians, will, directly or
indirectly through any officer, director, employee, agent or otherwise, take any
action to solicit, initiate, seek, encourage or support any inquiry, proposal or
offer from, furnish any information to, or participate in any negotiations with,
any corporation, partnership, person or other entity or group (other than Raytel
and its officers, employees and agents) regarding any acquisition of any capital
stock or other securities of Existing PA, any merger or consolidation with or
involving Existing PA, or any acquisition of any material portion of the Assets
of Existing PA. If such an acquisition proposal is received by, or information
is requested from Existing PA or any of its affiliates, or shareholders,
officers or directors, Existing PA shall promptly notify Raytel of such fact and
specify the nature of such proposal and/or the information requested and the
name of the person or entity making such proposal and/or requesting such
information.
Section 5.04 Covenant Not To Compete. Existing PA and the
Physicians, both jointly and severally, agree that they will obtain from each of
the present physicians employed by Existing PA or serving as an independent
contractor to Existing PA a binding covenant not to compete substantially
similar to the terms of the Agreement and Covenant Not To Compete attached as an
exhibit to the Agreement for the Purchase and Sale of Assets (which is one of
the Transaction Documents set forth in Section 1.43, herein above).
ARTICLE VI.
ADDITIONAL AGREEMENTS
Section 6.01. Certain Notifications. At all times from the date
hereof until the Closing, each party shall promptly notify the others in writing
of the occurrence of any event which will or may result in the failure to
satisfy any of the conditions specified in Article VII.
Section 6.02. Investment Representations and Covenants of
Physicians.
(a) Each Physician understands that the Securities will
not be registered under the Securities Act or any state securities
laws on the grounds that the issuance of the Securities is exempt
from registration pursuant to Section 4(2) of the Securities Act or
Regulation D promulgated under the Securities Act and applicable
state securities laws, and that the reliance of Raytel on such
exemptions is predicated in part on the Physician's representations,
warranties, covenants and acknowledgments set forth in this Section
6.02.
(b) Except as disclosed on the Investment
Representations Schedule
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25
attached hereto, each Physician represents and warrants that such
Physician is an "accredited investor" as defined in Rule 501
promulgated under the Securities Act.
(c) Each Physician represents and warrants that the
Securities to be acquired by such Physician upon consummation of the
transactions described in Article II of this Master Transaction
Agreement will be acquired by such Physician for such Physician's
own account, not as a nominee or agent, and without a view to resale
or other distribution within the meaning of the Securities Act and
the rules and regulations thereunder, and that such Physician will
not distribute any of the Securities in violation of the Securities
Act.
(d) Each Physician represents and warrants that the
address set forth below such Physician's name in the Investment
Representations Schedule is such Physician's principal residence.
(e) Each Physician (i) acknowledges that the Securities
issued to such Physician at the Closing must be held indefinitely by
such Physician unless subsequently registered under the Securities
Act or an exemption from registration is available, (ii) is aware
that any routine sales of Securities made pursuant to Rule 144 under
the Securities Act may be made only in limited amounts and in
accordance with the terms and conditions of that Rule and that in
such cases where the Rule is not applicable, compliance with some
other registration exemption will be required, and (iii) is aware
that Rule 144 is not currently available for use by such Physician
for resale of any of the Securities to be acquired by such Physician
upon consummation of the transactions described in Article II of
this Master Transaction Agreement.
(f) Each Physician represents and warrants to Raytel
that such Physician has such knowledge and experience in financial
and business matters such that such Physician is capable of
evaluating the merits and risks of such Physician's investment in
any of the Securities to be acquired by such Physician upon
consummation of the transactions described in Article II of this
Master Transaction Agreement.
(g) Each Physician confirms that such Physician has
received and read the Company's Prospectus dated November 30, 1995,
Annual Report for 1995, Proxy Statement dated April 5, 1996, and its
Form 10-Q for the quarter ended March 31, 1996. Each Physician also
confirms that Raytel has made available to such Physician the
opportunity to ask questions of and receive answers from it
concerning the terms and conditions of such Physician's investment
in the Securities, and the Physician has received to such
Physician's satisfaction, such additional information, in addition
to that set forth herein, about Raytel's operations and the terms
and conditions of the offering as such Physician has requested.
(h) In order to ensure compliance with the provisions of
paragraph (c) hereof, each Physician agrees that after the Closing
such Physician will not sell or otherwise transfer or dispose of
Securities or any interest therein (unless such shares
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26
have been registered under the Securities Act) without first
complying with either of the following conditions, the expenses and
costs of satisfaction of which shall be fully borne and paid for by
such Physician:
(i) Raytel shall have received a written
legal opinion from legal counsel, which opinion and
counsel shall be satisfactory to Raytel in the exercise
of its reasonable judgment, or a copy of a "no-action"
or interpretive letter of the Securities and Exchange
Commission specifying the nature and circumstances of
the proposed transfer and indicating that the proposed
transfer will not be in violation of any of the
registration provisions of the Securities Act and the
rules and regulations promulgated thereunder; or
(ii) Raytel shall have received an
opinion from its own counsel to the effect that the
proposed transfer will not be in violation of any of the
registration provisions of the Securities Act and the
rules and regulations promulgated thereunder.
Each Physician also agrees that the certificates or instruments representing the
Securities to be issued to such Physician pursuant to this Master Transaction
Agreement may contain a restrictive legend noting the restrictions on transfer
described in this Article and required by federal and applicable state
securities laws, and that appropriate "stop-transfer" instructions will be given
to Raytel's transfer agent, if any, provided that this paragraph (h) shall no
longer be applicable to any Securities following their transfer pursuant to a
registration statement effective under the Securities Act or in compliance with
Rule 144 or if the opinion of counsel referred to above is to the further effect
that transfer restrictions and the legend referred to herein are no longer
required in order to establish compliance with any provisions of the Securities
Act.
