EX-2.4
6
v035232_ex2-4.htm
Exhibit
2.4
MEMBERSHIP
INTEREST PURCHASE AGREEMENT
by
and among
BASIC
CARE NETWORKS, INC.
HEALTH
PLUS MANAGEMENT SERVICES, L.L.C.,
and
XXXXXX
XXXXXXXX
Dated
November 18, 2005
MEMBERSHIP
INTEREST
PURCHASE AGREEMENT
MEMBERSHIP
INTEREST PURCHASE AGREEMENT (this “Agreement”)
dated
November 18, 2005, by and among BASIC CARE NETWORKS, INC., a Delaware
corporation (the “Purchaser”),
HEALTH PLUS MANAGEMENT SERVICES, LLC, a
New York limited liability company
(the
“Company”),
and
XXXXXX XXXXXXXX (“Xxxxxxxx”
or
the
“Principal”).
W
I T N E S S E T H :
WHEREAS,
the
Principal owns 100% of the issued and outstanding membership interests (the
“Membership
Interests”)
of
HEALTH PLUS MANAGEMENT SERVICES, LLC, a
New York limited liability
company;
WHEREAS,
the
Company acquired certain assets pursuant to an Asset Purchase Agreement dated
July 28, 2005 (“Fonar
Agreement”)
among
the Company, Health Management Corporation of America, Dynamic Health
Management, Inc., and Fonar Corporation, on July 28, 2005 (the “Acquisition
Date”).
WHEREAS,
the
Company is a party to various management agreements (the “Management
Agreements”)
with
medical clinics formed as professional corporations, including Island South
Physical Medicine & Rehabilitation, P.C. (“Long
Island Rehabilitation”),
Physical Medicine & Rehabilitation of
New York, P.C. (“
New
York Rehabilitation”),
Sports Medicine & Spine Rehabilitation, P.C. (formerly known as Central
Island Physical Medicine & Rehabilitation, P.C.) (“Sports
& Spine Rehabilitation”),
and
Perry Physical Medicine and Rehabilitation, P.C. (“Perry
Rehabilitation”)
(together, Long Island Rehabilitation,
New York Rehabilitation, Sports &
Spine Rehabilitation, and Perry Rehabilitation are hereinafter sometimes
referred to as the “P.C.s”);
WHEREAS,
pursuant to the Management Agreements, the Company provides physician practice
management services to the P.C.s (the “Business”);
WHEREAS,
the
Principal desires to sell, and the Purchaser desires to purchase, 100% of said
Membership Interests (the “Purchased
Interests”)
pursuant to the provisions of this Agreement;
WHEREAS,
simultaneously with the closing of the purchase and sale of the Purchased
Interests, the Purchaser and the Company shall execute and deliver an Amended
and Restated Operating Agreement of the Company (the “Operating
Agreement”);
NOW,
THEREFORE,
in
consideration of the mutual covenants and agreements set forth in this
Agreement, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties do hereby agree as
follows:
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ARTICLE
I
SALE
OF THE PURCHASED INTERESTS
Section
1.1 Sale
of the Purchased Interests.
Subject
to the terms and conditions of this Agreement, the Principal agrees to sell,
assign, transfer and deliver to the Purchaser on the Closing Date (as defined
in
Section 2.3), and the Purchaser agrees to purchase from the Principal on the
Closing Date, the Purchased Interests.
ARTICLE
II
PURCHASE
PRICE AND CLOSING
Section
2.1 Purchase
Price.
Subject
to the terms of this Agreement, as full consideration for the sale, assignment,
transfer and delivery of the Purchased Interests and the execution and delivery
of the agreements referenced herein, the Purchaser shall deliver to Principal
the following aggregate consideration of (the “Purchase
Price”):
(a) TWELVE
MILLION, THIRTY-TWO THOUSAND, THREE HUNDRED AND FIFTY-SIX DOLLARS ($12,032,356)
(the “Unadjusted
Closing Cash Amount”),
less
an
amount equal to the accrued employee bonus compensation payable by the Company,
in an amount to be determined by the Principal, on behalf of the Company, on
or
prior to the Closing Date (the “Employee
Bonus Amount”),
which
Employee Bonus Amount shall be an assumed liability of the Purchaser hereunder
(the Unadjusted Closing Cash Amount, less the Employee Bonus Amount, shall
be
referred to herein as the “Closing
Cash Amount”).
At
the Closing, the Principal shall inform the Purchaser of the specific amount
of
the Employee Bonus Amount, which shall be paid by the Purchaser in accordance
with instructions provided by the Principal at or prior to the
Closing.
(b) The
Closing Cash Amount shall be paid by the Purchaser at the Closing as follows:
(i) first,
to
Health Management Corporation of America (“HMCA”),
an
amount equal to all principal and accrued interest, if any, owed by the Company
under that certain promissory note, dated July 28, 2005 between the Company,
as
Maker, and HMCA, as Payee (the “HMCA
Note Amount”),
by
wire transfer of immediately available U.S. funds, to an account designated
in
writing by HCMA at or prior to the Closing; and (ii) second,
to
Principal, an amount equal to the Closing Cash Amount, less the HMCA Note
Amount, by
wire
transfer of immediately available U.S. funds,
to an
account designated in writing by Principal at or prior to the
Closing.
(c) In
addition to the foregoing, and subject to the remaining terms of this
subparagraph, a promissory note (the “Promissory
Note”)
will
be issued (if applicable) on or prior to July 31, 2006 in the form attached
as
Exhibit
I
in the
principal amount equal to: three (3) times the excess, if any, of (i) Adjusted
EBITDA for the annualized period of July 28, 2005 through June 30, 2006
(unaudited) (the “Annualized
Earn-Out Period”),
over
(ii) Two Million, Nine Hundred and Eighty-Three Thousand, Eighty-Nine Dollars
($2,983,089) (the “Base
Year Amount”);
provided,
however
that notwithstanding the foregoing, the principal amount of the Promissory
Note
to be issued hereunder shall not exceed $2,000,000; and provided,
further, that the Employee Bonus Amount shall not be considered as an expense
to
be taken into account in determining Adjusted EBITDA (and thus shall be added
back to reach Adjusted EBITDA) in all determinations of Adjusted EBITDA under
this Agreement and all other agreements entered into in connection with the
transactions contemplated hereby. For clarity, the parties acknowledge that
(i)
if Adjusted EBITDA for the Annualized Earn-Out Period does not exceed the Base
Year Amount, no Promissory Note shall be issued pursuant to this Section, and
(ii) if, for example, Adjusted EBITDA for the Annualized Earn-Out Period exceeds
the Base Year Amount by $500,000, the Promissory Note shall be issued in the
principal face amount of $1,500,000 (i.e.,
$500,000 x 3 = $1,500,000).
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(d) The
parties acknowledge and agree that, in the event the Promissory Note is issued
but not paid, or in the event the Purchaser commits a material default under
the
Promissory Note which is not cured within the applicable cure period, and in
addition to any of the remedies available to the Company and Principal,
including, without limitation, any action for breach hereunder and under the
Promissory Note, (i) the Non-Competition Agreement between Principal and the
Company shall automatically terminate and be of no further force or effect,
and
(ii) at Principal’s option, the Consulting Agreement between Principal and the
Company shall automatically terminate and be of no further force or effect,
in
which event Principal shall give the Company written notice of such
termination.
Upon
issuance of the Promissory Note, interest on unpaid principal under the
Promissory Note shall accrue at the simple rate of six percent (6%) per annum
from and after the date of issuance. Any and all accrued interest under the
Promissory Note shall be due and payable six (6) months after the date of
issuance of the Promissory Note, with the remainder of all outstanding accrued
interest and principal under the Promissory Note due and payable eleven (11)
months after the date of issuance of said Promissory Note, but no later than
June 30, 2007. For purposes of this Agreement, “Adjusted EBITDA” shall mean
earnings of the Purchaser derived from the P.C.s before taxes, interest,
depreciation and amortization, determined in accordance with GAAP on an accrual
basis by the Company’s independent auditor, adjusted as follows:
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(1)
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neither
the proceeds from nor any dividends or refunds with respect to, nor
any
increases in the cash surrender value of, any life insurance policy
under
which the Purchaser or the P.C.s, is the named beneficiary or is
otherwise
entitled to recovery, shall be included as income, and the premium
expense
related to any such life insurance policy shall not be treated as
an
expense;
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(2)
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the
Employee Bonus Amount shall not be treated as an expense, and thus
shall
be added back to reach Adjusted EBITDA;
and
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(3)
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any
extraordinary or unusual gains or losses and any gains or losses
from the
sale of any capital assets used by the Purchaser or the P.C.s or
any
subsidiary thereof in its operations during the applicable twelve-month
periods under comparison (as opposed to assets acquired in the ordinary
course of the business of the Purchaser, the P.C.s and its subsidiaries
for resale or other disposition) shall be excluded from
income.
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Section
2.2 Payment
of the Purchase Price.
Payment
of the Purchase Price shall be made by the Purchaser in cash by direct wire
transfer (in U.S. Dollars) to the account of the Principal set forth on
Schedule
2.2,
or such
other account as the Principal may direct by written notice to the Purchaser
given pursuant to this Agreement.
Section
2.3 Closing.
The
closing (“Closing”)
of
such sale and purchase shall take place at the offices of Garfunkel, Wild &
Xxxxxx, P.C. located at 000 Xxxxx Xxxx Xxxx, Xxxxx Xxxx, XX 00000, as soon
as
practicable following the closing of the firm commitment underwritten initial
public offering of the Purchaser (the “Offering Date”), or at such other time
and place as the parties may agree upon in writing (such time and date is herein
called the “Closing
Date”).
Notwithstanding the foregoing or anything to the contrary contained herein,
in
the event that (i) Principal is unable, after using its good faith best efforts
for a period of at least thirty (30) days after the Offering Date, to satisfy
any of the conditions precedent required to be satisfied by Principal before
Closing hereunder, Purchaser’s sole remedy shall be either to waive such
condition and proceed with Closing, or to terminate this Agreement without
cost
or penalty to the Principal, or (ii) Purchaser is unable, after using its good
faith best efforts for a period of at least thirty (30) days after the Offering
Date, to satisfy any of the conditions precedent required to be satisfied by
Purchaser before Closing hereunder, Principal’s sole remedy shall be either to
waive such condition and proceed with Closing, or to terminate this Agreement
without cost or penalty to the Purchaser.
Section
2.4 Closing
Deliverables.
At the
Closing:
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(a)
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Assignment
of Membership Interests.
Principal shall deliver to the Purchaser: (i) an Assignment of Membership
Interests duly executed by the Principal in the form attached as
Exhibit
A,
(ii) an officer’s certificate in the form of Exhibit
E
attaching a true and correct copy of the Company’s Operating Agreement and
Articles of Organization, and (iii) all items to be delivered pursuant
to
the closing conditions set forth in Articles V and VI
hereof.
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(b)
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Payment
of Consideration for the Purchased Interests.
Purchaser shall pay the Closing Cash Amount as provided in Section
2.1.
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(c)
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Consulting
Agreement with Entity Formed by Xxxxxx Xxxxxxxx.
Purchaser and an entity to be formed by Xxxxxx Xxxxxxxx (“Newco”)
will enter into a five (5) year consulting agreement in the form
of
Exhibit
F
hereto (the “Newco
Consulting Agreement”),
with respect to consulting services to be provided by Newco after
the
Closing.
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Section
2.5 Accounting
Procedures.
The
amount of the Promissory Note to be issued pursuant to Section 2.1(b) hereof
shall be determined in accordance with the following procedure:
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(a)
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The
Company’s independent auditors (the “Accountants”)
shall prepare in accordance with GAAP, and deliver to the Company,
a
report containing a computation of Adjusted EBITDA under Section
2.1,
within 90 days following the completion of the 2005 calendar year,
and
within 45 days after the completion of the twelve month period ending
June
30, 2006 (each, a “Report
of Accountants”).
The Company shall promptly deliver, or cause to be delivered, a copy
of
each such Report of Accountants to the
Principal.
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(b)
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Either
party shall have thirty (30) days following receipt of a Report of
Accountants to dispute any computations made therein, by delivery
of a
written notice to the other party hereto, which notice shall include
an
explanation of the basis for such dispute. If after such thirty (30)
day
period neither party receives written notice of a dispute, the Report
of
Accountants shall thereupon be deemed final and binding on the
parties.
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(c)
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If
the Company and the Principal reconcile their differences, the applicable
Adjusted EBITDA for the relevant time period shall be adjusted accordingly
and shall thereupon become binding, final and conclusive upon agreement
in
writing by the parties, and shall be enforceable in a court of law.
If the
Company and the Principal are unable to reconcile their differences
in
writing within 20 days after written notice is delivered to the other
party (the “Reconciliation
Period”),
the items in dispute shall be submitted to a mutually acceptable
accounting firm (other than the Accountants) (the “Independent
Auditors”)
for final determination, and the calculation of applicable Adjusted
EBITDA
for the relevant time period shall be deemed adjusted in accordance
with
the determination of the Independent Auditors and shall become binding,
final and conclusive upon all of the parties hereto and enforceable
in a
court of law. The Independent Auditors shall consider only the items
in
dispute and shall be instructed to act within 20 days (or such longer
period as the parties hereto may agree) to resolve all items in dispute.
In the event the parties are unable to agree on a mutually acceptable
accounting firm within thirty (30) days of the expiration of the
Reconciliation Period, the matter shall be submitted to the courts
of the
State of New York, County of Nassau, which the parties agree shall
have
the exclusive right to appoint the accounting firm on behalf of the
parties.
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(d)
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Notwithstanding
any provision in this Agreement to the contrary, nothing in this
Agreement
shall require the Company to restate its audited financial
statements.
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ARTICLE
III
REPRESENTATIONS
AND WARRANTIES OF THE PRINCIPAL
6
The
Principal represents and warrants to the Purchaser, subject to such exceptions
as are specifically disclosed in the disclosure schedule furnished in connection
with this Article III (“Disclosure
Schedule”),
as
follows:
Section
3.1 Organization
and Standing of the Company.
The
Company is a limited liability company duly formed, validly existing and in
good
standing under the law of the State of
New York, and has all requisite limited
liability company power and authority to enter into this Agreement and to carry
out the transactions contemplated hereby.
Section
3.2 Authorization.
The
execution and delivery of this Agreement and the sale and all other transactions
contemplated hereby have been duly authorized by all necessary action on the
part of the Principal and the Company. Except as set forth on Schedule
3.2,
no
consents are necessary to authorize the transactions contemplated hereby under
any contract, indenture or other agreement to which the Principal or Company
is
a party or by which they are bound.
Section
3.3 Qualification.
The
Company is not required to qualify as a foreign entity authorized to do business
in any jurisdiction in which it is not so qualified where such failure to
qualify would have a material adverse effect on the Business and assets of
the
Company.
Section
3.4 Subsidiaries.
The
Company has no subsidiaries and does not own any stock or other equity interest
in any corporation, limited liability company, partnership or other
entity.
Section
3.5 Financial
Statements.
The
Principal has or shall use its best efforts to deliver to the
Purchaser:
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(a)
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internal
management report balance sheets for the Business as at December
31, 2002,
December 31, 2003 and December 31, 2004, and an interim internal
management report balance sheet for the Business as at September
30, 2005
(the “Balance
Sheet Date”);
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(b)
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internal
management report income statements for the Business for the one-year
periods ending December 31, 2002, December 31, 2003 and December
31, 2004,
and an interim internal management report income statement for the
Business as at September 30, 2005;
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(c)
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Exhibit
B
regarding certain the Company’s accounts and notes receivable as at
September 30, 2005, and as of the Closing
Date;
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(d)
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The
Principal shall cause the Company to deliver, if and when available
not
later than March 31, 2006 (unless the Closing shall have occurred
prior to
such date), an audited balance sheet, statement of income, and cash
flows
of the Company for the year ended December 31, 2005;
and
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(e)
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Statement
of capital accounts reflecting all changes in the capital account
or
accounts of the Company from inception through (i) the date hereof,
and
(ii) the date of the Closing, attached as Exhibit
C.
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7
All
financial statements, schedules, Exhibits and items referred to above are,
or
will be when delivered, complete and correct in all material respects, prepared
in accordance with generally accepted accounting principles consistently
followed throughout the periods indicated, fairly present or will when delivered
fairly present, the financial position of as at the respective dates indicated
and the results of its operations for the periods indicated, and disclose all
liabilities required to be disclosed, contingent or otherwise, as at said dates.
No such material liabilities are past due and no penalty or interest is payable
with respect to any such liabilities. Except as set forth in such financial
statements or this Agreement, there are no other liabilities of the
Company.
Section
3.6 Absence
of Certain Changes.
Since
the Acquisition Date, there has not been:
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(a)
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any
change in the Business, condition (financial or otherwise), assets
or
liabilities of the Company, whether or not covered by insurance and
whether or not arising from transactions in the ordinary course of
business, which, individually or in the aggregate, has been materially
adverse;
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(b)
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any
damage, destruction or loss (whether or not covered by insurance)
materially and adversely affecting the Business or prospects of the
Company or any of the assets and properties of the
Company;
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(c)
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any
increase in the compensation, pensions or other benefits payable
or to
become payable by the Company to any of its employees who are or
will be
performing services at the facilities to be operated by the P.C.s
or any
bonus payment or arrangement made to or with any thereof other than
those
which are consistent with past practices and have been disclosed
in
writing to the Purchaser;
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(d)
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any
event or condition of any character materially and adversely affecting
the
Business of the Company; and
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(e)
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the
operations and Business of the Company has been conducted in all
respects
only in the ordinary course and substantially in the manner in which
they
have been conducted since Acquisition
Date.
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Section
3.7 Tax
Returns and Payments.
All tax
returns and reports of the Company required by law to be filed have been duly
filed, and all taxes, assessments, fees and other governmental charges upon
any
properties, assets, income or franchises of any such entity or for which any
such entity is otherwise liable, which are due and payable (“Tax”
or
“Taxes”)
have
been paid, other than those presently payable without penalty or interest and
which have been disclosed in writing to the Purchaser. The charges, accruals
and
reserves on the books of the Company and the entities with which they are
consolidated for Tax reporting purposes with respect to Taxes for all fiscal
periods are adequate and the Company and Principal are not aware of any actual
or proposed Tax assessment for any fiscal period or of any basis therefor other
than as so reflected on the books and records of the Company. No extension
of
time for the assessment of deficiencies in any federal or state Tax has been
requested of or granted by the Company. The Company and the Principal (as a
member) shall file or cause to be filed when due (or as may be extended) the
Federal, State and local income Tax returns for the Company and the Principal
for all periods up to the Closing Date, shall pay all Taxes, interest and
penalties as may be due for such periods and shall be entitled to any refunds
for any such periods up to the Closing Date.
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Section
3.8 Real
Property.
The
Company does not own any real property. Schedule
3.8
attached
hereto contains a summary description of all leases of any real property held
by
the Company and used by it in the conduct of the Business. The Principal and/or
the Company has delivered to the Purchaser complete and correct copies of all
currently effective leases for real property. Except as set forth on
Schedule
3.8,
all of
such leases are valid and subsisting and none of them is in default. No toxic,
medically hazardous or radioactive materials are used in or produced by any
such
operations and no such materials are disposed of or stored on any properties
leased or used in such operations other than medical waste and x-ray materials
which are produced or used in the ordinary conduct of the P.C.s’ medical
practices and which are used, stored and disposed of in accordance with
applicable laws and regulations.
Section
3.9 Personal
Property.
All
personal properties and assets used in the conduct of the Business are owned
by
the Company and are listed in Schedule
3.9(a)
hereto
(the “Assets”).
The
Company has good and marketable title to each of said items of personal property
and assets, in each case subject to no mortgage, pledge, lien, conditional
sale
agreement, encumbrance or charge, except as set forth in Schedule
3.9(b).
None of
said personal properties or assets is held by the Company as lessee under or
subject to any lease or as conditional vendee under any conditional sale or
other title retention agreement, except as set forth in Schedule
3.9(b).
All
accounts and notes receivable of the Company on the schedule of accounts and
notes receivable attached hereto as Exhibit
B
represent valid and binding obligations as of the date of signing this Agreement
and are stated and reserved against in accordance with generally accepted
accounting principles and historical experience. All inventory and supplies
are
usable on a normal basis in the existing Business. There have been no
acquisitions or dispositions of any inventory or supplies since the Acquisition
Date except in the ordinary course of business. The Assets constitute all of
the
properties and assets used by Principal in connection with the operation of
the
Business and, include all of the properties and assets necessary to operate
the
Business as it has been operated prior to the date hereof.
Section
3.10 Energy
and Materials.
The
Company has not received any notice or other communication, whether formal
or
informal, from any supplier of gas, oil or electric power or of supplies or
other materials used in its Business or operations to the effect that any such
energy source, supplies or material will become unavailable to an extent which
might impair the continued conduct of its Business or operations at the greater
of their current or historic levels.
Section
3.11 Insurance.
The
insurance policies currently maintained by or for the benefit of the Company
are
listed on Schedule
3.11
hereto,
and will be fully paid for the period up to the Closing Date.
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Section
3.12 Disclosure.
Neither
this Agreement nor any certificate, list or other instrument purporting to
disclose facts germane to the Business or the Principal delivered or to be
delivered to the Purchaser by or on behalf of the Principal pursuant hereto
or
in connection with the transactions contemplated hereby contains or will contain
any untrue statement of a material fact. To the best of the Company’s knowledge,
there is no fact directly related to the Business which materially and adversely
affects the Business, properties, operations, condition or prospects, financial
or otherwise, of such Business, which has not been set forth in this Agreement
or in the other documents, certificates and statements already furnished to
Purchaser by or on behalf of the Principal in connection with the transactions
contemplated hereby.
Section
3.13 Contracts.
With
the exception of those contracts and commitments listed or referred to in
Schedule
3.13,
the
Company is not a party to or bound by any contract or commitment, whether
written or oral relating to the Business, other than orders and commitments
for
the purchase or sale of supplies or services entered into in the ordinary course
of business not involving commitments singly or in the aggregate of more than
Five Thousand United States Dollars ($5,000) (the “Agreements”).
The
Company has delivered to the Purchaser complete and correct copies of all
Agreements. The Company has complied with all the provisions of such Agreements
and is not in default under any of the terms thereof. No amounts owing by the
Company under any of such Agreements is past due.
Section
3.14 Names,
Copyrights, Patents, Trademarks, Et Cetera.
The
names or designations, trademarks, trade names, copyrights, patents and other
statutory rights used by the Company in the Business are listed in Schedule
3.14
and are
valid and in good standing and are owned or held by the Company without any
known or suspected conflict with the rights of others. The Company has all
franchises, permits, licenses and other authority as is necessary to enable
it
to conduct its Business as it is now being conducted, and is not in default
under any of such franchises, permits, licenses or other authority. To the
best
knowledge of the Company and the Principal, the Company possesses all
trademarks, trademark rights, trade names, trade name rights, copyrights,
patents, patent rights and other statutory rights necessary for it to conduct
the Business as now being conducted, without conflict with any valid rights
of
others. The Company has not licensed any other person to use, or to have access
to for any reason, any such rights owned or possessed by the Company relating
to
the Business.
Section
3.15 Compliance
with Law and Government Regulations.
To the
best knowledge of the Company and the Principal, the Company and Principal
are
in compliance with all applicable statutes, regulations, decrees, orders,
restrictions, guidelines and standards, imposed by the United States of America,
New York State and any other state, county, municipality or agency of any
thereof, and any foreign country or government to which they or any of its
operations may be subject, in respect of the conduct of its Business as
currently and historically conducted and the ownership and operation of its
respective properties.
Section
3.16 Compensation.
Attached
hereto as Schedule
3.16
is a
true and complete list of all persons employed by the Company at the facilities
to be operated by the P.C.s, specifying the rate of compensation (including
bonuses and commissions, if any) and position held by each such
person.
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Section
3.17 Employee
Stock Ownership Plan, Pension and Profit-Sharing
Obligations.
The
Company has delivered to the Purchaser complete and correct copies or
descriptions of, and any publications relating to, employee profit-sharing,
incentive, current or future pensions, retirement pay or other obligations
for
deferred compensation applicable to persons employed by the Company at the
facilities to be used by the P.C.s, whether or not such obligations are of
a
legally binding nature or in the nature of informal understandings, including,
without limitation, any Employee Stock Ownership Plan and Trust (“ESOP”).
A
list of all such plans is attached hereto as Schedule
3.17.
None of
said plans has incurred any “accumulated funding deficiency” as such term is
defined in Section 302 of the Employee Retirement Income Security Act of 1974,
as amended (whether or not such deficiency is being waived).
Section
3.18 Employee
Benefit Plans.
The
Company has delivered to the Purchaser complete and correct descriptions of,
and
any publications of any employee benefit plans, other than those referred to
in
Section 3.17 above, applicable to persons employed by the Company at the
facilities to be used by the P.C.s including but not limited to health insurance
plans. A list of such employee benefit plans is attached hereto as Schedule
3.18.
Section
3.19 Labor
Contracts, Et Cetera.
The
Company is not a party to any collective bargaining or other labor union
contract applicable to any persons employed by the Company. The Company and
Principal do not know of any activities or proceedings of any labor union (or
representatives thereof) to organize any employees of the Company, or of any
threats of strikes or work stoppages by any employees of the
Company.
Section
3.20 Litigation.
Except
as set forth on Schedule
3.20,
there
is no litigation, arbitration, proceeding or investigation pending, or to the
Company or Principal’s knowledge, threatened, which in their reasonable opinion
might, either individually or collectively, result in any material adverse
change in the Business or condition (financial or otherwise) of the Company’s
Business or in any of its properties or assets used therein, or in any material
liability on the part of the Company in respect thereof, or in any material
change in the methods of doing Business of the Company, or which questions
the
validity of this Agreement or of any action taken or to be taken pursuant to
or
in connection with the provisions of this Agreement and, to the Company and
Principal’s knowledge, there is no basis for any such litigation, arbitration,
condemnation, proceeding or investigation.
Section
3.21 Compliance
with Other Instruments, Et Cetera.
Neither
the execution and delivery of this Agreement nor the carrying out of the
transactions contemplated hereby will result in any violation, or be in conflict
with any term, of the certificate of formation or Operating Agreement of the
Company, any member or securityholder agreement or other governing agreement
or
document applicable to the Company, or any material obligation of the Principal.
The Principal hereby warrants that the consummation of the transactions
contemplated hereby will not result in any violation, termination of, default
under, or be in conflict with any contract or other instrument to which the
Company or Principal is a party, or by which they are otherwise
bound.
Section
3.22 No
Broker.
Neither
the Principal nor the Company have employed any finder, broker, agent or other
intermediary in connection with the negotiation or consummation of this
Agreement or any of the transactions contemplated hereby. The Principal shall
indemnify the Purchaser and hold it harmless against all liabilities, expenses,
costs, losses and claims, if any, arising from the employment by, or services
rendered to, the Company (or any allegation of any such employment by, or
services rendered to, any of them) of any finder, broker, agent or other
intermediary in such connection.
11
Section
3.23 Financial
Position of Certain P.C.s.
The
Principal represents, warrants and covenants to the Purchaser that through
the
payroll payment date of February 28, 2006, each of Perry Rehabilitation, Long
Island Rehabilitation and Sports & Spine Rehabilitation shall have
sufficient funds on hand to pay its payroll in a timely manner (including for
the purpose of such calculation, collections received through February 28,
2006
and excluding other expenses outside of the ordinary course of business and
the
management fees due under the Management Agreement), and that there shall be
no
need for Purchaser to advance any funds to any such P.C. for such purpose.
In
the event that the Purchaser does have to advance such funds to any such P.C.
for such purpose, the aggregate amount of any such advances shall be repaid
by
Principal.
Section
3.24 No
Default.
The
Company and Principal have not breached any material term of, nor has any
material default occurred (or is occurring) under the Fonar Agreement and
agreements related thereto, including the Assigned Agreements under the Fonar
Agreement, the Security Agreement, and the Note (as such terms are defined
in
the Fonar Agreement).
Section
3.25 Equity
Ownership; No Options or Restrictions.
The
Principal owns of record and has valid title to 100% of the Membership Interests
of the Company. There are no outstanding subscriptions, options, warrants,
rights (including “phantom equity rights”), calls, commitments, understandings,
conversion rights, rights of exchange, plans or other agreements of any kind
providing for the purchase, issuance or sale of any equity or ownership or
proprietary interest of the Company, or which grants any Person other than
the
Principal the right to share in the earnings of the Company. The Principal
owns
of record and beneficially has valid title to the Purchased Interests, and
such
ownership is free and clear of all Liens. There are no outstanding
subscriptions, options, rights, warrants, calls, commitments or arrangements
of
any kind to acquire any of the Purchased Interests and there are no agreements
or understandings with respect to the sale or transfer of any of the Purchased
Interests. There is no suit, action, claim, or to the Company’s knowledge,
investigation or inquiry, by any Governmental or Regulatory Authority, and
no
legal, administrative or arbitration proceeding pending or, to the knowledge
of
the Principal, threatened against the Company or any of the Purchased Interests,
with respect to the execution, delivery and performance of this Agreement or
the
transactions contemplated hereby or any other agreement entered into by the
Company in connection with the transactions contemplated hereby or
thereby.
Section
3.26 No
Changes Since Balance Sheet Date.
From
the Balance Sheet Date through the date hereof, except as specifically stated
on
Schedule
3.26,
the
Company has not (i) incurred any liability or obligation of any nature (whether
accrued, absolute, contingent or otherwise), except in the ordinary course
of
business, (ii) permitted any of its assets to be subjected to any Lien,
(iii) sold, transferred or otherwise disposed of any assets except in the
ordinary course of business, (iv) made any capital expenditure or
commitment therefor which individually or in the aggregate exceeded $25,000;
(v)
redeemed, purchased or otherwise acquired any shares of its capital or
membership interests, (vi) made any bonus or profit sharing distribution,
(vii) increased or prepaid its indebtedness for borrowed money, except
current borrowings under credit lines listed on Schedule
3.26,
or made
any loan to any Person other than to any employee for normal travel and expense
advances, (viii) wrote down the value of any work-in-process, or wrote off
as
uncollectible any notes or accounts receivable, except write-downs and
write-offs in the ordinary course of business, none of which individually or
in
the aggregate, were material to the Company, (ix) granted any increase in the
rate of wages, salaries, bonuses or other remuneration of any employee who,
whether as a result of such increase or prior thereto, received aggregate
compensation from the Company at an annual rate of $50,000 or more, except
in
the ordinary course of business, (x) entered into any employment or exclusive
consulting agreement which is not cancelable by the Company without penalty
or
other financial obligation within 30 days, (xi) canceled or waived any claims
or
rights of material value, (xii) made any change in any method of accounting
procedures, (xiii) otherwise conducted the Company’s Business or entered
into any transaction, except in the usual and ordinary manner and in the
ordinary course of its business, (xiv) amended or terminated any agreement
which
is material to the Business, (xv) renewed, extended or modified any lease of
real property or any lease of personal property, except in the ordinary course
of business or as set forth on Schedule 3.26(xv) hereto, or (xvi) agreed,
whether or not in writing, to do any of the actions set forth in any of the
above clauses.
12
Section
3.27 Repayment
of Loans.
Except
as set forth on Schedule 3.27, the Company has not incurred any indebtedness
to
the Principal, and any such indebtedness shall be repaid by the Company on
or
before the time of Closing.
Section
3.28 Distributions.
In
order to bring the Principal’s capital account to zero as of the Closing Date,
the Principal shall not cause or permit the Company to sell property outside
of
the ordinary course of business, but shall only look to the Company’s available
cash. Nothing herein is intended to prohibit or otherwise restrict the Company
from conducting its business in the ordinary course.