Section 6.03. No Corporate Practice. No Physician Party has
knowledge that the actions, transactions or relationships arising from, and
contemplated by the Transaction Documents violate any law, rule or regulation
relating to the corporate practice of medicine. Each Physician Party accordingly
agrees that such Physician Party will not, in an attempt to void or nullify any
Transaction Document or any relationship involving any Raytel Party or any
Physician Party, xxx, claim, aver, allege or assert that any such Transaction
Document or any such relationship violates any law, rule or regulation relating
to the corporate practice of medicine; provided, however, such Physician Party
is entitled to make any such claim, assessment, allegation or assertion if such
Physician Party reasonably believes, on advice from counsel, that failure to
terminate such Transaction Document or such relationship will subject such
Physician Party to material liability or will materially adversely affect such
Physician Party's right to practice medicine.
Section 6.04. Development of Cardiac Catheterization Laboratory.
Raytel agrees that it will use its best efforts to investigate the feasibility
of obtaining the necessary certification, accreditation and licensing for a
free-standing invasive cardiac catheterization
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xxxxxxxxxx (xxx "Xxxx Xxx"). However, in the event that Raytel determines in
good faith and after reasonable inquiry that it is either not economically
feasible to develop the Cath Lab, or that it is not legally possible for to meet
the requirements of federal or state laws prohibiting physician self-referral to
facilities such as the Cath Lab in which the physicians have a financial
interest (whether an equity ownership or profit participation of any sort), or
that it is not legally possible to comply with the Medicare Fraud and Abuse
provisions for a Cath Lab that is for the exclusive use of the Physicians, then
Raytel may terminate this Agreement. On the other hand, if Raytel determines
that such a Cath Lab is economically feasible and that all legal requirements
can be met to its satisfaction, then Raytel agrees that it will negotiate in
good faith with New PA to develop the ownership structure, management services
agreement, financial models and practice protocols for the Cath Lab in
accordance with the term sheet attached to the letter of intent dated June 18,
1996, between and among Raytel, the Physicians and Existing PA.
ARTICLE VII.
CONDITIONS
Section 7.01 Conditions Precedent to the Obligations of All Parties.
The obligations of the parties to complete the Closing shall be subject to the
fulfillment, at or prior to the time of the Closing, of each of the following
conditions:
(a) all permits, approvals, waivers and consents of any
Governmental Authority or of any third party necessary or
appropriate for consummation of the Closing shall have been
obtained;
(b) no preliminary or permanent injunction or other
order of a court or other Governmental Authority in the United
States shall have been issued and be in effect, and no United States
federal or state statute, rule or regulation shall have been enacted
or promulgated after the date hereof and be in effect, that (i)
prohibits the consummation of the Closing or (ii) imposes material
limitations after the Closing on the ability of Existing PA to
operate the Practice or Raytel Management to manage the Practice
pursuant to the Management Services Agreement; and
(c) there shall not be any action or proceeding
commenced by or before any court or other Governmental Authority in
the United States that challenges the consummation of the Closing or
seeks to impose material limitations on the ability of Existing PA
to operate the Practice or Raytel Management to manage the Practice
pursuant to the Management Services Agreement.
Section 7.02 Conditions Precedent to the Obligations of the Raytel
Parties. The obligations of the Raytel Parties to complete the Closing shall be
subject to the fulfillment, at or prior to the time of the Closing, of each of
the following conditions:
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(a) except for such changes as permitted or contemplated
by this Master Transaction Agreement, the representations and
warranties of the Physician Parties contained in this Master
Transaction Agreement shall be true and correct in all material
respects at and as of the Closing Date with the same force and
effect as if made at and as of the Closing Date;
(b) the Physician Parties shall have performed, complied
with and fulfilled all the covenants, agreements, obligations and
conditions required by any of the Transaction Documents to be
performed, complied with or fulfilled by them prior to or at the
Closing;
(c) since the date of this Master Transaction Agreement,
there shall not have occurred any event or events, whether
individually or in the aggregate, that have had or that reasonably
could be expected to have a material adverse effect on the financial
condition, results of operations, properties, assets, liabilities,
business, operations, ownership, organization or capital structure
or prospects of Existing PA or the Practice; and
(d) the Raytel Parties shall have received all of the
instruments, documents and other items described in Section 8.02
hereof.
Section 7.03. Conditions Precedent to the Obligations of the
Physician Parties. The obligations of the Physician Parties to complete the
Closing shall be subject to the fulfillment at or prior to the time of the
Closing, of each of the following conditions:
(a) except for such changes as permitted or contemplated
by this Master Transaction Agreement, the representations and
warranties of the Raytel Parties contained in this Master
Transaction Agreement shall be true and correct in all material
respects at and as of the Closing Date with the same force and
effect as if made at and as of the Closing Date;
(b) the Raytel Parties shall have performed, complied
with and fulfilled all of the covenants, agreements, obligations and
conditions required by any of the Transaction Documents to be
performed, complied with or fulfilled by them prior to or at the
Closing;
(c) since the date of this Master Transaction Agreement,
there shall not have occurred any event or events, whether
individually or in the aggregate, that have had or that reasonably
could be expected to have a material adverse effect on the financial
condition, results of operations, properties, assets, liabilities,
business, operations or prospects of Raytel; and
(d) the Physician Parties shall have received from the
Raytel Parties all of the instruments, documents and other items
described in Section 8.03 hereof.
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ARTICLE VIII.
CLOSING
Section 8.01 Closing.
(a) The Closing shall take place at the offices of
Xxxxxx, Xxxx & Xxxxxx, L.L.P., 000 Xxxxxxx Xxxxxx, Xxxxxxxx, Xxxxx
00000, immediately following the satisfaction of each condition set
forth in Article VII hereof (the "Closing Date").
(b) At the Closing, the parties shall complete the
transactions provided for in Sections 2.02 and 2.03 in the sequence
specified in Article II hereof.