ARTICLE
IV
REPRESENTATIONS
AND WARRANTIES OF THE PURCHASER
The
Purchaser represents and warrants to the Principal as follows:
Section
4.1 Organization
and Standing.
The
Purchaser is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Delaware and has all requisite corporate
power and authority to enter into this Agreement and to carry out the
transactions contemplated under this Agreement.
Section
4.2 Authorization,
Et Cetera.
The
execution and delivery of this Agreement and the purchase and all other
transactions contemplated hereby have been duly authorized by the necessary
parties on behalf of the Purchaser. No consent, approval, authorization or
order
of, or registration, qualification, designation, declaration or filing with,
any
governmental authority on the part of the Purchaser is required in connection
with the execution and delivery of this Agreement or the carrying out of the
transaction contemplated hereby. The Purchaser has obtained or will obtain
prior
to the Closing all consents necessary to authorize the transactions contemplated
hereby under any contract, lease, indenture or other agreement to which it
is a
party or by which it is bound. The Purchaser shall also make all necessary
governmental and non-governmental registrations, filings and notifications
required to be made by it in connection therewith.
13
Section
4.3 Litigation.
There
is no litigation, arbitration, proceeding or investigation pending or, to
Purchaser’s knowledge, threatened against the Purchaser which questions the
validity of this Agreement or of any action taken or to be taken pursuant to
or
in connection with the provisions of this Agreement, or which, in the
Purchaser’s reasonable opinion might, either individually or collectively,
result in any material adverse change in its business or condition (financial
or
otherwise) or in any of its properties or assets, or in any material liability
on its part, or in any material change in its business, and to its knowledge,
there is no basis for any such litigation, arbitration, condemnation, proceeding
or investigation.
Section
4.4 Compliance
with Law and Government Regulation.
To the
best of the Purchaser’s knowledge, the Purchaser and the Company are in
compliance in all material respects with all applicable statutes, regulations,
decrees, orders, restrictions, guidelines and standards, imposed by the United
States of America, any state, county, municipality or agency of any thereof,
and
any foreign country or government to which it or any of its respective
operations may be subject, in respect of the conduct by the Company of its
business as currently conducted and the ownership and operation of its
respective properties, where the consequences of noncompliance would have a
material adverse effect on such corporation or its business.
Section
4.5 Insurance.
The
Purchaser maintains such insurance policies or is self insured with respect
to
its assets, business and operations as it reasonably deems necessary, prudent
and cost-effective.
Section
4.6 Compliance
with Other Instruments.
Neither
the execution and delivery of this Agreement nor the carrying out of the
transactions contemplated hereby will result in any violation of or be in
conflict with any term of either the Purchaser’s formation or organizational
documents or of any contract or other instrument to which it is a party, or
of
any judgment, decree, order, statute, rule or regulation by which it is
bound.
Section
4.7 Disclosure.
Neither
this Agreement nor any certificate, list or other instrument purporting to
disclose facts germane to the Purchaser delivered or to be delivered to the
Principal by or on behalf of the Purchaser pursuant hereto or in connection
with
the transactions contemplated hereby, contains or will contain any untrue
statement of a material fact. To the best of the Purchaser’s knowledge, there is
no fact directly related to the Purchaser’s business known to the Purchaser
which materially and adversely affects the business, properties, operations,
condition or prospects, financial or otherwise, of the Purchaser which has
not
been set forth in this Agreement or in the other documents, certificates and
statements already furnished to the Company or Principal by or on behalf of
the
Purchaser in connection with the transactions contemplated hereby.
14
Section
4.8 Broker.
The
Purchaser has not employed any finder, broker, agent or other intermediary
in
connection with the negotiation or consummation of this Agreement or any of
the
transactions contemplated hereby, and it will indemnify the Company and
Principal and hold them harmless against all liabilities, expenses, costs,
losses and claims, if any, arising from the employment by, or services rendered
to it (or any allegation of any such employment by, or services rendered to
it)
of any finder, broker, agent or other intermediary in such
connection.
ARTICLE
V
ACTIONS
AT CLOSING BY THE PRINCIPAL
The
obligations of the Purchaser under this Agreement are subject to the fulfillment
to its reasonable satisfaction, prior to or at the Closing, of each of the
following conditions, unless otherwise waived by Purchaser in
writing:
Section
5.1 Representations
and Warranties True at Closing.
Each
of
the representations and warranties of Principal in this Agreement shall have
been true and correct in all material respects as of the date of this Agreement
and shall be true and correct in all material respects as of the Closing Date
as
if made on such date.
Section
5.2 Compliance
Certificate.
Principal shall have delivered to the Purchaser a certificate or certificates
dated the Closing Date, in form reasonably satisfactory to the Purchaser’s
counsel, to the fulfillment of the conditions specified in Sections 5.1, 5.8
and
5.9.
Section
5.3 No
Government Opposition.
No
governmental entity shall have made known any opposition to, or questioning
of,
the consummation of the transactions contemplated hereby.
Section
5.4 No
Private Opposition.
No
private party shall have commenced an action or filed suit against any of the
parties or their respective owners questioning in any way the validity of this
Agreement or the transactions contemplated hereby.
Section
5.5 Consents.
Principal shall have used commercially reasonable efforts to obtain all consents
and approvals required to be obtained by it hereunder to the transactions
contemplated by this Agreement.
The
parties acknowledge that any failure to obtain or receive consents or approvals
hereunder shall not be a breach of this Agreement, and that the Purchaser’s sole
remedy in the event of such failure shall be to terminate this Agreement without
cost or penalty.
Section
5.6 Condition
of Assets.
The
tangible Assets of the Company shall be in operating condition and shall have
suffered no loss or damage since the date hereof, normal wear and tear excepted,
whether by reason of causes within or without the control of the parties and
whether covered by insurance or not.
Section
5.7 Proceedings
and Documents.
All
proceedings in connection with the transactions contemplated hereby and all
documents and instruments incident to such transactions shall be reasonably
satisfactory in legal substance and form to counsel for the Purchaser, and
the
Purchaser and its counsel shall have received all such counterpart originals
or
certified or other copies of such documents as they or their counsel may
reasonably request.
15
Section
5.8 Compliance
with Covenants.
The
Principal shall have performed, complied with and fulfilled all the covenants,
agreements, obligations and conditions required by this Agreement or any
document referenced herein to be performed, complied with or fulfilled by it
prior to or at the Closing.
Section
5.9 Material
Adverse Change.
After
the date of this 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 Company.
Section
5.10 Registration
Statement Effective.
The
Registration Statement (as defined in Section 7.6, below) shall have become
effective under the Securities Act and no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been initiated or threatened by the
SEC
(as defined in Section 7.6, below); provided, however, that in the event the
Registration Statement (i) has not been filed on or before December 31, 2005,
or
(ii) has not become effective on or before April 15, 2006, the Principal shall
have the right, in its sole discretion, to terminate this Agreement without
cost
or penalty.
Section
5.11 Blue
Sky Clearance.
At or
prior to Closing, Purchaser shall have received all state securities and “Blue
Sky” permits necessary, in its sole discretion, to consummate the transactions
contemplated hereby.
Section
5.12 Opinion
of Counsel.
Principal shall have delivered to Purchaser an opinion of Principal’s counsel,
substantially in the form attached hereto as Exhibit D.
Section
5.13 Non-Competition
Agreement.
Principal shall have entered into the Non-Competition Agreement with Purchaser
in the form substantially as set forth in Exhibit
G
hereto.
Section
5.14 Bring-Down
Disclosure Schedule.
Principal shall have furnished to the Purchaser the Bring-Down Disclosure
Schedule, as provided in Section 7.6 hereof.
ARTICLE
VI
ACTIONS
AT CLOSING BY THE PURCHASER
The
obligations of Principal under this Agreement are subject to the fulfillment
to
its reasonable satisfaction, prior to or at the Closing, of each of the
following conditions, unless otherwise waived by Principal in
writing:
Section
6.1 Representations
and Warranties True at Closing. Each
of
the representations and warranties of Purchaser in this Agreement shall have
been true and correct in all material respects as of the date of this Agreement
and shall be true and correct in all material respects as of the Closing Date
as
if made on such date.
16
Section
6.2 Compliance
with Covenants.
The
Purchaser shall have performed, complied with and fulfilled all of the
covenants, agreements, obligations and conditions required by this Agreement
or
any document referenced herein to be performed, complied with or fulfilled
by it
prior to or at the Closing.
Section
6.3 Compliance
Certificate.
The
Purchaser shall have delivered to Principal a certificate or certificates of
appropriate executive officers dated the Closing Date, certifying in form
reasonably satisfactory to Principal’s counsel, as to the fulfillment of the
conditions specified in Section 6.1 and 6.2.
Section
6.4 No
Government Opposition.
No
governmental entity shall have made known any opposition to, or questioning
of,
the consummation of the transactions contemplated hereby.
Section
6.5 No
Private Opposition.
No
private party shall have commenced an action or filed suit against any of the
parties or their respective owners questioning in any way the validity of this
Agreement or the transactions contemplated hereby.
Section
6.6 Consents.
Purchaser shall have used commercially reasonable efforts to obtain all consents
and approvals required to be obtained by it hereunder to the transactions
contemplated by this Agreement. The parties acknowledge that any failure to
obtain or receive consents or approvals hereunder shall not be a breach of
this
Agreement, and that the Principal’s sole remedy in the event of such failure
shall be to terminate this Agreement without cost or penalty.
Section
6.7 Proceedings
and Documents.
All
proceedings in connection with the transactions contemplated hereby and all
documents and instruments incident to such transactions shall be reasonably
satisfactory in legal substance and form to counsel for the Principal, and
the
Principal and its counsel shall have received all such counterpart originals
or
certified or other copies of such documents as they or their counsel may
reasonably request.
Section
6.8 Related
Transactions.
The
closing of the transactions under the Asset Purchase Agreements between the
Purchaser and each of United Health Care Management Services, LLC, Park Slope
Management Associates, LLC and Grand Central Management Services, LLC,
respectively, shall all occur simultaneously with the closing of the
transactions contemplated by this Agreement.
Section
6.9 Registration
Statement Effective.
The
Registration Statement shall have become effective under the Securities Act
and
no stop order suspending the effectiveness of the Registration Statement shall
have been issued and no proceedings for that purpose shall have been initiated
or threatened by the SEC; provided, however, that in the event the Registration
Statement (i) has not been filed on or before December 31, 2005, or (ii) has
not
become effective on or before April 15, 2006, the Principal shall have the
right, in its sole discretion, to terminate this Agreement without cost or
penalty.
17
Section
6.10 Blue
Sky Clearance.
At or
prior to Closing, Principal shall have received all state securities and “Blue
Sky” permits necessary, in its sole discretion, to consummate the transactions
contemplated hereby.
Section
6.11 Opinion
of Counsel.
Purchaser shall have delivered to Principal an opinion of Purchaser’s counsel,
substantially in the form attached hereto as Exhibit H.
Section
6.12 Related
Transactions.
The
closing of the transactions under the Asset Purchase Agreements between the
Purchaser and each of United Health Care Management Services, LLC, Park Slope
Management Associates, LLC and Grand Central Management Services, LLC,
respectively, shall all occur simultaneously with the closing of the
transactions contemplated by this Agreement.
ARTICLE
VII
OTHER
AGREEMENTS
Principal
covenants and agrees with the Purchaser as follows (and as specifically noted
herein, Purchaser covenants and agrees with the Principal as
follows):
Section
7.1 Conduct
of Principal’s Business.
From
the date hereof to the Closing Date, except as otherwise consented to by
Purchaser in writing, Principal and/or Company (as applicable)
shall:
|
(a)
|
continue
to operate the Business as presently conducted and in the ordinary
course
of business consistent with past
practice;
|
|
(b)
|
use
its commercially reasonable efforts to maintain the goodwill of all
employees of the Company and all other persons or firms with whom
it has
dealings;
|
|
(c)
|
use
commercially reasonable efforts to keep the assets of the Company
intact
(provided, however, that
the foregoing shall in no event be deemed to require Principal to
make any
material expenditure or to incur any material cost not consistent
with
Principal’s past practice);
|
|
(d)
|
keep
in full force and effect insurance comparable in amount and scope
of
coverage to insurance now carried by the
Company;
|
|
(e)
|
perform
or cause to be performed, all of the Company’s material obligations under
agreements, contracts and instruments relating to or affecting its
properties, assets and Business being sold
hereunder;
|
|
(f)
|
maintain
the books of account and records of the Company in the usual, regular
and
ordinary manner;
|
|
(g)
|
comply
with all material statutes, laws, ordinances, rules and regulations
applicable to the Principal and the Company in connection with the
conduct
of the Business;
|
18
|
(h)
|
pay
all account payables and collect all account receivables of the Company
only in the ordinary course of business consistent with past practice,
not
accelerate collection of accounts receivable or defer payment of
accounts
payable in anticipation of the Closing and not purchase drugs or
supplies
on terms and conditions not in the ordinary course, consistent with
past
practice;
|
|
(i)
|
promptly
advise the Purchaser in writing of any change in the Business of
the
Company that would likely be regarded as having a material adverse
effect
on the Purchaser;
|
|
(j)
|
not
cause the Company to enter into, assume or amend in any material
respect,
any agreement, contract or commitment of the character referred to
in
Section 3.13, other than in the ordinary course of
business;
|
|
(k)
|
not
cause the Company to merge or consolidate with or purchase substantially
all of the assets of, or otherwise acquire, any corporation, partnership,
association or other business;
|
|
(l)
|
not
increase or decrease, or cause the Company to increase or decrease,
salaries or other compensation of employees of the Principal other
than in
the ordinary course of business consistent with past
practice;
|
|
(m)
|
not
issue or cause the Company to issue any equity interests (or any
rights to
acquire the same), derivative securities, or effect any securities
split
or other reclassification;
|
|
(n)
|
not
cause the Company to create, incur, assume, guarantee or otherwise
become
directly or indirectly liable with respect to any indebtedness for
borrowed money other than in the ordinary course of business;
and
|
|
(o)
|
not
enter into, or cause the Company to enter into, any agreement or
understanding to that would interfere or conflict with the Company’s
obligations set forth in subsections (a) though (i) above, or engage
in or
cause the Company engage in any of the actions described in subsections
(j) through (n).
|
Section
7.2 Consents.
Principal shall use its commercially reasonable efforts to obtain all consents
required to be obtained by it to consummate the transactions contemplated by
this Agreement.
The
parties acknowledge that any failure to obtain or receive consents hereunder
shall not be a breach of this Agreement, and that the Purchaser’s sole remedy in
the event of such failure shall be to terminate this Agreement without cost
or
penalty.
19
Section
7.3 Access
to Information and Records Before Closing.
The
Purchaser may, at its sole cost and expense, prior to the Closing date and
solely to the extent necessary to (i) respond to any request for information
by
the SEC, or (ii) otherwise gather information materially necessary to the
Closing of the transactions contemplated hereby which could not be obtained
in
any other way, make, or cause to be made, such reasonable investigation of
the
Business, and of the assets, liabilities, operations and properties of the
Company and of its financial and legal condition as the Purchaser deems
reasonably necessary or advisable to familiarize itself with such matters.
The
Principal shall permit the Purchaser and its representatives (including legal
counsel and independent accountants) upon reasonable notice to Principal to
have
reasonable access to the properties and relevant books and records of the
Company and of the Business at reasonable business hours, and will use
reasonable efforts cause its employees to furnish the Purchaser with such
financial and operating data and other information and copies of documents
with
respect to the services, operations and properties of the Company and the
Business as the Purchaser may from time to time request; provided,
however, that Purchaser’s sole remedy for Principal’s or Company’s failure to
provide such information under this Section 7.3 shall be to terminate the
transactions contemplated under this Agreement. Nothing contained herein shall
require Principal or the Company to provide such information in the event it
has
used reasonable efforts to do so.
Section
7.4 No
Solicitation.