Section 8.02 Deliveries to the Raytel Parties at the Closing. At the
Closing, and simultaneously with the deliveries to the Physician Parties
specified in Section 8.03 hereof, and in addition to any other deliveries
required to be made to an Raytel Party pursuant to any other Transaction
Document at the Closing, the Physician Parties shall deliver or cause to be
delivered to the Raytel Parties the following:
(a) the New P Partnership Agreement duly executed by
each Physician;
(b) the New PA Articles of Association, New PA Bylaws,
New PA Consent;
(c) the Management Services Agreement duly executed by
New P and New PA;
(d) the Employment Agreements duly executed by New PA
and each Physician;
(e) the Asset Purchase Agreement duly executed by
Existing PA, together with the Agreement and Covenant Not To Compete
duly executed by each Physician;
(f) the Security Agreement duly executed by the
Physicians;
(g) the Conveyance Agreement duly executed by New PA and
Existing PA;
(h) the Partnership Interest Purchase Agreement duly
executed by each Physician; and
(i) such other closing documents, certificates and
instruments as are contemplated by the other Transaction Documents
or as shall have been reasonably requested by the Raytel Parties and
as are customarily delivered in connection with
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transactions of the type contemplated herein.
Section 8.03 Deliveries to the Physician Parties at the Closing. At
the Closing, and simultaneously with the deliveries to the Raytel Parties
specified in Section 8.02, and in addition to any other deliveries required to
be made to a Physician Party pursuant to any other Transaction Document at the
Closing, the Raytel Parties shall deliver or cause to be delivered to the
Physician Parties the following:
(a) the Asset Purchase Agreement duly executed by Raytel
Management;
(b) the Security Agreement duly executed by Raytel
Management;
(c) the Partnership Interest Purchase Agreement duly
executed by Raytel Management;
(d) the consideration required to be delivered by the
Raytel Parties at the Closing pursuant to the Transaction Documents;
and
(e) such other closing documents, certificates and
instruments as are contemplated by the other Transaction Documents
or as shall have been reasonably requested by the Physician Parties
and as are customarily delivered in connection with transactions of
the type contemplated herein.
ARTICLE IX.
TERMINATION
Section 9.01 Termination by Mutual Agreement. This Master
Transaction Agreement may be terminated by the mutual agreement in writing of
the parties hereto at any time prior to the Closing.
Section 9.02 Termination by Raytel Parties. If at any time prior to
or at the Closing (a) any of the Physician Parties shall have failed to perform
in any respect any of their respective covenants or obligations, at the time
required to be performed, set forth in this Master Transaction Agreement or the
other Transaction Documents and such failure has not been or cannot be cured to
the reasonable satisfaction of the Raytel Parties within a reasonable time; (b)
any material representation or warranty of any of the Physician Parties
contained herein or in any of the other Transaction Documents is false or
misleading in any material respect; (c) any of the Physician Parties shall fail
to make any deliveries, at the time required to be delivered, specified in
Section 8.02; or (d) any of the conditions set forth in Sections 7.01 or 7.02
shall not have been satisfied in any respect (and such failure cannot be cured
to the reasonable satisfaction of the Raytel Parties prior to Closing) or waived
in writing by the Raytel Parties, all obligations of the Raytel Parties under
this Master Transaction Agreement (other than their obligations under Sections
12.02 and 12.11) may be terminated by the Raytel Parties.
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Section 9.03 Termination by the Physician Parties. If at any time
prior to or at the Closing (a) any of the Raytel Parties shall have failed to
perform in any respect any of their respective covenants or obligations, at the
time required to be performed, set forth in this Master Transaction Agreement or
the other Transaction Documents and such failure has not been or cannot be cured
to the reasonable satisfaction of the Physician Parties within a reasonable
time; (b) any material representation or warranty of any of the Raytel Parties
contained herein or in any of the other Transaction Documents is false or
misleading in any material respect; (c) any of the Raytel Parties shall fail to
make any deliveries, at the time required to be delivered, specified in Section
8.03; or (d) any of the conditions set forth in Sections 7.01 or 7.03 shall not
have been satisfied in any respect (and such failure cannot be cured to the
reasonable satisfaction of the Physician Parties prior to Closing) or waived in
writing by the Physician Parties, all obligations of the Physician Parties under
this Master Transaction Agreement (other than their obligations under Sections
12.02 and 12.11) may be terminated by the Physician Parties.
Section 9.04 Termination Date. This Master Transaction Agreement may
be terminated by either the Raytel Parties or the Physician Parties giving
written notice to the other in the event the Closing has not occurred by August
31, 1996, unless due to the breach of this Master Transaction Agreement by any
of the parties seeking termination.
ARTICLE X.
INDEMNIFICATION
Section 10.01 Indemnification by the Physician Parties. Subject to
the limitations set forth in Section 10.06, each of the Physician Parties,
jointly and severally, hereby agrees to indemnify, defend and hold the Raytel
Parties, and their respective officers, directors, employees and shareholders
(collectively, "Raytel Indemnified Persons") harmless from and against all
demands, suits, claims, actions or causes of action, assessments, losses,
damages, liabilities, liens, settlements, penalties, and forfeitures, and
reasonable costs and expenses incident thereto (including reasonable attorneys'
fees) (collectively, the "Indemnity Losses" and individually, an "Indemnity
Loss"), asserted against or suffered or incurred, directly or indirectly, by any
of the Raytel Indemnified Persons and resulting from:
(a) any misrepresentation in or breach of the
representations or warranties of any of the Physician Parties or the
failure of any of the Physician Parties to perform any of their
respective covenants or obligations contained in this Master
Transaction Agreement, the Asset Purchase Agreement or the
Partnership Interest Purchase Agreement;
(b) except with respect to those liabilities
specifically assumed by Raytel Management pursuant to the Asset
Purchase Agreement, the operation of the Practice prior to the
Closing including, but not limited to, any and all obligations or
liabilities of any of the Physician Parties of any kind, description
or character, direct or indirect,
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absolute or contingent, known or unknown;
(c) any tax liability arising out of, or by virtue of,
or based on any Physician Party; or
(d) any Environmental Claim (as hereinafter defined)
arising out of or based upon operation of the Practice on or prior
to the Closing Date. For purposes of this Master Transaction
Agreement, the term "Environmental Claim" means any liabilities,
responsibilities, third party (including private parties,
governmental agencies and employees) actions, lawsuits, claims or
proceedings (whether they arise under common law or statute or are
recognized now or at a later time and regardless of form including
strict liability and negligence) that relate to or arise from or in
connection with any environmental law or hazardous wastes,
including, but not limited to, any liability which relates to or
arises from or in connection with any investigation, remediation, or
removal of any hazardous wastes.
Section 10.02 Indemnification by the Raytel Parties. Subject to the
limitations set forth in Section 10.06, the Raytel Parties, jointly and
severally, hereby agree to indemnify, defend and hold the Physician Parties and
their respective officers, directors, employees, partners and shareholders
(collectively "Physician Indemnified Persons") harmless from and against any
Indemnity Loss asserted against or suffered or incurred by any of Physician
Indemnified Persons and resulting from any misrepresentation in or breach of the
representations and warranties of any of the Raytel Parties or the failure of
any of the Raytel Parties to perform any of their respective covenants or
obligations contained in this Master Transaction Agreement, the Asset Purchase
Agreement, the Partnership Interest Purchase Agreement, the Management Services
Agreement of the Raytel Parties in connection with the consummation of the
transactions contemplated by the Transaction Documents.
Section 10.03 Notice. If any person or entity has reason to believe
that he, she or it has suffered or incurred (or has a reasonable belief that he
or it will suffer or incur) any Indemnity Loss subject to indemnity hereunder,
such person or entity shall so notify the indemnifying party promptly in writing
describing such loss or expense, the amount thereof, if known, and the method of
computation of such Indemnity Loss, all with reasonable particularity. If the
nature of the Indemnity Loss set forth in the notice does not involve any third
party claim, and if the indemnifying party does not respond to the indemnified
party in writing contesting the existence of amount of any Indemnity Loss within
thirty (30) days after delivery of such notice, then such indemnifying party
shall be obligated to pay, and shall pay in accordance with Section 10.05, the
amount of the Indemnity Loss set forth in such notice to the indemnified party.
If any action at law, suit in equity, administrative action or arbitration or
mediation proceeding is instituted by or against a third party with respect to
which any person intends to claim any liability or expense as an Indemnity Loss
under this Article X, such person shall promptly notify the indemnifying party
of such action. The failure to give or
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to timely give any notice required by this Section 10.03 shall not relieve the
party from whom indemnity is sought of any of its obligations under this Article
X, except to the extent that such failure results in actual prejudice to the
indemnifying party.
Section 10.04 Defense of Third Party Claims.
(a) With respect to any action at law, suit in equity,
administrative action or arbitration or mediation proceeding that is
instituted by or against a third party with respect to which any
person intends to claim any liability or expense under this Article
X, the indemnifying party shall have ten (10) business days after
receipt of the notice with respect thereto referred to in the first
sentence of Section 10.03 to notify the indemnified party that it
elects to conduct and control any action, suit or proceeding with
respect to such claim; provided, however, that no such election may
be made with respect to any action, suit or proceeding by a taxing
authority with respect to any consolidated, combined or unitary
return filed by Raytel or any of its affiliates. If the indemnifying
party does not give such notice, the indemnified person shall have
the right to defend, contest, settle or compromise such action, suit
or proceeding in the exercise of its exclusive discretion, and the
indemnifying party shall, upon request from the indemnified person,
promptly pay the indemnified person in accordance with the other
terms and conditions of this Article X the amount of any Indemnity
Loss subject to indemnity hereunder resulting from its liability to
the third party claimant. If the indemnifying party gives such
notice, it shall have the right to participate in, and, to the
extent that it shall desire, to undertake, conduct and control,
through counsel of its own choosing (which counsel shall be
satisfactory to the indemnified party in the reasonable judgment of
the indemnified party and shall not, except with the consent of the
indemnified party, be counsel to the indemnified party) and at its
sole expense, the conduct and settlement of such action, suit or
proceeding, and the indemnified person shall cooperate with the
indemnifying party in connection therewith; provided, however, that
(i) the indemnifying party shall not thereby permit to exist any
lien, encumbrance or other adverse charge securing the claims
indemnified hereunder upon any asset of the indemnified person, (ii)
the indemnifying party shall not thereby consent to the imposition
of any injunction against the indemnified person without the written
consent of the indemnified person, (iii) the indemnifying party
shall permit the indemnified person to participate in such conduct
or settlement through counsel chosen by the indemnified person, but
the fees and expenses of such counsel shall be borne by the
indemnified person except as provided below, and (iv) upon a final
determination of such action, suit or proceeding, the indemnifying
party shall promptly reimburse to the extent required under this
Article X the indemnified person for the full amount of any
Indemnity Loss resulting from such action, suit or proceeding and
all reasonable and related expenses incurred by the indemnified
person, other than fees and expenses of counsel for the indemnified
person incurred after the assumption of the conduct and control of
such action, suit or proceeding by the indemnifying party (except as
provided below); provided further, however, that such fees and
expenses of counsel for the indemnified party shall be borne by the
indemnifying party if (i) the employment of
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counsel by the indemnified party has been authorized in writing by
the indemnifying party, (ii) the indemnified party has reasonably
concluded (based on the advice of counsel) that there may be legal
defenses available to it that are different from or in addition to
those available to the indemnifying party, (iii) a conflict or
potential conflict exists (based on advice of counsel to the
indemnified party) between such party and the indemnifying party in
which case the indemnifying party will not have the right to direct
the defense of such action on behalf of the indemnified party, or
(iv) the indemnifying party has not in fact employed counsel to
assume the defense of such action within a reasonable time after
giving notice of its intent to assume such defense. So long as the
indemnifying party is contesting any such action in good faith, the
indemnified person shall not pay or settle any such action, suit or
proceeding. Notwithstanding the foregoing, the indemnified person
shall have the right to pay or settle any such action, suit or
proceeding, provided that in such event the indemnified person shall
waive any right to indemnity therefor from the indemnifying party
and no amount in respect thereof shall be claimed as an Indemnity
Loss under this Article X.