Until
the earlier of (i) the Closing, or (ii) the termination of this
Agreement pursuant to its terms, Principal shall not, and Principal shall cause
its representatives not to, directly or indirectly, (A) initiate, solicit
or encourage (including by way of furnishing information regarding the Business)
any inquiries, or make any statements to third parties which may reasonably
be
expected to lead to any proposal concerning the sale of the Business or any
portion thereof (whether by way of merger, purchase of equity interests,
purchase of assets or otherwise) (a “Competing
Transaction”);
or
(B) enter into any agreements with, or provide any information to, any
third party concerning a proposed Competing Transaction or cooperate in any
way
with, agree to, assist or participate in, solicit, consider, entertain,
facilitate or encourage any effort or attempt by any third party to do or seek
any of the foregoing.
Section
7.5 Certain
Notifications.
From
the date of this Agreement until the Closing, the Principal shall promptly
notify the Purchaser in writing regarding any:
|
(a)
|
Action
taken by the Principal or to the Principal’s knowledge, the P.C.s, not in
the ordinary course of business and any circumstance or event that
could
reasonably be expected to have a material adverse effect on the
Business;
|
|
(b)
|
Fact,
circumstance, event, or action by the Principal or to the Principal’s
knowledge, the P.C.s (i) which, if known on the date of this
Agreement, would have been required to be disclosed in or pursuant
to this
Agreement; or (ii) the existence, occurrence, or taking of which
would result in any of the representations and warranties of the
Principal
contained in this Agreement or in any agreement referenced herein
not
being true and correct when made or at
Closing;
|
|
(c)
|
Breach
of any covenant or obligation of the Principal;
and
|
20
|
(d)
|
Circumstance
or event which will result in, or could reasonably be expected to
result
in, the failure of the Principal to timely satisfy any of the closing
conditions specified in Article
V
of
this Agreement.
|
Section
7.6 Bring-Down
Disclosure Schedule.
At the
time of Closing, the Principal shall furnish Purchaser with a bring-down
disclosure schedule in conjunction the Principal’s representations and
warranties in Section 3 that shall be true and correct as of the Closing Date
(the “Bring-Down
Disclosure Schedule”).
Except in the case of demonstrated fraud or intentional misrepresentation,
such
Bring-Down Disclosure Schedule shall be deemed to supplement and amend the
disclosure schedule delivered upon the signing of this Agreement; provided,
however, it shall not be used for the purposes of determining whether any of
the
conditions set forth in Article
V
have
been satisfied. Accordingly, in the event that the transactions contemplated
hereby do not close for any reason, except in the case of demonstrated fraud
or
intentional misrepresentation on the part of the Principal or the Company to
which this provision shall not apply: (x) Purchaser’s sole remedy with regard to
any issue arising out of or related to any update to the representations and
warranties (whether for new events or updating existing schedules with regard
to
prior events) shall be to terminate this Agreement and the transactions
contemplated hereby, and (y) without limiting the foregoing or any other
provision contained herein, the parties expressly agree and acknowledge that
no
disclosure made by the Principal or the Company in the Bring-Down Disclosure
Schedule shall entitle the Purchaser to assert any breach of, or any default
under, this Agreement by the Principal or the Company, or to assert any claim
for indemnification and/or damages.
Section
7.7 Filing
of Registration Statement; Other Action.
|
(a)
|
The
Company shall use reasonable efforts to cooperate with Purchaser
in the
Purchaser’s preparation of its registration statement on Form S-1 (or
other appropriate Form) to be filed by the Purchaser with the SEC
under
the Securities Act in connection with the initial public offering
of
Purchaser’s securities (including the prospectus constituting a part
thereof, the “Registration
Statement”).
The date on which the SEC declares the Registration Statement effective,
and each date on which an amendment or supplement thereto is declared
effective, is referred to as an “Effective
Date.”
|
|
(b)
|
The
Company agrees to use reasonable efforts to promptly furnish, upon
request
of the Purchaser, factual information specifically regarding the
Company
and the Business that may be required by the United States Securities
and
Exchange Commission (the “SEC”),
and such other matters as may be reasonably requested by the Purchaser
in
response to any request by the SEC, in connection with the preparation
of
the Registration Statement and each amendment or supplement thereto,
or
any other statement, filing, notice or application made by or on
behalf of
each such party to the SEC, which may include Company’s material
agreements, corporate documents, schedules and exhibits (the “Principal
Information”).
|
21
|
(c)
|
The
Company represents and warrants that to the Company’s best knowledge,
without independent investigation thereof, the Company Information,
when
furnished by the Company, shall be true and correct in all material
respects; provided however, that the foregoing representation and
warranty
shall be strictly limited to the Company Information (and not facts
regarding the Purchaser, the Affiliates of the Purchaser, the Registration
Statement as a whole or any part thereof), and shall be limited to
the
extent that the furnished Principal Information relates to facts
concerning the Company and the Business. In addition, the parties
hereto
acknowledge and agree that Company shall not be liable or responsible
for
any failure to provide, or delay in providing, Company Information
so long
as Company uses good faith reasonable efforts to respond to any proper
request made hereunder.
|
Section
7.8 Compliance
with Conditions Precedent; Further Assurances. Subject
to the express limitations set forth herein, each party agrees (a) to
furnish upon request to each other party such further information, (b) to
execute and deliver to each other party such other documents, and (c) to do
such other acts and things, all as another party may reasonably request for
the
purpose of carrying out the intent of this Agreement and the transactions
contemplated hereunder. The parties agree that neither party will, in an attempt
to void or nullify this Agreement or any document referenced herein or any
relationship involving the Purchaser or Principal, xxx, claim, aver, allege
or
assert that this Agreement or related document or any such relationship violates
any law, rule or regulation relating to the corporate practice of medicine.
Notwithstanding the foregoing, nothing in this Section 7.8 shall be construed
to
require the Principal or the Company to take any action or provide any
information, whether to Purchaser or any third party, in connection with the
Purchaser’s Registration Statement, except to the extent expressly required by
this Agreement.
Section
7.9 Additional
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 is likely
to
result in the failure to satisfy any of the conditions specified in Articles
V
or VI.
Section
7.10 Principal
to Obtain Own Tax Advice.
The
Principal represents and warrants that it has relied, and covenants and agrees
that in connection with the transactions contemplated by this Agreement, it
will
rely, solely on its own 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.
Section
7.11 Corporate
Existence.
During
the term of the Consulting Agreement, the Principal shall use Principal’s best
efforts to cause the Consultant to maintain and preserve in full force and
effect its legal existence.
Section
7.12 Capital
Accounts; Distributions.
On or
prior to the Closing, Principal may cause the Company to distribute an amount
in
cash to the Principal, as sole member, as may be necessary to bring the
Principal’s capital account balance to zero as of the Closing Date;
provided,
however, that the Principal shall not cause or permit the Company to sell
property outside the ordinary course of business in order to bring his capital
account to zero as of the Closing Date, but shall only look to the Company’s
available cash. Nothing herein is intended to prohibit or otherwise restrict
the
Company from conducting its business in the ordinary course.
22
ARTICLE
VIII
SURVIVAL;
INDEMNITY
Section
8.1 Survival.
The
representations and warranties of the parties under this Agreement shall survive
the Closing for a period of two (2) years.
Section
8.2 Indemnification
by Principal.
Subject
to the limitations contained herein, the Principal shall indemnify and hold
harmless the Purchaser from all losses, liabilities, obligations, claims,
lawsuits, judgments, costs and expenses (including reasonable attorneys’ fees)
arising from: (a) any material misrepresentation or breach of warranty under
this Agreement, (b) any breach of covenant by Principal under this Agreement
or
the failure of the Company or Principal to perform any material obligation
required to be performed by such parties hereunder; and (c) events occurring,
conditions existing, or activities of Principal (provided that same are outside
the scope of the Consulting Agreement) following the Closing. Notwithstanding
anything herein to the contrary, Principal shall not be obligated to indemnify
Purchaser under this Section
8.2:
(i) unless the aggregate of all Losses exceed Ten Thousand Dollars
($10,000) (the “Seller’s
Basket”),
in
which case the Purchaser shall be entitled to recover all Losses up to the
Seller’s Indemnification Cap (defined below), including the amount equal to the
Seller’s Basket, or (ii) for aggregate Losses in excess of Five Million Dollars
($5,000,000) (the “Seller’s
Indemnification Cap”);
provided,
however, that to the extent the Principal has any indemnification obligations
hereunder (A) directly resulting from the demonstrated fraud or intentional
misrepresentation of the Principal, or (B) directly resulting from Principal’s
material breach of Section 2.4(a)(i) or (ii) of this Agreement (but not
2.4(a)(iii)), the Seller’s Indemnification Cap shall be increased to the
Purchase Price. Under no circumstances shall Principal’s aggregate liability
under this Agreement exceed the Seller’s Indemnification Cap.
Section
8.3 Indemnification
by the Purchaser.
The
Purchaser shall indemnify and hold harmless the Principal from all losses,
liabilities, obligations, claims, lawsuits, judgments, costs and expenses
(including reasonable attorneys’ fees) arising from: (a) any material
misrepresentations, breach of warranty or breach of covenant by it under this
Agreement or its failure to perform any obligation required to be performed
by
it hereunder; (b) any operations of Purchaser before and, with respect to both
the Purchaser and the Company, after the Closing.
Section
8.4 Indemnification
Procedures.
In the
event that any claim is made with respect to which a party hereto (an
“Indemnified
Party”)
intends to seek indemnification hereunder, the Indemnified Party shall give
the
party from which it intends to seek indemnification hereunder (“Indemnifying
Party”)
prompt
written notice of such claim and the Indemnifying Party shall have the right
to
assume the defense of the claim with counsel of its own choosing reasonably
acceptable to the Indemnified Party, provided that such defense is conducted
with diligence and continuity and provided further that the Indemnified Party
shall have the right to participate in the defense of such claim with counsel
of
its choosing at its expense. The parties shall cooperate in the defense of
any
such claim and neither the Indemnifying Party nor the Indemnified Party shall
have the right to settle or pay any such claim without the consent of the other,
which consent shall not be unreasonably withheld.
23
Section
8.5 Limitations
On and Other Matters Regarding Indemnification.
Section
8.5.1. Termination
of Indemnification Obligations of the Principal and the
Purchaser.
The
obligations of the Principal and Purchaser, respectively, to indemnify one
another under Section 8.2 and Section 8.3 hereof shall terminate on the second
(2nd)
anniversary following the Closing Date, except as to matters as to which either
the Purchaser Indemnified Party or Principal Indemnified Party, as applicable,
has made a written claim for indemnification, which claim is made in good faith
and described in reasonable detail, and which has been received by the
applicable Indemnified Party on or prior to such date, in which case the right
to indemnification with respect thereto shall survive the expiration of such
period until such claim for indemnification is finally resolved and any
obligations with respect thereto are fully satisfied.
Section
8.5.2. Treatment.
Any
indemnity payments by an Indemnifying Party to an Indemnified Party under this
Article VIII shall be treated by the parties as an adjustment to the Purchase
Price.
Section
8.6 Certain
Definitions.
For
purposes of this Agreement, the following terms shall have the following
respective meanings:
|
(a)
|
An
“affiliate”
of any Person, shall mean any Person that directly, or indirectly
through
one or more intermediaries, controls, or is controlled by, or is
under
common control with such Person
|
|
(b)
|
“Business
Day”
shall mean any day on which commercial banks are not authorized or
required to close in New York City.
|
|
(c)
|
“Code”
shall mean the Internal Revenue Code of 1986, as
amended.
|
|
(d)
|
“Lien”
shall mean (a) any mortgage, deed of trust, lien, pledge, hypothecation,
encumbrance, charge or security interest in, on or of such asset,
(b) the
interest of a vendor or a lessor under any conditional sale agreement,
capital lease or title retention agreement (other than an operating
lease)
(or any financial lease having substantially the same economic effect
as
any of the foregoing) relating to such asset and (c) in the case
of
securities, any purchase option, call or similar right of a third
party
with respect to such securities.
|
|
(e)
|
“Loss”
or “Losses”
as used in this Agreement shall mean any and all loss or losses,
damages,
injury, liabilities, obligations, claims, lawsuits, judgments, awards,
settlements, fines, penalties, Taxes, fees, charges, costs and expenses
(including reasonable attorneys’ fees), and is not limited to matters
asserted by third parties against an Indemnified Party, but includes
Losses incurred or sustained by an Indemnified Party in the absence
of
third party claims. Notwithstanding the foregoing or anything to
the
contrary contained herein, the parties acknowledge and agree that
the term
“Loss” or “Losses” shall not include special, consequential or incidental
damages (e.g., lost opportunity, decline in value,
etc.).
|
24
|
(f)
|
“Person”
shall mean and include an individual, a company, a joint venture,
a
corporation (including any non-profit corporation), an estate, an
association, a trust, a general or limited partnership, a limited
liability company, a limited liability partnership, an unincorporated
organization and a government or other department or agency
thereof.
|
ARTICLE
IX
MISCELLANEOUS
Section
9.1 Expenses.
|
(a)
|
Except
as otherwise provided herein, Principal will pay all costs and expenses
attributable to the performance of and compliance with all agreements
and
conditions contained in this Agreement to be performed or complied
with by
it (including, without limitation, all fees and expenses of their
counsel), and the Purchaser will pay all costs and expenses attributable
to the performance of and compliance with all agreements and conditions
contained in this Agreement to be performed or complied with by it
(including, without limitation, all fees and expenses of their
counsel).
|
|
(b)
|
Principal
shall be responsible for and shall pay any Taxes arising or resulting
from
or in connection with the conduct of the Business, sale of his Membership
Interests, or the ownership of the Membership Interests in the period
prior to Closing. Purchaser shall be responsible for and shall pay
any
Taxes arising or resulting from or in connection with the conduct
of the
Business or the ownership of the Company in the period after the
Closing.
|
|
(c)
|
All
real property, personal property, ad valorem or other similar Taxes
(not
including income Taxes) levied with respect to the Business for a
taxable
period which includes (but does not end on) the Closing Date shall
be
apportioned between Purchaser and Principal based on the number of
days
included in such period through and including the Closing Date and
the
number of days included in such period after the Closing
Date.
|
Section
9.2 Governing
Law.
The
interpretation and construction of this Agreement, and all matters relating
hereto (including, without limitation, the validity or enforcement of this
Agreement), shall be governed by the laws of the State of
New York without
regard to any conflicts or choice of laws provisions of the State of New York
that would result in the application of the law of any other
jurisdiction.
25
Section
9.3 “Knowledge”
Defined.
Where
any
representation and warranty contained in this Agreement is expressly qualified
by reference to the knowledge of the Principal, such term shall be limited
to
the actual knowledge of the Principal without independent investigation. Where
any representation and warranty contained in this Agreement is expressly
specified by reference to the knowledge of the Company, such term shall be
limited to the actual knowledge of the executive officers of the Company or
Principal without independent investigation. Where any representation and
warranty in this Agreement is expressly specified by reference to the knowledge
of Purchaser, such term shall be limited to the actual knowledge of the
executive officers of the Purchaser.
Section
9.4 Captions.
The
Article and Section captions used herein are for reference purposes only, and
shall not in any way affect the meaning or interpretation of this
Agreement.
Section
9.5 Publicity;
Confidentiality.
No party
to this Agreement shall directly or indirectly make or cause to be made any
public announcements or issue any notices in any form (other than as may be
required by law, in which case copies will be provided to the other party at
least three (3) Business Days prior to such announcement) with respect to the
terms and conditions of this Agreement without the consent in writing of the
other parties.
Section
9.6 Notices.
All
notices, consents and other communications hereunder shall be in writing and
shall be deemed to have been given when delivered personally, on the next
Business Day when sent overnight by Federal Express or other nationally
recognized overnight courier service, or five (5) days after being mailed if
mailed by first-class, registered or certified mail, postage prepaid, addressed
(a) if to Principal at 000 Xxxxxxx Xx., Xxxxx 000, Xxxxxx Xxxx, Xxx Xxxx 00000,
Attention: Xxxxxx Xxxxxxxx, President; or at such other address or addresses
as
Principal shall have furnished to the Purchaser in writing, or (b) if to the
Purchaser, at 0000 Xxxxxxxxx Xxx, Xxxxxx Xxx Xxx, Xxxxxxxxxx 00000, or at such
other address as the Purchaser shall have furnished to Principal in writing.