(b) If requested by the indemnifying party, the
indemnified person agrees to cooperate with the indemnifying party
and its counsel in contesting any claim which the indemnifying party
elects to contest or, if appropriate, in making any counterclaim
against the person asserting the claim, or any cross-complaint
against any person asserting the claim, or any cross-complaint
against any person and further agrees to take such other action as
reasonably may be requested by an indemnifying party to reduce or
eliminate any loss or expense for which the indemnifying party would
have responsibility, but the indemnifying party will reimburse the
indemnified person for any expenses incurred by it in so cooperating
or acting at the request of the indemnifying party.
(c) The indemnified person agrees to afford the
indemnifying party and its counsel the opportunity to be present at,
and to participate in, conferences with all persons, including
governmental authorities, asserting any claim against the
indemnified person or conferences with representatives of or counsel
for such persons.
Section 10.05 Payment of Losses. Except as specifically set forth in
any other section of this Master Transaction Agreement, the Asset Purchase
Agreement or the Partnership Interest Purchase Agreement with respect to payment
of losses, which section shall govern payment of losses with respect to matters
set forth therein, the indemnifying party shall pay to the indemnified person in
cash the amount of any Indemnity Loss to which the indemnified person may become
entitled by reason of the provisions of this Agreement, such payment to be made
within sixty (60) business days after any such amount of losses is finally
determined either pursuant to mutual agreement of the parties, pursuant to the
second sentence of Section 10.03, pursuant to the provisions of Section 10.04(a)
or pursuant to the dispute resolution provisions set forth in Article XI or
pursuant to a final, nonappealable binding judgment of a court with
jurisdiction. If any of the Physicians is the indemnifying party and fails to
make payment as contemplated by this Section 10.05, Raytel, at its election,
shall be
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entitled to (i) terminate its obligation to deliver such number of shares of
Raytel Common Stock, valued at the Market Price per share as of the date payment
was due under this Section 10.05, representing the amount equal to or less than
the amount of Indemnity Loss, or (ii) set off all or any amounts payable under
the Note held by such Physician, representing the amount equal to or less than
the amount of the Indemnity Loss, or both of the foregoing, but in no event
shall Raytel be entitled to offset amounts in excess of the Indemnity Loss
pursuant to this Section 10.05. Such indemnifying party agrees to redeliver to
Raytel any Note that, as a result of the exercise of set-off rights, is paid in
full.
Section 10.06 Limitations. Notwithstanding anything contained to the
contrary in this Master Transaction Agreement, a Party's right to recover any
amounts under the indemnification provisions of this Article X shall be limited
as provided in this Section 10.06.
(a) All representations, warranties and associated
indemnities made by the parties shall survive the Closing and shall
thereafter terminate and expire twenty-four (24) months after the
Closing Date, except that indemnities with respect to tax matters
and environmental matters, shall survive for a period equal to the
statute of limitations applicable to any claim arising from or
attributable to such matters; provided, however, that
notwithstanding the foregoing, the rights and obligations with
respect to indemnification as provided in Article X shall continue
with respect to any matter for which indemnification has been
properly sought pursuant to the terms and conditions of this Master
Transaction Agreement prior to the expiration of any such survival
period.
(b) The Physician Parties' liabilities to Raytel
Indemnified Persons pursuant to this Article X shall be limited as
follows: with respect to any claim for indemnification under Section
10.01, no Raytel Indemnified Person shall be entitled to
indemnification pursuant to Article X until the Raytel Indemnified
Parties in the aggregate have suffered or incurred Indemnity Losses
of $25,000, and each Physician Party's obligations under this
Article X shall be limited to the amount set forth opposite such
Physician Party's name on the Disclosure Schedule; provided,
however, that nothing contained in this Section 10.06(b) shall be
deemed to limit or impair an Raytel Party's right to seek injunction
or other equitable relief for a Physician's breach of any provision
set forth in the Non-Competition Covenant attached to the Asset
Purchase Agreement or in the Partnership Interest Purchase
Agreement.
(c) The Raytel Parties' liabilities to Physician
Indemnified Persons pursuant to this Article X shall be limited as
follows: with respect to any claim for indemnification under Section
10.02, no Physician Indemnified Person shall be entitled to
indemnification pursuant to Article X until the Physician
Indemnified Persons in the aggregate have suffered or incurred
Indemnity Losses of $25,000.
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ARTICLE XI.
ARBITRATION
Section 11.01 Scope. Unless otherwise specifically provided in any
other Transaction Document, the parties hereto agree that any claim,
controversy, dispute or disagreement between or among any of the parties to any
of the Transaction Documents arising out of or relating to any Transaction
Document (other than claims involving any noncompetition or confidentiality
covenant) shall be governed exclusively by the terms and provisions of this
Article XI; provided, however, that the terms and provisions of this Article XI
shall not preclude any party hereto from seeking, or a court of competent
jurisdiction from granting, a temporary restraining order, temporary injunction
or other equitable relief for any breach of (i) any noncompetition or
confidentiality covenant in any Transaction Document or (ii) any duty,
obligation, covenant, representation or warranty, the breach of which may cause
irreparable harm or damage.
Section 11.02 Arbitrators. In the event any claim or claims for an
Indemnity Loss is brought by any of the Raytel Parties or any of the Physician
Parties, or there is any other claim, controversy, dispute or disagreement among
any of the Raytel Parties or the Physician Parties arising out of or relating to
any Transaction Document, and the parties are unable to resolve such claim,
controversy, dispute or disagreement within thirty (30) days after notice is
first delivered pursuant to Section 10.03, then such Physician Parties shall
select one arbitrator, and the Raytel Parties shall select one arbitrator, and
the two arbitrators shall select a third arbitrator (the "Presiding Arbitrator")
who is experienced in the matter or action that is subject to such arbitration
and who then shall have sole and complete jurisdiction over the arbitration. If
such claim, controversy, dispute or disagreement is between any of the Physician
Parties, on the one hand, and any of the Raytel Parties, on the other hand, then
such Physician Parties shall select one arbitrator, and the Raytel Parties shall
select one arbitrator, and the two arbitrators shall select a third arbitrator
(the "Presiding Arbitrator") who is experienced in the matter or action that is
subject to such arbitration and who then shall have sole and complete
jurisdiction over the arbitration. If such claim, controversy, dispute or
disagreement is between any of the Physicians, on the one hand, and Existing PA
or New PA (as the case may be), on the other hand, then the Physician shall
select one arbitrator, and Existing PA or New PA (as the case may be) shall
select one arbitrator. The two arbitrators so chosen shall then select a third
arbitrator (the "Presiding Arbitrator") who is experienced in the matter or
action that is subject to such arbitration and who then shall have sole and
complete jurisdiction over the arbitration. If such matter or action involves
healthcare issues, then the Presiding Arbitrator shall have such qualifications
as would satisfy the requirements of the National Health Lawyers Association
Alternative Dispute Resolution Service. Each of the arbitrators chosen shall be
impartial and independent of all parties to the Transaction Documents. If either
of the parties fails to select an arbitrator within twenty days after the end of
such thirty-day period, or if the arbitrators chosen fail to select a third
arbitrator within twenty days, then any party may in writing request the judge
of the United States District Court for the Eastern District of Texas senior in
term of service to appoint the Presiding Arbitrator and, subject to this Article
XI, such Presiding Arbitrator shall hear all arbitration
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matters arising under this Article XI.
Section 11.03 Applicable Rules.
(a) Each arbitration hearing shall be held at a place in
Houston, Texas acceptable to the Presiding Arbitrator. The
arbitration shall be conducted in accordance with the Commercial
Arbitration Rules of the American Arbitration Association to the
extent such rules do not conflict with the terms hereof. The
decision of the Presiding Arbitrator shall be reduced to writing and
shall be binding on the parties. Judgment upon the award(s) rendered
by the Presiding Arbitrator may be entered and execution had in any
court of competent jurisdiction or application may be made to such
court for a judicial acceptance of the award and an order of
enforcement. The charges and expenses of the arbitrators shall be
shared equally by the parties to the hearing.
(b) The arbitration shall commence within ten (10) days
after the Presiding Arbitrator is selected in accordance with the
provisions of this Article XI. In fulfilling the duties with respect
to determining the amount of an Indemnity Loss, the Presiding
Arbitrator may consider such matters as, in the opinion of the
Presiding Arbitrator, is necessary or helpful to make a proper
valuation. The Presiding Arbitrator may consult with and engage
disinterested third parties to advise the Presiding Arbitrator. The
Presiding Arbitrator shall add an interest factor reflecting the
time value of money to the amount of any Indemnity Loss and shall
not award any punitive damages.
(c) If a Presiding Arbitrator selected hereunder should
die, resign or be unable to perform his or her duties hereunder, the
two original arbitrators selected by the parties or such senior
judge (or such judge's successor) shall select a replacement
Presiding Arbitrator. The procedure set forth in this Article XI for
selecting the Presiding Arbitrator shall be followed from time to
time as necessary.
(d) As to any determination of the amount of an
Indemnity Loss, or as to the resolution of any other claim,
controversy, dispute or disagreement, that under the terms hereof is
made subject to arbitration, no lawsuit based on such claimed
Indemnity Loss or such resolution shall be instituted by any of the
Raytel Parties or the Physician Parties, other than to compel
arbitration proceedings or enforce the award of a majority of the
arbitrators.
(e) All privileges under Texas and federal law,
including attorney-client and work-product privileges, shall be
preserved and protected to the same extent that such privileges
would be protected in a federal court proceeding applying Texas law.
The rules of evidence under the Federal Rules shall apply to the
arbitration proceedings conducted pursuant to this Article XI.
(f) The parties shall have the right to conduct and
enforce pre-hearing discovery in accordance with the then current
Federal Rules of Civil Procedure, subject
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to these limitations:
(i) Each party may serve no more than
one set of interrogatories;
(ii) Each party may depose the other
party's expert witnesses who will be called to testify
at the hearing, plus two fact witnesses without regard
to whether they will be called to testify (the Physician
Parties and the Raytel Parties will be entitled to a
total of not more than 24 hours of depositions of the
other party's witnesses); and
(iii) Document discovery and other
discovery shall be under the control of an enforceable
by the Presiding Arbitrator.
Discovery disputes shall be decided by the Presiding Arbitrator. The
Presiding Arbitrator is empowered to:
(i) issue subpoenas to compel
pre-hearing document or deposition discovery;
(ii) enforce the discovery rights and
obligations of the parties; and
(iii) otherwise to control scheduling
and conduct the proceedings.
Notwithstanding any thing to the contrary herein, the Presiding
Arbitrator shall have the power and authority to, and to the fullest
extent practicable shall abbreviate arbitration discovery in a
manner which is fair to all parties in order to expedite the
conclusion of each alternative dispute resolution proceeding.
(g) The hearing shall be conducted to preserve its
privacy and to allow reasonable procedural due process. The parties
hereto will maintain the substance of any proceedings hereunder in
confidence and the arbitrators, prior to any proceedings hereunder,
will sign an agreement whereby the arbitrators agree to keep the
substance of any proceedings hereunder in confidence.
ARTICLE XII.
MISCELLANEOUS
Section 12.01 Remedies Not Exclusive. No remedy conferred by any of
the specific provisions of this Master Transaction Agreement or any other
Transaction Document is intended to be exclusive of any other remedy, and each
and every remedy shall be cumulative and shall be in addition to every other
remedy given hereunder or now or hereafter existing at law or in equity or by
statute or otherwise. The election of any one or more remedies by any party
hereto shall not constitute a waiver of the right to pursue other available
remedies.
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Section 12.02 Expenses. Whether or not the transactions contemplated
by this Master Transaction Agreement are consummated, each of the parties hereto
shall pay the fees and expenses of its counsel, accountants and other experts
incident to the negotiation and preparation of the Transaction Documents and
consummation of the transactions contemplated thereby.