A
copy of all notices sent to Purchaser shall also be sent to Attn: Xxxxx Xxxxx,
Xxxxxxxxxx & Xxxxx LLP, 00000 Xxxxxxxx Xxxxxxxxx, Xxxxx 000, Xxx Xxxxxxx,
Xxxxxxxxxx 00000, Facsimile (000) 000-0000. A copy of all notices sent to
Principal shall also be sent to Garfunkel Wild & Xxxxxx P.C., 000 Xxxxx Xxxx
Xxxx, Xxxxx 000, Xxxxx Xxxx, Xxx Xxxx 00000, Attention: Xxxx Xxxxx,
Esq.
Section
9.7 Parties
in Interest.
This
Agreement may not be transferred, assigned, pledged or hypothecated by any
party
hereto, other than by operation of law. Any purported such transfer, assignment,
pledge, or hypothecation (other than by operation of law) shall be void and
ineffective. This Agreement shall be binding upon and shall inure to the benefit
of the parties hereto and their respective heirs, executors, administrators,
successors and permitted assigns.
Section
9.8 Severability.
In the
event any provision of this Agreement is found to be void and unenforceable
by a
court of competent jurisdiction, the remaining provisions of this Agreement
shall nevertheless be binding upon the parties with the same effect as though
the void or unenforceable part had been severed and deleted.
26
Section
9.9 Counterparts.
This
Agreement may be executed in two or more counterparts or by facsimile
transmission, all of which taken together shall constitute one
instrument.
Section
9.10 Entire
Agreement.
This
Agreement, including the other documents referred to herein and the Exhibits
and
Schedules hereto that form a part hereof, contains the entire understanding
of
the parties hereto with respect to the subject matter contained herein and
therein. This Agreement supersedes all prior agreements and understandings
between the parties with respect to such subject matter.
Section
9.11 Amendments.
This
Agreement may not be amended, supplemented or modified orally, but only by
an
agreement in writing signed by each of the parties hereto.
Section
9.12 Jurisdiction.
Any
judicial proceeding brought against any of the parties to this Agreement on
any
dispute arising out of this Agreement or any matter related hereto shall be
brought in the courts of the State of New York, County of Nassau, and, by
execution and delivery of this Agreement, each of the parties to this Agreement
accepts for itself or himself the process in any action or proceeding by the
mailing of copies of such process to such party at its address as set forth
in
Section 9.6, and irrevocably agrees to be bound by any judgment rendered thereby
in connection with this Agreement. Each party hereto irrevocably waives to
the
fullest extent permitted by law any objection that it or he may now or hereafter
have to the laying of the venue of any judicial proceeding brought in such
courts and any claim that any such judicial proceeding has been brought in
an
inconvenient forum. The foregoing consent to jurisdiction shall not constitute
general consent to service of process in the State of New York for any purpose
except as provided above and shall not be deemed to confer rights on any Person
other than the respective parties to this Agreement. EACH PARTY HERETO WAIVES
TRIAL BY JURY IN ANY JUDICIAL PROCEEDING UNDER THIS AGREEMENT.
Section
9.13 Use
of Terms.
Whenever the context so requires or permits, all references to the masculine
herein shall include the feminine and neuter, all references to the neuter
herein shall include the masculine and feminine, all references to the plural
shall include the singular and all references to the singular shall include
the
plural.
Section
9.14 No
Strict Construction.
The
language used in this Agreement will be deemed to be the language chosen by
the
parties hereto to express their mutual intent, and no rule of law or contract
interpretation that provides that in the case of ambiguity or uncertainty a
provision should be construed against the draftsman will be applied against
any
party hereto.
Section
9.15 Assignment.
This
Agreement may not be assigned by any of the parties without the express written
consent of the other parties hereto. Notwithstanding the foregoing, any
agreement or instrument delivered pursuant to this Agreement may be assignable
to the extent expressly provided therein.
[Remainder
of Page Left Blank Intentionally]
27
IN
WITNESS WHEREOF, the parties hereto have executed this Membership Interest
Purchase Agreement, on the day and year first above written.
PURCHASER:
|
BASIC
CARE NETWORKS, INC.
|
| |
|
By:/s/
Xxxxxx Xxxxxxxx
Name:
Xxxxxx Xxxxxxxx
Title:
Chief Executive Officer
|
| |
| |
PRINCIPAL:
| |
|
By:
/s/
Xxxxxx Xxxxxxxx
Xxxxxx
Xxxxxxxx
|
| |
| |
COMPANY:
|
HEALTH
PLUS MANAGEMENT SERVICES, L.L.C.
|
| |
|
By:
/s/
Xxxxxx Xxxxxxxx
Name:
Xxxxxx Xxxxxxxx
Title:
|
28
INDEX
OF EXHIBITS
EXHIBIT
A
|
ASSIGNMENT
OF MEMBERSHIP INTERESTS
|
EXHIBIT
B
|
ACCOUNTS
RECEIVABLE
|
EXHIBIT
C
|
STATEMENT
OF CAPITAL ACCOUNTS
|
EXHIBIT
D
|
OPINION
OF COUNSEL TO COMPANY AND PRINCIPAL
|
EXHIBIT
E
|
OFFICER’S
CERTIFICATE
|
EXHIBIT
F
|
CONSULTING
AGREEMENT
|
EXHIBIT
G
|
NON-COMPETITION
AGREEMENT
|
EXHIBIT
H
|
OPINION
OF COUNSEL TO PURCHASER
|
EXHIBIT
I
|
PROMISSORY
NOTE
|
29
DISCLOSURE
SCHEDULE
30
Schedule
3.9(a)-1
Schedule
of Assets
I. The
assets of the Company include the following Management Agreements and related
Promissory Notes, Limited Guarantees, Covenants and HIPAA Business Associate
Addenda (collectively, the “Management Agreements”):
1. Turnkey
License and Management Agreement, dated April 21, 2005, between HMCA and New
York Rehabilitation.
2. Promissory
Note, dated June 9, 2005, of New York Rehabilitation in favor of HMCA in the
principal amount of $52,500.
3. Promissory
Note, dated June 13, 2005, of New York Rehabilitation in favor of HMCA in the
principal amount of $3,000.
4. Promissory
Note, dated June 23, 2005, of New York Rehabilitation in favor of HMCA in the
principal amount of $62,000.
5. Promissory
Note, dated July 7, 2005, of New York Rehabilitation in favor of HMCA in the
principal amount of $45,000.
6. Promissory
Note, dated July 21, 2005, of New York Rehabilitation in favor of HMCA in the
principal amount of $18,000.
7. Limited
Guarantee, dated March 2005 of Xxxxxx Xxxxxxx in favor of HMCA.
8.
Covenant
of New York Rehabilitation and Xxxxxx Xxxxxxx.
9. HIPAA
Business Associate Addendum, dated March, 2005, between New York Rehabilitation
and HMCA.
10. Turnkey
License and Management Agreement, dated March 30, 2005, between HMCA and Perry
Rehabilitation.
11. Promissory
Note, dated June 16, 2005, of Perry Rehabilitation in favor of HMCA in the
principal amount of $30,000.
l2. Promissory
Note, dated
June 30, 2005, of Perry Rehabilitation in favor of HMCA in the principal amount
of $44,000.
13. Limited
Guarantee, dated March 30, 2005, of Xxxxxxx Xxxxx in favor of HMCA.
Restrictive
Covenant of Perry Rehabilitation and Xxxxxxx Xxxxx.
14. HIPAA
Business Associate Addendum, dated March 30, 2005, between Perry Rehabilitation
and HMCA.
15. Turnkey
License and Management Agreement, dated April 4, 2005, between HMCA and Long
Island Rehabilitation.
16. Promissory
Note, dated June 3, 2005, of Long Island Rehabilitation in favor of HMCA in
the
principal amount of $12,500.
17. Promissory
Note, dated June 16, 2005, of Long Island Rehabilitation in favor of HMCA in
the
principal amount of $28,000.
18. Promissory
Note, dated June 30, 2005, of Long Island Rehabilitation in favor of HMCA in
the
principal amount of $15,000.
19. Limited
Guarantee, dated April 4, 2005, of Xxxxxx Gregorace in favor of
HMCA.
20. Restrictive
Covenant of Long Island Rehabilitation and Xxxxxx Gregorace.
21. HIPAA
Business Associate Addendum, dated April, 2005, between Long Island
Rehabilitation and HMCA.
22. Turnkey
License and Management Agreement, dated April 4, 2005, between HMCA and Sports
& Spine Rehabilitation.
23. Promissory
Note, dated June 3, 2005, of Sports & Spine Rehabilitation in favor of HMCA
in the principal amount of $31,500.
24. Promissory
Note, dated June 16, 2005, of Sports & Spine Rehabilitation in favor of HMCA
in the principal amount of $51,500.
25. Promissory
Note, dated June 30, 2005, of Sports & Spine Rehabilitation in favor of HMCA
in the principal amount of $38,000.
26. Limited
Guarantee, dated April 4, 2005, of Xxxxxx Gregorace in favor of
HMCA
27. Restrictive
Covenant of Sports & Spine Rehabilitation and Xxxxxx Gregorace.
28. HIPAA
Business Associate Addendum, dated April, 2005, between Sports & Spine
Rehabilitation and HMCA.
II. The
assets of the Company also include the real estate leases set forth on Schedule
3.8, subject to the qualifications set forth therein.
III. The
assets of the Company also include:
1. Office
furnishings owned by the Company and owned equipment located at the locations
listed on Exhibits A and B to each of the Management Agreements and those office
furnishings owned by the Company and owned equipment listed on Schedule 3.9(a)-2
hereto.
2
2. Inventory
and supplies owned by the Company relevant to the Physical Therapy Management
Business and located at the locations listed on Exhibit A to each of the
Management Agreements.
3. Books
and
records of the Company relevant to the Physical Therapy Management
Business.
4. Goodwill
associated with Physical Therapy Management Business.
3
EXHIBIT
A
Assignment
of Membership Interests
EXHIBIT
A
ASSIGNMENT
OF MEMBERSHIP INTEREST
Reference
is made to that certain Membership Interest Purchase Agreement (“Agreement”)
dated
November 18, 2005 by and between BASIC CARE NETWORKS, INC., a Delaware
corporation (“Purchaser”)
and
HEALTH PLUS MANAGEMENT SERVICES, LLC, a New York limited liability company
(the
“Company”),
and
Xxxxxx Xxxxxxxx (“Xxxxxxxx”
or
the
“Principal”).
For
good and valuable consideration the receipt of which is hereby acknowledged,
pursuant to the Agreement, the undersigned Principal hereby assigns all right,
title and interest in the membership interests held by Principal of HEALTH
PLUS
MANAGEMENT SERVICES, LLC, a New York limited liability company, to the
Purchaser, effective on the Closing Date (as defined in the
Agreement).
| | |
| PRINCIPAL:
|
|
|
|
| By: | |
|
Xxxxxx
Xxxxxxxx |
| Title |
EXHIBIT
B
Schedule
of Accounts and Notes Receivable
See
Schedule 3.9(a)-1 for a list of notes receivable.
See
attachment for a list of management fee accounts receivable as of November
10,
2005
EXHIBIT
F
Consulting
Agreement
CONSULTING
AGREEMENT
This
Consulting Agreement (“Agreement”)
is
made as of the ___ day of ___________ 2005 by and between [Newco], LLC, a New
York limited liability company having its principal place of business at 000
Xxxxxxx Xx., Xxxxx 000, Xxxxxx Xxxx, Xxx Xxxx 00000 (the “Consultant”),
and
Basic Care Networks, Inc., a Delaware corporation (the “Company”),
in
reference to the following:
RECITALS
A. The
Consultant was formed for the purpose of providing physician practice management
and administrative services to professional entities which conduct physical
therapy, rehabilitation services in the State of New York. Xxxxxx Xxxxxxxx
(“Xxxxxxxx”)
is a
beneficial owner of the Consultant.
B. This
Consulting Agreement is being entered into between the Company and Consultant
as
a condition of closing pursuant to the Asset Purchase Agreement dated an even
date herewith (“Asset
Purchase Agreement”),
by
and between the Company and United Health Care Management, LLC, Grand Central
Management Services, LLC and Park Slope Management Associates, LLC, respectively
(“Sellers”),
pursuant to which the Company shall acquire substantially all of the assets
(“Acquired
Assets”)
of the
Sellers (the “Acquisition”).
The
Asset Purchase Agreement, together with each of the schedules and exhibits
attached thereto and this Agreement, are hereinafter collectively referred
to as
the “Transaction
Documents.”
C. The
Company and Xxxxxxxx (in addition to Health Plus Management Services, LLC)
are
also a party to a Membership Interest Purchase Agreement dated an event date
herewith (the “Membership
Purchase Agreement”),
pursuant to which the Company will acquire from Xxxxxxxx 100% of the membership
interests of Health Plus Management Services, LLC (“HPMS”),
a
health care management company with various management agreements (the
“Management
Agreements”)
with
medical clinics formed as professional corporations, including Island South
Physical Medicine & Rehabilitation, P.C. (“Long
Island Rehabilitation”),
Physical Medicine & Rehabilitation of New York, P.C. (“New
York Rehabilitation”),
Sports Medicine & Spine Rehabilitation, P.C. (formerly known as Central
Island Physical Medicine & Rehabilitation, P.C.) (“Sports
& Spine Rehabilitation”),
and
Perry Physical Medicine and Rehabilitation, P.C. (“Perry
Rehabilitation”)
(together, Long Island Rehabilitation, New York Rehabilitation, Sports &
Spine Rehabilitation, and Perry Rehabilitation are hereinafter sometimes
referred to as the “P.C.s”).
D. The
Consultant has valuable knowledge, relationships, experience and expertise
in
the management and administration of clinics such as the P.C.s (which provide
physical therapy and rehabilitation services) in addition to expertise relating
to the development and operation of health care management companies such as
HPMS.
E. The
Company desires to engage Consultant, and Consultant desires to enter into
this
Agreement with the Company, to provide consulting services and assistance to
the
Company in order for the Company to (i) develop, build, operate and manage
additional clinics in the New York metropolitan area, and (ii) operate and
manage HPMS.
F. This
Agreement is entered into by the parties hereto as a condition of Closing under
the Asset Purchase Agreement. All capitalized terms used herein and not defined
shall have the same respective meanings assigned to such terms in the Asset
Purchase Agreements.
NOW,
THEREFORE,
the
Company and the Consultant agree as follows:
AGREEMENT
1. Term.
The term
of this Agreement shall commence on the date of Closing and shall continue
until
December 31, 2010, or until this Agreement is earlier terminated pursuant to
Section 5 below.
2. Duties
of Consultant.
2.1. Consultant
shall, to the best of its ability, render the services set forth in Section
2.2
below (the “Services”),
in a
timely and professional manner in accordance with this Agreement. Subject to
the
foregoing, the manner and means by which Consultant chooses to complete the
Services are in Consultant’s sole discretion and control. If, in the sole and
reasonable discretion of the Consultant, any services, functions or
responsibilities not specifically described in this Agreement are required
for
the proper performance and provision of the Services, they shall be deemed
to be
included within the scope of Services to the same extent as if specifically
described in this Agreement. Further, the parties shall cooperate in good faith
to agree upon and implement such further services and agreements as may be
requested by Company relating to the Services. In performing the Services,
Consultant agrees to provide its own personnel, equipment, tools and other
materials at its own expense. Company shall make its facilities and equipment
available to Consultant as reasonably necessary in connection with the Services.
Consultant may not subcontract or otherwise delegate its obligations under
this
Agreement without Company’s prior written consent. For any work performed on
Company’s premises, Consultant shall comply with all security, confidentiality,
safety and health policies of Company.
2.2 The
Services under this Agreement shall include:
(a) Development
of New Clinics.