Section 12.03 Parties Bound. Except to the extent otherwise
expressly provided herein, this Master Transaction Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective heirs,
representatives, administrators, guardians, successors and assigns; and no other
person shall have any right, benefit or obligation hereunder.
Section 12.04 Notices. All notices, reports, records or other
communications that are required or permitted to be given to the parties under
this Master Transaction Agreement shall be sufficient in all respects if given
in writing and delivered in person, by telecopy, by overnight courier or by
registered or certified mail, postage prepaid, return receipt requested, to the
receiving party at the following address:
If to the Raytel Parties, addressed to:
Raytel Medical Corporation
0000 Xxxxxx Xxxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxxxxxx 00000-0000
Attn: Xxxxxxx Xxxxxx, General Counsel
Telecopy: (000) 000-0000
With copies to:
Mayor, Day, Xxxxxxxx & Xxxxxx, L.L.P.
000 Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxx
Telecopy: (000) 000-0000
If to the Physician Parties, addressed to:
Southeast Texas Cardiology Associates II, P.A.
0000 Xxxxxx Xxxxxx
Xxxxxxxx, Xxxxx 00000
Attn: Xxxxxxx Xxxxxxxxx, M.D.
Telecopy: ________________
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With copies to:
Xxxxxx, Xxxx & Xxxxxx, L.L.P.
000 Xxxxxxx Xxxxxx
Xxxxxxxx, Xxxxx 00000
Attn: Xxxx Xxxxxxxxx, Esq.
Xxxxx Xxx, Esq.
Telecopy: 409-838-6959
or to such other address as such party may have given to the other parties by
notice pursuant to this Section 12.04. Notice shall be deemed given on the date
of delivery, in the case of personal delivery or telecopy, or on the delivery or
refusal date, as specified on the return receipt, in the case of overnight
courier or registered or certified mail.
SECTION 12.05 CHOICE OF LAW. THIS MASTER TRANSACTION AGREEMENT SHALL
BE CONSTRUED, INTERPRETED, AND THE RIGHTS OF THE PARTIES DETERMINED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS EXCEPT WITH RESPECT TO MATTERS
OF LAW CONCERNING THE INTERNAL AFFAIRS OF ANY CORPORATE OR PARTNERSHIP ENTITY
WHICH IS A PARTY TO OR THE SUBJECT OF THIS MASTER TRANSACTION AGREEMENT, AND AS
TO THOSE MATTERS THE LAW OF THE STATE OF INCORPORATION OR ORGANIZATION OF THE
RESPECTIVE ENTITY SHALL GOVERN.
Section 12.06 Entire Agreement; Amendments and Waivers. This Master
Transaction Agreement, together with the other Transaction Documents and all
exhibits and schedules hereto and thereto, constitutes the entire agreement
between the parties pertaining to the subject matter hereof and supersedes all
prior and contemporaneous agreements, understandings, negotiations and
discussions, whether oral or written, of the parties, and there are no
warranties, representations or other agreements between the parties in
connection with the subject matter hereof. No supplement, modification or waiver
of this Master Transaction Agreement shall be binding unless it shall be
specifically designated to be a supplement, modification or waiver of this
Master Transaction Agreement and shall be executed in writing by the party to be
bound thereby. No waiver of any of the provisions of this Master Transaction
Agreement shall be binding unless executed in writing by the party to be bound
thereby. No waiver of any of the provisions of this Master Transaction Agreement
shall be deemed or shall constitute a waiver of any other provision hereof
(whether or not similar), nor shall such waiver constitute a continuing waiver
unless otherwise expressly provided.
Section 12.07 Reformation Clause. The parties acknowledge that
federal and state law and regulations applicable to business transactions in
which physicians and other healthcare providers own equity interests in
healthcare companies are in a state of flux, and that as such laws and
regulations, and interpretations of such laws and regulations by the courts and
regulatory authorities, evolve, the transactions contemplated by this Master
Transaction Agreement may be prohibited by, or become economically impractical
due to, such laws and regulations. If such event occurs, the parties each agree
to negotiate in good faith such changes to the structure and terms of the
transactions provided for in this Master
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Transaction Agreement as may be necessary to make these transactions, as
restructured, lawful under applicable laws and regulations, without materially
disadvantaging either party.
Section 12.08 Assignment. The Master Transaction Agreement may not
be assigned by operation of law or otherwise except that Raytel shall have the
right to assign this Master Transaction Agreement, at any time, to any direct or
indirect wholly owned subsidiary of Raytel. No such assignment shall relieve
Raytel of its obligations hereunder.
Section 12.09 Attorneys' Fees. Except as otherwise specifically
provided herein, if any action or proceeding is brought by any party with
respect to this Master Transaction Agreement or the other Transaction Documents,
or with respect to the interpretation, enforcement or breach hereof, the
prevailing party in such action shall be entitled to an award of all reasonable
costs of litigation or arbitration, including, without limitation, attorneys'
fees, to be paid by the losing party, in such amounts as may be determined by
the court having jurisdiction of such action or proceeding or by the arbitrators
deciding such action or proceeding.
Section 12.10 Further Assurances. From time to time hereafter and
without further consideration, each of the parties hereto shall execute and
deliver such additional or further instruments of conveyance, assignment and
transfer and take such actions as any of the other parties hereto may reasonably
request in order to more effectively consummate the transactions contemplated by
the Transaction Documents or as shall be reasonably necessary or appropriate in
connection with the carrying out of the parties' respective obligations
hereunder or the purposes of this Master Transaction Agreement.
Section 12.11 Announcements and Press Releases. Between the date
hereof and the Closing Date, none of the parties shall furnish any
communications to, or otherwise communicate with, the public with respect to the
transactions contemplated by this Master Transaction Agreement and the other
Transaction Documents, except to the extent necessary to obtain consents and
approvals required in order to complete the transactions. Any press releases or
any other public announcement concerning this Master Transaction Agreement or
the other Transaction Documents shall be approved by both Raytel and Existing
PA, which approval shall not be unreasonably withheld or delayed where such
communication is required by applicable law or is required as a condition of any
regulatory approval sought by a Raytel Party; provided, however, that if any
party reasonably believes that it has a legal obligation to make a press release
and the consent of the other party cannot be obtained, then the release may be
made without such approval. No such communication or public announcement shall
disclose the amount of the consideration unless, in the opinion of Raytel's
counsel, such disclosure is required by applicable law.
Section 12.12 Return of Information and Confidentiality. If for any
reason whatsoever the transactions contemplated by this Master Transaction
Agreement and the other Transaction Documents is not consummated, (i) each party
shall promptly deliver (without retaining copies thereof) to the other party, or
certify to the other party that it has destroyed,
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all documents, work papers and other material obtained by such party or on its
behalf from the other party or any of its agents, employees or representatives
as a result hereof or in connection herewith, whether so obtained before or
after the execution hereof, and (ii) each party shall cause any such
confidential information obtained from the other party pursuant to this Master
Transaction Agreement or the other Transaction Documents or otherwise to be kept
confidential and will not use, permit the use of, such confidential information
in its business or in any manner or for any other purpose.
Section 12.12 Antidilution.
(a) The existence of Raytel's obligation to issue shares
of Raytel Common Stock pursuant to Section 2.03(c) of this Master
Transaction Agreement shall not affect in any way the right or power
of Raytel or its stockholders to make or authorize any or all
adjustments, recapitalizations, reorganizations or other changes in
Raytel's capital structure or its business, or any merger or
consolidation of Raytel, or any issue of bonds, debentures,
preferred or prior preference stock ahead of, or affecting the
Raytel Common Stock, or the rights thereof, as the dissolution or
liquidation of Raytel, or any sale or transfer of all or any part of
its assets or business, or any other corporate act or proceeding,
whether of similar character or otherwise.
(b) If Raytel effects a subdivision or consolidation of
shares of Raytel Common Stock or other capital readjustment, the
payment of a stock dividend, or other increase or reduction of the
number of shares of Raytel Common Stock outstanding, without
receiving compensation therefor in money, services or property, then
the number of shares of Raytel Common Stock subject to issuance
pursuant to Section 2.03(c) of this Master Transaction Agreement
shall be appropriately adjusted in such a manner to entitle the
Physicians to receive the same total number and class of shares as
it would have received had it received shares of Raytel Common Stock
immediately prior to the event requiring the readjustment. In the
event of any capital reorganization or reclassification of the
capital stock of Raytel, any consolidation or merger of Raytel with
or into another corporation, or any sale, lease or disposition of
all or substantially all of the assets of Raytel that is effected in
such a manner that holders of shares of Raytel are entitled to
receive additional shares, other securities and/or property
(including cash) with respect to or in exchange for shares of Raytel
Common Stock, Raytel shall, as a condition precedent to such
transaction, cause effective provision to be made so that the
Physicians shall thereafter have the right to receive the kind and
amount of additional shares, other securities and/or other property
receivable upon such event as it would have received had it received
the shares of Raytel Common Stock immediately prior to the event.
Section 12.13 No Tax Representations. Each party acknowledges that
it is relying solely on its advisors to determine the tax consequences of the
transactions contemplated hereunder and that no representation or warranty has
been made by any party as to the tax consequences of such transactions.
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Section 12.14 No Rights as Stockholder. No Physician shall have any
rights as a stockholder with respect to any shares of Raytel Common Stock until
the issuance of a stock certificate for such shares. Except as otherwise
provided in Section 12.12, no adjustments shall be made for dividends or
distributions or other rights for which the record date is prior to such date
any such stock certificate is issued.
Section 12.15 Multiple Counterparts. This Master Transaction
Agreement may be executed in one or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
Section 12.16 Headings. The headings of the several Articles and
Sections herein are inserted for convenience of reference only and are not
intended to be a part of or to affect the meaning or interpretation of this
Master Transaction Agreement.
Section 12.17 Severability. Each article, section, subsection and
lesser section of this Master Transaction Agreement constitutes a separate and
distinct undertaking, covenant or provision hereof. In the event that any
provision of this Master Transaction Agreement shall finally be determined to be
unlawful, such provision shall be deemed severed from this Master Transaction
Agreement, but every other provision of this Master Transaction Agreement shall
remain in full force and effect.
IN WITNESS WHEREOF, the parties have caused this Master Transaction
Agreement to be duly executed as of August 21, 1996.
RAYTEL MEDICAL CORPORATION /s/ XXXXXXX X. XXXXXXXXX
a Delaware corporation --------------------------
XXXXXXX X. XXXXXXXXX, M.D.
By: /s/ Xxxxxxx X. Xxxxx
---------------------------------------------
Name: Xxxxxxx X. Xxxxx /s/ XXXXX X. XXXXXXXX
Title: Chairman and Chief Executive Officer --------------------------
XXXXX X. XXXXXXXX, M.D.
RAYTEL SOUTHEAST MANAGEMENT, L. P.
a Texas limited partnership
By: Raytel Texas Physician Services, Inc. /s/ XXXXXXX X. XXXXX
Its General Partner --------------------------
XXXXXXX X. XXXXX, M.D.
By: /s/ Xxxxxxx X. Xxxxx
---------------------------------------------
Name: Xxxxxxx X. Xxxxx /s/ XXXXXX XXXXXXXXXXX
Title: Chairman and Chief Executive Officer --------------------------
XXXXXX XXXXXXXXXXX, M.D.
[signatures continued on next page]
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[signatures continued from previous page]
SOUTHEAST TEXAS
CARDIOLOGY ASSOCIATES, P.A.,
a Texas professional association
By: /s/ Xxxxxxx Xxxxxxxxx
-----------------------------
Name: Xxxxxxx Xxxxxxxxx, M.D.
Title: President
SOUTHEAST TEXAS
CARDIOLOGY ASSOCIATES II, P.A.,
a Texas professional association
By: /s/ Xxxxxxx Xxxxxxxxx
-----------------------------
Name: Xxxxxxx Xxxxxxxxx, M.D.
Title: President
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