The
Company shall prepare a written development plan for one or more new clinics,
which shall include a commitment to provide up to $300,000 of initial capital
for the development of each new clinic (each, a “New Clinic”
and
collectively, the “New
Clinics”).
The
Consultant shall advise the Company with respect to the development plan,
including revisions thereto, and generally assist the Company in the
development, establishment and promotion of each New Clinic.
(b) Ongoing
Consultation Relating to New Clinics.
During
the term of this Agreement, the Consultant shall advise the Company regarding
all aspects of the operation and management of each New Clinic by the Company
in
its capacity as an exclusive management company for such New
Clinics.
(c) Management
of Back Office Functions.
Consultant shall advise the Company regarding, and manage, the employees and/or
consultants who handle payroll, benefits, accounting and collections for each
New Clinic and the P.C.s.
2
(d) Ongoing
Consultation relating to HPMS.
During
the term of this Agreement, Consultant shall advise the Company regarding all
aspects of the operation and management of HPMS, which shall include management
of the existing P.C.s pursuant to the Management Agreements.
2.3 Duties
of Xxxxxxxx.
Xxxxxxxx agrees to take primary responsibility for the Consultant’s rendering of
Services under this Agreement, and to devote sufficient personal time and effort
as may be necessary to discharge Consultant’s obligations under this Agreement;
provided,
however, that the Company acknowledges and agrees that, in addition to the
Services being provided under this Agreement, Xxxxxxxx is also responsible
for
providing similar services on behalf of certain other consulting entities under
three (3) additional consulting agreements to which the Company is a party.
Accordingly, Xxxxxxxx shall allocate his time in such a manner as he may deem
reasonably necessary in order to fulfill his duties under all such consulting
agreements.
3. Compensation.
3.1 Fixed
Compensation. The Company shall pay to the Consultant, as fixed base
compensation (“Base Compensation”) for the Services under Section 2.2(b), (c)
and (d), Two Hundred Seventy-Five Thousand Dollars ($275,000) per annum during
the term of this Agreement, payable in twelve (12) equal consecutive monthly
installments and pro rated daily for any partial period of service.
3.2 Profit-Based
Compensation for New Clinics.
The
Company shall pay to the Consultant, as compensation for the Services involving
the development of new clinics set forth in Section 2.2(a), thirty percent
(30%)
of New Clinic Profits calculated on an annual basis, beginning with the twelve
month period ending December 31, 2006. For purposes of this Agreement, “New
Clinic Profits” shall mean a positive dollar amount equal to the annual Adjusted
EBITDA of the Company derived from the New Clinics, in the aggregate. “Adjusted
EBITDA” for purposes of this Section 3.2 shall mean earnings before interest,
taxes, depreciation and amortization, determined in accordance with GAAP on
an
accrual basis by the same independent accountants mutually acceptable to the
Company and Consultant, adjusted as follows:
(a) neither
the proceeds from nor any dividends or refunds with respect to, nor any
increases in the cash surrender value of, any life insurance policy under which
the Company or any of the New Clinics is the named beneficiary or is otherwise
entitled to recovery, shall be included as income, and the premium expense
related to any such life insurance policy shall not be treated as an
expense;
(b) the
Employee Bonus Amount (as such term is defined in the Membership Purchase
Agreement) shall not be treated as an expense and thus shall be added back
to
Adjusted EBITDA;
(c) any
extraordinary or unusual gains or losses and any gains or losses from the sale
of any capital assets used by the Company or the New Clinics in their operations
during the applicable year (as opposed to assets acquired in the ordinary course
of the business of the New Clinics for resale or other disposition) shall be
excluded from income; and
3
(d) an
amount
equal to five percent (5%) of the gross revenue of the Company received from
the
New Clinics during each applicable year shall be considered as corporate
overhead expense, and shall be treated as an expense.
3.3 Incentive
Compensation for Management of the P.C.s.
The
Company shall pay to the Consultant, as additional incentive compensation for
the Services involving management of the existing P.C.s as set forth in Section
2.2(d), twenty percent (20%) of Annual Incremental Profits derived under the
Company’s Management Agreements with the P.C.s, calculated on an annual basis.
For purposes of this Agreement, “Annual
Incremental Profits”
with
respect to a period shall mean the aggregate excess Adjusted EBITDA of the
Company derived under the Management Agreements (if any), for the six (6) month
period ending December 31, 2006, and for each of the calendar years ending
December 31, 2007, 2008, 2009 and 2010, respectively (each, a “Measuring
Period”),
over
Adjusted EBITDA of the Company derived under the Management Agreements for
the
calendar year ending December 31, 2006 (except that the six month period ending
December 31, 2006 shall be compared against the same six month period ending
December 31, 2005). “Adjusted
EBITDA”
for
purposes of this Section 3.3 shall mean earnings before interest, taxes,
depreciation and amortization, determined on an accrual basis by the same
independent accountants mutually acceptable to the Company and Consultant,
adjusted as follows:
(a) neither
the proceeds from nor any dividends or refunds with respect to, nor any
increases in the cash surrender value of, any life insurance policy under which
the Company or the P.C.s is the named beneficiary or is otherwise entitled
to
recovery, shall be included as income, and the premium expense related to any
such life insurance policy shall not be treated as an expense;
(b) the
Employee Bonus Amount (as such term is defined in the Membership Purchase
Agreement) shall not be treated as an expense and thus shall be added back
to
Adjusted EBITDA; and
(c) any
extraordinary or unusual gains or losses and any gains or losses from the sale
of any capital assets used by the Company or the P.C.s or any subsidiary thereof
in its operations during the applicable Measuring Period (as opposed to assets
acquired in the ordinary course of the business of the P.C.s and their
subsidiaries for resale or other disposition) shall be excluded from
income.
3.4 Payment
Terms.
The
Company shall pay Consultant the amounts set forth in Sections 3.2 and 3.3
as
follows:
(a) The
Company shall pay the amounts due under Section 3.2 and 3.3 hereof based upon
the Company’s confidential good faith estimate of New Clinic Profits and Annual
Incremental Profits, within thirty (30) days after end of each calendar year
beginning with the year ended December 31, 2006.
4
(b) Within
10
days after the release of the Report of Accountants with respect to each
calendar year, the Company shall pay to the Consultant any deficiency, or the
Consultant shall pay to the Company any excess (as the case may be), in the
amount paid to Consultant pursuant to Section 3.4(a) based upon a reconciliation
of the Company’s estimated New Clinic Profits and Annual Incremental Profits on
the one hand, and New Clinic Profits and Annual Incremental Profits as
determined by the Accountants (defined below) on the other hand. The Company
may
at its sole discretion, with respect to any excess or deficiency in Consultant’s
compensation resulting from a reconciliation pursuant to this Section 3.4(b),
credit the Consultant for any such deficiency or offset any of Consultant’s
compensation hereunder for any such excess, and apply such credit or offset
(as
applicable) in the following calendar year.
(c) The
payment terms in this Section 3 shall survive the termination of this Agreement
until all payments due to Consultant under this Section 3 are calculated and
paid; provided,
however, that Consultant’s compensation hereunder shall be pro rated for any
partial calendar year of service.
(d) The
Consultant hereby agrees that any good faith estimate determined by the Company
pursuant to this Section shall constitute Confidential Information (as defined
below), and shall not be released to any party without the prior consent of
the
Company.
3.5 Accounting
Procedures.
The
compensation to be paid pursuant to Sections 3.2 and 3.3 hereof shall be
determined in accordance with the following procedure:
(e) The
Company’s independent auditors (the “Accountants”)
shall
prepare in accordance with GAAP, and deliver to the Company, a report containing
a computation of Adjusted EBITDA under Sections 3.2 and 3.3, respectively,
within 90 days following the completion of each calendar year (“Report
of Accountants”).
The
Company shall promptly deliver, or cause to be delivered, a copy of each such
computation of each applicable Adjusted EBITDA to the Consultant or its
representatives.
(f) Either
party shall have thirty (30) days following receipt of the Report of Accountants
to dispute any computations made therein, by delivery of a written notice to
the
other party hereto, which notice shall include an explanation of the basis
for
such dispute. If after such thirty day period neither party receives written
notice of a dispute, the Report of Accountants shall thereupon be deemed final
and binding on the parties.
(g) If
the
Company and the Consultant reconcile their differences, the applicable Adjusted
EBITDA for the relevant time period shall be adjusted accordingly and shall
thereupon become binding, final and conclusive upon agreement in writing by
the
parties, and shall be enforceable in a court of law. If the Company and the
Consultant are unable to reconcile their differences in writing within 20 days
after written notice is delivered to the other party (the “Reconciliation
Period”),
the
items in dispute shall be submitted to a mutually acceptable accounting firm
(other than the Accountants) (the “Independent
Auditors”)
for
final determination, and the calculation of applicable Adjusted EBITDA for
the
relevant time period shall be deemed adjusted in accordance with the
determination of the Independent Auditors and shall become binding, final and
conclusive upon all of the parties hereto and enforceable in a court of law.
The
Independent Auditors shall consider only the items in dispute and shall be
instructed to act within 20 days (or such longer period as the parties hereto
may agree) to resolve all items in dispute. In the event the parties are unable
to agree on a mutually acceptable accounting firm within thirty (30) days of
the
expiration of the Reconciliation Period, the matter shall be submitted to the
courts of the State of New York, County of Nassau, which the parties agree
shall
have the exclusive right to appoint the accounting firm on behalf of the
parties.
5
(h) Notwithstanding
any provision in this Agreement to the contrary, nothing in this Agreement
shall
require the Company to restate its audited financial statements. The Company
may
at its sole discretion, with respect to any excess or deficiency in Consultant’s
compensation resulting from a dispute resolved pursuant to this Section 3.5,
credit the Consultant for any such deficiency or offset any of Consultant’s
compensation hereunder for any such excess, and apply such credit or offset
(as
applicable) in the following calendar year, provided however that any credit
shall be paid to Consultant within 30 days of final determination under this
Section that such credit is owed.
4. Nondisclosure
and Noninterference.
4.1 Access
to Confidential Information.
The
Consultant and Xxxxxxxx agree that during the term of the business relationship
between the Consultant and the Company, the Consultant and Xxxxxxxx will have
access to and become acquainted with confidential proprietary information
(“Confidential Information”) which is owned by the Company and is regularly used
in the operation of the Company’s business. The Consultant and Xxxxxxxx agree
that the term “Confidential Information” as used in this Agreement is to be
broadly interpreted and includes (i) information that has, or could have,
commercial value for the business in which the Company is engaged, or in which
the Company may engage at a later time, and (ii) information that, if disclosed
without authorization, could be detrimental to the economic interests of the
Company. The Consultant and Xxxxxxxx agree that the term “Confidential
Information” includes, without limitation, any proprietary or otherwise
undisclosed information about present and future patents, patent applications,
copyrights, trademarks, trade names, service marks, service names, “know-how,”
negative “know-how,” trade secrets, customer and supplier identities,
characteristics and terms of agreement, details of customer or consultant
contracts, pricing policies, operational methods, marketing plans or strategies,
product development techniques or plans, business acquisitions plans, science
or
technical information, ideas, discoveries, designs, computer programs (including
source codes), financial forecasts, unpublished financial information, budgets,
processes, procedures, formulae, improvements or other proprietary or
intellectual property of the Company, whether or not in written or tangible
form, and whether or not registered, and including all memoranda, notes,
summaries, plans, reports, records, documents and other evidence thereof. The
Consultant and Xxxxxxxx acknowledge that all Confidential Information, whether
prepared by the Consultant or otherwise acquired by the Consultant and Xxxxxxxx
in any other way, shall, as between the Company and the Consultant and/or
Xxxxxxxx (as applicable), remain the exclusive property of the
Company.
6
4.2 No
Disclosure by Consultant.
The
Consultant and Xxxxxxxx promise and agree that the Consultant (which shall
include the Consultant’s employees and contractors) shall not misuse,
misappropriate, or disclose in any way to any person or entity any of the
Company’s Confidential Information, either directly or indirectly, nor will the
Consultant or Xxxxxxxx use the Confidential Information in any way or at any
time except as required in the course of the Consultant’s or Xxxxxxxx’x business
relationship with the Company. Consultant and Xxxxxxxx agree that, during the
term of this Agreement and thereafter, they shall (a) hold Confidential
Information in trust and confidence; (b) use Confidential Information only
for the benefit of Company (and not for the benefit of Consultant or Xxxxxxxx
or
any third party), (c) not use Confidential Information in any manner or for
any purpose not expressly set forth in this Agreement; (d) reproduce such
Confidential Information only to the extent reasonably required to fulfill
Consultant’s or Xxxxxxxx’x obligations hereunder; and (e) not disclose,
deliver, provide, disseminate or otherwise make available to any third party,
directly or indirectly, any Confidential Information without first obtaining
the
Company’s express written consent on a case-by-case basis. Consultant or
Xxxxxxxx may disclose Confidential Information only to Consultant’s employees
and agents who have a need to know such Confidential Information. Consultant
and
Xxxxxxxx shall take at least the same degree of care that they use to protect
their own confidential and proprietary information of similar nature and
importance (but in no event less than reasonable care) to protect the
confidentiality and avoid the unauthorized use, disclosure, publication or
dissemination of Confidential Information.
4.3 Termination
of Confidentiality Obligation.
Confidential Information ceases to be confidential and subject to the terms
of
this Agreement if (a) such information becomes generally known to the public
through no fault of the Consultant or Xxxxxxxx; (b) the Company conveys such
information to a third party without designating it as confidential; and/or
(c)
the Consultant or Xxxxxxxx learn of such information from a third party who
did
not breach any obligation of confidentiality. Additionally, the Consultant
and
Xxxxxxxx shall have the right to disclose Confidential Information if required
to do so by court order, provided that prior to so disclosing, the Consultant
and/or Xxxxxxxx (as applicable) shall inform the Company of the court order
and
give the Company an opportunity to seek a protective order respecting such
Confidential Information.
4.4 Noninterference.
Consultant and Xxxxxxxx acknowledge that Company’s relationships with its
employees, agents, suppliers, customers and vendors are valuable business
assets. Accordingly, Consultant and Xxxxxxxx agree that, during the period
of
this Agreement Consultant and Xxxxxxxx shall not (for itself or for any third
party) divert or attempt to divert from Company any business, employee, agent,
supplier, client, customer or vendor, through solicitation or
otherwise.
4.5 Obligations
Survive Agreement.
The
obligations of Consultant and Xxxxxxxx under this section 4 shall survive the
expiration or termination of this Agreement.
5. Termination.
5.1 Termination
on Default.
Should
either party default in the performance of this Agreement or materially breach
any of its provisions, which default or breach is not cured within thirty (30)
days after delivery of written notice specifying the nature of such default
or
breach (as applicable) by the non-breaching party to the breaching party, the
non-breaching party may terminate this Agreement immediately upon expiration
of
such thirty (30) day period. Termination shall be effective upon two days notice
(which notice shall be given in accordance with Section 8 below). For purposes
of this section, material breaches of this Agreement shall include, but not
be
limited to any of the following:
7
(a) the
failure by the Company to pay the compensation set forth in section 3 above
when
due, or the Company’s default under the Promissory Note between the Company, as
Maker, and Xxxxxx Xxxxxxxx, as Payee;
(b) either
party’s material breach or refusal to perform any of such party’s material
obligations under this Agreement;
(c) the
material failure, on more than one occasion, to perform material duties which
are required to be performed under the terms of this Agreement on the part
of
the Consultant;
(d) the
commission of an act of fraud or misrepresentation by the Consultant or
Xxxxxxxx;
(e) the
material failure by the Consultant to conform to all material laws and
regulations governing the Consultant’s duties under this Agreement;
(f) the
commission by the Consultant of any act that has a direct material adverse
effect on the reputation of the Company;
(g) the
disassociation, departure, separation or termination of Xxxxxxxx by or from
the
Company, except due to death or Disability;
(h) the
repeated failure of Xxxxxxxx to be reasonably available during normal business
hours for consultation as required by this Agreement, except in the case of
his
death or Disability (hereinafter defined);
(i) the
cessation of Continuous Service (hereinafter defined) under this Agreement
by
Xxxxxxxx, except in the case of death or Disability; “Continuous Service” means
that the provision of Services to the Company under this Agreement (as a member
of the Consultant) is not materially interrupted or terminated; provided that
Continuous Service shall not be considered materially interrupted in the case
of
a leave of absence of up to one month during any twelve month period, unless
approved by the Company;
(j) the
breach by Consultant or the Company of any material term of the Transaction
Documents to which they are a party;
(k) the
Company shall (A) apply for or consent to the appointment of a receiver,
trustee, liquidator, administrator, manager or custodian of the Company or
of
all or a substantial part of its property, (B) be unable, or admit in writing
its inability to pay its debts as they mature, (C) make a general
assignment for the benefit of its creditors, (D) become insolvent (as such
term
may be defined or interpreted under any applicable statute), (E) commence a
voluntary case or other proceeding seeking liquidation, reorganization,
administration or other relief with respect to its debts under any bankruptcy,
insolvency or other similar law now or hereafter in effect or consent to any
such relief or to the appointment of or taking possession of the Company’s
property in an involuntary case or other proceeding commenced against the
Company, or (F) take any action for the purpose of effectuating any of the
forgoing.
8
For
purposes of this Agreement, “Disability” means inability to engage in any
substantial gainful activity by reason of any medically determinable physical
or
mental impairment which can be expected to result in death or which has lasted
or can be expected to last for a continuous period of not less than twelve
(12)
months.
5.2 Automatic
Termination.
This
Agreement will terminate without any further action on the part of either party
upon the occurrence of any of the following events: (a) a mutual agreement
by
the parties to terminate, as contemplated by section 1 above, or (b) the
voluntary or involuntary dissolution or winding up of the
Consultant.
5.3 Return
of Company Property.
Upon the
termination or expiration of this Agreement, the Consultant shall immediately
transfer to the Company all files (including, but not limited to, electronic
files), records, documents, drawings, specifications, equipment and similar
items in its possession relating to the business of the Company or its
Confidential Information (including the work product of the Consultant created
pursuant to this Agreement) and the Company shall immediately transfer to the
Consultant all files (including, but not limited to, electronic files) records,
documents, drawings, specifications, equipment and similar items in its
possession belonging to the Consultant, so long as such property does not
include or encompass Confidential Information belonging to the Company. If
property otherwise belonging to the Consultant includes or encompasses
Confidential Information belonging to the Company, then such Confidential
Information shall be removed from the property, if possible, but if it is not
possible to remove the Confidential Information then the Company and the
Consultant will negotiate in good faith to find a mutual solution to the
disposition of the property.
5.4 Remedies
for Breach.
Consultant recognizes that the covenants contained in Section 4 hereof are
reasonable and necessary to protect the legitimate interests of Company, that
Company would not have entered into this Agreement in the absence of such
covenants, and that Consultant’s breach or threatened breach of such covenants
shall cause Company irreparable harm and significant injury, the amount of
which
shall be extremely difficult to estimate and ascertain, thus, making any remedy
at law or in damages inadequate. Therefore, Consultant agrees that Company
shall
be entitled, without the necessity of posting of any bond or security, to the
issuance of injunctive relief by any court of competent jurisdiction enjoining
any breach or threatened breach of such covenants and for any other relief
such
court deems appropriate. This right shall be in addition to any other remedy
available to Company at law or in equity.
6. Status
of Consultant.
The
Consultant understands and agrees that the employees of the Consultant are
not
employees of the Company and that neither the Consultant nor its employees
will
be entitled to receive employee benefits from the Company, including, but not
limited to, sick leave, vacation, retirement or death benefits. The Consultant
shall be responsible for providing, at the Consultant’s expense and in the
Consultant’s name, disability, worker’s
compensation, E&O insurance, or other insurance as well as licenses and
permits usual or necessary for conducting the Services hereunder. Furthermore,
the Consultant shall pay, when and as due, any and all taxes incurred as a
result of the Consultant’s compensation hereunder, including estimated taxes,
and shall provide the Company with proof of said payments, upon
demand.
7. Representations
and Warranties.
9
7.1 Representations
and Warranties of Consultant.
(a) The
Consultant represents that the Consultant has the qualifications and ability
to
perform the Services in a professional manner, without the advice, control,
or
supervision of the Company.
(b) Consultant
represents and warrants that, to the best of its knowledge, there is no other
existing agreement or duty on Consultant’s part that is inconsistent with this
Agreement.
(c) The
Consultant has the full power and authority to enter into this Agreement and
to
perform its obligations hereunder.
(d) The
execution and delivery of this Agreement by the Consultant and the consummation
by it of the transactions contemplated hereby have been duly authorized by
all
required company action on behalf of the Consultant.
(e) This
Agreement has been duly and validly executed and delivered by the Consultant
and, assuming due authorization, execution and delivery by the Company,
constitutes a legal, valid and binding obligation of the Consultant, enforceable
against it in accordance with its terms subject to applicable bankruptcy,
insolvency, fraudulent conveyance, moratorium, liquidation, reorganization
or
other similar laws affecting the enforcement of creditor’s rights in
general.
(f) The
Consultant has no knowledge that Xxxxxxxx or any officer, director or employee
of Consultant (collectively, the “Contractors”)
intends to terminate his or her employment or other engagement with Consultant,
nor does Consultant have a present intention to terminate the employment or
engagement of any Contractor.
(g) The
execution, delivery and performance by Consultant and Xxxxxxxx of their
obligations under this Agreement and the consummation of the transactions
contemplated hereby and thereby, will not violate, conflict with or result
in
the breach Articles of Organization, Operating Agreement (or other comparable
documents), or any other agreement of the Consultant.
7.2 Representations
and Warranties of the Company.
(a) The
Company has the full power and authority to enter into this Agreement and to
perform its obligations hereunder.
(b) The
execution and delivery of this Agreement by the Company and the consummation
by
it of the transactions contemplated hereby have been duly authorized by all
required company action on behalf of the Company.
(c) This
Agreement has been duly and validly executed and delivered by the Company and,
assuming due authorization, execution and delivery by the Company, constitutes
a
legal, valid and binding obligation of the Company, enforceable against it
in
accordance with its terms subject to applicable bankruptcy, insolvency,
fraudulent conveyance, moratorium, liquidation, reorganization or other similar
laws affecting the enforcement of creditors’ rights in general.
10
(d) The
execution, delivery and performance by the Company of its obligations under
this
Agreement and the consummation of the transactions contemplated hereby and
thereby, will not violate, conflict with or result in the breach Articles of
Organization, Operating Agreement (or other comparable documents), or any other
agreement of the Company.
8. Notices.
All
notices, consents and other communications hereunder shall be in writing and
shall be deemed to have been given when delivered personally, on the next
business day when sent overnight by Federal Express or other nationally
recognized overnight courier service, or five (5) days after being mailed if
mailed by first-class, registered or certified mail, postage prepaid, addressed
(a) if to Consultant at 000 Xxxxxxx Xx., Xxxxx 000, Xxxxxx Xxxx, Xxx Xxxx 00000,
Attention: Xxxxxx Xxxxxxxx, President; or at such other address or addresses
as
Consultant shall have furnished to the Company in writing, or (b) if to the
Company, at 0000 Xxxxxxxxx Xxx, Xxxxxx Xxx Xxx, Xxxxxxxxxx 00000, or at such
other address as the Company shall have furnished to Consultant in writing.
A
copy of all notices sent to Company shall also be sent to Attn: Xxxxx Xxxxx,
Xxxxxxxxxx & Xxxxx LLP, 00000 Xxxxxxxx Xxxxxxxxx, Xxxxx 000, Xxx Xxxxxxx,
Xxxxxxxxxx 00000, Facsimile (000) 000-0000. A copy of all notices sent to
Consultant shall also be sent to Attn: Xxxx X. Xxxxx, Esq., Garfunkel, Wild
& Xxxxxx, P.C., 000 Xxxxx Xxxx Xxxx, Xxxxx 000, Xxxxx Xxxx, Xxx Xxxx 00000,
facsimile (000) 000-0000.
9. Additional
Covenants.
The
Consultant agrees to promptly notify the Company in writing of any change in
status of the Consultant, including: (i) the disassociation, departure,
separation, termination of Xxxxxxxx from the Consultant, (ii) the termination
or
expiration of the Operating Agreement of the Consultant; or (iii) the voluntary
dissolution or winding up of the Consultant.
10. Choice
of Law and Venue.
This
Agreement shall be governed according to the laws of the State of New York.
Venue for any legal or equitable action between the Company and the Consultant
which relates to this Agreement shall be in the county of Nassau.
11. Entire
Agreement.
This
Agreement supersedes any and all other agreements, either oral or in writing,
between the parties hereto with respect to the services to be rendered by the
Consultant to the Company and contains all of the covenants and agreements
between the parties with respect to the services to be rendered by the
Consultant to the Company in any manner whatsoever. Each party to this agreement
acknowledges that no representations, inducements, promises, or agreements,
orally or otherwise, have been made by any party, or anyone acting on behalf
of
any party, which are not embodied herein, and that no other agreement,
statement, or promise not contained in this Agreement shall be valid or binding
on either party.
12. Counterparts.
This
Agreement may be executed manually or by facsimile signature in two or more
counterparts, each of which shall be deemed an original, and all of which
together shall constitute but one and the same instrument.
11
13. Severability.
If any
term or provision of this Agreement or the application thereof to any person
or
circumstance shall, to any extent, be determined to be invalid, illegal or
unenforceable under present or future laws effective during the term of this
Agreement, then and, in that event: (A) the performance of the offending term
or
provision (but only to the extent its application is invalid, illegal or
unenforceable) shall be excused as if it had never been incorporated into this
Agreement, and, in lieu of such excused provision, there shall be added a
provision as similar in terms and amount to such excused provision as may be
possible and be legal, valid and enforceable, and (B) the remaining part of
this
Agreement (including the application of the offending term or provision to
persons or circumstances other than those as to which it is held invalid,
illegal or unenforceable) shall not be affected thereby and shall continue
in
full force and effect to the fullest extent provided by law.
14. Preparation
of Agreement.
It
is
acknowledged by each party that such party either had separate and independent
advice of counsel or the opportunity to avail itself or herself of same. In
light of these facts it is acknowledged that no party shall be construed to
be
solely responsible for the drafting hereof, and therefore any ambiguity shall
not be construed against any party as the alleged draftsman of this
Agreement.
15. Assignment.
Consultant acknowledges that Company has entered into this Agreement on the
basis of the particular abilities of Consultant. Accordingly, the Company shall
be entitled to assign, sell, transfer, delegate or otherwise dispose of, whether
voluntarily or involuntarily, by operation of law or otherwise, this Agreement
and any of its rights or obligations of this Agreement, but Consultant shall
not
and shall not have the right to assign, sell, transfer, delegate or otherwise
dispose of, whether voluntarily or involuntarily, by operation of law or
otherwise, this Agreement or any of its rights or obligations under this
Agreement without the prior written consent of Company. Except as provided
herein, any purported assignment, transfer or delegation by Consultant shall
be
null and void. Subject to the foregoing, this Agreement shall be binding upon
and shall inure to the benefit of the parties and their respective successors
and permitted assigns.
16. Electronically
Transmitted Documents.
If a
copy or counterpart of this Agreement is originally executed and such copy
or
counterpart is thereafter transmitted electronically by facsimile or similar
device, such facsimile document shall for all purposes be treated as if manually
signed by the party whose facsimile signature appears.
17. Further
Assurances.
Each
party agrees to do such other acts and things, all as another party may
reasonably request for the purpose of carrying out the intent of this Agreement,
to perform such party’s obligations contemplated hereunder in good faith, and to
refrain from any action to directly or indirectly circumvent such party’s
obligations hereunder.
[Remainder
of Page Left Blank Intentionally]
12
IN
WITNESS WHEREOF,
the
parties have executed this Consulting Agreement on the date first written
above.
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“CONSULTANT”
[Newco],
LLC
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| By: | |
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Name:
Title:
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“COMPANY”
Basic
Care Networks, Inc.
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Xxxxxx
Xxxxxxxx, Chief Executive Officer |
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ACKNOWLEDGED
AND AGREED
AS
TO SECTIONS 2.3 AND 4
By:
_________________________
Xxxxxx
Xxxxxxxx
13
EXHIBIT
G
Non-Competition
Agreement
NON-COMPETITION
AGREEMENT
THIS
NON-COMPETITION AGREEMENT (this “Agreement”)
is
made and entered into as of ____________ __, 2005 by and between Basic Care
Networks, Inc., a Delaware corporation (“Purchaser”)
and
Xxxxxx Xxxxxxxx (“Obligor”).
The
Closing Date (as defined in the Asset Purchase Agreements (as defined below))
shall be the “Effective
Date”
of
this
Agreement.
RECITALS
A. Grand
Central Management Services, LLC (“Grand
Central”),
United Healthcare Management LLC (“United”)
and
Park Slope Management Associates, LLC (“Park
Slope”)
(each,
a “Seller”
and
collectively, the “Sellers”)
are
engaged in the business of providing management and administrative services
to
healthcare providers (the “Business”)
in the
State of New York. Purchaser is a Delaware corporation also engaged in the
Business.
B. The
undersigned Obligor is a beneficial owner of each of the Sellers.
C. This
Non-Competition Agreement is being entered into between the Purchaser and
Obligor as a condition of closing pursuant to certain Asset Purchase Agreements
dated an even date herewith by and between the Purchaser and each of the
respective Sellers (each, an “Asset
Purchase Agreement”
and
collectively, the “Asset
Purchase Agreements”),
pursuant to which the Purchaser shall acquire substantially all of the assets
(“Acquired
Assets”)
of the
Sellers.
D. Each
of
the Sellers (Grand Central, United and Park Slope, respectively) act as
management companies who provide management and administrative services to
the
following clinics, respectively: (i) Midtown Medical Practice, P.C., a New
York
professional corporation located at 00 Xxxx 00xx
Xxxxxx,
Xxx Xxxx, XX 00000 (“Midtown”),
(ii)
Alliance Medical Office, P.C., a New York professional corporation located
at
0000-0000 Xxxxx Xxxxxx, Xxxxxxxx, Xxx Xxxx 00000 (“Alliance”)
located at 0000 Xxxxx Xxxxxx, Xxxxxxxx, Xxx Xxxx, 00000, and (iii) Synergy
Medical Practice, P.C., a New York professional corporation located at 0000
0xx
Xxxxxx,
Xxxxxxxx, Xxx Xxxx 00000 (“Synergy”).
For
purposes of this Agreement, Midtown, Alliance and Synergy are collectively
referred to as the “Clinics.”
E. Purchaser
will pay the Sellers consideration for the Acquired Assets acquired in the
Acquisition, which consideration may be assigned, transferred or otherwise
distributed to the members of the Seller. The Seller and Obligor acknowledge
that key among the Acquired Assets are the respective Turnkey License and
Management Agreements between each of Grand Central, United and Park Slope
and
the respective Clinics.
F. The
Sellers and the Obligor have valuable knowledge, relationships, experience
and
expertise in connection with the Business, and as a condition to closing of
the
Acquisition, the Purchaser and each Seller shall concurrently enter into a
consulting agreement pursuant to which each Seller (including the Obligor as
a
member of the Seller) will provide consulting services to the Purchaser (the
“Consulting
Agreements”).
G. Additionally,
the Purchaser is entering into a separate consulting agreement with Obligor,
who
shall assist the Purchaser in the development, establishment, operation and
management of additional medical clinics (the “New
Clinics”)
at one
or more locations.
H. As
a
condition and mutual inducement to the Acquisition, and to preserve the value
of
the Acquired Assets being acquired by Purchaser after the Acquisition, the
Asset
Purchase Agreement contemplates, among other things, that the Obligor shall
enter into this Non-Competition Agreement effective on the Effective
Date.
I. All
capitalized terms used herein and not defined shall have the same respective
meanings assigned to such terms in the Asset Purchase Agreements.
AGREEMENT
NOW,
THEREFORE, in consideration of the mutual promises made herein, Purchaser and
the Obligor hereby agree as follows:
1. Covenant
Not to Compete or Solicit.
(a) Beginning
on the Effective Date and ending eighteen (18) months after the termination
or
expiration of the Consulting Agreement (the “Non-Competition Period”), Obligor
shall not, other than on behalf of Purchaser, directly or indirectly, without
the prior written consent of Purchaser: (i) engage in a Competing Business
Activity (as defined below) anywhere within a seven (7) mile radius of any
Clinic or New Clinic (the “Restricted Area”), whether as an employee, agent,
consultant, advisor, independent contractor, proprietor, partner, officer,
director or otherwise, or have any ownership interest in (except for ownership
of three percent (3%) or less of any publicly-held entity), or participate
in or
facilitate the financing, operation, management or control of, any firm,
partnership, corporation, entity or business that engages or participates in
a
Competing Business Activity; or (ii) interfere with the business of Purchaser
or
approach, contact or solicit patients, employees, contractors, physicians,
shareholders or other affiliates of the Clinics or New Clinics, or employees
or
contractors of the Purchaser, in connection with a Competing Business Activity.
For purposes of this Agreement, “Competing Business Activity” shall mean any
business or activity involving or relating to providing physician management
and
administrative services to clinics or practices which are engaged in the same
or
substantially similar lines of business as any of the Clinics or New Clinics
within the State of New York.
(b) Beginning
on the Effective Date and ending eighteen (18) months after the date of
termination or expiration of the Consulting Agreements (the “Non-Solicitation
Period”), Obligor shall not, directly or indirectly, without the prior written
consent of Purchaser, solicit, encourage or take any other action which is
intended to induce or encourage, or has the effect of inducing or encouraging,
any employee of the Purchaser, the Clinics, the New Clinics, or any subsidiary
or affiliate of the foregoing, to (i) terminate his or her employment with
the
Purchaser, the Clinics, the New Clinics, or any subsidiary or affiliate thereof,
or (ii) engage in any action in which Obligor would, under the provisions of
Section 1(a) hereof, be prohibited from engaging.
2
(c) The
covenants contained in Section 1(a) hereof shall be construed as a series of
separate covenants, one for each seven (7) mile radius comprising the Restricted
Area. Except for geographic coverage, each such separate covenant shall be
deemed identical in terms to the covenant contained in Section 1(a) hereof.
If,
in any judicial proceeding, a court refuses to enforce any of such separate
covenants (or any part thereof), then such unenforceable covenant (or such
part)
shall be eliminated from this Agreement to the extent necessary to permit the
remaining separate covenants (or portions thereof) to be enforced. In the event
that the provisions of this Section 1 are deemed to exceed the time, geographic
or scope limitations permitted by applicable law, then such provisions shall
be
reformed to the maximum time, geographic or scope limitations, as the case
may
be, permitted by applicable laws.
(d) Obligor
acknowledges that (i) the goodwill associated with the existing business,
customers and assets of the Sellers and Clinics prior to the Acquisition,
including but not limited to the Turnkey License and Management Agreements
by
and among Grand Central, United, Park Slope, and the respective Clinics, is
an
integral component of the value of the Acquired Assets to Purchaser, and (ii)
Obligor’s agreement as set forth herein is necessary to preserve the value of
the Acquired Assets following the Acquisition. Obligor also acknowledges that
the limitations of time, geography and scope of activity agreed to in this
Agreement are reasonable because, among other things: (A) the Sellers and
Purchaser are engaged in a highly competitive industry, (B) Obligor has unique
access to, and will continue to have access to, the trade secrets and know-how
of the Sellers and Purchaser, including, without limitation, the plans and
strategy (and, in particular, the competitive strategy) of the Purchaser, (C)
Obligor is receiving significant consideration in connection with the
Acquisition, (D) in the event of the termination of the Consulting Agreements
between the Purchaser and Sellers (of which Obligor is an employee and
beneficial owner), Obligor would be able to obtain suitable and satisfactory
employment or engagement without violation of this Agreement.
(e) Obligor’s
obligations under this Agreement shall remain in effect for a period of eighteen
(18) months if the Consulting Agreements between the Purchaser and Sellers
are
terminated for any reason. Notwithstanding the foregoing or anything to the
contrary contained herein, this Agreement shall terminate and be of no further
force or effect ten (10) days after Xxxxxx Xxxxxxxx provides written notice
to
the Company that an Event of Default has occurred under the Promissory Note
between Xxxxxx Xxxxxxxx, as Payee, and the Company, as Maker, dated of even
date
herewith.
2. Miscellaneous.
(a) Governing
Law; Consent to Personal Jurisdiction.
This
Agreement shall be governed by the laws of the State of New York without
reference to rules of conflicts of law. Obligor hereby consents to the personal
jurisdiction of the state and federal courts located in Nassau County, New
York
for any action or proceeding arising from or relating to this Agreement or
relating to any arbitration in which the parties are participants.
(b) Severability.
If any
portion of this Agreement is held by a court of competent jurisdiction to
conflict with any federal, state or local law, or to be otherwise invalid or
unenforceable, such portion of this Agreement shall be of no force or effect
and
this Agreement shall otherwise remain in full force and effect and be construed
as if such portion had not been included in this Agreement.
3
(c) No
Assignment.
Because
the nature of the Agreement is specific to the actions of Obligor, Obligor
may
not assign this Agreement. This Agreement shall inure to the benefit of
Purchaser and its successors and assigns.
(d) Notices.
All notices, consents and other communications hereunder shall be in writing
and
shall be deemed to have been given when delivered personally, on the next
business day when sent overnight by Federal Express or other nationally
recognized overnight courier service, or five (5) days after being mailed if
mailed by first-class, registered or certified mail, postage prepaid, addressed
(a) if to Obligor, at 000 Xxxxxxx Xx., Xxxxx 000, Xxxxxx Xxxx, Xxx Xxxx 00000,
Attention: Xxxxxx Xxxxxxxx; or at such other address or addresses as Obligor
shall have furnished to the Purchaser in writing, or (b) if to the Purchaser,
at
0000 Xxxxxxxxx Xxx, Xxxxxx Xxx Xxx, Xxxxxxxxxx 00000, or at such other address
as the Purchaser shall have furnished to Obligor in writing. A copy of all
notices sent to Purchaser shall also be sent to Attn: Xxxxx Xxxxx, Xxxxxxxxxx
& Xxxxx LLP, 00000 Xxxxxxxx Xxxxxxxxx, Xxxxx 000, Xxx Xxxxxxx, Xxxxxxxxxx
00000, Facsimile (000) 000-0000. A copy of all notices sent to Obligor shall
also be sent to Attn: Xxxx X. Xxxxx, Esq., Garfunkel, Wild & Xxxxxx, P.C.,
000 Xxxxx Xxxx Xxxx, Xxxxx 000, Xxxxx Xxxx, Xxx Xxxx 00000.
(e) Entire
Agreement.
This
Agreement contains the entire agreement and understanding of the parties and
supersedes all prior discussions, agreements and understandings relating to
the
subject matter hereof. This Agreement may not be changed or modified, except
by
an agreement in writing executed by Purchaser and Obligor.
(f) Waiver
of Breach.
The
waiver of a breach of any term or provision of this Agreement, which must be
in
writing, shall not operate as or be construed to be a waiver of any other
previous or subsequent breach of this Agreement.
(g) Headings.
All
captions and section headings used in this Agreement are for convenience only
and do not form a part of this Agreement.
(h) Counterparts.
This
Agreement may be executed in counterparts, and each counterpart shall have
the
same force and effect as an original and shall constitute an effective, binding
agreement on the part of each of the undersigned.
(i) Termination.
This
Agreement shall automatically terminate and be of no force and effect eighteen
(18) months after the termination or expiration of each of the Consulting
Agreements between the Purchaser and the Sellers.
[Remainder
of Page Left Blank Intentionally]
4
IN
WITNESS WHEREOF, the Parties have executed this Non-Competition Agreement as
of
the date first written above.
BASIC
CARE NETWORKS, INC.
By:
____________________________
Xxxxxx
Xxxxxxxx
Chief
Executive Officer
OBLIGOR:
______________________________
Xxxxxx
Xxxxxxxx
Address:
Fax:
(
)______________________
5
PROMISSORY
NOTE
$______________
________,
2007
BASIC
CARE NETWORKS, INC. (the “Maker”), for value received, hereby promises to pay to
the order of XXXXXX XXXXXXXX (the “Payee”), at 000 Xxxxxxx Xx., Xxxxx 000,
Xxxxxx Xxxx, Xxx Xxxx 00000, the principal sum of
__________________________________________ ($_________________).
This
Note
is issued in connection with the payment of a portion of the Purchase Price
for
limited liability company membership interests acquired pursuant to Section
2.1(c) of that certain Membership Interest Purchase Agreement dated November
__,
2005 by and between the Health Plus Management Services, L.L.C., Payee and
the
Maker (“Purchase Agreement”). All capitalized terms used herein and not defined
shall have the same respective meanings assigned to such terms in the Purchase
Agreement.
Interest
on unpaid principal under this Note shall accrue at the simple rate of six
percent (6%) per annum from and after the date of issuance, except in the case
of an Event of Default as set forth below. This Note shall be paid in two
installments: (i) any and all accrued interest under this Note shall be due
and
payable six (6) months after the date of issuance of this Note; and (ii) the
entire unpaid principal amount plus the remainder of unpaid accrued interest
under this Note shall be due and payable on the date that is eleven (11) months
following the date of issuance of this Note, but in no event later than June
30,
2007.
All
payments shall be made in lawful money of the United States of America. This
Note may be prepaid in full at any time, or in part from time to time, without
penalty or premium, but with interest accrued on all outstanding principal
to
the date of such payment. All payments on this Note shall be applied first
to
accrued but unpaid interest and then to the outstanding principal balance
hereof.
If
any
installment of this Note becomes due and payable on a Saturday, Sunday, or
public or other banking holiday under the laws of the State of New York, the
maturity thereof shall be extended to the next succeeding business day, and
interest shall be payable thereon at the rate herein specified during such
extension.
Except
as
otherwise provided herein, the Maker waives presentment, demand, demand for
payment, protest, notice of dishonor or notice of any kind in connection with
this Note.
The
occurrence of any one or more of the following shall constitute an event of
default under this Note (an “Event of Default”):
1. The
Maker
shall fail to make any payment hereunder when due and such failure shall
continue for a period of ten (10) business days following its due
date;
2. The
Maker
shall cease doing business as a going concern, make an assignment for the
benefit of creditors, admit in writing its inability to pay its debts as they
become due, file a petition commencing a voluntary case under any chapter of
Title 11 of the United States Code (the “Bankruptcy Code”), be adjudicated an
insolvent, file a petition seeking for itself any reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar arrangement
under
any present or future statute, law, rule or regulation or file an answer
admitting the material allegations of a petition filed against it in any such
proceeding, consent to the filing of such a petition or acquiesce in the
appointment of a trustee, receiver or liquidator of it or of all or any part
of
its assets or properties, or take any action looking to its dissolution or
liquidation; or
3. An
order
for relief against the Maker shall have been entered under any chapter of the
Bankruptcy Code or a decree or order by a court having jurisdiction in the
premises shall have been entered approving as properly filed a petition seeking
reorganization, arrangement, readjustment, liquidation, dissolution or similar
relief against the Maker under any present or future statute, law, rule or
regulation, or any trustee, receiver or liquidator of the Maker or of all or
any
part of its assets and properties shall be appointed; or if there is commenced
against the Maker any proceeding seeking any such relief or the appointment
of
any such trustee, receiver or liquidator which remains undismissed for a period
of sixty (60) days.
Upon
the
occurrence of an Event of Default, at the option of the Payee, this Note shall
become immediately due and payable together with all accrued and unpaid interest
hereunder up through the date of payment, upon the giving of notice by the
Payee. Upon the occurrence of an Event of Default, the interest accruing under
this Note shall accrue at a rate per annum equal to the higher of: (i) twelve
percent (12%), (ii) four hundred basis points above the “prime rate” on the date
(or the next business day if a bank holiday or non-business day) of the Event
of
Default, as published in the Wall
Street Journal
(the
“Default Rate of Interest”), provided,
however,
that
should such Default Rate of Interest be deemed to be illegal or otherwise
prohibited, the Default Rate of Interest shall be the highest rate allowed
by
law.
In
the
case of an occurrence of an Event of Default that has not been cured within
the
applicable cure period, the Maker shall pay to the Payee all reasonable costs
and expenses (including reasonable attorneys’ fees) incurred in connection with
the enforcement and collection of this Note; provided that such costs and
expenses of the Payee are actually incurred by Payee and documented in writing
(or as otherwise deemed appropriate by the parties).
No
delay
on the part of the Payee in exercising any of its options, powers or rights,
or
partial or single exercise thereof, shall constitute a waiver thereof. No waiver
of any of its rights hereunder shall be deemed to be made by the Payee unless
the same shall be in writing, duly signed on behalf of the Payee, and each
such
waiver, if any, shall apply only with respect to the specific instance involved,
and shall in no way impair the rights of the Payee or the obligations of the
Maker to the Payee in any other respect at any other time. This Note may be
modified or amended only in a writing duly executed by Payee and
Maker.
2
This
Note
shall be binding upon the Maker and the Payee and their respective successors
and permitted assigns. This Note may not be assigned by Maker without the prior
written consent of the Payee. Payee shall give the Maker written notice of
any
assignment of this Note by Payee hereunder, but such assignment by Payee shall
not require the prior consent of Maker.
This
Note
shall be governed and construed in accordance with the laws of the State of
New
York without reference to the conflict of laws provisions thereof.
The
courts of record of New York State or of the United States District Courts
for
the Southern and Eastern Districts of New York shall have exclusive jurisdiction
with respect to any legal action or proceeding relating to or arising under
this
Note.
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BASIC
CARE NETWORKS, INC.
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By:
________________________
Name:
Xxxxxx Xxxxxxxx
Title:
Chief Executive Officer
|
FIRST
AMENDMENT TO
MEMBERSHIP
INTEREST PURCHASE AGREEMENT
OF
HEALTH
PLUS MANAGEMENT SERVICES, L.L.C.,
and
XXXXXX
XXXXXXXX
THIS
FIRST AMENDMENT (“Amendment”) dated as of February 10, 2006, by and among BASIC
CARE NETWORKS, INC., a Delaware corporation (the “Purchaser”),
HEALTH PLUS MANAGEMENT SERVICES, LLC, a New York limited liability company
(the
“Company”),
and
XXXXXX XXXXXXXX (“Xxxxxxxx”
or
the
“Principal”),
is an
amendment to that certain Membership Interest Purchase Agreement dated November
18, 2005 by and among the Buyer and Seller (the “Agreement”).
The
parties mutually agree that Section 5.10 of the Agreement is hereby amended
and
restated to read in its entirety as follows:
“5.10
Registration
Statement Effective.
The
Registration Statement (as defined in Section 7.6, below) shall have become
effective under the Securities Act and no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been initiated or threatened by the
SEC
(as defined in Section 7.6, below); provided, however, that in the event
the
Registration Statement (i) has not been filed on or before March 15, 2006,
or
(ii) has not become effective on or before May 15, 2006, the Principal shall
have the right, in its sole discretion, to terminate this Agreement without
cost
or penalty.”
[Remainder
of Page Left Blank Intentionally]
IN
WITNESS WHEREOF, the parties hereto have executed this Amendment, on the
day and
year first above written.
PURCHASER:
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BASIC
CARE NETWORKS, INC.
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By:
/s/
Xxxxxx Xxxxxxxx
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Name:
Xxxxxx Xxxxxxxx
Title:
Chief Executive Officer
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PRINCIPAL:
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By:
/s/
Xxxxxx Xxxxxxxx
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Xxxxxx
Xxxxxxxx
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COMPANY:
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HEALTH
PLUS MANAGEMENT SERVICES, L.L.C.
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By:
/s/
Xxxxxx Xxxxxxxx
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Name:
Xxxxxx Xxxxxxxx
Title:
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